Touring Architectural Homes in Venice, California: Minimalist Aesthetic Meets Maximalist Price Point

This is a post by Luke Jones.  Living in Venice one can’t fail to notice all these funky looking buildings and be curious to know what they’re like on the inside – so today I checked out the latest Architectural listings on the Venice market.

The first thing that struck me about this style of home is that there are so many things you can get wrong! Firstly, it’s easy to make an architectural home feel cold and sparse. It’s also easy to make it feel cluttered or unfinished. Unless you are a minimalist or are neurotically tidy, or unless you have a bold and radical style throughout, there’s always going to be things that don’t quite fit it. Even down to the shampoo bottles in the bathroom!

So, the first thing to think about when eyeing an architectural home is whether or not your lifestyle will suit this kind of home. The second thing that struck me about looking at architectural homes is that, for all the flair and imagination that goes into this style, it's actually pretty standardized these days. After all, there’s only so much you can do with brushed concrete! The real beauty of an architectural home is how it's possible to juxtapose your own life within the framework of an open space, showcasing your own style to the maximum effect…

The first property in Venice I looked at was the enormous and imposing 333 Indiana Avenue. From the outside, it looks like a rather drab apartment building but as soon as you enter through the heavy doorway, you immediately notice the sense of scale. The first floor, with concrete flooring and a basic kitchen that was obviously put in place by someone who had no intention of cooking, feels like a professional showroom. The master bedroom is bizarrely situated just off the kitchen on the ground floor and apart from the huge entry way / gallery space, and there is surprisingly little room to actually use for dining and seating. Upstairs is the "money shot": a massive open plan studio space with soaring 16 ft ceilings, exposed metal beams, maple floors and skylights – an incredible live-work space. This home is ideally suited for persons with an extensive art collection or someone who wants to work from home. And you’d have to be pretty successful – at $3,350,000 this property doesn’t come cheap. But for the square footage (5,632 ft), it's actually comparatively well priced.

The next property I checked out was at 135 Brooks Avenue. Situated on the busy intersection of Main and Brooks, this corner lot has a more homey feel to it than the first one. The open plan living room / kitchen is quite small and, although it has large windows stretching to the ceiling, since it’s on a small lot in a crowded subdivision, it feels a little gloomy. However, it does have high vaulted ceilings giving an impression of scale. A curiously dark stairwell leads up to the second floor where you have two guest bedrooms, one of which is more suited to being a decent guest bedroom benefitting from large windows looking onto the quieter alley way below and a sizeable walk in closet. The smaller of the two guest bedrooms would be fine for a queen or adequate as an office / study. The master bedroom and bathroom is on the third floor and features a large, walk-in closet and an open-plan feel with curved walls that sweep onto a small, functional roof terrace. This attractive and funky home feels like a starter pack for someone who wants to dip their toe in the architectural lifestyle without having to contend with big open spaces or imposing architecture. I think it’s overpriced at $1,595,000 or $844 / sq ft, but with parking for 3 cars and with 3 bedrooms, perhaps one could rent out a room to a lodger.

Next up is a condo with a town house feel. Based on another busy intersection (Brooks and Pacific), number 49 Brooks Avenue is a large, bright unit in an eye-catching condominium block. A stone's throw from the boardwalk, this has an urban feel to it (urban by Venice standards, that is), but with your own entrance, you’d forget that you’re in a shared co-op. There is plenty of natural light throughout, and there is a bright gourmet kitchen with a large island as the main feature of the room. This is an entertainer's house, no doubt, and the entire layout and vibe feels very welcoming, fresh and breezy. The bedrooms are well-proportioned and the master bedroom has a fabulous corner window that looks towards the sea and the mountains. Furthermore, the unit features its own private balcony with 360 degree views and a wood-burning fireplace. With parking onsite for two cars and a clean, modernist exterior, this certainly has the feel of a single family architectural home but with the price of a condo. At $1,475,000 or $636 per sq ft, this is a bargain compared to the previous property at 135 Brooks. The big drawback is the proximity to the busy street -- but that only adds to its urban feel.

A little ways down pacific and set back from the busy street on a quiet walk street is 35 20th Street. At $1,295,000 this 2,000 sq ft lot is currently divided into a duplex giving some rent return on your investment. But this is where the good news ends. This very peculiarly designed architectural home feels clustered and confused. Whilst it features a nice front yard on a peaceful walk street and even though it fits in perfectly with all the other eclectic homes in the neighborhood, it all feels very over designed. Strange cabinetry at odd angles make rooms feel cramped; tiny bathrooms with barely room to swing a cat feel like they’ve been designed without any thought for luxuriating; and, annoying metal spiral staircases that creak and groan as you walk noisily up them make the place feel like you’re in a half-finished experiment. Also - and this is an observation of mine as someone who used to live on a walk street – as nice as it is to have the pedestrian walk street on one side, you have to remember that you’ve got the drug ridden, trash-can strewn, urine-smelling alleyway on the other side. No, sadly this one wasn’t for me. But then again, if living close to the beach with all the action in a quirky, crazy home is your cup of tea – check it out.

So, feeling a little dismayed, I made my way back home via one last property on California. Another world from the beach side of Venice, this is towards the Lincoln end of Venice. Immediately seeing that it was bang opposite a busy high school, I was expecting the worst. But lo and behold, it turned out that this was the best home I’d seen all day. No 844 California Avenue, with 3 bedrooms, 3 baths, 2 car garage, nice yard, roof deck with 360 degree view and warm open layout with distinguishable areas makes this an all-in-one hit and at $1,445,000, comparatively a bargain in relation to the previous property that had so many things wrong with it. This stunning home has a warm, inviting feeling with impeccable style. The rooms are well-proportioned and with bright, maple floors throughout there’s both an air of continuity but also individuality. The drawbacks to this property are: (1) the proximity to the school, which would be a noise nuisance during the week; (2) heavy traffic; (3) the fact that it is not situated in the heart of Venice but nearer hectic Lincoln Blvd.  Weighing these downsides against the sensible pricing and terrific design and proportions, I think this architectural home perfectly achieves the balance of modernism, space and warmth.

Getting Onto the Property Ladder in Venice: High-Cost Market Tests Affordability, But Owning By the Beach is Better than Owning the S & P 500 by a Country Mile

This is a post by Luke G-Jones. 

Most long-term residents of Los Angeles aspire to climb onto the property ladder at some point. And when they do, the usual tough decisions prevail: “I don’t want to leave the area I’ve come to love, but I can’t afford it”, “I don’t want to have to downgrade in terms of space and I get so much more room by renting”, “If I’m going to buy, I want some outdoor space”, “Will I build some equity in this place over the next few years”… The list goes on and invariably sacrifices will have to be made.

However, with interest rates at 39-year lows (around 4.5%), and with so much distress in the housing market, there are excellent buying opportunities out there. If you are in a stable job, can put down a modest deposit (as low as 3.5% for an FHA loan), are prepared to pay a premium in rent and want to make that all-important step onto the first rung of the ladder, then read on.

First, consider the chart above.  In 2000 the median sale price for a home in Venice was $409,000.  Even after the real estate gyrations of the past few years, the median price of a single family home year-to-date in Venice is $975,000.   That's an increase of 138% over the decade.  Long-term renters in Venice may have had affordable rent for the 2000s (and renting does have its advantages), but they missed out on owning their roof over their head, and benefiting from among the most superior investment returns around.  Consider that the S & P 500 has delivered a loss of 15% over the past decade (1365 on 10/29/2000 and 1165 on today.)

First up is 126 Vista Place, a picture-perfect Venice Beach bungalow nestled away on a quiet walk street between Main and Pacific. In this blogger’s opinion, these walk streets trump those that head down to the beach by a country mile by virtue of the fact that you don’t get the tourist traffic and there are fewer drivers using Speedway as a rat run. This property is on the market as a trust/conservatorship.

The price has been reduced to a very reasonable $699k. Considering similar properties can often go for around $800-900k, this is quite a bargain. Granted, it could do with a little TLC, but it has a gorgeous little front yard, a good-sized porch, and plenty of parking out back. Having numerous friends who live in the neighborhood and love the walk streets, I know this would be considered a very appealing first-time buy. For not too much more than your rental costs, you could segue into owning a similar-sized home within the same neighborhood and start building equity. There isn’t much room to expand this home, but if you’re sold on Venice, want to maintain the style in which you’ve become accustomed, then I think this one is for you!

If you’re already in expansion mode, check out 1157 Lake Street, a substantial 4 bedroom, 3 bathroom property one block south of Rose and between Walgrove and Lincoln. At $989,000 it’s competitively priced (with 2,000 square feet across a lot size of over 5,000 square foot, it works out at around $500 per square foot of living space) and it has a spacious, light and well-proportioned feel to it. It’s a “flip” with beautiful hardwood floors throughout, a new roof, freshly painted interior and exterior, a garage converted into a spacious den, and new asphalt on the driveway. It’s also a two-story home, which is fairly unusual within this price range. Whilst a million bucks is still a lot for a first-time buyer, you’d be spending around $5k a month to rent a similar single family home.

Unfortunately, whilst this property is close to the outdoor space of Penmar Park and public golf course, it is also under the flight path of Santa Monica airport. Whilst no commercial jets fly out of SM Airport, the noise of those small private charters can certainly distract your swing! However, if you want a piece of real estate, if you can drag yourself east of Lincoln, and you don’t mind the noise of George Clooney’s private Lear jet flying over your house, then this one could be just the thing for you.

If you’re a little more price conscious but still want a bit of space, a yard, room to expand, and an opportunity to do some modest fixing up, check out 1412 Oakwood Avenue. This corner lot south of California and North of Milwood is right in the heart of Venice. I've blogged about it before, it’s been on the market for a while. Again, it’s a good “starter pack” to get your foot on the ladder and with a great front porch and plenty of yard space, it’s a perfect way to play house. It's not got great light in front, and the rooms aren’t too well proportioned, but at $685k it’s a pretty good price. Compared to 1157 Lake Street, you get a lot less "bang for you buck", but if "location, location, location" is your priority and you’re paying around $2,500 per month in rent for a similar style of cottage, then this is definitely something worth checking out.

As I mentioned at the beginning, I’m making some pretty wide assumptions for ye reader: you’ll need to be able to put down a deposit, qualify for a loan, and have a stable income. Unfortunately, gone are the days of mortgage payments being similar to rent. However, if you can stomach an increase in monthly outgoings and you’re ready to pounce, then there’s rarely been a better time to get on the housing ladder.

Venice, California -- Small Investment Opportunities Abound In High-Rent, High-Demand, Hi-Style Neighborhood by the Beach

This is a post by Luke Jones. A couple of months back I blogged about 421 Grand Avenue, in Venice, a small lot consisting of two beach cottages of about 650 sq ft each with a separate and secure garage on site. The price of this property has now been lowered to $949,000. With vacation rentals of a similar size going for as much as $3,600/month or even $250/night for short term stays, one could live in one of the cottages, let the other, and look at clearing around $30,000/year after vacancy and expenses. This would go a long way towards any mortgage payments. So, it got me thinking that I could explore some other similar opportunities in and around Venice for this post. Here’s what I found out there in the market.

902 Milwood Avenue, Venice is priced at $1,295,000 and is located just one block west of Lincoln and about halfway between Rose and Venice. (We love Milwood Avenue and represented buyers on the purchase of a property on the 700 block.) This California bungalow has a second home/income property that could be let for around $2,500/month. I wasn’t able to see the two bedroom rental property, but the main home is beautifully maintained and well appointed with three beds, two baths, and a large grassy yard with front and back porch area with swings. The interior has detailed paneling, original features, and built-in 1920’s cabinetry. There is also a spacious garage that could easily accommodate one large car or two small cars. The price on this property has been reduced and I think the owners are highly motivated. They’ve already moved abroad, have hired a company to stage the home and will consider offers.  With the income property bringing in around $20,000/year (net), this could make mortgage payments very similar to what one could expect to pay in rent for something similar.

An investor with an eye for opportunity may be interested in 667 Marine Street. Technically Santa Monica, this 3,700 sq ft corner lot is just west of Lincoln between Rose and Ocean Park and still has that Venice vibe. It’s a really cute area with a local grocery shop directly opposite, and the property is just seven blocks from the beach. At $779,000, it’s a steal – but here’s why: it’s pretty much a tear down. But the upside is clear. The existing house (740 sq ft) is in good enough condition to move into right now whilst building a new house in the spacious yard. Or one could tear the whole place down and build a sizeable property instead. It’s being sold in “as is” condition, which means buyer beware!

For an investment property that you would actually live in, check out 3007 3rd Street, Santa Monica, listed at a highly competitive $645,000. This area is known as the San Francisco of the South due to the landmark buildings, hilly streets and walking community. West-facing, with an ocean view and 42 steps up from street level, this bright and breezy 1908 California bungalow definitely has a San Francisco vibe. The house needs some TLC, but for around $50,000, one could spruce it up to a very high standard. The compound used to consist of four duplexes (8 units), but was converted a few years ago into four freestanding bungalows with two beds and two baths each.

All four properties are owned as a “tenancy in common”. In layman’s terms, this means that any new owner would become an equity stakeholder in all four properties with equal ownership and rights. The obvious downside meaning that you would have to consult with your tenants in common over matters such as improving, maintaining and managing the property. Again, the price has been dropped recently and the other co-operative tenants in common are motivated to sell. The listing agent lives in one of the units and has extensive knowledge of the property. She has also gained permission from one of the other tenants in common to convert their basement into a two-car garage and she is offering one half of this garage for the use of the new owner.

Finally, for the Vacation Rental by Owner (VRBO) investor, 447 Grand Boulevard, Venice, offers a very high rate of return. The property consists of three immaculately maintained and well-appointed one bedroom, one bath vacation properties, and is priced at $1,650,000. They have been remodeled with sustainable/green features and include washer/dryers, dishwashers, full kitchens, WiFi and 42” HDTV’s. Renting at either $250/night or around $4,000/month, these properties yield a “back of the envelope” 5.8% cap rate based on 65% occupancy. If one were able to market more aggressively or secure longer-term tenants, the cap rate could be as high as 9%. For Venice, this is an exceptional yield. The current owners have built a solid brand and have loyal returning clients. This existing client base and the brand awareness of these rentals would be “goodwill” that comes with the property.

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If you have a question about Venice, Santa Monica, or investment properties, please call us at (310) 845-6810 or email us by clicking on this link. We'd like to hear from you!

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Venice, California -- More Housespotting on Canals, and Beyond, in August 2010

This is a post by Luke Jones.  Venice, California, was founded as a beach town resort in 1905 by Abbott Kinney, a tobacco millionaire. He constructed a pleasure pier and a long arcade street with Venetian architecture and dug several miles of canals so that tourists could tour the area in gondolas. By 1925, Venice was quickly falling into rack and ruin with the sewage systems and roads badly in need of repair. In 1929, wildcatters discovered oil in the area, and as oil waste flooded into the canals, the area deteriorated even further.

By 1950, Venice was known as the ‘slum by the sea’. At this point, Venice started to attract European immigrants and the young counterculture of LA, including artists, writers and poets. With the canals largely filled in or filled with rubbish and prominent gangs in the area, Venice remained largely an impoverished slum until around the late eighties.

A generation later, Venice is now one of the most desirable, vibrant, and eclectic areas of Southern California.  Property prices have skyrocketed and, with a high median household income, this once modest neighborhood is now one of the wealthiest neighborhoods in the city of Los Angeles. Today, only four main canals remain and where once stood small, rundown cottages, you now have magnificent ‘palazzos’ fit for a king.  This week, I checked out a varied selection of properties in the area that, once again, highlight the range in terms of both price and quality that you can find in Venice.

Firstly, we have a short-term lease opportunity. 217 Sherman Canal is a fabulous architectural home with prime canal frontage. It is available for 5 months only from October 1st and comes fully furnished. Ideal for a creative type coming to LA on a work assignment or a family who fancies staying in Sunny California through the winter, it has 3 bedrooms, 3 baths across two stories with an amazing master suite with soaring ceilings throughout. At $8,500 per month, it’s not cheap, but the rent includes a weekly maid and gardener and is fully equipped with built in BBQ, modern kitchen, wifi and satellite TV. The decoration is a cross between modern Spanish and Italian with cherrywood flooring, mahogany cabinetry and tile / granite surfaces. There is a two car garage that will be available for use, as well. If you’re tempted by the lifestyle in Venice but feel you want to dip your toe in the proverbial canal water first, then this could be just right for you.

If, on the other hand, you want to splash into something truly palatial, then why not check out 420 Carroll Canal. At $5,750,000 this is a seriously large home. With 90 foot of waterfront and a lot size of over 5,000 sq ft, this represents a unique opportunity to own three separate buildings that are interconnected via French doors and shared courtyards. The seller basically owned one Spanish-style home and then bought the two buildings beside it to create this rare, triple lot compound.

As it is now, the largest of the three buildings, has 3 beds, 3.5 baths, with high ceilings and French doors that lead to waterfront, and balconies as well as a spacious roof deck. The 2nd home has a full kitchen and large study / living room with canal frontage as well as full guest suite or 2nd master upstairs with an en suite bath. The 3rd house is a single room studio with small kitchen and private bathroom that could be a perfect cabana / studio or office. The property has an ornate courtyard with an outdoor fireplace and koi pond. With parking for 8 cars, this expansive property would be ideal for entertaining or running a business from home or, alternatively, could generate significant rental income from the 2 adjoining properties.

If you’re thinking of something more modest that could also be used to house your business or generate rental income, consider 421 Grand Boulevard. Grand, as the name would suggest, used to be the widest of the canals in Venice. It’s now a fairly busy road in Venice connecting Pacific to the north west and Venice to the south east. The properties on Grand are an eclectic mix of modern architectural homes, small single family homes from the 1970’s, and original beach huts from the 1920’s.

This 2,700 sq ft lot comprises of 2 charming vintage cottages with steep pitched roofs. Each house is pretty much identical with one property facing the street and one out back. Each cottage is about 600 sq foot with a small bedroom in the back, living room / reception in the front, and loft space that could easily be a master bedroom. The small kitchen has a utility space behind it and so if one were to knock down the diving wall, you could feasibly have a nice kitchen / dining room. The bathroom, typical of these kind of houses, is tiled throughout with a shower / bath.

In addition to the 2 cottages on the lot is a spacious 2 car garage that could possibly be converted into an office space. With a front yard and white picket fence, this truly is one of those last remaining vintage Venice cottages. What intrigued me about this property is just how many options one has. You could live in one and rent the other, generating about $2,250 / month of $26k per year to go towards your mortgage payments. You could buy it with a friend or family member as tenants in common and each have a small cottage for half the price of a single family home in the same neighborhood, or you could use one of the cottages as an office / guest home. At just under a million, I think this place is well worth checking out.

For a little more space and even a little less money, take a look at 1412 Oakwood Avenue, a single family home in east Venice. Slightly further away from the beach and in the slightly less salubrious Oakwood district of Venice, this is a property that only a few years ago would have been a fraction of the price. Interestingly, the Oakwood district of Venice was home to one of the most notorious and dangerous gangs in the 1950’s and was the founding place of the Crips in the 1970’s. However, during the 1990’s, wealthy homeowners began revitalizing the area and renovating old houses. In 1994, a deadly battle between rival gangs resulted in around 50 deaths. Subsequently, a ceasefire was called and the area is now fairly calm. So, this area is not necessarily for the faint hearted, but it certainly has character. I’m still surprised, however, at the property prices and I can’t quite believe that the market will be able to hold at this level.

1412 Oakwood Avenue is on a corner lot with a nice front yard and expansive back yard, including a hot tub. With hardwood floors throughout and a large 2 car garage, this is a classic single family home. I mention this property merely because it gives a good indication as to what prices are being set at the moment. I think you could do better, but if your heart is set on Venice, then this property is very typical of what you can get for under a million. Location, location, location!

Next time, I’ll blog about North Venice / Santa Monica. With the new mall about to open at the bottom of 3rd street promenade in Venice, I can see a lot of activity starting to happen in that area.

You can also check out my previous post chronicling my house-hunting in Venice. 

Until then, enjoy the California summer and don’t hesitate to contact us should you have any questions or queries.

Venice, California -- Hello Summer, "June Gloom" Departs and I'm Housespotting from the Canals to Abbott Kinney and Across Lincoln

This is a Guest Post by Luke, who is pleased to announce he will soon be joining the Adner Group team.
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Warren Wilson Beach House

Summer has officially arrived in Venice, California. It’s not just that the Summer solstice was the other day. It’s not just that it’s World Cup time. It’s not just that “June Gloom” ceases to be a daily gripe amongst Venice’s residents. (June gloom, for the uninitiated, is a LA Westside phenomenon that occurs when the cool air from the ocean hits the warm winds from the East, causing a blanket of sea mist to stretch as far inland as the 405.) When summer comes, the change in mood is almost palpable. The skies are blue. The beaches are busy mornings and afternoons, and those lucky tourists who missed the mist don’t know the difference. So, a perfect day for me to write my first post, about Venice.

Venice Canal

Different homes, different sizes, different prices, and different vibes, that’s what I love about Venice. Venice is one of the best areas in Los Angeles to live in on a long-term basis, for as one gets older, has a family, gets richer or poorer, there’s always somewhere to lay your hat. It has a bustling rental market, too. From a studio on the beach for $1,200 / month to a 3-story townhouse on the canals for $2400 / week, there’s something for everyone. Sound interesting? It is. Let’s take a look at some new properties on the market.

434 Linnie Canal, Venice. With 3 bedrooms and 2 bathrooms across 2 floors, this English-style home is on a nice 2,800 sq ft lot right beside the canal. The living room bay window looks out onto a reasonably-sized front garden that fronts the east/west-running canal. Did I mention this house has its own little launch jetty? However, don’t get too excited. When I say jetty, it’s more of a platform on which to sit and dip your toes in the water. The back of the property looks over the alleyway. This is where the three main bedrooms are with one on the ground floor and two on the upper. The upper bedrooms benefit from a large patio space that gets a ton of sun since it’s south facing. The architecture is a little funky, particularly with the Swiss chalet-style roof and rather gloomy front door passage way, but at $1,595,000 it’s well-priced.


690 Harbor Street #1, Venice. If living by the water but with a condominium lifestyle is your cup of tea, why not check out 690 Harbor Street in the Del Rey Colony. This secluded little triangle that nestles just to the north of Washington between Pacific and Lincoln is a unique 53-unit ‘resort style’ community featuring a heated pool, spa, gym and BBQ area. The unit itself is bright and breezy with a 1980’s modernist style. The frontage is lovely with a wide vista of the community and a private deck that looks directly over the canals. For 3 bedrooms, 2.5 bath and a kickass view, $1,125,000 seems a good deal, but the homeowners’ dues are a whopping $1,080 a month. Granted, you get bang for your buck but that’s around $13K a year on top of your other bills for the privilege. The unit feels quite ‘sophisticated’ and is set right on the canals.
1225 Elm Street, Venice. Now, I’m European, so I’m kind of used to that ‘lived in’ look, so I really liked this place. But it’s definitely been lived in. It’s got plenty of original features throughout and it looks like, at some point, an extension was built at the back of what would have been a very cozy and traditional Venice house. This extension has a nice kitchen and dining area as well as plenty of storage and access to the back garden. The current owners have also recently constructed a 560 sq ft studio space above the large detached garage. It's got a small but functional yard outback that has a built in BBQ and some cool landscaping as well. I liked this place. It’s a bit cozy if you’re used to big open spaces, but if what you’re looking for is a groovy, Venice-style home, this could be it. The house sits about 50 yards East of Lincoln, so for those Venice snobs who consider that too far away from Abbot Kinney, take a look at the price - $847,500….That’s pretty good when you consider that only 5 or 6 blocks West and you’re probably looking at another $50K – !
217 Windward, Venice. Fancy living a hip, modernist lifestyle with that bright, architectural vibe? Well, check out 217 Windward just a stone’s throw from Hama Sushi and smack in the middle of Venice. With the beach 500 yards in one direction and Abbott Kinney 500 yards in the other, this is about as central as it gets. It’s a 2-story, industrial-style build with a mix of bamboo and granite flooring throughout the ground floor and with grey carpeting in the bedrooms. Yes, very chic. What’s unique about this place is that it has an entirely separate dwelling out the back that is connected to the property by a metal gangway. This other property could either be a rental unit, a work / office space, or just somewhere to “get away from it all.” It’s bright, airy and has a sizable 3-car garage. There’s no real yard to speak of, other than a small koi pond / soaking tub in between the garage and the main house. Priced at $1,485,000, this would come down to a matter of taste and location.
235 Main Street, Venice. And, ahhh, to close, the Clown building just on the corner of Main and Rose. It’s a big complex built back in the late 80’s that has great restaurants, bars and coffeeshops on-site. It’s a short distance from Santa Monica. But I mention it because it’s one of those “plug and play” kind of homes. It’s got everything you need from a shared pool, spa and all the amenities. The condo itself is compact. At 1,200 sq ft, it’s not a manse, but it would be a great pied-a-terre for an East Coast urbanite who needed a West Coast home, or for a savvy investor looking for a great unit to rent out to the holiday crowd. At $849,000, it seems fairly priced. Again, it’s a case of location, location, location.

So, that’s my assessment of this week’s Venice market. Check in next week for more West Side observations.

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Venice for Beginners:

North West Venice (North of Windward as far as Navy and West of Main) is still pretty grungy. A lot of locals, the Venice dog park. Some industrial warehouse space, Golds Gym, and some of the local beach bars.

South West Venice (South of Windward and West of Pacific as far as Washington) is the slightly more upscale version of its northern counterpart. Fewer homeless people, more townhouses, a couple of cocktail bars, and generally higher income professionals. The beach is still pretty hectic, what with world-famous Muscle Beach, Venice surf break, and Venice recreation park right there.

Central Venice and the Canals (East of Pacific and south west of Abbot Kinney as far as Washington) feels like an entirely different city. A certain Mr. Abbot Kinney envisaged an entire community based on Venice, Italy and it’s here that you can still see his vision intact. Four main canals remain with all its little tributaries and it’s here that property prices really start to rocket.

Westside Los Angeles Multifamily 4th Quarter 2009: Investors Pay Premium to own in Santa Monica; West LA Offers Highest GRMs

Analysis of Westside apartment building sales in the the 4th Quarter 2009 show that investors are willing to accept a wide variety of returns in such neighborhoods as Santa Monica, Venice, West LA and Palms-Mar Vista. The dominant themes:

• Santa Monica - Close to the beach, Gross Rent Multipliers (GRMs) are in the range of 14.0 - 14.5. Close to the freeways, or areas further north, east or south in Santa Monica, GRMs are in the 10 - 12 range. Some of the largest sales were the best-located buildings that offered the lowest GRMs.
• Venice - The biggest sale of the quarter (15 Horizon Avenue) was for a vacation-rental by the beach offering a straight 10.0 GRM (with presumably a lot more management than a traditional rental building). Most other Venice sales are duplexes and other owner-occupied properties.
• West LA / Palms-Mar Vista - West LA offered investors the highest GRM -- 8.7 (1973 S Bedford Street). Palms-Mar Vista was light in multifamily sales -- only one sale topped $1 million.
  

15 Horizon Avenue in Venice sold for $3,600,000. Gross operating income is $359,628 -- or a 10.0 GRM. The building's twenty units have been operated as a vacation rentals.
1518 9th Street in Santa Monica sold for $2,775,000, for a GRM of 13.9. The building has fifteen units, eight of which have below market rents, and is located a short distance to the beach and freeways.

1001 12th Street in Santa Monica has nine units and sold for $2,495,000, or 12.6 times gross rents.
1334 16th Street in Santa Monica has ten units and sold for $2,375,000 or 15.1 gross rents.

2584 S Centinela Avenue in West LA has eight units and sold for $1,995,000 or 11.5 gross rents. This 1988 building is not subject to Los Angeles Rent Control.

The highest GRM in the quarter was recorded for 1973 S Bedford Street. This 16 unit building, by Los Angeles standards, is a "cash cow", generating $217,320 for its $1,900,000 purchase price of $1,900,000.

What's the Worry about Westside Los Angeles Real Estate?

Last week we took a look at market trends on the corridor between West Hollywood and Downtown Los Angeles. This week we're taking a look at market trends in the chunk of Los Angeles Westside, the highest priced markets in the city between Beverly Hills and the Beach.

The selected neighborhoods included Beverly Hills, Beverly Hills Post Office, Brentwood, Pacific Palisades, Santa Monica, Venice and Westwood - Century City.

There is currently a 3.2 months supply of inventory of homes priced under $1 million, the lowest level in more than two years. Under these conditions, buyers are forced to view properties and write contracts as they compete with other buyers who are also trying to get into these high-barrier-to-entry neighborhoods.

What is driving this decline in inventory? Record low interests rates, reduced prices, a higher supply of distressed properties, and a sentiment that the market is in the process of bottoming-out.

But the sales in these neighborhoods under $1 million account for only 17% of the market. What's happening in the market for houses selling for more than $1 million?

Current inventory is about 7 months, slightly below what it was two years ago. After a gut-wrenching decline in activity during the worst part of the financial crisis when inventory exploded to two or three years worth, we're now returning to normal levels of selling.

The big picture is that the home market collapsed and is recovering and now looks a lot like it did two years ago. The median selling price in these neighborhoods last month was $1,645,000 -- a scant $3,000 above the median selling price in September 2007.

With so much negative sentiment about residential real estate, the California economy, etc., it's surprising to see that the real estate fundamentals in high-end neighborhoods of Los Angeles remain strong.

Venice Market: June - Sept 2009

While there seems to be heavy erosion in the Hollywood Hills home market, what's the drift at the beach?

All things considered, Venice seems to be the paragon of stability. In the past four months there were fifty home sales, including one for over $5 million, four for $2 - 3 million, and seventeen for $1 - 2 million. During the June - September period, the median sale price was $900,000. Currently, there is a scant seven months of inventory.

Venice is a hot market. Walk down the blocks north of Abbott Kinney and see the construction, with some owners rehabbing properties and others building new. The hip, laid-back life west of the 405 freeway never loses its appeal. C'mon, it's the beach!

Here are some sales from June - September 2009:

An eye-popping sale closed at 1311 Abbott Kinney. This 5 bedroom, 5 bath pad on a postage stamp-sized 3,397 sq ft lot sold for $5.6 million. That's well below its January 2008 $9.9 million asking price, but $5.6 million is a princely sum in the Los Angeles real estate market today.
The canals had some high-priced sales. 242 Sherman Canal, 2008 construction with 3 bedrooms, 3.5 baths and 3,580 sq ft of living area, sold for $2.9 million. Two houses on Linnie Canal sold for $2.38 million and $1.89 million.

The pedigreed architectural project -- even with land purchased at 2006 prices -- is still alive and well in Venice. 743 Palms Boulevard, purchased in 2006 for $1.25 million, was formerly the site of a shambling bungalow. The site was redeveloped with a Marmol-Radziner 2,878 sq ft beach shack with 3 bedrooms and 2.5 baths, and for $2.1 million three years later.

2009 is by no means 2006 and we estimate that values for properties priced $1.5 million and under have fallen 10 - 15% since the peak of the market. (And more for higher-priced properties.) 29 29th Avenue, a 3 bedroom house about 50 yards from the beach, sold for $1.67 million in October 2006. It was resold in July 2009 for $1.51 million, a 9.3% reduction in price.

887 Commonwealth Avenue was also sold in 2006 and again in 2009, except in this case the second sale was a foreclosure. This 2 bedroom, 1 bath home sold for $690,000 in November 2006 and was resold for $575,000 two and one-half years later. This is a 16.7% reduction in price, but some of this loss can be attributed to its sale as a distressed property.

Venice Market Round-Up -- March - May 2009

What’s happened in the Venice home market in the past three months? This neighborhood continues to attract buyers and everything from bank-owned bungalows to canal palazzos are selling.

There were 23 home sales in Venice in the March – May 2009 period, with a median sale price of $1,105,000.

The highest priced sale between March and May 2009 was 428 Linnie Canal, which closed at its $2,499,000 asking price after 31 days on the market. This 3 bedroom, 3 bath home features 3,000 sq ft of living area on a 2,849 sq ft, and was built in 2003. Rehabbed homes on the canals are trading at about $833/sq ft.
Rehabbed homes on the walk streets are trading at about $760/sq ft. 853 Amoroso Place, a 3 bedroom, 3.5 bath 3,017 sq ft home built in 2008 on a 3,330 sq ft lot sold for $2,295,000, below its $2,795,000 asking price, after 151 days on the market.


Plenty of modest properties also sold during the period. 931 Nowita Place, a 2 bedroom, 1 bath, 816 sq ft bungalow on a 3,400 sq ft lot sold for $675,000, below its $849,000 asking price, after 55 days on the market.

Venice experienced such a dramatic run-up in median sale price over the past real estate cycle, from $247,000 in 1996 to $1,150,000 for 2007 and 2008. Where does the Venice market stand today?

In spite of the hard times, the Venice prices remain at lofty levels. In the first five months of the year, the Venice median sale price dropped to $1,102,000, 4% off its high. Venice homeowners can breathe a sigh of relief knowing that prices on their home turf are holding firm.

Westside LA Income Property Market – 1st Quarter 2009

Buyers of Westside Los Angeles income property pay a premium to own property on the Westside and their objectives differ from those who invest in neighborhoods further east.

Westside buyers are typically not assessing a building on its current cash flows but are looking at its: 1) future development potential; 2) future market rents; or, 3) value as an owner-user opportunity.

Below we’ll look at an example that sold during the 1st Quarter of 2009 from each of these categories.
1) 430 - 506 Pico Boulevard, Santa Monica – Development Opportunity

These five contiguous lots near the corner of Pico and 4th in Santa Monica total almost 25,000 sq ft, are delivered vacant, and are zoned for redevelopment. Asking price was $5.8 million. Sale price was $4.5 million. Sale time 117 days.

These units are sold for land value. In spite of the jitters in the commercial real estate market, a developer is seeing an upside by buying in this area.


2) 209 Venice Boulevard, Venice – Capture Upside in Rents

This 10-unit non-rent-controlled building located a few blocks from the beach sold for $3.8 million, close to its $4.125 million asking price, in 24 days. With 12,279 sq ft of living area, units, on average, are over 1,200 sq ft and come with two parking spaces. Gross rent is $282,000, yielding a GRM (Gross Rent Multiplier) of 13.5.

Although the building is advertised as having an upside rent potential of 17%, the building is trading at a 30 – 35% premium to properties in Hollywood or Silver Lake / Echo Park, where comparable buildings are trading at a GRM of approximately 10.


3) 2137 20th Street, Santa Monica - Owner-User Opportunity

2137 20th Street sold for $1.5 million, below its $1.7 million asking price. This 6-unit compound is essentially a 3 bedroom, 2.5 bath house on the same parcel as five rental units generating on average $1,500/month. The owner benefits from a heavily subsidized mortgage payment but most bear the cost of owning and operating a 5-unit income property at his doorstep.

During the boom, cap rates for “bread and butter” income properties (say in Santa Monica) were compressed to as low as 3.5% as investors saw future value in properties and were willing to forgo income in the present in order to obtain these returns.

Values may have declined from these heady days, but the Westside Premium is still very much in play. One may ask, why are investors willing to pay such a premium to own Westside property? The answer is twofold.

The first can be attributed to “availability bias”: buyers tend to buy (and to overvalue) what is most familiar to them. Investors who live on the Westside know the Westside and buy on the Westside.

The second is experience: these buyers invested on the Westside, yielded outsized returns, and are looking for a repeat performance. During past real estate cycles, property close to the beach proved to be gold – and there is no reason to expect the trend to change.