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THE HOLLYWOOD REPORTER - Spring Real Estate - May 21-23, 2004

Swell Continued from page 8-26-

in the summer, 55 degrees in the winter. "These are areas where residents fully take advantage of their surroundings," says Re/Max Real Estate's Steven Goddard, a 30-year veteran who has encyclopedic knowledge of the South Bay. "People stay in the neighborhood as opposed to leaving town. They walk to dinner, ride their bikes to breakfast on Sunday."

The good life doesn't come cheap, however. Once sleepy, unsophisticated seaside communities from Palos Verdes to Pacific Palisades have reemerged in recent time as among the most expensive places to live. "You'll find starter homes but definitely not at starter prices," says Lisa Kirshner, DBL's top agent in Santa Monica, where teardowns often start at $1 million.

Last year, Malibu, Manhattan Beach and Palos Verdes were the top three communities with the highest median homes prices in all of California. "It's not uncommon to pay a 20%-30% premium for a beachside property," says Leslie Appleton Young, vp and chief economist at the California Association of Realtors.

With land values obscenely high, original beach bungalows are being demolished and replaced by fabulous homes worthy of the land value upon which they sit. "Southern California beach communities probably have more architect-designed homes per stretch than anywhere else in Los Angeles," according to Jan Eric Horn, head of Coldwell Banker's architectural properties division. "Buyers are replacing the original structures with architectural homes that are spectacular. All the best architects are working at the beach."

The biggest challenge for prospective buyers and their brokers is low inventory. The "for sale" sign is practically an endangered species. Manhattan Beach, for example, has only a fraction of the number of homes for sale it had just two years ago. In January 2002, the beach city had I59 active listings; this January, it had only 34, according to Michael Davin, executive vp at Catalist Homes, a real estate firm serving several beach communities.

The turnaround for properties is at breakneck speed. "Homes sell at full or over full price within three weeks," says South Bay Brokers owner Jack Gillespie, a leader in the South Bay real estate market.

"Teardowns go in 2 minutes," concurs Shorewood Realtors' Raju Chhabria, who brokered more than $176 million in South Bay property last year and ranked 13 in a national survey of top selling brokers.

But even paradise has a downside. "Beach dwellers must contend with unbelievable atmospheric and environmental issues that the rest of us can't begin to imagine: flooding, storms, constant repair issues due to salt water and moist air," Horn says. "They must be willing to give up lot size, a yard with sidewalks and close proximity to town in exchange for the exquisite soul of beach living. People who make the jump feel the trade-offs are worth it."

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