Archive for July, 2007

Location versus Price and Value in Santa Monica

Anne Pautler asks: why do prices in Santa Monica change so much block to block?

Actually, it depends upon which block and the answer is a variation of the old joke about the three most important things in real estate being location, location, location.

The difference in price between otherwise nearly identical condos half a block north of Wilshire and half a block south of Wilshire can easily be 15-20 percent. Both units would be in the same city, have the same environment, have no appreciable difference in crime rate, and even have the same public schools except on the elementary level, where McKinley would stand in for Franklin or Roosevelt. Is such a difference in price rational? In my opinion, no, but that doesn’t make the price differential any less real in the marketplace.

In most general terms, property in Santa Monica commands a higher value the further north you go and the further west, closer to the beach, you go. But there are exceptions to the rule. The lowest priced properties will be found in the band on either side of the Santa Monica freeway, south of Olympic Blvd. and north of Pico Blvd. As one moves south of Pico, property values rise, just as they do as one moves north of Olympic.

I’ve had clients who have come to me almost literally after stepping off the plane at LAX and they ask for “north of Wilshire” even if they know nothing else about Santa Monica. If everything else were equal, north of Wilshire properties, which command a better rate of appreciation, increasing value more in an “up” market, holding on to value more in a “down” market, would be the obvious choice.

But everything else isn’t equal. When one purchases a property, one is buying a package of two things: investment potential and “bang for the buck” as reflected in size, age, level of finish, etc. At the same price point, if one part of the package goes up, the other part of the package goes down, just like opposite sides of a teeter-totter.

Which is why one client, a professor at UCLA, after first looking at two-bedroom condos in the Santa Monica area ultimately purchased a four-bedroom house in Woodland Hills in the same price range. In so doing, he got more “bang for the buck” in a very dramatic way at the cost of a less advantageous long-range outlook in investment potential.

In making a purchase, there is no “right” decision. The balance point between location and “bang for the buck,” whether on a broad range between Santa Monica and Woodland Hills, or a narrower range between south and north of Wilshire, is decision that each buyer will weigh differently. My job as a real estate consultant is to identify the trade-offs for each client so that they can make an informed decision in light of their needs.

July 28, 2007 at 10:11 pm Leave a comment

Condos vs. Townhouses

G3Gecko asks: What’s the difference between a condo and a townhouse?

In everyday usage, “condo” is meant to be a single-level unit with an individual owner, as distinguished from an “apartment,” one such unit in a multi-unit building with all units owned by the same entity. The British “flat” is another word describing the same thing.

A townhouse is a multi-story unit. Usually the living room, dining room, kitchen, and a powder room (half bath with toilet and basin) are on the entry level and two or more bedrooms are on an upper level. Sometimes, in cases where there is a “view” potential as with townhouses along the beach, the floorplan may be reversed with the bedrooms downstairs and the living area up.

Townhouses may feature stairs providing “direct access” to a garage, which may consist either of spaces in a common garage or a private garage. Some floor plans lend themselves to a “bonus room” between the bottom of the stairs and the garage, usable for a home office, an exercise room, a game room, a room for hobbies, or just additional storage. Some townhouses also may feature a loft, overlooking either the living room or the master bedroom; many lofts are used for home offices. A few townhouses offer roof-top decks which, depending on location, may offer views of city lights, the mountains, or the ocean.

Technically speaking, the word “condo” is a form of legal ownership, where a user owns 1/n of the entire property, where “n” equals the numbers of units, along with the airspace within a designated unit. “Townhouse” refers to a style of architecture, the upstairs/downstairs as previously described. Thus, all townhouses are condos but not all condos are townhouses.

All other things being equal–locations, square footage, level of “finish,” etc.–a townhouse will be more expensive than a similar single-level condo simply because more people would rather not have anyone living above or below them and are willing to pay more to do so. Townhouses located in the front or rear of a complex will command a higher price than those in the middle of a building because they typically have more light and because there is a neighbor on the other side of only one wall.

Single-level condos on the top floor command the most price for the simple reason that nobody is above the unit; most people would rather be the “clumper” than the “clumpee.” While townhouses are more popular in the marketplace overall, single-level condos are more popular with older Buyers whose knees may not relish running up and down stairs all the time.

July 23, 2007 at 3:45 pm Leave a comment


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