That's not surprising at all. It's 2 blocks from the beach, and is (or will be) rezoned for multi-unit residential or even maybe mixed use. There's a burned out house on PCH just north of the pier, which has an asking price of $21,000,000. AS-IS!
Personally I wouldn't live in Santa Monica even in a free mansion, as I don't agree with the political atmosphere there. I have a friend who owns a 12-unit apartment building, and she got so angry with the soviet-minded Santa Monica city government, that she kicked everyone out, and it has been sitting vacant for 10 years. Not to mention that the whole Santa Monica Bay coastline is full of greenies and leftys, and they'd probably egg my 1-ton Chevy 4x4 Diesel as I belch out nice thick black smoke on Ocean Ave.
I like it where I am now, about 15 miles due north (inland) from Malibu, near Moorpark. I'm a 15 minute drive to Port Hueneme, and 25 minutes to Zuma or the Malibu Pier, depending on which canyon route. For a little more than the price of that old, broken down bungalow house in SM, you can have a 20-acre ranch with 5000sf house, pool, spa, your own motocross track

, and a 16,000sf steel barn building, and your own private road. If I want the busy city, we also live in North Dallas about half the time.
If you want great value and you want to be near the Santa Monica/Venice area, you can also look in Calabasas, Woodland Hills, or Agoura. Those are all within a 25-minute drive to the Santa Monica pier, and you could get that same house, but 80 years newer, in a good class neighborhood, and without crime and crowds, for about $325,000.
If you really want to be in walking distance to the beach, you can also check Pacific Palisades. That's not much cheaper than SM, but I think it's a lot better class, and isn't part of Soviet Republic of Santa Monica. There are also the South Bay cities, from Redondo to Manhattan Beach. Probably the same prices though. Malibu is cheaper, but the beach is mostly privately owned, and you can't use it if you aren't a beachfront homeowner.
In a higher price range, I'd like this one... It's up on the hill behind us, and has a view of the whole coastline from Ventura Harbor to Malibu.
9067 North Vista Anacapa Rd, Moorpark, CA, 93021 - MLS #90016944 - Single Family Home real estate - REALTOR.com®
Charles