SOUTH BAY DIGS | Digital Edition Online

ED'S VIEW | ROCKET BAY | WEEK 4 OF 16 THE SOUTH BAY BUYER NOBODY IS TALKING ABOUT They came here to rent. Now they want to stay—and they may want the same home you do. "The next buyer may already live around the corner." RENT TRY THE AREA LEARN THE ROUTINE SETTLE BUILD CONNECTIONS FEEL AT HOME BUY DECIDE TO STAY WEIGH THE COSTS COMPETE LIMITED CHOICES DIFFERENT BUYERS BY ED KAMINSKY | WHEN A TEMPORARY ADDRESS BECOMES HOME One of the South Bay buyers you may be competing with has already moved here. They just haven't bought a house yet. They signed a lease. Maybe a new contract brought them to Los Angeles. Maybe a business move did. Buying could wait. First, they needed to learn the neighborhoods and figure out how long they would stay. Then the temporary address started to feel like home. THE LEASE IS ONLY THE BEGINNING I've worked with athletes since the 1990s, including players from the Los Angeles Lakers, Los Angeles Clippers and LA Kings. Renting first makes sense when a contract is short. Why buy before knowing the city or the family's plans? Many athletes have two places they call home: where they play and where they return in the off-season, often near family. But I have watched the South Bay change that arrangement. Families build friendships, settle into schools and discover routines they want to keep. I have seen this particularly among LA Kings players. What begins as a place to stay during the season can become the place they want to live afterward. It isn't limited to athletes or business people. One significant part of this story is families displaced by the Pacific Palisades fire who have made the South Bay their home. They came here needing somewhere to live. Now, for some, buying here means staying in the community where they have rebuilt their routines. That is easy to miss when we talk about demand. A prospective buyer may already know the street, the school routine and the walk to coffee. They have been living the decision before making it. HIGH RENT DOES NOT SETTLE THE QUESTION At the upper end, substantial rent payments can prompt a serious conversation about ownership. If a family expects to stay, buying may give them the permanence they want. But an expensive lease does not automatically make a purchase the better financial choice. I remember three athlete clients who bought in 2007 and faced losses when they needed to sell during the downturn. Their contracts and their housing timelines did not line up with the market. That experience belongs in this conversation just as much as the success stories. A buyer needs to consider the likely holding period, financing, property taxes, insurance, maintenance and the cost of selling again. Renting buys flexibility. Ownership can build equity, but appreciation is not guaranteed, and an unexpected move can change the calculation quickly. A HIGH FIVE FOR THINKING AHEAD Rob Blake bought his double-lot Manhattan Beach Strand property in 1998 for $5 million, at age 28—the same year he signed a new contract with the LA Kings. That was a substantial commitment for a young player. His career took him to other teams, but he held onto that home. Today, my estimate for a single Strand lot in a good location is close to $13 million for the land alone. That's context, not an appraisal of his property. So, high five, Rob. Choosing that property was smart. Keeping it through the years was just as important. That's the kind of long-term thinking that intelligent buyers bring to this market. YOU ARE NOT THE ONLY NEW BUYER This is where the story connects to Rocket Bay. A SpaceX employee entering the market with new wealth may be competing with someone who has already spent a year or two deciding exactly where to live. The competition can also include athletes, business owners, doctors, lawyers and longtime homeowners with substantial equity. For some buyers, the South Bay is a second-home destination, much like Aspen or Park City. But there is a local twist: sometimes the person buying that second home already lives right here. I had a multimillion-dollar listing on the Strand and was waiting for a buyer to arrive. At that price, I figured he would pull up in a Mercedes or a Ferrari. He showed up on a skateboard. He already owned a home nearby. He wasn't moving out of it. He wanted a second home on the beach. That's a part of this market you miss if you only count the people moving into town. Hundreds of SpaceX employees who are capable of buying a home already live here and are part of the demand. THE HOME EVERYONE WANTS IS RARE When buyers ask for an ocean view, room for a pool, a substantial home and a walk to downtown Manhattan Beach, I pay particular attention to the northwest Hill Section. In my view, it offers an unusually compelling combination of those priorities. That doesn't mean every property there delivers all of them. The lot, the actual view and the walk matter. But it helps explain why buyers looking for a specific combination may find very few substitutes. A record sale is evidence of what one property sold for. It does not establish the value of every exceptional home that has never traded. At the same time, a lack of comparable sales is not proof of a higher value. Buyers still need a defensible analysis. DEMAND HAS TWO SIDES These sources of demand can support the market, but they cannot make it immune to a downturn. They also make entry harder for families whose children grew up here and would like to buy nearby. I hear that frustration, and it deserves to be part of the story. For buyers, the lesson is practical: understand the home, your time horizon and who else may want it. The next person competing for that property might already live around the corner. Their name is simply still on a lease. THINKING OF BUYING? START HERE 1 Plan for an unexpected move. 2 Compare the full cost of ownership. 3 Know what makes this home scarce. WHO ELSE WANTS YOUR HOME? The renter-to-buyer story—and why the highest sale may not be the ceiling. P A L O S V E R D E S R E D O N D O B E A C H H E R M O S A B E A C H M A N H A T T A N B E A C H T O R R A N C E B R O K E R E D B Y E D K A M I N S K Y | 3 1 0 . 3 0 7 . 2 2 2 4 | I T Z S O L D . C O M #1 REAL ESTATE AGENT IN THE SOUTH BAY | TOP 15 IN THE NATION (REAL TRENDS) | OVER $4 BILLION SOLD

• Cover