The Inside Scoop with Louis Leal + The Real Deal
Our Director of Marketing and Business Manager, Louis Leal, spoke with The Real Deal Los Angeles Real Estate News to talk about development in Mar Vista, and how mansionization restrictions are changing the outlook for future building endeavors.
Development in Mar Vista could be dimmed by mansionization restrictions
Meanwhile, sales volume in area has slowed compared with last year: report
August 03, 2016 By Laurie Dove
Louis Leal of Halton Pardee + Partners
Good schools and proximity to coastal beaches have drawn residential interest to Mar Vista — but development in the area may slow with new restrictions.
A look back over the past 12 months reveals an 8.23 percent increase in single-family home prices, which have reached an average of $1.38 million. The average price per square foot increased 4.8 percent during the same time period to hit $813 in the second quarter, up from $776 per square foot in the same period last year, according to a new report by Halton Pardee + Partners.
“A lot of people are cashing-out Venice properties and buying in Mar Vista,” said Louis Leal of Halton Pardee + Partners. “Developers are going there, too, looking for sub-1 million price points they can capitalize on, applying the same formula as in Venice.”
This formula entails buying aging housing stock for the land value, then razing the structures to max-out the lot with a large new home. Attractive as this is to residential developers, in Mar Vista it may soon come with a twist that could slow developers.
Temporary Interim Control Ordinances were put in place last year, which were meant close loopholes in the Baseline Mansionization Ordinance originally enacted in 2008. These loopholes had allowed homes to be built to maximum size, and also allowed vertical and horizontal add-ons. The ICOs sought to restrict the scale of new construction and prevented, with varying success, the construction of 4,000-square-foot homes on 6,000-square-foot lots. Currently, the Mar Vista ICOs are under review as part of a look at new zoning codes, and the standards are expected to tighten.
The mood, which among residents seems focused on preserving neighborhood character against overbuilt lots, is giving developers pause.
“Developers will be affected and Mar Vista won’t be as attractive,” Leal says of the anticipated zoning code changes. “The temperament is anti-development; residents don’t like to see a one-story neighborhood with an occasional two-story house right now. We’re at some type of high water mark, with grassroots activism to stop neighborhood changes.”
Judging by second quarter sales, most individual buyers seem unaffected by the impending changes. One hundred single-family homes were sold during the second quarter, including a five-bedroom, four-bath, two-story Craftsman-style at 3540 South Barrington Avenue that pulled in $2.27 million.
At 67 percent, single-family sales retained the lion’s share of the Mar Vista submarket in the past 12 months, with income properties grabbing 19 percent and condo sales registering at 15 percent.
Condos along Mar Vista’s commercial corridors are the “best starter price to get in the market,” Leal said. “It’s a function of being furthest from the ocean and being situated along a more congested route.”
The majority of the 22 condo sales that occurred during the second quarter were well under the $1 million mark. For example, a two-bed, four-bath 1,636-square-foot condo at 13346 Washington Boulevard sold for $890,000 in June after a rare 160 days on the market. A smaller two-bed, 2.5-bath, 1,210-square-foot condo on 4365 Mclaughlin Avenue, however, sold for $600,000 after being listed 18 days. The average days on the market was 33.
Mar Vista, which still offers entry-level options for buyers getting into the ownership arena on the west side, has a number of revitalized amenities that add to the appeal. Bowlero Mar Vista, for example, is relatively new on the scene and there are several Mar Vista residents with standing reservations to meet friends for “bowling night,” Leal said.
Income properties were active in Mar Vista during the second quarter, with 28 sales averaging $1.45 million, but analysts are keeping an eye on the market’s slowing velocity. Income properties averaged 66 days before selling, with some wait times ranging into the low hundreds.
The potential backlog of inventory is worth watching. “The whole market is moving sideways,” Leal said. “There is a lot of inventory in Mar Vista that needs to be cleared. We either need to have more buyers come or reduce prices to entice buyers into the pool. Right now there’s a stand-off between sellers who don’t want to lower prices and buyers who have price exhaustion and are willing to wait.”
According to Halton Pardee’s report, the number of single-family units sold to-date in 2016 is 163, on pace to dip below last year’s total sales of 332.