Arbolado Update

About 7 weeks ago, MBC noted that three homes in Arbolado Tract (aka the Arbolado Ct. Development) were all up for sale at the same time.

How are they faring?

Well, all three are still active listings. (So this can be a short update!) Two have made token reductions.

To refresh the details:

• 1140 Laurel: 3br/3ba, 2550 sq. ft. – $1,599,000 (-$40k since our story)
• 758 14th St.: 4br/3ba, 3050 sq. ft. – $1,860,000 (-$39k since our story)
• 752 14th St.: 5br/3ba, 3550 sq. ft. – $2,150,000 (stable since our story)

Using two sales within the last year, MBC opined that:

• 1140 Laurel should be between $1.42m-$1.5m
• 758 14th St. should be between $1.7m-$1.8m
• 752 14th St. should be between $1.9-$2.0m

Remember, those projections applied the per-square-foot price from two sales in '06 – one of them, actually, being 758 14th. They suggest last year's values. Frankly, buyers are wondering if they should even be paying last year's prices. The higher figure should be the utter peak price, since it's from a home in a better location (8 Arbolado) that sold quickly, $150k over asking. And yet all three remain priced above that level.

Someone (perchance the listing agent?) commented that 752 features $160k in remodel/upgrades, therefore making the price perfect. We could quibble, since this invites a direct comparison between the upgrades at 8 Arbolado and 752 14th, but let's skip it. The point is: that's the story the sellers are telling themselves, and that's why they've made no reductions.

At this time only 758 14th is long in the tooth – 120 DOM with a bogus re-list – while the others are like spring chickens at about 50 DOM each. Average DOM is close to 100 these days, so there's time for the newbies to keep trying to get their lucky prices.

Over at 758, though, a more brutal reckoning may be around the corner. 'Twould appear this is a forced sale of some kind, but keeping the price 9% above last summer's price simply draws the scorn of buyers who, as a group, don't think we've seen that much appreciation since last July. That may be what the sellers need, but that's not anyone else's problem.

The Street Where Listings Don't Last

If you're thinking of selling, this is a tough time. Particularly if you're in the Tree Section, and you are entering the crowded $2m+ segment...

...unless you happen to own a home on Poinsettia between Valley and 31st.

In that case, stick a sign in the yard and schedule a meeting with your investment broker, for you shall rather soon have much to discuss.

This is "The Street," a little slice of storybook-perfect suburbia, a unique couple dozen homes sharing a tree canopy reminiscent of towns much farther east. In a lucky turn of events, the redevelopment of the last decade here has mostly been tasteful and careful. It's so charming you could just pinch the block, if you could pinch a block.

This week, the third home on this block to be put on offer in 2007 was sold, undoubtedly for asking or above. 3005 Poinsettia sought $2.525m for 5br/4ba and 3250 square feet. (The sellers paid $1.89m in Feb. '04 when the home was new.) They waited 9 days to accept an offer.

Their neighbors at 3001 Poinsettia (5/4, 3300) sold for $2.49m in late March, and 2805 Poinsettia (5/4, 3400) sold for asking ($2.549m) in May after about 3 weeks on the market.

What is it that they say about location?

Meet the Latest, Priciest Home in the Trees

For several months, builders have been pushing the ceiling up in the Tree Section, trying to make $3.5m the new normal for top-end everything.

Along comes 1718 Pacific, blowing them all away with a $4.5m pricetag on a remodel just a few doors down from the school. (To be fair, this was a big-time rebuild/remodel, in '03.)

The big asset: a 9,900 sq. ft. lot – yes, double the normal size for the area, and it's well-concealed, too, because the lot is much deeper than it is wide.

The rear yard has room for all you'd find in a different kind of suburban neighborhood – a patio for entertaining, some grass, a pool, and a sports court.

Compare this to the previously most-expensive home in the Trees: new construction at 570 27th (across from Ladera School), and there is no comparison. The listing for 27th ($3.75m) seeks your oohs and ahs for: "a huge, rare 6800+ square foot lot," onto which the builders (Schaar) placed the following outdoor amenities: grass, and a narrow strip of tiled patio. The home at 1718 Pacific is actually larger.

Now, is this Pacific home $750k better than the 27th St. home, or $1m better than the nice Farnham build at 717 31st (with no outdoor space to speak of)?

Or, for that matter, is this one really in a place beyond the grander homes in the Hill Section at $3.0-$4.3m? Mere mortals cannot say... but the market will.

Price War Starting on Pacific?

The folks offering 2804 Pacific to the public apparently would rather not bother with the routine of overpricing, waiting, reducing, reducing again and wondering why there are no offers.

Today they have thrown a monkey wrench into the whole Tree Section market between $1m-$2m, asking a paltry $1.399m for their 3br/3ba, 2050 sq. ft. home.

As the photos show, the home is pleasantly remodeled, even a bit sleek inside. There is good outdoor space (patios, not a yard, exactly, but nicely landscaped). The listing says it's in "move-in condition," and by appearances that's right. (No one has walked through yet.)

The price is $200k below all comparable homes in the Trees, and it thereby threatens all 9 active listings currently marked at $1.5m-$2m.

Most directly, 2804 Pacific undercuts neighboring 2622 Pacific, at the corner of 27th and Pacific, which for 3 1/2 months has sought $1.699m, fully $300k more, for a home with a bit more square footage but less outdoor space and frankly much less curb appeal. (See last of 3 photos here.)

Comparable closed sales in the Trees this spring have ranged from $1.17m-$1.45m, leaving this pounding question: Why do so many current Tree section sellers think they can get $1.6m or more when recent history suggests they should get $1.2-1.4m?

The new Pacific listing moots out that debate. They're starting at $1.4m. A series of relieved buyers, who have tuned out the current crop of sellers, are going to be coming through.

Realtors like to say, when they see a nice home that's well priced, that it will go quickly with multiple offers. This one will draw that sort of comment. But the sellers just need one offer – one more than most of their competitors have drawn.

UPDATE: Late today, 2622 made a token reduction of $50k to $1.649m.

Trulia Terrible for MB Searches

Not so long ago, property search engine Trulia.com offered a nice "widget" for bloggers that MBC considered using.

By dropping a little code into the template, we could offer viewers a "search box" into which readers could easily type an address and pull up info.


It turns out that Trulia is truly terrible. At this hour, a Trulia search for SFRs in MB 90266 pulls up 36 entries. By contrast, a ZipRealty search pulls up 121.

The Trulia results are not just skimpy, but several are simply wrong. For instance, try to find 7 Highland Ave. on a map. Oops, it's in Connecticut! But it's one of those 36 you will pull up in MB 90266 on Trulia. Or try looking up 770 N. Bayview Drive, which clearly shows up as MB – turns out you can't get a home for $120k on the South End, because this one is in Georgia.

The "active" SFRs include homes that are pending or sold, listings for which the location is given as "address withheld" and others for which the price appears to have been entered wrong.

In sum, Trulia is a disaster for someone trying to get a handle on the current RE market in Manhattan Beach. So we won't post the search box, and we'll hope against hope that Trulia gets its act together. We know something about why their system is so abysmal, but this points up the broader problem of online property searches, too, an issue we'll tackle again soon.

Buy OR Rent for $20k/mo.

Where can we even start with 512 John? So much to cover.

First, believe the hype. This is a striking masterpiece of a home, built in 2000 in a great location, the kind that some folks are just dreaming about when they write "panoramic ocean views." The home is set high above the street and takes good advantage of the added privacy. (MBC might criticize the first-floor master facing the street, except it's private and it drinks up the ocean views.)

The home's style might not be yours. It's very modern, Japanese-inspired, using simple materials – concrete, glass, bamboo, steel. The walls are white. You get a feeling of order, cleanliness, simplicity. It's striking. It just might not suit your furniture, your plates, your clothes or your kids. But it's great.

For all that, the sellers would like $4.35m. (They started at $4.45m in February, but re-listed to hide that fact.) As of June 26, it's been on the market 129 days.

When a seller has trouble finding a buyer, the question becomes: Can you rent it out?

At 512 John, that's now an option. This week's print ad offers the home for rental at, achem, $20,000 per month.

How does that compare to the costs of owning 512 John? If you take out a loan of $3m at 6.75% (30y fixed), you'll pay $19,500/mo. just on the 1st TD, and $50k in property taxes. Oh, and that assumes a down payment of $1m+.

So, if you rent this house, even at the rate of $20k/mo., you keep your $1m in the bank and save about $50k/yr. But you don't get to watch the home appreciate in value.

But appreciation is the wrinkle in this story. Evidence suggests this house is a 2007 flip.

The previous owners paid about $2.7m in total by the time construction was complete in 2000. Now the county assessor shows that a sale closed Feb. 15, 2007, for $4.075m.

Funny, the original listing for this property came out the very next day – at the aforementioned $4.45m.

At the moment, the sellers are hoping for $275k more than they paid 4 months ago. Or, they'll let you cover their new mortgage, so they can sell later when the home is worth more. Which is the smarter move for today's buyer?

Saying It Doesn't Make It So

If you're browsing the Beach Reporter looking for your new home, you might come across this ad for 2709 Oak, new construction in the Trees. It fairly blares two claims:

"NEW LISTING"

and

"PRICED RIGHT"

Neither of which appears to be true.

2709 Oak was first listed on August 15, 2006, 314 days ago.

Perhaps some of those days on market were pre-completion, but the home has been ready for a long while.

Is it "priced right?"

The first list price, which lasted nine months, was $2.395m. This month, it dropped a token $16k to $2.379. Before this week's deja vu debut, the price dropped again to $2.349m. That's a total reduction of just $49k.

Ten months on market, with little movement and no sale, offers evidence that the home is not "priced right." Saying it doesn't make it so.

Of course, this is advertising, and readers will take all claims with a grain of salt.

If you look up the property using most MLS searches, however, that "new listing" claim might seem legit. The "current" listing date (MLS #S949367) is June 20, 2007. DOM: 5.

If your realtor looks it up, let's hope he or she doesn't miss that "CDOM" field (combined days on market): it reveals 246 DOM as the actual age of the listing. (Much of that was accumulated with the MLS #S932160.)

That's still low by 70 days from our records, but it gives the lie to that headline, doesn't it?

The latest move does make 2709 Oak nearly the lowest-priced new construction in the Tree Section. (Only a smaller new one at 2309 Pacific is seeking less.) But the problem isn't just where you stack up against the rest, but how much you're asking for someone to live on Oak. And you might get off on a better foot by being forthright with the folks whose money you seek.

Spring Slowdown

The most widely read data source on Southland home sales is the Dataquick numbers published in the LA Times Sunday Real Estate section.

As detailed in this brief at our sister site, Manhattan Beach Market Update, the data paint a picture of a substantial slowing this Spring.

Would you believe: A 21% drop in sales from April to May, and a 40% drop from March to May?

Remember in the first part of the year when folks were amazed at how well the market was moving?

Sat. Lite: Check Your Listing Language

MBC is going to go out on a limb here and invite a threat to the site's accessibility from AOL, public libraries, and others that filter content.

You know this is not an x-rated site, but today MBC is compelled to share the "addendum" to a newer listing at 877 8th (verbatim, we swear):

Gourmet kitchen includes a solid walnut bar, breakfast nook and opens to the great room with bookshelves and desk. WALKER ZANGER glass tiles, Anal sacks limestone-stunning top-of- the-line finishes. The romantic master suite becomes a soothing haven french doors leading to the private yard, its own fireplace, two closets and a striking master bath.

Something in there just seemed wrong, but we tried giving the benefit of the doubt.

We tried our best to find that particular kind of limestone. We tried alternative spellings. Uh-uh.

Mostly there were references to veterinary care, i.e., how to check your cat's this-or-that.

Maybe we're just rubes here, unschooled in the newest materials in $3.7 million homes, or maybe someone needs to contact Shorewood agent Jane Sager about the need for a little spell check.

UPDATE: A correspondent reports that Ann Sacks is a design company with a line of stone, tile, etc. Someone still needs to tell Ms. Sager.

SECOND UPDATE, SUNDAY: The language has been changed, now promoting "Anne Sacks' limestone." It's the wrong form of "Ann" and the apostrophe is superfluous, but we're going to let it slide.

More Faith in Rising Prices

Nationally, more than half of all Americans think they can sell their home now for more than they could have fetched last year.

The LA Times reports:

• 55% of Americans believed they could sell their house for more now than a year ago, down slightly from the 59% who felt that way last summer; and

• Nearly three-quarters think they could sell their homes within the next six months at a price they set.

This survey is courtesy of the Boston Consulting Group (BCG). In April, the LA Times ran its own poll showing even greater real estate bullishness among average Americans. As MBC distilled the Times' findings:

• 83% believe that home values in their neighborhoods will remain the same or increase over the next six months; and

• [M]ost of the no-decrease folks (51% of the 83% total) are just expecting flat values.

Back to today's news, the BCG survey (click here for the entire press release) also tells us:

• Most Americans (52%) believe the residential real estate slump will last two years or less.

• Only 22% believe it will last for five or more years.

• 85% of Americans believe their house will be worth more five years from now than it is today.

The masses may well be right. We don't have much survey data from the doldrums of real estate down-cycles in the past, so it's hard to say whether such cycles began with such a broad mix of optimistic sentiments before everyone got depressed.

There are at least two sellers in MB who seem to take this bullishness to heart.

• 404 10th St., a pretty new, sharp, Lazar-built home on a walkstreet (see picture). The sellers paid $2.5m on April 13, 2006. They listed it for $3.2m on February 25, and then raised the price to $3.3m a day later. They have faith that the home's value rose since last year. (Or that they got a steal of a deal last April.)
  

• 758 14th St., the first of three Arbolado Court homes to go up for sale this year (all still active). The sellers paid $1.695m last year, closing July 21, 2006. They put it up again March 1 for $1.990m. It's down to $1.860m now, but they're still seeking an 8% premium over last year's price.

Unlike your average American answering a telephone survey, these folks have to convince someone they're right about the state of the market. So far, they haven't been too compelling.

Some Haircuts in the Trees at $2m+

As some closed sale data start to come in from the Spring, we're seeing a few haircuts that got properties sold in the Tree Section in the glutted $2m+ segment.

• 758 27th - dropped $199k (began 2/5/07 @ $3.099m, closed 5/7/07 @ $2.9m)
• 3104 Maple - dropped $109k (began 9/20/06 @ $2.599m, closed 6/19/07 @ $2.49m)
• 637 35th - dropped $149k (began 11/10/06 @ $2.699m, closed 6/17/07 @ $2.550m)
• 2104 Poinsettia – dropped $299k (began 1/18/07 @ $2.099m, closed 6/14/07 @ $1.8m)

Of these, the first three were all new construction, while Poinsettia was a remodel. These three new homes were the only ones (in this segment) listed on the MLS this Spring to close escrow thus far – and they all took cuts.

Now, these cuts were no great strides toward mass affordability. But it's news that builders took somewhat less than they sought, and that efforts to push pricing upward were rebuffed.

Few of the new homes lingering in the $2m+ segment now have taken major reductions, but these sales show that the builders will take less – they'd just rather do it in the context of a negotiation, not by adjusting their list prices.

MBC had chided 3104 Maple for a bogus re-list a month ago when the seller/builder slapped a new MLS number on the property, but didn't bother adjusting the price from $2.549m, where it had been for some time. Alas, just days later the seller agreed to take $60k less than that.

In just the last day or so we have seen some cuts in list prices:

• 2104 Palm, new construction that began this January at $3.675m, re-listed yesterday; it's now down $376k to $3.299m;
  
• 2311 Poinsettia, a remodel that hit the market just last month at $2.149m, re-listed today and took $100k off; and
  
• 2709 Oak, new construction near 1 year on the MLS, re-listed today at $2.349m, down just $46k from its $2.395m start.

Perhaps the take-home message for buyers in this segment is: The builders are rational folks, just don't expect that most of them will make the first move.

UPDATE: The sale price on 3104 Maple has been corrected since the initial version of this story was posted.

Figuring out a location discount

MBC writes only about homes west of Sepulveda. Today we feature the easternmost house yet – 1043 10th St., because it is now in escrow.

Congrats to the willing buyer and willing seller. Now permit us to analyze.

This is new construction, 5br/4ba, 3,950 sq. ft. on a large lot (7,500 sq. ft.).

About that lot...

On the other side of the fence on the right side of the photo is the main local branch of the post office. Trucks enter and leave the loading docks just a few feet away for much of the day. A fairly screaming, hilly portion of Sepulveda is 25 yards away.

It's not all bad. Right across 10th St., a mini-mall features ice cream, El Gringo, a high-end spa and a great wine store.

But still, the listing called for a discount.

No doubt the seller/builder thought they were offering a discount by starting at $2.247m. (That's where they started Jan. 24, though the property has been re-listed a couple times.)

Roughly comparable Hill Section properties on the market this Spring ranged from $2.4m-$3.4m. The low end, 601 Larsson, is still for sale at $2.395m; solds with similar br/ba/sq. ft. included 938 Duncan ($3.23m), 108 S. Dianthus ($3.25m) and 624 6th ($3.4m).

Comparable new construction in the Tree Section starts at $2.3m and quickly reaches $2.7m and higher. (We'll have to assume the buyers weren't so picky about location, and might have taken a nice Tree Section home instead.)

The last list price on 1043 10th was $1.999m. We won't have the sale price for a month, but let's assume it wound up near that.

So... the initial list price was at least 5-20% below comparable properties. We saw an 11% drop in the list price in 5 months. That means the location discount was at least 15%, probably close to 25%.

You know who this matters to most?

801 11th, newer construction, a smaller home (by 950 sq. ft.) on a much smaller lot (4300 vs. 7500) in another compromised location: the corner of Pacific and 11th, a stone's throw from MBB and backing onto a commercial building. That listing is at $1.995m today, having failed to sell at $2.45m last year.

Last week, our subject property and 801 11th were priced the same. Now, 11th is in trouble. How eager are the sellers to cut again after chopping $450k off their wish price?

The news is also no fun for a would-be lot sale at 845 10th. You don't have the same location concerns there, but when a new home up the street goes for $1.9+, you'll have a hard time getting your $1.875m for a teardown.

A whole separate line of inquiry... was this a profitable venture? The builder paid $1.2m for the lot at 1043 10th. After costs of holding and selling, perhaps $600-650k is left. Let's just say: it's hard to build a quality 4000 sq. ft. home for less than that...

Sales for Eight Mays in MB

MBC is all about data, and how could you not be intrigued by this post at Kaye Thomas' blog?

Kaye tried to gauge whether we had a good or bad May this year based on 8 years' worth of data. MBC has set her numbers to music – well, graphics:


This time period covers much of the recent up-cycle.

Ain't it interesting how the "wow" period, with the greatest mix of optimism and trading-up and flipping, was 2002-03? Let's not draw too many conclusions from one month, though.

As for May 2007 – that's no big slump we're looking at.

What is an "average" May?

Two answers: Based on the full eight-year data set here, it's one with 42 sales. If we take out the outlier year (2002) and the current year to gauge "normal" conditions, it's 40.

Given those averages, 33 is a drop of 18-24% in sales, but beware small samples. At least we can say that's much better than the SoCal average – DataQuick reported that sales slipped 34% last month (YoY) and hit the lowest levels in 12 years. Not us!

Keep in mind this is data for all SFRs in Manhattan Beach 90266. And we're looking at closings in May, meaning we're really measuring buy/sell decisions made in March and April this year.

Of the 33 sales recorded in May, MBC's Market Updates recorded details on 20 sales west of Sepulveda (our focus), or 61%.

Would it be great to have data from the pre-2000 period? Of course. That would include some sluggish times to use for comparison. We're working on it.

Market Update for 6/15/07

You can download the newest MB "Market Update" (6 pgs., PDF) by clicking here.

Or go over to our sister site, Manhattan Beach Market Update, to read the discussion of the updates and/or to download the PDF.

'Make Me Move' Meets the Market

Zillow offers a cool, quirky feature, "Make Me Move," allowing homeowners to post their dream prices.

IF I WANTED TO SELL, I'd do it for... x...

It's a brilliant way of creating a grey market for homes. And of course the prices these non-serious sellers put on their properties are overstated.

The only interesting question is: How overstated? Here's some evidence.

The owners of 332 6th St. took the time to enter a "make me move" price on Zillow. They hoped for $3.750m for their newer, South End, walkstreet, 4br/5ba, 4,400 sq. ft. home. (Those factors do add up to: desirable.)

Alas, they were not just teasing. These folks actually want to sell.

Now they're on the MLS at $3.375m.

Based on a sample of 1, "make me move" prices are overstated by 10%. We'll be more systematic next time, but this one caught our eye.

Oh, the sellers paid $1.7m back in 2001, which certainly seems like 100 years ago in real-estate time. Six years later, they'll move if you give them $1.5 million to take with them.

How to Hide the Truth About Your Listing

MBC has complained a few times about bogus re-listings. It's time again.

Re-listing is a common practice meant to wipe away the true listing history of a home. The tactic hides true days on market and the history of price reductions (if any) on the property.

The effect is to deprive potential buyers of valuable information, and to cloud the data used by many people to gauge the health or direction of the local real estate market.

Here's an example of how it's done:

Two brand-new, completed homes by the same developer on neighboring lots were put up on offer in late April. They were each assigned their own MLS #'s, and priced just a bit differently:

• 925 27th: S945952, $3.250m
• 927 27th: S945951, $3.285m

A couple of months later, in the glutted Tree Section higher-end market, there were no takers. The seller was ready to make a price reduction on each one.

Today, the "old" listings were canceled. Replacing them:

• 925 27th: S948980, $3.125m (-$125k)
• 927 27th: S948979, $3.195m (-$90k)

Those are "new" listings showing zero days on market at this writing.

Use this public MLS search tool, and you'll only see the new listings. The old ones are lost to the ether.

Use ZipRealty's search (free reg. required), and, for now, both old and new listings come up. Zillow has the updated prices, though it has no MLS affiliation.

Here's a surprise. Look at the site of the listing agent, David White of South Bay Brokers, and – whoops! – you find the old MLS #'s and old prices. 'Twould appear they're busy wiping the public records, printing up new fliers, etc., before updating the in-house stuff.

It won't be long before all records of the "old" prices and start dates are lost. Or that would be the case without MBC, we'd humbly suggest. Plug: Our twice-monthly Market Updates use only the real start date and price.

Savvy local realtor Kaye Thomas wrote just the other day that the local MLS had made a positive change in its report-generation system, showing "combined days on market" (CDOM) rather than mere "days on market" (DOM) in realtors' comp reports.

CDOM, in theory, is not subject to "re-listing" manipulations. But in reality, of course the database is regularly fooled. That's part of why the publicly reported average DOM is near 60 days while the true DOM is closer to 100.

Everyone thinks there are rules that restrict bogus re-listings. You have to be off the market 60 days, or go with a new broker, and so forth.

There's no enforcement, though. Who is going to punish whom? The folks with a stake in accurate, honest information aren't at the table. Caveat emptor.

Two-Year Itch Update

MBC is tracking listings held by the owners for two years before they hit the market this Spring and Summer.

The issue was first discussed in this story three weeks ago, when we had 9 itchy listings.

We're now at 13, with 5 pending or sold.

This graphic, organized by markup % sought, provides a snapshot:












(click to enlarge graphic)

There's not yet enough data to say much.

The sale at 628 12th St. was so quick, and at such a modest markup, you almost think these sellers could have made $100k-$200k more if they had been willing to try a higher price and a longer wait. (They sold within 2 days.) Well, they were ready to go, and, in fact, they probably didn't walk away with a profit.

The sale at 2500 Pacific provides no clear market information for us today – the buyers 2 years ago actually took a big discount off the $1.2m-$1.4m VRM price when they paid $1.005m. (No one got discounts in Summer 2005!) So, while they sold now for $1.170m, is that really a 17% increase in value?

Pending are two big-time remodels (1800 Laurel & 3204 Poinsettia) and a home that was already sold once this year (228 5th Pl).

You can see how cloudy our quest for information on the market's trajectory, based on this measure, is becoming.

We'll check out of this update with these generalizations...

4 of the 5 sold homes were very nice. 1 was just nicely priced for today's market.

Among the actives, almost all are desirable, but the prices range from wishful to delusional.

Second Try: $450k Lower to Start

Testing the market last year, the sellers at 3200 Pacific put some thought into marketing, but they put none into pricing.

Around Labor Day last year, this home was featured on the cover of the thick, glossy, and yet free Homes & Land ad-zine you can pick up all around the South Bay. Asking price for this 4BR home with a 4400 sq. ft.: $3.9 million.

The price wasn't just high, it was preposterous.

Nothing came of that listing, and the signs came down. Now they are trying again, starting at $3.45m.

That's a drop of 11% in asking, but from such lofty heights, it's hard to call this a price cut or reality check, as MBC might otherwise. Let's see what the competition looks like in the Tree Section over $3m:














Mostly the others are new construction, smaller lots, better locations. This does not bode well.

3200 Pacific was built in 1990. It is an imposing presence, ahead of its time in its styling, mixing a mini-castle feel with a quasi-Mediterranean look. But the inside seems to need a bit of updating, not to mention some color. This one has to feel right to a prospective buyer to justify the price, but it lacks soul.

What's worse, the sellers will be in no mood to bargain.

In their minds, they've just cut a half a million off their expectations. Try to drive them closer to $2.5-$3m and they'll slam the door on you. If, some day, that (overpriced) new home on 27th by Ladera School sells, this will be the most expensive home in the Tree Section, and how will the sellers justify that?

Raw Data from Spring

Upon request, here is the raw data that went into making the graphs for active & sold listings for our Spring Bounce (see the graphs at our Market Update subsection).



(Click to enlarge)

Short Sale Pending on Valley

Today it seems we're saying goodbye to a couple of old friends.

2507 N. Valley is pending after, sheesh, at least 15 months on the market (with some periods off).

High: $2.249m, Low: $1.799m.

The news comes almost two months after the selling agent dropped this bomb into the listing language:

Subject to short sale approval by bank.

As we have noted before, the seller paid $1.54m in Feb. 2004, but the "short sale" stuff popped up when the price was at $1.999m. Uh-oh. At something less than $1.799m (we're guessing), a bank somewhere is looking at about a $300k loss on this one.

Now it can be said: The sneaky "price increase" tactic didn't work here. Two others that have tried that are still looking for action.

UPDATE: An anonymous comment tells us the sale is $370k short.

Also working its way off our inventory lists: 710 Manhattan Beach Blvd. It's also in escrow. This is the townhome that undercut its neighbor when it dropped to $1.249m a while back. The neighbor (714 MBB) dropped out of sight a while later.

MBC is Now a Dot-Com

To simplify things a bit for our readers, MBC has now created a .com address that is a bit easier to remember:

mbconfidential.com

(You can use the www. prefix, or not.)

That address just points to the content on Blogger, but it's smooth and seamless.

Please report any bugs or issues via comments or private email.

DIY for $3m, or Buy for $4m

If you can't even imagine a two million-dollar fixer, maybe you should stop reading now.

Dated, forlorn and a bit musty, 524 15th St. is nonetheless quite the rage in town. The entry fee is $2.2 million, but that's just the beginning for whomever takes the keys.

The home is being marketed simultaneously to builders and to "move-in buyers." A clever strategy that might, just might, draw top dollar.

The big reason: Location, location. This isn't the best or highest part of American Martyrs hill, but it is where it is – 6300 sq. ft. of dirt on the beach side with some sparkling views of downtown, PV and Catalina from the rear.

The other reason this might get expensive quickly: If you can get a second party bidding, madness could break out. Say what you will about builders, but they're smart. They don't want to pay $2.2m for this lot. They won't get into a bidding war with other builders. But if you suck "move-in" buyers into this mix, the lot value does go up. Who comes out on top then?

Recent lot sales up the street suggest that $2.2m is high by 10%, probably more. Here they are:

• 608 15th, sold 2/06, $1.975m
• 613 15th, sold 5/06, $1.950m
• 604 15th, sold 8/06, $2.020m

All those lots are midway through construction now, and there's talk that some are pre-sold at $4m-plus.

So the bad news for 524 15th is that the lot location is worse, by comparison, than those lots sold last year at $2m or so.

And there's this: Builders are starting to wonder about the prices they can get at completion. Today's $4.2-$4.5m house might not fetch all that in two years. So do you pay more for the lot while worrying you'll get less when you're built out?

Would-be "move-in buyers" have a different calculus. To walk through is to realize there is no way that paint, floorings, windows and countertops will modernize this house. Unh-unh.

The master is an insult, by today's standards. It's the only bedroom (out of 4) with room for more than a bed and dresser. Not much more room, though, and the "master bath" is small and cannot be expanded without huge changes in the floorplan.

The highest-quality space – the second floor living room with the views – really fails to impress. To capture the potential here, you're going to take out the fireplace, raise the roof, build a deck – generally treat the existing layout like a bad first draft.

At 2,200 sq. ft., the house is positively tiny for its price range. If you're remodeling, you have to fix various flaws and probably add square footage. At the end, you're in for close to $3 million, assuming that the guts of the house (45 y.o.) are intact. You might wind up with 3,000 sq. ft. of nice home in a plus location, but for all the hassle, why not buy something newer?!?

That's why, here, MBC is betting on the builders. In this market, we need someone to start over on this lot.

Even if the current owners have found their home lovely, the family committing $3m to buy and remodel has better options. The builder hoping for $4m can probably pull that off if he moves quickly.

Saturday Lite

At this hour it's open house time, so let's keep it short and simple...

One of MBC's favorite poems about real estate, sort of... courtesy of McSweeney's (frequent visits suggested):

What the People
Who Used to Live in My House
Apparently Said to Each Other
Before Selling it to Me

BY JESSY RANDALL

- - - -

"I think wall-to-wall beige carpeting is the way to go."

"How can we beige it up even more?"

"Let's paint all the walls the exact same beige as the beige light-switch covers at Home Depot."

"Still not beige enough."

"We could paint the moldings beige, that might help."

"Everyone loves beige!"

If you need something a little more substantive, check out the new graphs of active/sold ratios for Spring over at our MB Market Update subdivision.

Beach Reporter Bites Hand

A big reason the Beach Reporter is free is also a big reason it's so heavy: Real estate ads.

So builders all over MB will be choking on their lattes, er, scotch, when they open up their copies this week and see, right on page 2, columnist Paul Silva's piece. In "The Stains of Speculation," Silva bemoans the continuing redevelopment of Manhattan Beach by profit-seeking speculators.

Now, MBC is neutral on the subject, but here's Silva's take:

[I]f you build an ugly, ostentatious house just for profit, you deserve to go broke doing it....

It's hard to think of another form of profit-seeking that leaves us with as many public stains as real estate speculation... an ugly house can last 40 years or longer....

Silva's complaint isn't just about garishness, but size. Building out to every allowable square foot means no yards, and changes the flavor of a neighborhood.

The builders will tell you that maximum square footage is what sells these days, but it's a circular argument because few developers have the courage to place a bet on open space.

Builders are yella!?!

What prompted Silva's outburst? The writer lives near a large new house in MB that's been sitting on the market for months. He's not-so-secretly happy that the builder has had trouble finding a buyer – maybe it will be a lesson to others.

Or not.

Silva worries that there isn't much that can be done. "[W]e are at the mercy of the taste and discretion of spec builders," he sighs. Unless, that is, the buyers in the $3-$5m range turn their backs on these new homes, and insist that less is more:

If these wealthy newcomers demand more yard space and less grandiosity, and a few developers lose their shirts on some mini Taj Mahals, we're all better off.

Wow, that's twice Silva is openly hoping for builders to lose money. It's for a purpose, of course: a desire for a better-scaled community. But what do you think the business department at BR said when they saw the piece?

Poinsettia Reality Check

This morning 1829 Poinsettia has reduced its price by $160,000, down to $1.625m.

After just 22 DOM, a 9% drop is a pretty rapid acknowledgment that the start price was way out of line. No offers, or low offers, surely served as a wakeup call.

More on this listing here and here.

True DOM: Higher than you know

A new post at our companion blog, Manhattan Beach Market Update, shows that true average days on market for active listings is 58% higher than some sources have said.

In the three regions west of Sepulveda, it's an average of 98 DOM.

The chart says it all, but for more detail on how the chart was created and other considerations and analysis, please see the full, nerdier post here.

NY Times on Housing Downturns

Let's break away from our little burg, where no one seems to be hitting the housing panic button just yet, and look at some bigger-picture data.

Sunday's New York Times Business section featured this article by Floyd Norris discussing the history of housing booms and declines. Norris notes:

There are few economic trends harder to measure than home prices, given that every home is unique, and a house in one area can cost far more than an identical one in another location. All such measures show the market has weakened, but some do not yet show a broad national decline.

One index does show national declines, the Case-Shiller index, mentioned here last week. Norris compares today's national data to those from a previous downturn that began in October 1989:

Prices are falling more rapidly this time, just as they rose more rapidly coming into the 2006 peak than they had a generation earlier...

(Follow the NYT story link above to see some graphs you'll find terrific and a bit scary.)

Norris reports that it was not for 99 months – achem, 99 months – that prices returned to their peak levels.

To some of us in MB, all that talk sounds like it's from another planet, not just another time. Price declines? Eight-year slumps? Not here!

No question, MB seems to be insulated from some of the nastier trends out there today, but can we really defy the national market completely? Local RE leaders would say yes.

FYI, if you are inclined to read more doom-and-gloom, er, analysis, on the national housing market, a mid-year analysis over at Calculated Risk provides both chat and charts worth your time.

Shorewood Calls the Bottom, Sorta

In unveiling April sales data for South Bay neighborhoods, Shorewood Realtors recently issued a typical sun-is-shining-everywhere press release.

As MBC has said before, if the data back it up, it's fine to sound as bullish as can be. If South Bay sales have really increased year-over-year in three consecutive Aprils, that's something to crow about.

And yet there's a stretch beyond the data here, too. A statement attributed in the release to Shorewood's co-owners, Arnold Goldstein and Larry Wolf (apparently they were speaking at the same time), says:

We believe we’re seeing a renewal of confidence among both buyers and sellers that the housing downturn which began in the fall of 2005 has more or less run its course in the South Bay. Prices are holding steady for the most part and smart buyers have decided not to wait for further downturns, which frankly we don’t think will occur, so long as mortgage rates hold steady.

Let's examine this a bit further.

First, has the record really been clear – has Shorewood always said a "downturn" began in Fall 2005? Good research question.

Second, does Shorewood believe the slump, however mild, has "run its course?" Oh no, that's the "buyers and sellers" who have "confidence" that the "downturn" is over, not Shorewood. Don't blame us if we're wrong.

"Further downturns" will not occur, in the Shorewood owners' frank view, so long as rates are steady. Hey – that is an opinion. We'll check back on that one.

OK now, "smart buyers," remember, you're the ones who are not going to wait any longer. Any buyers who are waiting, sorry to insult your intelligence, just please call Shorewood when you're ready to make a move.

Start the Clock on 45th/Highland

Today it's official, 4419 Highland Ave. is on the MLS at $1.695m. So the clock starts now.

The listing notes that you will have a "White water view!"

Not so much emphasized: Power Plant View, or Gas Station View.

Previous posts about this home, which MBC has taken to calling "The Gateway to Manhattan Beach," are here and here.

One in Three MB Listings Sold in Spring

Here's a preview of some number-crunching MBC will be publishing this week.

MBC tracked 126 homes (SFRs) listed west of Sepulveda this Spring (which we define as, essentially, April and May – actual date range: March 27-May 31).

36% of the listings wound up pending or sold by May 31.

The data by section:

• 45% of listings in the Sand Section were pending or sold, as were
• 32% of listings in the Hill Section, and
• 32% of listings in the Tree Section.

Clearly, if you hear that the Sand Section is hot, the data back that up. Keep in mind, MBC only tracks SFRs, but the townhomes in the Sand Section are moving well, too.

And if you hear that things are slow in the Trees above $2m – where a lot of new construction is lingering – well, the data back that up, too. Just 25% of the listings over $2m in the Trees sold or went pending. In raw numbers, that was 9 out of 36 of the $2m+ listings.

MBC is not in a position to offer comparative data. It'd be great to set 2007 data alongside 2003, '04, '05 and '06 data. But we go forward with the data we have.

We're aware of markets near and far where much more inventory is going unsold despite desperate measures. And yet, don't we all know that MB used to be a bit hotter than this?

A local realtor who blogs regularly, Kaye Thomas, offers her own "market snapshot." She also observes:

The market is showing signs of slowing down a bit... which is normal for this time of
year.

Note: All the data referenced above, and to come this week, is easily compiled from the most recent Manhattan Beach Market Update. MBC offers it to you in a PDF but we're (obviously) working from a spreadsheet, and we'll offer analysis from several angles. Graphs and charts are on the agenda as well.

UPDATE 6/7/07: The graphs for actives/solds are up here at MB Market Update.

Market Update for 5/31/07

Check out the newest Market Updates for May 31, 2007, over at our companion blog/twin sister site.

Links to the spreadsheets and discussion are here.

In the updates, you'll find a summary of all the market activity west of Sepulveda this Spring.

You'll see true days on market, our "realty reality check" that counts market exposure from the first listing date, not the most recent bogus re-listing date. And with that, you see the original price, not just the most recent baby-step down.

MBC will be offering further analysis of the "Spring Bounce" based on this data in the coming days.

Meantime, our best to buyers and sellers alike – may all find a common understanding.