Recent Trends in Buyer Demand in Playa Vista – A Plea to Developers of Phase II
In the last few months, I have noticed a few things about buyer demand trends in Playa Vista:
– 2 bedroom units under $450,000 are scorching, even smaller ones.
– 1 bedrooms are less in demand than previously, probably due to the large drop in prices for small 2 bedroom units.
– Nice, large 3 bedroom units are very hot, however puny or dark/unattractive 3 bedrooms are out of favor, even if the price is much lower.
These trends show that price per square foot does not matter as much as comfort and utility. A large 2 bedroom unit will have a difficult time selling, even at under $300/sf, however a nice upgraded three bedroom or a smaller, less expensive 2 bedroom should be able to sell for around $350/sf, no problem. This makes me wonder if people really need the extra space, say from 1,400-1,800 sf? Is this space not useful or is the marginal value much lower for the additional 400 sf than the first 1,400? Could the increase in mello roos tax at the higher threshold be part of the problem? The potential buyers of more expensive two bedroom units seem willing to stretch to get something larger or nicer, but are not enticed by squeezing a third bedroom into the same amount of space and charging only slightly more for it.
Based on this information, I suggest to the developers of phase II, if you are reading, to skip the large 1,800 sf 2 bedrooms and the small 1,800 sf 3 bedrooms and build more 1,400 sf 2 bedrooms and 2,200 sf 3 bedrooms. Put the 3 bedrooms in premier locations such as top floor, better views, and townhomes, and price them much higher than the 2 bedroom units (similar price/sf despite economies of scale). This will maximize usable space, create inventory that is in demand, and help the bottom line.