Hill Section Sales & Medians, Apr.-Oct. '07

For several months, MBC has been publicly tracking market activity among SFRs west of Sepulveda.

While there is a wealth of information in each of our twice-monthly updates, we have now re-compiled data from April-October of this year in a few new ways for special reports that we hope you'll find even more accessible and useful.

This is the first of three data releases, this time covering the Hill Section. You'll need to download a 3-page PDF, either by clicking here or by using a link in the upper-right corner of the front page under "MB Market Updates."

The spreadsheet has 3 pages, with each looking at the same data on 15 closed sales that occurred in the April-October span of the report in 3 different ways:

• Sorted by Home Condition
• Sorted by Median Price
• Sorted by Median Price Per Square Foot (PPSF)

Note that a sort by date closed is already included in each of our twice-monthly updates.

What do these various sorts show us?

First, the median price* of sold homes in the Hill Section in this period was $3.230m (see page 2). That was the actual price on 938 Duncan, a 5br/5ba, 4650 sq. ft. remodel that lingered for over 300 days before selling in June. (It also suffered $565k in cuts [-15%] from initial asking.)

Second, the median price per square foot in the Hills was $714 (see page 3). This figure is boosted somewhat by 1 or 2 homes that are likely teardowns – we have made no adjustment for that. This $714 figure was the PPSF for another long-time listing, 108 S Dianthus, which began at $4.5m and sold for $3.25m after 385 DOM.

Third, looking at new construction (see page 1), 5 of the 6 new homes sold went for 93% or more of their list prices. Three took price cuts of between $175k-$320k, but those were off big prices. The outlier was a new home next to the main post office on Sepulveda, which chopped 13%. Bigger cuts, as high as 15-28%, were more common among newer or remodeled homes.

We're offering 7 months' worth of data here, as a kind of "beta" release of our whole 2007 collection. (Alas, MBC began operations in March 2007 and we won't offer detail before that.) We're always open to critiques, corrections and suggestions. Happy downloading!


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* At risk of offending some readers, we'll just note that "median" means the price of the home precisely at the middle of all the homes sold. With our sample of 15, there were 7 homes priced higher, and 7 homes priced lower, than the 1 home that serves as the "median" priced home in this analysis.

What Can Sell 872 MBB?

If you hear there's a home for sale that's literally on Manhattan Beach Blvd., you're going to be skeptical.

And then you get the pictures. Ugh.

A new listing for an SFR on MBB (872 Manhattan Beach Blvd.) wastes its first three photos by turning off potential buyers. (Click address for pics and details via Redfin.)

We're showing you #1 here – the (happily) fresh garage door. This is your curb appeal, by the way.

#2 shows the cavernous storage area, and #3 features the somewhat spare grass in the back yard.

Did we mention that the sellers would like $1.247m of your hard-earned money? Actually, no, we hadn't yet. That'll get you 3br/2ba and 1275 sq. ft.

Seems pricey? Well, it's – gulp – technically, the Hill Section.

But you see, you're not just paying for the house – you can redevelop the property into an office building, thanks to the zoning. Oh, so I needn't worry that there's a house there now, thanks, I'll just build a skinny commercial complex.

MBC is obligated to add this detail – the sellers are two-year itchers. They paid $960k in Sept. 2005, according to Redfin, so they're currently seeking a markup of 30% (+$287k) over 2 years.

That's right, they bought at the peak, but still think they deserve 30%. For a property on MBB, zoned commercial, surrounded by commercial, with these pics. Oh, me.

Buyers Save Almost a Mil

The Sand Section has seemed like the hottest area for sales this year – no huge surprise. But there was a letup in sales activity recently, and no sales closed between October 25 and Nov. 20.

The three Sand Section SFRs that did close in November (all in the two days before Thanksgiving) reflected buyers saving a combined $860k off the original list prices.

In order of price reductions:

2008 Highland (first pic), a newer 4br/3ba, 2325 sq. ft. modern home, got $2.175m, down $120k (-5%), after just a month on the market.

209 19th, a walkstreet home with 3br/4ba, 3350 sq. ft., located just north of downtown, was on and off the market this Summer (MBC counted 153 days from its first listing date). The sellers got $3.675m – awfully impressive – but that's down $275k (-7%) from its start price ($3.950m) on June 7.

209 42nd (second pic) was the big bargain of the group, fetching $1.835m after more than 400 days on the market – a drop of $465k (-20%) from the pre-completion start price of $2.3m.

The last two of these were both quick escrows. MBC wrote about them as new sales just three weeks ago (see "Lucky 209s").

There are three SFR sales pending in the Sand Section now, one of those a likely lot sale at 328 16th, which MBC also referenced earlier this month (see "Sand Lots").

Getting Shorter

As the weeks and months pass, the market value of 1313 Oak is approaching its Dec. 2004 sale price – $1.525m.

It was just three weeks ago that MBC noted that this home was now officially a short sale. That was with a price of $2.199m. Now the price is at $1.999m, off another $200k.

In our last story (see "Get Shorty") we noted that, at $2.199m:

The shame is that this home is still overpriced. A certifiable beauty down the block at 1725 Oak, built at about the same time (2004), sold quickly last month for $2.050m (but it was listed at $1.979m). It was about the same size as [1313 Oak].

Now, $1.999m at least puts 1313 Oak in the same ballpark as a recent comp on Oak.

Let's not forget how high of a moonshot these sellers tried to pull. Last year, this home was up for $2.799m for a time – $800k above the current list, and $1.3m more than the owners paid. There was some time off the MLS before it came back at $2.490m on May 24 this year. The current price is down $490k (-20%) from there.

Modest House, Bold Move

The sellers of 2623 Palm have a message: We are ready to deal.

They've had their modest 3br/2ba, 1950 sq. ft. ranch-style home on the market just 2 months, but they have now taken a post-Thanksgiving cut of $156k, bringing their price down $200k total from its start. Palm is now available for $1.399m. (Click the address above for details via Redfin.)

Think about that – 13% in cuts in a short window of time, much of that coming as the holiday-season slowdown really begins. If the sellers are already chopping like that, they're effectively saying "we'll take almost any offer."

How low can they go? MBC did not quickly find a sales record on the home, but it appears the current owners have held it for a number of years. That means they could have tons of equity and, therefore, flexibility, to go with their evident motivation.

Palm's bold move is terrible news for the rest of the homes lingering in the Tree Section after Turkey Day. One motivated seller like this could really mess up the comps (or, if you prefer, tumble the house of cards, start the dominoes falling...).

Palm threatens to redefine the $1.6m wish-price tier as $1.4m, or below, while making the homes at $1.2-$1.4 all looked overpriced. It's just not very neighborly.

Among the listings that could be most directly harmed, pricewise:

• 3012 Palm (3br/2ba, 1800 sq. ft.), an apparent flip at 31st/Palm that was purchased for $1.3m this past June. (It never hit MBC's radar so it must have been a private sale or transfer.) The listing touts remodeling work. This one began Sept. 4 at $1.579m, then cut and pulled a bogus re-list with a price of $1.479m. It's smaller than 2623 Palm and has a curb-appeal challenge despite the remodel.

• 3517 Elm (3br/2ba, 1400 sq. ft.), which entered the market just a month ago at $1.399m, and recently cut to $1.349m. It is 550 sq. ft. smaller than 2623 Palm and the location is another strike. If Elm were priced the same as 2623 Palm by square footage alone, it'd be at $1.004m now. The owners paid $1.045m in Oct. 2004.

• 2822 Ardmore and 1829 Poinsettia, two listings that recently dropped off the MLS, but could come back. (Ardmore still has a sign out.) Ardmore began in late June at $1.299m (for 3br/2ba, 1400 sq. ft.) but quickly rose to $1.399m, sensing a market that was heating up. Poinsettia began at the preposterous price of $1.785m, lowered to $1.599m (for 3br/2ba, 1450 sq. ft., tricked-out), and quit after 5 1/2 months. We'd bet it'll be back next year.
  

MBC noted the other day that 2615 Valley cut $325k to make a deal. We also saw a recent escrow begin at 637 13th after $230k worth of cuts (last at $1.355m). With Palm cutting $200k to attract attention, there's a veritable outbreak of price competition in the Trees, just as folks are beginning to shop for... trees.

60% Think Prices Will Drop 25%+

Online polls are not scientific (not even a bit), but it's intriguing that this morning's LA Times poll (click for a link to current results) is, at this moment, showing that 60%+ of respondents believe that "Southland" home prices will drop by 25% or more.

Yes, it depends on what you mean by "Southland."

The poll jumps off of a front-page story (see "Homeowners' big question: How low will prices go?") offering more predictions about the future of the housing market.

There's agreement by the analysts that the Inland Empire is toast. The disagreement is over the Westside and luxury markets. And here, we have a little USC-UCLA rivalry (timely!).

First, one expert (a Berkeley guy) says:

... in areas where there is very little new housing, where it's hard to build and a lot of wealthy people live, there will be little decline or maybe none at all.

With which the USC person, Delores Conway of the Casden Real Estate Economics Forecast, concurs, with the Times noting her view that "demand remains high in affluent, established areas such as the Westside and Newport Beach."

Naturally, both Christopher Thornberg – formerly of the UCLA Anderson School – and Ed Leamer, currently at Anderson, are quoted, and cited as "are among the most bearish of analysts" – in part because of their edgy opinion that "the recently ended housing boom pushed prices out of sync with incomes." (Emphasis added.)

"Recently ended housing boom" – how about that? Do you like how the Times just slipped that in the middle of a story? They don't ring a bell or print 3-inch headlines when the peak has passed, do they?

Thornberg is said to view the Berkeley-USC hypothesis as "wishful thinking," saying:

Every place takes the hit in the long run.

In a sidebar, Thornberg is also quoted:

If you sit around and pretend you will be immune from the downfall, you're fooling yourself.

Leamer's got data from the 1990s downturn in L.A. that shows that, eventually, the priciest areas declined to the same degree that the cheapest areas did.

There is some question in the story about how long the downturn lasts (no one looks beyond 2010), some hand-wringing over the fact that the declines are happening absent a broader economic recession (so far!), and the obligatory statement that: "If the U.S. falls into a recession, all bets are off."

Meanwhile, the note of optimism (we think) comes from the California Association of Realtors, predicting a 4% drop statewide next year. (An opinion they've offered before – see "Outlooks Getting Gloomier.") Sorry, no data for the "Southland."

Today's predictions for the Southland strike us as consistent with broader market analyses (see "Getcher Predictions Here"), but the online poll respondents are suggesting a big break in consumer and homeowner psychology.

In April 2007, a scientific poll by the LA Times found that 83% of all Americans expected flat or increasing home values over the next 6 months. And in June, more than half thought their homes were worth more this year than last year. (See "More Faith in Rising Prices.")

One online poll is but a thread of evidence that expectations are shifting – a glacial process, but one which had to begin in response to the onslaught of downbeat news and data of the last few months.

Foreclosure Row No More

For a while there, we had two listings in the Hill Section on the same street that were in foreclosure and up for sale at the same time. We were half-expecting a third, but now there are none.

One of the houses, 402 Larsson (first pic), is now in escrow – the cheapest Hill Section listing we've seen this year at $1.1m. With 3br/3ba and 1800 sq. ft., the home offered, shall we say, tremendous remodeling opportunities. And for the seller, a million bucks should make those bad loans go away – at last.

Only one home in the Hills has sold for less than $1.1m this year, and that was 234 Larsson, a townhome that was listed at $1.3m but sold for $1.075m.

Why the Larsson discounts? Have you ever driven on Larsson? It's the Hill Section's version of Oak Ave. in the Trees – Sepulveda-adjacent with all homes on one side of the street backed up on businesses. In its defense, we can say Larsson is actually wide enough for traffic and parked cars to share the road, unlike Oak, and it has a cute little park (the "Parkette," in fact).

Over on the "right" side of the street, for several months we've been watching 601 Larsson. This home was purchased for $2.0m in Sept. 2005, and came on the market again less than 2 yrs. later at $2.695m (March 20, 2007).

It's a distressed-seller situation, full of foreclosure notices and several scheduled auctions (all postponed, so far) and an attempt on Craigslist to get someone to take over the loans and, ultimately, a last-ditch effort to go with a short sale (at $1.899m, guaranteeing a loss of about $150k – maybe more – to the holder of the 2nd).

Alas, this home is not worth what it was 2 years ago, and demand for homes with compromised locations is minimal. Nothing has worked to sell 601 Larsson, and now it has canceled off the MLS again. Its fate would appear to be REO, in which case we could see it back next year at $1.5m-$1.7m.

Making it Happen (-$325k)

They say you can't time markets.

Here's an example of what seems like bad timing – 2615 Valley came up for sale on July 31, a week before the mortgage meltdown began.

The RE world changed on or about August 7, 2007, and here was Valley, asking $1.799m for 4br/4ba and 1950 sq. ft. on a busy street.

Sure, the remodel was (is!) unusually good. A nice plus. But, really, $1.8m was high then, and it quickly looked ridiculous. So the price slipped to $1.699m and then to $1.599m.

About 3 months into the process, the sellers got a live one, and reeled him in by offering a further $125k discount. This week, 2615 Valley closed for $1.475m, down $325k (-18%) from initial list.

It's no catastrophe for the sellers, who were two-year-itchers. They paid $1.229m in April 2005. Their sale price here is +$246k (+20%), or +$157k net if they paid out a full 6% for costs of sale.

Would the sellers have preferred another $300k in profit? Of course. But in this market, it's better to get out than to hold out.

Worthy Causes

Next weekend is the Holiday Homes Tour organized by the Sandpipers, a local charity.

Four MB homes are on display (click here for the list w/ pics), one in the Hill Section, one on Martyrs Hill in the Trees, one on a South End walkstreet and one that you have surely admired before when visiting Sand Dune Park, a classically styled home at the end of 31st St. abutting a large park lawn. (The pic here is of the Martyrs Hill home, open Saturday only.)

Each home will have new and extra decor and holiday trimmings sponsored by area vendors. The tour is great, it's for a good cause, and you might just find a photographer, artist or designer to help you fill a need at home.

To order tickets online ($20 each, plus a meager $1 online fee – beats $25 at the door), click here to go to the Sandpipers' order page.

Who are the Sandpipers and what do they do? Click here for more.

Of course, in this season, we cannot forget that there are many people who need a lot more than a good designer.

Michael Locke is a local boy who was hit by an SUV while biking in late August. After weeks of hospitalization, he's home, but will need continuing rehabilitation. Friends and family have set up the "Michael Be Strong" website to raise funds to help with his recovery. To learn more and to contribute, please click the link above or here.

The recent California wildfires are no longer in our faces, but the thousands of families who lost homes are very much in need now. There are several options for helping them out, but the gold standard remains the Red Cross, whose California Wildfire Relief page is here.

A Real Turkey

As you prepare to give thanks for your blessings this week, here's one to add to the list:

You do not now, and probably never will, live at 462 36th Place.

This dreadful SFR is currently the cheapest home west of Sepulveda – for the second time this year. (Click address above for details via Redfin.) For $929k, the listing says you will get 3br/2ba and 1150 sq. ft. on a 1260 sq. ft. lot. The writeup concludes: "Must see!"

But if you see it, you may be traumatized – so be warned.

After this home was purchased in August of this year for $760k (second pic is the "before"), it was rapidly remodeled – just 8 weeks between closing and return to market on Sept. 27. The remodel did update the exterior, and surely improved the interior, but it had to be pretty bad previously for this Home-Depot-clearance-table job to qualify as an improvement:

• Pergo-type faux-wood flooring that has soft, bubbly, bouncy spots;
• Low-end appliances and presswood countertops in the kitchen;
• $70 "fancy" mirrors screwed to the bathroom walls as accents; and
• Raw wood stairs from the 2nd to the 3rd floor bedroom.

The flipper may or may not have gotten permits for this work, but what he or she really needed was quality control, and the city doesn't provide that.

The remodel is subpar, but that's not the biggest issue in this horror show. From small to big:

Le Garage. There is a garage (apparently legal), but good luck fitting any modern car into it. Good for a pinball machine, bad for opening your doors.


Location, location... The location is on one of MB's most-shameful streets. 36th Place is just not discussed in polite company. It's an alley, and a ghastly one at that. We're not sure any other house has an entry on this street – mostly it's garages for homes on Rosecrans or 36th St. (a street that's no beaut up here, either). (Third pic shows the street; fourth pic, the view of the refinery from the top of the block.)

The Tower of Horrors. Alas, there's something worse than the location – a late-1980s addition that produced a strange, 3-story tower at the back of the main house. Start up the steps, and you're awed by the height of the ceiling above, which we might call cathedral-like, if not for the risk of offending various religions. The 150-sq.-ft. 2nd-floor landing is, apparently, a "bedroom." (No door.) If you dare, you may hike up the ultra-steep, extremely perilous, raw-wood staircase (just get me a ladder!!) to the loft above, which, given the closet, is evidently the third "bedroom." Oh, the horror.

MBC cannot tell you:

• Why this lot was split in the first place (forcing 462 36th Pl to front the alley);
• Why this home was built;
• Why the late-80s remodel (adding the second & third floors) was so awful;
• Why the Sept. 2007 remodel was so uninspired and cheap;
• What the flippers were thinking; or
• Why anyone would spend $900k+ to live here, given the many, many... ok, many better options all over the world for $900k.

Thanks be to 462 36th Pl for helping us to ask: Is a ZIP code alone really worth a million dollars, regardless of the house or location?

6th Street is Turning Over

MB's South End walkstreets are among the town's real treasures – particularly the flat, or nearly flat, family-friendly streets between 4th and downtown.

We can thank the developers who carved up the area south of MBB and west of Valley early in the last century. The design was brilliant – maximizing the number of lots per acre, while making each one of those lots more pleasant to live on and, ultimately, more valuable.

Walkstreet homes don't come on the market much. It's said that if you want one, you're going to need to be patient – there's a growing list of folks waiting to pounce.

Since MBC started publicly tracking the MB market in March, just 3 walkstreet homes in the South End have come on the market. Two sold, and one sat for 7 months before quitting (it was an overpriced attempted flip at 404 10th).

Curiously, both of the sales were on 6th Street.

And now, suddenly, three more homes are available on 6th Street. The area doesn't turn over much, but, apparently, 6th Street does. The new listings are:

408 6th (first photo, click for details via Redfin) – asking $2.625m – In the middle of the block, a squarish home built in 1977 that almost pushes itself away from the walkstreet, rather than inviting the street life in. It's got the location, but not the orientation, that you might want when seeking a walkstreet home. It's got 4br/3ba and 2250 sq. ft., and is updated inside, in large part. Do check out the hot-pink dining room (click address for pics). Owners paid $1.050m in July 2001.

528 6th (second photo) – asking $3.449m – is more contemporary, startlingly so. The home was written up in an architectural mag when it was new a couple of years ago. It features 4br/4ba and much more living space than 408 6th, at 4150 sq. ft. But it's east of Ingleside and just one house west of Valley, which is truly a factor. Owners paid $2.995m less than 2 years ago (Feb. 15, 2006).

532 6th – asking $2.7m – is the next-door neighbor of 528 6th – curious! – and is actually situated on Valley on a trapezoidal half-lot. It's also startlingly modern in style. (532 appears to have literally the same builder as 528.) Here you get 4br/4ba and 2700 sq. ft., substantially less space than the neighboring house. The owners paid $1.818m in March 2005. (Note: This listing, with MLS #S958483, currently appears on ZipRealty, but not Redfin or Realtor.com.)

The other sales on 6th Street this year were:

• a vacant lot (technically 506 6th Pl.) that went for $1.8m in April (off the MLS);

• 440 6th, a corner lot on Ingleside that went for $2.050m (+$150k over asking) in September; and

• a great newer home at 332 6th that went for $3.14m (4br/5ba, 4025 sq. ft., $770/psf) in September, -$234k from list price and -$600k from its Zillow "Make Me Move" price.

In considering the market values of the three new listings, we have just one PPSF ($770, from 332 6th) to go on, then the previous sale prices as a reference. Looking at them first in square-footage terms:

• 408 6th seeks $1,166 per square foot
• 528 6th seeks $ 831 per square foot
• 532 6th seeks $1,000 per square foot

And comparing to their purchase prices:

• 408 6th seeks +$1.575m (+150%) over its July 2001 price (25% annual appreciation)
• 528 6th seeks +$454k (+15%) over its Feb. 2006 price (9% annual appreciation)
• 532 6th seeks +$882k (+49%) over its March 2005 price (18% annual appreciation)
  

In sum, 528 6th seems the most reasonably priced (everything is relative), while 408 6th has the best location, if not everything you want in a walkstreet home. On Valley, 532 6th is pushing the envelope seeking almost 50% above the price from about 2 1/2 years ago.

What will the rumored legions of walkstreet buyers say about these?

LA Doesn't Know MB

If you browse real estate blogs – well, of course you do – then you're probably familiar with Curbed LA. One of the blog's regular features is a "PriceSpotter" game, in which a property is described and commenters are asked to guess the price.

At the end of last week, Curbed featured a certain Tree Section property in the game. OK, now it can be told, it was 3305 Laurel, new and very elaborate construction listed currently for $3.65m. (This one has been on the market 5 months with no bogus re-lists.)

Many of the Curbed readers' guesses revealed that a lot of LA folks don't know MB.

See the comments in the original story (click above) or today's "Big Reveal" graphic. The first guesses were near $1.5m – about what the developer paid for the lot 23 months ago – but, over time, the consensus grew nearer to $2.5m. (Curbed now complains that someone posted the actual list price, and that this skewed later guesses, even after the offending comment was removed.)

Curbed's conclusion:

This week, the lot of you guessed an average of $1.046 million under the actual asking price. Clearly we need to work on our South Bay real estate lessons.

A point with which we concur.

And yet, we wonder if there's not some kind of inherent intelligence among the uneducated masses commenting on Curbed.

Maybe we locals are blind to things like the location for 3305 Laurel – four blocks from the Chevron refinery, a lot on a narrow street (33rd) with no curbs and erratic, jumbled, quasi-private parking.

We're all accustomed to giant price tags. And this stately home oozes timeless quality – it's seductive. So who's seeing values clearly, after all?

MB Market Update for 11/15/07

The new MB Market Update spreadsheets are available for download by clicking here, or by using the link at the upper-right corner of the main MBC page. Information in this update closed Nov. 15. This and older updates are archived at our data & archive site here.

Total SFR inventory west of Sepulveda was at 80 on Nov. 15, +1 from the end of October.

There were 7 sales (new escrows) of SFRs listed on the MLS in this 2-week period. (In our subject region west of Sepulveda.) Of the new sales, 4 had been offered for more than 100 days – 2 of those for more than 400 days each. Two others sold within 2 weeks of popping up.

Let’s look at our region by section:


Hill Section

There are 10 active SFRs.

In the Hills, we lost a pricey one and gained a cheapie. 230 Anderson, first offered at $7.2m and mostly listed at $6.988m since, has given up (for now) after 6 months. (We don’t have the sense that the owners were under a lot of pressure to sell; they’re just spending more time in their other home.)

Taking Anderson’s place: 1019 11th, one that MBC questioned because it was initially touted as the “best location” west of Sepulveda. With that puffery now dropped, it’s just an average 3br/2ba, 1400 sq. ft. bungalow for $1.199m. These sellers paid $1.165m in July 2005, and bought it from someone who had paid $1.150m the year before. So the value here has been flat for 3 1/2 years – or, perhaps the market will say it has dropped. Stay tuned.

The rest of our news is just price cuts:

• 811 Boundary (pictured) is now down $350k (-13%) to $2.249m after 5 months on the market.

• 911 Duncan is now at $3.299m, down $470k (-12%) from its start – MBC noted the other day that it’s destined to fare worse than any new construction in the Hill Section this year; and
  

• 222 N Dianthus dropped $100k to $2.399m just a couple weeks after its start.
  

Sand Section

There are 23 active SFRs.

There were 2 sales (new escrows), both with the street address of 209, a quirk MBC noted here. One was long-suffering El Porto new construction at 209 42nd, which began in October 2006 at the improbable price of $2.3m (for 3br/4ba, 1950 sq. ft.) and was at $1.899m when it went pending. The other was a walkstreet home north of downtown at 209 19th, last at $3.8m.

There are 5 new listings on this report, two of which actually began before Oct. 31.

• 473 31st (pictured) is a brand-new showpiece at the top of the North End plateau above Sand Dune park – the home offers 4br/5ba and 4130 sq. ft., and the seller requests $3.25m;

• 704 Highland, a home with 3br/3ba, 1550 sq. ft., features a crusty and worn exterior on a half-lot on Highland; the owners have made no apparent effort to spiff it up for sale, but they would like $1.340m, exactly $25k less than the comparable 7-month-old listing at 117 Highland;

• Across town, 3505 Alma is smaller than both Highland homes at 3br/2ba and 1420 sq. ft., but it’s remodeled inside – sellers seek $1.499m – uh-oh, the Redfin listing reveals this one was purchased for $1.430m in October 2006... it's another case of one year and out;

• 328 16th currently has a dated duplex, but it’s the dirt for sale here at $1.867m (see “Sand Lots” on MBC); and
  

• 128 5th is the other lot sale discussed in “Sand Lots,” a truly premier location for which the seller (a local agent) has priced in an expected frenzy, shooting for $3.975m.

We also had no closed sales among SFRs in the Sand and, interestingly, we saw no price reductions this round in the region, either.


Tree Section

There are 47 active SFRs. Of these, 20 are priced below $2m, and 27 are above $2m.

Of all the 7 sales west of Sepulveda in this report, 5 happened in the Tree Section, and 4 were in the <$2m range.

• Priciest sale: 2310 Palm, new construction that began at $2.699m in August 2006, and was one of three homes mentioned by MBC in “The 1-Year Club in the Trees.” Thanks to MBC’s curse-in-reverse, it went into escrow shortly after that mention. Last priced at $2.399m.
  

• Cheapest sale: 1732 Palm, which MBC just days ago called a “terrible, small, older home” that was “approaching lot value” at $1.175m. Ah, the curse-in-reverse!

• Quickest sales: 3404 Pacific, medium-sized at 3br/2ba and 1750 sq. ft., nicely updated, lasted just 7 days at $1.325m; also, a newer, larger (4br/3ba, 3100 sq. ft.) charmer at 1408 Poinsettia went in 16 days, last at $1.749m.

• Flattest sale: yes, flat – 2509 Poinsettia, in which the current owners lived for 18 months, had been listed 40 days at $1.999m, just $19k more than the sellers paid. (It was a relo, we’re told.)

• Rumored sale: We also heard a couple of times in the comments at MBC that 2807 Elm had sold, but it is not yet posted as “pending.” Specifically, we heard there were two offers and one was accepted at $2.1m. Important, if true. Not only is the price drop huge (this one began at $2.9m – obviously too high), but Elm is a great home with an actual yard. A sale price near $2.1m is going to have ramifications for the remaining inventory.

New to the market below $2m is one home you might have expected to enter above $2m – new construction at 1144 Elm (starting at $1.995m). But as MBC noted, this is the “First Newbie Under $2m” because of its location – just off MBB. Also, returning to the <$2m segment is 3013 Oak, which just took a couple of weeks off, now returning with a bogus re-list and a somewhat less bogus new price of $1.249m (-$100k/-7%).

The only new entry in the $2m+ segment is 3300 Blanche, a used house that was new 18 months ago when the current owners paid $2.425m. They now seek $2.659m to start (+234k/+10%).

MBC was wondering: Is this really among the élite of the new and newer homes in the Trees, even with the location on Blanche? And the answer, actually, is yes – owing to lots of elaborate details in the construction, made all the more posh by lavish interior design. (The owner is a designer.) The place drips luxury. It's almost wasted in this location, with the entry a couple yards off Blanche, but, once inside, buyers may find that the home sings to them.

Most noteworthy reductions:

• 561 35th, which first tried to sell in 2006 at $2.299m, is now at $1.899m (-$300k from its re-start price this summer);

• 616 19th, a lot sale MBC featured when it began at $2.1m in September, has also chopped $300k and is now at $1.8m; and

• 2404 Palm, with the strange layout featured here by MBC, is down almost $150k (-8%) to $1.749m, a move made (with a bogus re-list) less than one month after its start.

One sale closed in the Tree Section: 1718 Pacific, which raised eyebrows (and got MBC’s attention) when it opened at $4.5m back in June, closed for $462,500 less (-10%) – at a still-impressive $4.037m.

Web is Vital to RE Sales

Buyers use the internet to search for homes at the same rate as they use real estate agents, according to the National Association of Realtors.

Results of a mail survey by NAR show that 84% of buyers used the web and 84% used an agent to search for a home. (There is overlap because people used multiple methods.) Also, 50% looked at newspaper ads and 48% went to open houses.

Business time is agent time: Once it was time to buy, 8 in 10 of the internet users did use a real estate agent, the survey says. So it would appear that the web relieves pressure on agents to show a bunch of homes without diminishing business all that much.

Internet exposure connects buyers with homes: Of those who actually bought a home in the 1-year period between July 2006 and June 2007, nearly the same number first discovered their future home online as saw it with an agent (29% online, 34% with an agent). This is a more vital measure of the internet's role in facilitating real estate sales. By contrast, just 3% first saw their new home in a newspaper ad, while 0% first learned of it via an open house. Now, why, again, do some sellers choose not to list on the web, or withhold addresses?

They love you, no they don't: In a bit of self-contradiction, 9 of 10 recent buyers said they would use their agent again – but among repeat buyers, just 2 in 10 actually did use an agent from a previous transaction. That's a pretty dramatic dropoff, which NAR reports but does not comment on. Where does the love go?

The NAR survey covers a lot of other ground, mainly looking at buyers' and sellers' feelings about realtors (and non-realtor RE professionals). It was a mail survey compiling 10,000 results from 150,000 copies mailed out to recent buyers and sellers.

There are also these tidbits:

Financing the whole thing. Amazingly, 45% of first-time buyers purchasing from July '06-June '07 put no money down. The rate among all buyers was 29% with no skin in the game. Remember, this was the last full year before the mortgage meltdown tightened credit – it'll be years before those rates are equaled again, if ever.

Long-term thinking. When the NAR runs ads urging people to view home buying as a long-term investment, they're really just echoing back what people already believe. This NAR survey showed that 3 in 4 recent buyers "believe their home will perform at least as well as stocks."

Now read those last two items together. Bullish (or cash-poor) buyers put nothing down and expect investment-level price performance.

What happens if they are disappointed by the performance and/or get underwater? (Some would argue that most 0-down buyers are already underwater.) There are a few words that start with "f."

First Newbie Under $2m

We know the situation is tough for new construction in the Tree Section.

Until recently, however, new stuff in the Trees always started over $2m. Certainly, since Spring this year, that's been the case. No new home has been priced at, or sold for, less than $2m.

Breaking the pricing mold: 1144 Elm, a 2-week-old listing that otherwise fits the basic profile – 5br/5ba, 3300 sq. ft., and a standard 4480 sq. ft. lot. It started $5k below $2m, at $1.995m.

The home has character inside, with good living spaces downstairs, nice detail work in the kitchen and baths, even kids' bedrooms that don't seem too scrunched. It's bright, too, despite a northern orientation – apparently a good use of skylights.

So why is a very decent new build priced, achem, low?

Consult your book on Cardinal Rules of Real Estate: Location, location...

1144 Elm is one door in from MBB, buffered from that busy street by commercial buildings. You really don't want to see your neighbors to the south. And being pinned in by MBB makes you realize you're not really close to anything except the Arco station. Do you really want to drive everywhere?

Demerits, also, for the tiny back yard (par for the course) and for the façade, which is confused and generally a turnoff for this viewer. The stapled-on stone is pretty awful – in fact, MBC has previously called out this dreadful garage arch. We don't think the whole look comes together.

The builders grabbed this lot for $925k in June '06, which suggests both that they got a good deal and that they threw this house up fairly quickly. Though the construction does not suggest a rush job, the pricing is the most aggressive we've seen so far in the Trees. Will that get them to a sale more quickly?

Fallingprice

The new Hill Section home at 911 Duncan was pitched for some time as "reminiscent" of Frank Lloyd Wright's "Fallingwater." But it's noteworthy now for its falling price.

This slick, modern home, with 5br/6ba and 3700 sq. ft., was first offered June 1 at $3.770m. Last month it slipped to $3.650m. This week, along with a bogus re-list and a fresh DOM clock, Duncan dropped to $3.299m, down $470k (-12%) from its start. (True DOM: 165.)

The $470k worth of cuts to date at 911 Duncan are the largest, dollarwise, that we've seen for new construction in the Hills since Spring. The three biggest cuts on closed sales:

• 114 N Ardmore – 5br/5ba, 4750 sq. ft., cut $195k from its start; closed in June at $3.2m
• 1043 10th – 5br/4ba, 3950 sq. ft., cut $297k from start; closed in July at $1.95m
  
• 300 N Dianthus – 6br/6ba, 5500 sq. ft., cut $320k from start; closed in August for $4.175m (MBC once labeled this one "The Fishbowl")
  

Percentagewise, 1043 10th suffered the largest cut among new construction (13%) – no big surprise given its location next door to the loading docks of the main post office on Sepulveda. (See "Figuring out a location discount.")

Given this data, it appears that, by the time it sells, 911 Duncan is going to fare the worst among new homes listed in the Hills this year.

The builder may well have room to maneuver and still profit. The lot was purchased for $950k in August 2005. That means the current price is +$2.3m, which ought to cover expenses to date.

However, this is very much a custom design – a bit strange for the open market – and it was surely more costly than the average speckie.

Main oddity: the main living and dining areas – including the kitchen – share the top floor with... the master bedroom. That's a little crazy, but it was the best way to treat visitors and masters alike to the best ocean views.

There's no yard except the grassy driveway, and we're a bit suspicious of the livability of some of the bedrooms on the basement level, but, overall, 911 Duncan is a beauty. (We've previously said "cutie," and we're sticking to that, too.)

This home should be perfect for someone. And that someone is likely to feel that they're stealing it at $3 million or so.

Old's Cool

It's all too typical around MB – folks assume that a home built decades ago is just a musty old teardown that's in the way of progress.

But there's one 80-year-old on the block that's cooler and more distinctive than most of the fresh hot stuff in town.

It's 3116 Alma (4br/2ba, 2500 sq. ft., $2.275m), a genuine Spanish-style home that instantly conjures old-time California. (Click address for photos & details.)

Think of the original homes in places like Pasadena, Miracle Mile, old Long Beach. Strutting through Alma, you're somewhere else.

Pleasant surprises:

• A more-than-adequate kitchen, with plenty of workspace and modern appliances mixed in tastefully with original cabinetry.
• A spacious family room opening to a decently sized side yard/patio.
• Big, grand ocean views from the oversized master upstairs.

Also, you simply cannot miss the spectacular, imported, in-your-face tile work in the master bath (see the pics). It's the complete workup, no mere accent – kind of psychedelic. And speaking of tile work, the living space in the master features a fireplace with custom tiling with darling old-time renderings of all the islands off California. Gotta love 'em.

Obviously, MBC loves the uniqueness of this home, but let's not skip over the issues.

Some caveats:

• One "bedroom" was once a one-car garage and is now an office with a Murphy bed; it's a bit sketchy. The other two downstairs bedrooms aren't bad. (One features a second Murphy bed.)
  
• In the 1920s, no one thought it strange to have one bathroom per level, which in this case means all guests and downstairs bedrooms share one bath, so you'll have to roll with that.
• The stucco seems to be of 1960s/70s vintage and probably needs an update. Some of the exterior wood, too, needs rehabbing or replacement.

Home shoppers in MB aren't accustomed to the kinds of compromises, or charms, of older homes. So we here at MBC have no idea whether Alma will go quickly (just 14 DOM at this writing) or whether it will sit for months for lack of interest in this sort of thing.

If it lingers, MBC has a few suggestions: Freshen up the exterior paint, stage the home without the foosball table in the front living room, and... hmmm... there was something else...

Oh, yeah, stop smoking in the house while it's for sale!

Your humble, naive correspondent had kind of forgotten that people in the world do, in fact, smoke cigarettes. What's that smell?, we wondered. Hmmph. This does not leave potential buyers feeling all that good about the home.

Once the title transfer happens, we're terribly intrigued. Will the new buyer leave things as they are, or spend $100k-$400k to take the whole home up a notch with revived stucco, wood, baths, landscaping, etc.? This one's in the historical register, but surface improvements shouldn't be a problem. How much will the next owner love 3116 Alma?

Lucky 209s

Two new sales in the Sand Section happen to have the same street address:

• 209 19th, a somewhat dated walkstreet charmer near downtown, west of Highland, was last at $3.799m – down $150k/4% from its start in June; and

• 209 42nd, hard-luck, long-overpriced new construction in El Porto, last at $1.899m, but this one began (pre-completion) 13 months ago at $2.3m, so it was down $400k/17%.

Meanwhile, over in the Tree Section, 2509 Poinsettia is pending. (See "A Year and Out," where this one was featured.) As MBC noted before, it was last purchased for $1.980m just a year ago, and was listed for $1.999m.

The builders offering 2509 Palm and 2509 Walnut (both new) are hoping a little number magic from the Sand Section moves east a bit.

No Longer the 'Best'

The sellers of 1019 11th have had some second thoughts about their home being touted as:

One of the best Locations in Manhattan Beach west of sepulveda.

The listing that had that language (MLS #S957632) now has been canceled. (See MBC's story from last Friday on this one.)

The new listing (MLS #S958021) says, instead:

One of the locations in manhattan beach west of PCH .

Now THAT is accurate. It is "one of the locations." Not the best, just one. Great.

No other changes to the listing, as best we can tell. But due to the re-list, we had to update our Redfin property link. It was worth it.

NAR Makes Fools of its Members

Sunday's LA Times carried a sappy, angry full-page ad by the National Association of Realtors.

Sappy, because an ad that purports to be about persuasion also tosses in a pic of a cute little kid on a tree swing. Frankly, we like for our hearts to be tugged in emotional ads, and for our brains to be exercised in persuasion pieces.

Angry, because the Times ad lashes out at "misinformation presented in the national media," but, alas, we never learn what, exactly, is wrong with the popular drift on the housing market.

The apparent purpose of the NAR ad is to persuade a sidelined, would-be buyer that it's a good time to buy. Oh, high hurdle! (Click here for the "national" version of the full-age ad [PDF download], or here for TV spots and other print ads, courtesy of NAR.)

Interestingly, last year, NAR's pitch was that it was both a "great" time to buy and to sell. This year, not so much emphasis on the "great time to sell."

You might think that a part of the pitch to a potential buyer now would be that prices are dropping, that it's a buyer's market, that you have both time on your side and your pick of the active listings.

But no, no, no, that's not going to be NAR's pitch, because realtors' #1 clients are sellers. Everyone needs buyers to make the game go, but you don't go out there broadcasting the news that prices have gone soft.

The NAR ad does indirectly acknowledge home price declines, and the fear of price declines to come. (The latter being the #1 reason not to buy now.)

NAR would like you to think, instead, about how home ownership is "a great way to build long-term wealth." So, please, don't worry that your hard-earned down payment of $50k, $150k, or $500k could go "poof!" in the next few years, because, long-term, you'll be fine.

NAR allowed for some local tailoring of its ad, and that is where the LA Times version got clunky and bizarre. The best way to show this is to first contrast the original copy with the local copy:

NATIONAL VERSION, 4th GRAF:

Sixty percent of the average homeowner's wealth is their home equity. Very few people look back and regret their decision to purchase a home. Historically, homeowners that are in it for the long haul will build equity. In fact, home equity is the largest single source of household wealth for most Americans.

LA TIMES VERSION, 4th GRAF:

The Los Angeles housing forecast is better than reported. You might wonder if buying a home is a smart financial decision these days, given some of the misinformation presented in the national media. Your local realtor associations want you to know that in the second quarter of 2007, over 22,000 homes were sold in the Los Angeles area. And there's even more good news – home values were up 2.9%, compared to August 2006.

We prefer the national version.

There is no L.A. "forecast" offered here. The data all come from the second quarter of 2007, and duh, any buyer – well, c'mon, everyone – knows things changed a lot somewhat after the second quarter. (We can't explain the Aug. 2006 reference; the footnote is to Q2 data, apparently a mistake.)

How dare NAR scold others for "misinformation" before pretending that useless statistics should change buyers' perspectives? If you fail to prove your point, you just look like you don't know what you're talking about.

In other forums, NAR has begun acknowledging the difficulties in the market. For instance:

The National Association of Realtors reported ... that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record. [emphasis added]

How about the recent 5.7% drop in year-over-year median prices in LA County (according to Case-Shiller/S&P)? How does that relate back to those 2nd-quarter data?

There's also a steady drop in median list prices in LA County, down 10.6% since this time last year, according to Housing Tracker.

If NAR – and, most particularly, its local affiliates – are trying to say that the local market is stronger than others say, they're failing. Instead, they're making every local realtor member look like a liar and a fool.

Tweaks Big & Small

As you can tell by the sudden flood of Christmas decorations (already!?!), the Holiday Season is upon us. (Don't mean to stress you out.)

That means we ought not to see many new listings for a while. Much of the inventory we've got now may be with us till Valentine's Day. (Don't mean to stress you out.)

The action we see these days consists of re-lists (of the bogus variety, of course), homes going off the MLS while still, actually, for sale, and price tweaks.

The big tweak of the week was at 2404 Palm, a 3-week-old listing MBC found strange and not terribly family-friendly (see "Unique Ain't Always Great").

Well, forget that $1.895m start price – and the Oct. 18 start date – because the clock just started at zero for Palm, with a new price of $1.749m (-$146k/-8%).

That's a sensible response to the market's rejection of the home at $1.9m. But as we approach $1.7m, we approach $1.6m, and there's a cluster of smaller, less-well-located homes there that could feel some pressure from this one.

Not threatened, apparently, is the recent remodel at 3012 Palm (second pic). It began at $1.579m, dropped to $1.499m, then re-listed with a fresh new 0 DOM and a price increase of $11k. (Really? $11k? Why bother?) So it's now at $1.510m. Worth noting: This appears to be a flip, purchased in June 2007 for $1.3m.

We saw a similar upward tweak a couple weeks ago on the new construction at 1901 Poinsettia. Three days after dropping to $2.249m, the listing went up to $2.259m (+$10k). This past Thursday, the extra 10 came off, and we're back at $2.249m. (That's -$249k from the start in August.)

These last two listings are probably playing games just to stay on the hot sheet – a price change merits a mention. Obviously, very little is "hot" this time of year (except Christmas decorations), but these sellers are doing what they feel they have to do.

Which reminds us... one listing that's recently gone dark (from the MLS) was one that MBC noted, back in August (see "Bump it Up? Why not?"), because the sellers appeared so "confident" that they actually boosted their price twice. The home is a forgettable bungalow at 2822 Ardmore – it canceled in late October but they've kept the sign out. They never wavered from their boosted price of $1.399m for 3br/2ba and 1400 sq. ft.

It's an intriguing case because the market shifted completely just days after the sellers increased their price. They never responded. And now they're in hibernation mode. We'll see what they wake up to.

Sand Lots

A couple of new Sand Section listings are going to help define lot values near the beach.

The mortgage mess is not a factor here. We're talking about homes that will be worth $4m-$6m when they're built out. We're not even sure people take out mortgages when buying at these levels.

The interesting question is what the dirt will cost now.

Down low, west of Manhattan Ave., 128 5th is newly on offer. (Click address for details via Redfin.) It's a walkstreet location just far enough from downtown to be quiet, without being too much of a trudge to restaurants and shops. As you see in the photo, down in the 100s, you are steps to the Strand and sand. Nice views.

Though the listing speaks hopefully of someone adding a second story, this one seems unlikely to be remodeled or rebuilt. It's a $4 million teardown. (Well, $3.975m.)

Last time a comparable lot came up, it was 120 2nd, also a walkstreet down low, and the sellers aimed high, asking $3.3m for the lot. Ha, ha! laughed the market, you have guessed too low! By the time all the bidding was done, 120 2nd went for $3.810m (closed 4/30/07).

128 5th is pricing in the anticipated market frenzy. The listing says: "Absolutely will not last!" And for this one, we believe the listing hype. Worth noting: The current owners paid just $1.3m in April 2002. They're set to triple their money now, 5 years later.

Now move north just a bit past downtown, and go east, up past Highland, on 16th Street. You've got two choices as we write:

• 337 16th, a 10-year old, modern Mediterranean (this one features the "animal magic" MBC noted previously), at $3.99m; or

• 328 16th, which currently houses a duplex, but which is offered at lot value for $1.867m. (If that sounds strangely precise, please don't ask about the $122 tacked on at the end – different story).

The second photo here is the view from 328 16th, and if you don't find it dreamy, check your pulse. You may not like crossing Highland to walk to the beach, but the tradeoff is those panoramic views.

So, what'll it be: A lot for $2m? A home for $4m? Or a better lot for $4m, and after that, we can design your $6m-$7m home...

Quick Poll

Readers, we're considering creating a comment archive. Would like your opinions.

You may have noticed that comments can't be searched like the blog content, and it's easy to lose track of which thread is going on where. The goal of archiving comments would be to make them readable and searchable. Probably one week's stories and comments would be lumped together in a bigger story. (Most likely on the sister site.)

My only worry is that archiving like this might discourage some folks from posting. Maybe you like the impermanence of comments.

If you like or hate the idea, please post comments to this story. On ANY OTHER matter, don't post comments to this one, because we'll probably delete the story after getting a read on opinions of this idea.

Thanks...

MB

It's Hard to Be Straight

In the advertising world, the art of pitching schlocky products with high gloss is well advanced.

Home listing language isn't there yet, and probably won't get there. The body copy isn't what sells a house, and realtors are rarely writers.

Still, something's got to fill in the blanks. You've got to accentuate the positive, downplay the negative, and do your best in 100 words to explain what truly awaits the in-person visitor.

It's with this general sense of understanding that MBC today calls attention to a pretty misleading pitch for a new Hill Section listing.

You see, 1019 11th (click for details via Redfin) is not just any Hill Section house. The listing tells us it's:

One of the best Locations in Manhattan Beach west of sepulveda.

Really, now? Because we just looked at the other 80-odd SFR listings west of Sepulveda, and 98.5% are in better locations.

As we can see in the graphic, 1019 11th (in yellow) is awfully close to the intersection of MBB and Sepulveda, two of our town's busiest streets. On 11th, it's right between the Arco and the Jiffy Lube.

As the main listing photo above shows, the back yard abuts a 2-story commercial building. It's a bit imposing.

Are we still sure about this "best location" claim?

The truth is that this home is a clean, small bungalow (3br/2ba, 1425 sq. ft.) with some recent remodeling work to dress it up. At $1.199m, it's the cheapest Hill Section listing other than a wreck in foreclosure at 402 Larsson. It's livable, if that's your budget and you must get into MB soon, and you don't mind making a bunch of compromises.

Well, you can see why MBC is rarely invited to write listing language. (But if you're interested, call for rates!)

Before we go, let's note that other buyers paid about the same price – twice – at the peak, for the same house. The recent sales history is a kick:

• July 2004: $1.150m
• July 2005: $1.165m
• Nov. 2007: (list: $1.199m)

The home is already vacant, it's entering the market at one of the slowest times of year, and the price suggests a net loss from day one. We're thinking this doesn't end well, but don't underestimate the demand for, achem, cheap homes with a Hill Section address.