The Strand: the most expensive residential property in the United States
by Tony Cordi
There is nothing quite like The Strand anywhere else. Bryn Stroyke of Stroyke properties sums it up nicely when he says, “Our small, private, beaches are the best beaches in Los Angeles.” He adds, “They are local, pristine and have great central downtowns.”
However, with fewer than 450 homes on The Strand, the demand for the homes greatly outstrips the supply. This fact is reflected in astonishingly high prices. In fact, the single family land value per square foot exceeds that of any other location in the country.
This supply of coveted homes is further constrained by the fact that the turnover rate for Strand homes is below two percent, with fewer than 40 closed sales in Hermosa Beach and Manhattan Beach combined over the past five years. National Association of Realtors data reveals that the current national turnover rate is seven percent. People who buy on The Strand tend to stay put.
Manhattan and Hermosa have median sales prices higher than over 99 percent of the zip codes in the country. Forbes annual study of median home prices in 2016 for the 29,500 zip codes covering 95 percent of the total population had Manhattan Beach at number 74. Hermosa came in at number 119, with a median price 21 percent below that of Manhattan.
The numbers for Manhattan or Hermosa would skew considerably higher if the Strand homes were isolated in the Forbes study. Newly remodeled Strand homes sell now for over $14 million in both cities and it is becoming increasingly difficult to find anything below $7 million. Interestingly, for the typical lot size in Manhattan, this translates to between $100 million and $200 million per acre.
To put this in perspective, the land cost for a square, 15-foot wide deck or a carport would be well over $500,000, which happens to be double the median sale price for an existing home in the country.
Last year, the most expensive home sale in the nation on the public record was $45 million for a waterfront home with 1.6 acres on prestigious La Gorce Island in Miami, though there were rumored private sales of over $100 million. The record for the most money paid for a home in the U.S. stands at about $150 million in East Hampton, New York, sitting on 18 acres. Scaling these properties to a value per acre yields $4 million and just over $8 million, respectively. The story plays out similarly in all of the exclusive communities across the country.
The increase in Strand property values no doubt has an impact on prices across the beach communities, which leads to higher property tax revenues for the cities. Property tax revenue for Manhattan Beach was slightly over $20 million in their 2012-2013 general budget and has climbed to $27.8 million for this fiscal year.
Stroyke had a quick response when asked if there is a limit to how high Strand property values might go. He shared the story of how his Realtor parents were the first family to pay $300,000 for a Strand home in Hermosa, many years ago. If asked then if they could see prices ever reaching $1 million or even $2 million one day, they no doubt would have responded positively. However, if asked if $10 million was a possibility they would have thought it absolutely crazy. “It’s impossible when in the moment to conceive of how high values will climb over time,” he said.
Toni Cordi is a commercial real estate consultant with The Innate Group. He can be reached at firstname.lastname@example.org
by Kevin Cody
Kevin is the publisher of Easy Reader and Beach. Share your news tips. 310 372-4611 ext. 110 or kevin[at]easyreadernews[dot]com