Chops Around the Block

The Spring Selling Season might need a new name for 2008 – Spring Slashing Season.

Sales are a major disappointment. Bursts of warm weather haven't heated up buyers' motivation.

And while that translates to a steady drumbeat of price-cutting that could make for a daily feed all its own, what's drawing MBC's attention is a wave of big-dollar cuts in just the last few days.

But first, before we cover those, let's pause a moment to wave some positive vibes over to The Farmhouse, 570 27th, which is now in escrow after – achem – $1 million in price cuts over the course of 13 months. Yes, yes, keep cutting and one day they'll knock on your door.

The Farmhouse began at a wish price of $3.899m in mid-March 2007. It had cut a total of $600k by September (see "The High End Gets Lower") and recently had trickled down to $2.899m. When all's said and done, that's still one pricey home (we don't have the deal price yet), just not as pricey as they penciled it in to be. Note this: a few months back, Blake Roberts – a huge fan of the home, as you know – said this of the Farmhouse:

[T]his is just speculation, but I'd guess that the builder wouldn't have (or couldn't have) moved forward with the Farm House project had he known it would end up selling close to $3,000,000 bucks.

And that was when the list price was $3.199m.

More than a million bucks were chopped off just a few listings in recent days:

• 132 2nd, a large, newer home on the walkstreet right at Manhattan Ave., cut $305k to $5.695m. Word here at MBC previously – in comments – was that it had been in escrow well above $6m before hitting the market in late March;

• 332 20th, an impressive new home at the top of the 20th St. walkstreet, began at $4.795m but has just cut $300k to $4.495m;

• 923 1st chopped $220k more this week and is now down $623k from its start (now $7.375m) – no huge surprise because it never was an $8m house (see "Unpredictable");

• The smallest cut we'll feature was at 661 26th, a mere $120k cut that allowed it to leap behind The Twins on Poinsettia, which had cut to $2.599m – now 26th is at $2.579m; and

drumroll, please...

• 794 27th (Pacific/27th) took an amazing cut of $200k more this week and is now down $500k from its Feb. 6 start at $2.599m (now $2.099m) – most shocking because the home was purchased for $2.5m just 2 years ago (May 2006). Hey, someone is trying to sell this house!

Overall, that's an impressive $1.145m taken off just 5 listings in the past week. And one of these is a candidate to overtake The Farmhouse some day in the magnitude of cuts from start, but we'll let the market decide that one.

Confidence Off a Cliff

This morning's LA Times lays bare the shocking decline in consumer confidence since last Summer with this novel graphic. (Click to enlarge, or pick up your copy's front page.)

Is there a relationship between consumer confidence and home-buying? Of course.

If you prefer a longer view, the second graph (courtesy of Market Harmonics) shows about 9 years' worth of data from the same source (Conference Board), though it is missing the newest figure.

Finally, a separate consumer survey released by the University of Michigan last week showed confidence at its lowest level in 26 years.

Also today, the U.S. economy grew by just 0.6% in Q1 – hey, maybe it's not a recession! – while inflation crept up and the Fed cut again.

There's more to say but let's hit all of that another day.

For the time being, take a look at the LAT article that accompanied the graphic (see "Shaken Consumers Clamp Wallets Shut"), which somehow prophesies the imminent end of American consumers' love affair with credit-fueled living, even though every such prior prediction has proved incorrect.

Sand Happ'nin's

There's action in a few parts of the Sand Section. Not sales – no new ones since April 15 – but action worth a look.

First, as we go to press (?), SFR inventory in the Sand Section is at 40, the highest we've seen in a year-plus of public market tracking. That's already +5 over the figure at mid-month. (See this story for a graph.)

There's one less listing in that mix, though. The toe-dipping, market-testing, ultra-modern walkstreet home at 528 6th (pictured) has now called it quits. The listing was withdrawn and the signs are down.

This home hit the market in mid-November 2007 at $3.449m, fully $450k higher (+15%) than its Feb. 2006 purchase price ($2.995m). That was ambitious.

Though we know some people liked it, the market snubbed 528 6th. Its stark, angular modern design just isn't what the typical family is looking for. (The apparently bogus square footage reported in the listing also drew MBC's ire in "Buyer, You'd Better Verify.")

More importantly, the sellers' attempt to play to scarcity in the market simply didn't work. True, when the listing emerged there were few South End walkstreet options, and there's always talk about how "pent-up" demand is for such homes. But 528 6th is just one door in off of Valley, not a classic walkstreet feel, and, well, maybe demand is not so pent-up after all. (See "Options Grow on South End Walkstreets.") The sellers never cut their price in an effort to move it, and appear to have decided to keep it.

Much further north – up at the Gateway to Manhattan Beach – there's a long-running case of involuntary keeping of a property: 4419 Highland (click for details via Redfin). You all know the story here, so we won't rehash it.

It was most recently offered for rent, but the news is that you can now buy 4419 Highland on a lease-option basis.

A lease-option. When another El Porto (El Norte!) listing sang this siren song last Summer, we presented the sellers' pitch and described the pitfalls. (See "The Lease-Option Gambit.") The home did sell pretty quickly, though, so we gave credit for creativity to the sellers then.

To compress the essence of our story from last year, the catch to a lease-option can be that you put up a high security deposit thinking it'll be part of your down payment. Then, 12-24 months after agreeing to purchase the home at today's price, you either do so, or you walk and the landlord/seller keeps your cash. The worst part, in a declining market, is being frozen into an agreement to pay today's price ($1.299m for 4419 Highland).

There are a hundred ways to offer a lease-option, however, and we won't assume this is a bad deal on the Gateway till we get more detail.

Finally, back down South, we have a case of a neighbor perhaps undercutting another. 401 3rd St. (click for pics & details via Redfin) just hit the market at $2.685m – a decent price for a sizable (4br/4ba, 3450 sq. ft.), newer home (an older home radically remodeled in 2006).

Across the street, 400 3rd (click for details) is a lovely corner-lot Nantucket (Cape Cod?) with 4br/4ba and 4050 sq. ft., priced at $3.499m. That's a difference of $814k for two comparable homes with almost the same location.

Because 401 has a narrow street frontage and 400 has that coveted corner, location advantage definitely goes to 400. And 400 offers 600 extra square feet. But is it an $800k advantage?

By PPSF, 401 is undercutting 400 by 10% ($778/PSF vs. $864/PSF). If it sold tomorrow morning at full price, 401 3rd might ultimately cost the sellers of 400 3rd $200k or more. Both sellers would walk away happy, but there could be grounds for a grudge.

Newbies Slipping in the Trees

We're seeing the bar being lowered time and again as new homes sell in the Tree Section.

New case in point: 2309 Pacific. This one hit the market last Spring (in May) at a time when a moribund market had hit an unexpected patch of new enthusiasm.

The listing began at what seemed like a lower-end price at the time for new construction: $2.299m. But the buyers that were out were picky, and virtually any excuse was good enough to pass on a home – a Pacific location being an obvious strike.

So 2309 Pacific hung around. And hung. Around.

It was staged, then un-staged. It was re-listed.

As the months passed, the action finally happened only after a recent, seemingly reluctant price chop to $2.099m. But oh, what action.

A buyer swooped in at that point and said something like, "nice enough house, nice new price cut, now take another $200k off now and we're in." And soon a deal was inked.

The home closed for $1.890m last Friday. It's a new (recent) low for new construction in the Tree Section. We're now under $1.9m, when recently seeing new homes sell below $2m was news.

Here are some recent sales (last 6 months) in order of their closings with their drops from initial asking:

• 2310 Palm – $2.200m (-$499k/-18%)

• 2807 Elm – $2.100m (-$799k/-28%)

• 648 35th – $2.075m (-$375k/-15%)

• 3104 Pacific – $1.950m (-$199k/-9%)

• 2709 Oak – $1.950m (-$445k/-19%)

• 1901 Poinsettia – $1.999m (-$500k/-20%)

• 2309 Pacific – $1.890m (-$409k/-18%)

We also note that one new home was recently listed for sale below 2309 Pacific's closed price, but it has canceled. 1144 Elm had begun at $1.999m last November, and was last at $1.879m. (We're assuming it's rented but we don't have info yet.)

Above, we have selected sales that exemplified the recent trend toward substantially lower sale prices, including cuts below $2m. Sizes ranged from 3200-3600 sq. ft. We'll cover the rest in a moment.

There was some argument when 2807 Elm first sold in December 2007 as to whether it was a bellwether or an anomaly. Now it appears that it was, in fact, the leading edge of a trend toward lower sale prices for new homes. Its $592/PSF price was exceeded only twice in the subsequent 5 sales (from this list), though not by much ($625/PSF being the highest, on 1901 Poinsettia).

In the same span of time, here are the other closed sales of new homes in the Trees:

• 2612 Poinsettia – $2.199m (-$200k/-8%)

• 604 15th – $4.200m (pre-market sale off MLS)

• 613 15th – $4.050m (-$129k/-3%)

• 2100 Flournoy – $2.750m (-$450k/-14%)

• 644 33rd – $2.949m (-$301k/-9%)

Most of these are higher-end sales that don't tell us as much about the fate of smaller, less-well-located new homes that have been the majority of sales and which continue to dominate the lingering inventory.

2100 Flournoy is the rose in this group of sales, a home only a bit bigger than the standard 3200 sq. ft. Tree Section home at 3600 sq. ft. That home netted the highest PPSF of new homes offered on the open market ($764/PSF). Here's a theory: Quality construction in a nice location will still fare well, even if the builder does have to reduce his ambitions.

2612 Poinsettia is an outlier because, while tax records do show $2.199m ($687/PSF) as the closed price, the property appears to have been purchased partly in exchange for a Torrance property that went to the builder. That complicates an exact valuation.

So where does this discussion leave us?

The leftover twin of 2309 Pacific, 2611 Palm, would appear to be in deep trouble. It began at $2.495m last year, and cut to $2.285m after Pacific went into escrow. Its location is plainly superior to its now-sold twin, but can you really say it's $395k better, as the current price implies?

Two other twins, 2509 Walnut ($2.199m) and 2509 Palm ($2.299m), each offered for more than 250 days, face some price pressure as well. It would not be a surprise, given recent activity, to see one go for close to $2m, or under.

There are several more new homes of comparable size (3200-3400 sq. ft.), many newer to the market, currently priced between $2.3m-$2.7m. As always, there are adjustments to make for location, build quality, etc., but as the bottom moves down, so, too, do the higher-end properties.

Poll Results on 815 2nd

We've got word back now from the readership, and it's good news/bad news for the builder/sellers of 815 2nd, a new Cape Cod in the Hill Section.

The good news: A third of voters in the poll (34%) think it's now priced within 10% of its likely final sale price or, in other words, its market value. Given that our polls run to the bearish side, that's still a good vote of confidence.

More good news: A solid majority (61%) think it's now priced within 15% of its market value.

Bad news: Very few (12%) think $4.5m or so is the right price.

The largest response, a healthy 37% plurality, thinks this one goes between $3.75m-$4.0m, which would mean the start price of $4.795m was high by nearly $1m.

Still, if a sale closes in that range, you have to imagine that the builder still clears a tidy profit. The lot was purchased for $1.8m near the peak in Sept. 2006 – a warning sign. But if the costs of construction came out below $2m ($439/PSF), this one's likely to be in the black, and that's more than we can say for the newbies lingering and selling in the Tree Section these days.

Sunday Opens (4/27)

Here's the dilemma, and we invite you to play along at home.

Let's say you want to publish a weekly list of what's new and worth a look among local RE listings. And then, all at once, the mass of local sellers and agents refuses to provide fodder, er, subjects. There are literally zero new listings in the Hill Section or Sand Section that are posted as open in the Beach Reporter's online listings. So, what do you do?

At MBC, first, we shut down the "Weekend" version of the open house listings. We have a "Sunday" version instead, still an ample guide. Then we bit the bullet and re-listed (!) a few homes we've noted before. Finally, we partway wrote up a house for the Hills that's new but not open. Only the Tree Section offers truly new stuff.

It's strange to be confronted with this problem at a time that our tracking shows inventory higher than MBC has ever recorded in a year-plus of public tracking – 104 SFRs west of Sepulveda on Saturday, a figure deemed reliable but not guaranteed.


Hill Section

Don't forget to drop in on 815 2nd, subject of our weekend pricing poll. Open Sun. 2-4pm.

The only new listing in the Hills this week is 864 11th (pictured), but, lo, they have decided to keep the public at bay. It will be by-appt.-only to view this one.

Still it's worth a mention – 11th is a large (5br/5ba, 3775 sq. ft.) family home on a lot of nearly 8000 sq. ft. Pluses: Nice great room, updated kitchen & master bath, a garage in the back corner of the property, a decent yard. Start price seems quite high at $3.35m, considering that a somewhat comparable, yet larger (by 700 sq. ft.), home at 916 9th recently went into escrow priced at $2.895m (and that took several months of trying).


Sand Section

Hey, did we mention that 221 34th (pictured) – which debuted last week – is stunning, cool, clean, modern, and features world-class ocean, PV & pier views?

OK, now we have. Must see. Asking $5.4m. Open Sun. 1-4pm.

Also up there at the high end, someone reported last week on their astonishment at 332 20th, a large and luxurious new home at the top of the 20th St. walkstreet.

That was a good reminder of a home we liked when it first came on. It's got style and commanding views. Kind of amazing it has lasted almost 90 days, but that $4.795m pricetag does limit the buyer pool. 332 20th is open Sun. 2-4pm.

When, oh when, will someone love 516 24th (pictured) like we do? Sure, it's close to the school and has no yard, but it's a tight, completely charming modern beach cottage with surprising views from the master. It's down a tad again, now at $2.349m. Open Sun. 1-4pm.

Let's look at the other end – have you seen 131 Kelp, one of the least-pricey El Porto listings? It's a little place (2br/2ba, 1400 sq. ft.) surrounded by larger buildings, but cute and, we imagined, not long for the open market at $1.095m. Well, it's been 70 days now, not forever. A steal at $900k. Open Sun. 1-4pm.


Tree Section

In the past week, it seems that all the new listings are in the Tree Section at $2m+.

616 29th (pictured) is a 3-year-old Craftsman with 4br/5ba and 3500 sq. ft. We cringe a bit at the exterior styling – it just doesn't feel authentic. But many of the interior spaces are sweet and spacious.

Now, about that price – if $2.475m seems high for today's market, where more new homes are selling below $2m, well, what do you say to the folks who bought this home for $2.425m almost 3 years ago, in Aug. 2005? You can't get out flat? Open Sun. 1-4pm.

1820 Elm is a new Craftsman (we're just reporting what they say here) with 5br/4ba and a bit more than 3000 sq. ft. Starts at $2.349m. Open Sun. 1-4pm.

3404 Pine boasts "hilltop" views from a neo-Spanish home. (We wrote that and then saw that the listing is calling it "Mediterranean," and yet we're sticking with Spanish.) It's the standard profile for a Tree Section newbie in some respects – 5br/5ba, 3250 sq. ft. Starts at $2.45m. Open Sun. 1-4pm.

Pricing Poll: 815 2nd

Besides Strand homes and west-of-Highland walkstreets, there's no luxury home market in MB quite like new estates in the Hill Section.

An intriguing newer entry into this market is 815 2nd (click for details via Redfin), which first hit the market in February at $4.795m. With a recent cut to $4.495m (-$300k/-6%), it's the least-expensive new home in the Hill Section – indeed, the listing now says it's the "best-priced new construction" in the sub-market.

The question is: What really is the right price for 815 2nd? Please vote in our newest pricing poll. Give us your opinion on what the final sale price is likely to be, and support your view in the comments on this story. We'll run the poll for 3 days, closing Sunday night at 7pm. (The home is open Sunday 2-4pm, so drop by if you can.)

Here's a sampling of what MBC has said previously about 815 2nd, which offers 5br/6ba and 4550 sq. ft.:

• a departure from the typical Hill Section estate;
• on a street that is among the busiest in the Hills;
• the views are better than expected – ocean views on 2 levels;
• a cool lower level (too bright to call a "basement") with a tiered home theater;
• lots of crisp finishes and fine details;
• the design favors lots of cozy, private spaces over the huge megarooms you would normally find in a Hill manse;
• a unique family layout with... unfortunately, some pretty small bedrooms; and
• surprisingly modest (in a good way) overall.

Also, we're not huge fans of that shade of blue, but paint shouldn't be a big factor.

It's hard to develop a reliable list of comps for 815 2nd because the turnover in the Hills is fairly slow (low inventory, few sales), especially in recent months. There are just two sales of new homes in the last 6 months – 853 6th and 911 Duncan.

853 6th was a different style (Caliterranean), a bit bigger (6br/4ba, 4925 sq. ft.) and closed for $4.5m ($914/PSF). 911 Duncan was an ultra-modern home, somewhat smaller than 2nd (5br/6ba, 3700 sq. ft.) with views comparable to 2nd, and closed for $3.190m ($862/PSF). If we go only by PPSF, this puts 2nd between $3.9m-$4.2m before any adjustments (for views, location, finishes, etc.).

The 3 other active new homes in the Hill Section are all shooting higher on a PPSF basis (click addresses for details via Redfin):

• 930 John (5br/7ba, 5400 sq. ft.) – $4.995m ($925/PSF)

• 617 6th (5br/6ba, 5725 sq. ft.) – $5.950m ($1,039/PSF)

• 218 N. Dianthus (4br/5ba, 5600 sq. ft. – $6.75m ($1,205/PSF)

Again, based purely on PPSF, these actives would put 815 2nd between $4.2m-$5.5m.

So what's right for 815 2nd? How would you adjust for the views, location and finishes? Vote, and let us know in the comments.

MB Market Update for 4/15/08, Trees

This is the third of 3 articles summarizing data in the MB Market Update spreadsheets for 4/15/08 (click to download), focusing this time on the Tree Section.

Total SFR inventory in the Tree Section as of 4/15/08 was 45, with 25 homes priced below $2m and 20 priced above $2m. (Those figures remain essentially the same at this writing, just +1 in the $2m+ range.)

Speaking of figures remaining level – there were 4 new listings in the Trees in this period, and 4 sales (new escrows). That's flat, or zero population growth, if you prefer.

Of the new offerings, 3 are all on busy streets:

• A true "starter home" under $900k at 3301 N. Valley. For $875k, you get 2br/1ba plus another room that could be a bedroom, 1050 sq. ft. and a small (2500 sq. ft.) corner lot. Inside it's tidy and cozy, perhaps just right for an entry-level buyer.

Suffering by comparison: 3612 Poinsettia, a smaller would-be starter priced at $849k, and particularly 2505 Pacific, which is on Valley, is the same size and isn't nearly as cute, but which began at $995k recently.

• 835 Marine (pictured) is the stylish home just off the triangular strip of grass between Ardmore and Marine near Pacific – if you drive the area you know it. It's bigger than you'd think at 3br/2ba and 1800 sq. ft., and it is really, really tricked out and modernized inside. (See pics for more.) That said, the sellers don't appear to be deluded about the location, and they're content to start at $1.250m.

• 3011 N. Valley is a bona fide charmer that is also fairly large (4br/4ba, 3250 sq. ft.). Purchased 2 years ago for $1.9m (see "A Loss at 2 Yrs?"), now offered at $1.849m.

There was one other new listing at 850 18th, a giant 2-year-old Spanish that started at $4.6m and was snapped up quickly. (See "We Hardly Knew 850 18th.") Finally, new to the spreadsheets is 672 19th, which actually was new in the prior period (late March). (See "Be Their Guest.")

In addition to the sale at 850 18th, we watched buyers grab:

• 738 26th (pictured), a unique and traditionally styled (if a bit quirkily remodeled) home with 4br and 2900 sq. ft. – it went into escrow in its first weekend in March, but that didn't stick and it hung around 6 weeks more at $1.799m;

• 2309 Pacific, a longtime listing of new construction that began at $2.299m last May, and drew offers when it cut to $2.099m;

• 2705 Palm, a short-term listing of a high-quality new home that wasn't yet complete, asking $2.699m; and

• 3517 Elm, a nicely remodeled cottage with 3br/2ba and 1400 sq. ft.; started at $1.385m in October and was down $100k to $1.285m.

Also new to the spreadsheet is the sale at 709 35th from late March, which we hadn't recorded.

Dropping out of the race were 2 lower-end listings that tried for just 2 months each – 1708 Oak ($899k) and 3601 Poinsettia ($1.139m). We also removed 2404 Palm from our spreadsheet as the sign came down and we confirmed it's no longer for sale.

And a surprise dropout was 1144 Elm (pictured), a brand-new home in a compromised location that had drawn our notice last November as the first new construction in the Trees to start out below $2m (see "First Newbie Under $2m.")

That was news at the time, but since Elm came on, we've seen other newbies drop in price below $2m, with 3 selling below $2m (2709 Oak, 1901 Poinsettia and 3104 Pacific).

Elm tried coming down further to set a new (recent) low for new construction at $1.879m, but still had no takers. We might assume it has been rented; all we know for sure is that the listing canceled.

The most noteworthy price cuts were at:

• 794 27th (pictured), a highly stylized Asian contemporary with the downside of a location on Pacific. It's starting to look like the current owner overpaid substantially at $2.5m in May 2006 – after a start at $2.599m in February, it's already down $300k to $2.299m, gearing up for a sizable loss;

• 2611 Palm, new construction that we strain to call a "new" home because it's the longest-running listing of a new home in MB (west of Sepulveda) at 463 DOM as of April 15. (The overall record-holder is 2812 Elm at 580 DOM.) Its twin (reversed floor plan) was 2309 Pacific, which just sold when listed at $2.099m. So Palm took a new hit of $114k and now sits at $2.285m; and

• 2310 John, a newer listing of a newer contemporary home, cut $100k to $2.099m.

There were 3 sales that closed in this 2-week period in the Trees:

• 1906 Flournoy, a 4br/2ba, 1800 sq. ft. ranch-style home, got $1.7m even (recall that is sold quickly); and
  

• 742 27th, a spiffed-up remodel much-discussed here after MBC ran a pricing poll (see the first story and the poll results), had begun at $2.4m, cut to $1.999m and ultimately drew more than one offer, closing at $2.075m (-$325k/-14%), a nice finish.
  

An even happier ending came at 2507 Valley, also much-discussed at MBC as the seller fell into default last year, tried to sell using the tactic of increasing his price, then tried to sell short and failed, ultimately losing the home at auction. The full price history:

• The home was purchased new in Feb. 2004 for $1.54m;
• Attempted sale prices in 2007 ranged from $1.799m-$2.249m;
• An investor picked it up for $1.643m last October;
• The investor tried to get $1.790m, but decided to cut losses after 90 days;
• The investor took $1.5m to shed it from the books.

What a deal – a hair below the Feb. 2004 price!

And let's not lose sight of this fact: One man's depreciated asset is now a family's great new home.

MB Market Update for 4/15/08, Sand

This is the second of 3 articles summarizing data in the MB Market Update spreadsheets for 4/15/08 (click to download), focusing this time on the Sand Section.

As we noted in our first story, with this edition, the Sand Section now spans 3 separate sheets, instead of 2, a change made necessary by growing inventory in the area.

At this time last year, SFR inventory in the Sand Section was less than half the April 15, 2008, figure – 17 last year, versus 35 this year.

Indeed, SFR inventory in the region peaked at 23 in the Summer months, and only hit 27 in mid-December, so it's now up substantially by any measure. (At this writing, SFR inventory is at 39.)

One factor behind ballooning inventory is, obviously, slipping demand. While that's true in all parts of MB, the combination of low demand and booming inventory is becoming acute in the often-hot and always-desirable areas near the beach. Supply is coming on like it's Summer, while demand seems to be stuck in Winter.

Just 10 SFR sales closed in the Sand Section in the first 3 1/2 months of the year (some, obviously, from deals made in late 2007). Our twice-monthly tracking has recorded 19 new escrows in this same 3 1/2 month period, in a period with 36 new listings hitting the market.

The good news is that much, if not all, of the inventory lingering in the Sand Section is pretty decent, occasionally spectacular – just pricey. So you can imagine the equation for fixing that problem.

New this period (as always, click any highlighted address for pics & details via Redfin):

• 317 5th is a South End walkstreet home on the corner with Crest that offers the max – 4br/5ba and 4150 sq. ft. The early-90s contemporary style is pretty sleek but some details (tile work, kitchen) may strike buyers as dated. The start price seemed a bit aggressive at $3.2m, and that had one apparent effect – a $100k+ cut at nearby 341 10th (to $3.195m).

• 417 28th is a huge newer home with big ocean views from the top floor. Unlike the modern-art feel of 317 5th, this one is warm with nice cabinetry, flooring and other finishes. It offers 5br/6ba and 4600 sq. ft. on a corner lot. Owners paid $2.55m 2 1/2 years ago, and they're thinking the market's booming. The listing starts at $3.495m (+$945k/+37%).

• 437 1st is a short-term hold that has been rehabbed. (It hit the market 50 weeks after the previous purchase – a private sale off the MLS – had closed at $1.45m.) It's spacious (4br/3ba, 2600 sq. ft.) although peculiar in some ways, and the remodel isn't so high-end.

One of those bedrooms is teeny, while one closet (off the master) is nearly the size of a whole room – a quirk of a prior remodel. This one began at $1.740m and is at $1.680m at this writing.

The price at 1st pretty clearly undercuts a nearby listing: long-stuck 505 3rd, still holding at $1.899m – but no longer, as the language for 3rd says, "The LOWEST Priced Single Family Home in the South Manhattan Sand Section, West of Valley, on a Full Lot." Nope, not anymore.

Also, returning to the market after a brief hiatus (and sporting a new MLS #) was 468 33rd, held only a short time (18 months) before it first hit the market near Christmastime. Same price, $3.495m, still +$720k/+26% over the May 2006 purchase price.

There are some terrific homes available in the Sand Section – 26 of them priced above $2m. But in this 2-week period, the only 2 sales (new escrows) were on lower-end, marginal properties:

• 704 Highland, a dated 3br/3ba, 1550 sq. ft. home that defied the usual market wisdom – spruce up the place before trying to sell. The new owner gets peeling paint along with 3br/3ba, 1550 sq. ft. and a close-to-everything location. Last price: $1.279m after 5+ months on market.

• 429 29th Pl., a little Spanish cottage on an alley with an ocean peek and 3br/2ba, 1300 sq. ft. It lasted just 2 months; last at $1.199m.

There were several price reductions, none more significant than that at 408 6th, a mid-block flat walkstreet home that began last November at $2.625m. After the latest $150k cut, it's at $2.099m (-$526k/-20%) and rapidly approaching lot value. (Interested parties are told of an issue that helps to explain the listing's long time on market and price reductions, but we have decided not to cover the details here.)

224 31st made its first cut – $200k – after almost 8 months on market. This large (5br/5ba, 4200 sq. ft.), newer, ocean-view walkstreet home west of Highland is now at $4.795m.

Only one sale closed in this period, that of an SFR on about 2/3rds of a lot, 233 20th – on Highland fronting the walkstreet on 20th. This home, with 3br/2ba and 1700 sq. ft., was offered in 2007 along with the back part of the lot, as a separate but simultaneous sale, and the two properties went quickly. But that deal ultimately was scratched and just 233 came back, selling for $1.275m, just $14k off its list price.

MB Market Update for 4/15/08, Hills

The new MB Market Update spreadsheets are available: download the 4/15/08 update by clicking here, or at any time by using the link at the upper-right corner of the main MBC page. Information in this update closed April 15.

We now split up the discussions of our 3 areas west of Sepulveda into separate articles. You can download the complete spreadsheet now or at any time. Articles on the Sand Section and Tree Section will follow.

Total SFR inventory west of Sepulveda was at 96 on April 15, -1 from the end of March. How's that?, you may ask. Inventory dropping?

In this 2-week period, we saw 11 new listings and 9 sales (new escrows), so we would be +2 on inventory, but cancellations make up the difference (2 in the Trees, 1 in the Sand). That's a rough balance overall in this period, not a continuation of the trend of the first many weeks of 2008. (See "Inventory Swelling.") That said, several new homes hit the market after our spreadsheet closed Tuesday; more on that this week.

Those of you who were finding the Sand Section spreadsheets increasingly difficult to read due to rising inventory there (yes, we read all emails) will be relieved to see that we've added a third page to the Sand report. Just as we do with the Tree Section, we have one sheet with homes priced below $2m and one with those priced above $2m – the bulk of Sand Section SFRs. For now, sales in the Sand Section are reflected on a single sheet.

Let's take a look at activity in the first half of April in one region, the Hill Section.


Hill Section

There were 15 active SFRs on April 15.

Two new listings came on in this period:

• 930 John (pictured), offering 5br/6ba and 5400 sq. ft. and starting at $4.995m. It's what you expect in a grand Hill Section home, except for the views – not ocean, but city, since the home faces north and west.

• 943 9th, a 7500 sq. ft. lot that may well have been underpriced at $1.6m, for it was gone in 3 days. (See "Action on 9th.")

There were 3 sales (new escrows), an unusual turn of events in a low-inventory, low-turnover area (see "Hills En Fuego"). One sale was the lot at 943 9th and the others were:

• 916 9th (pictured), often referenced here as a favorite. It offers 5br/5ba, 4550 sq. ft. and one terrific great room/back yard combo, so complete and spacious as to mock Tree Section pretenders on narrower, shallower lots. (For more, see our review in "A Modest +50% in the Hills.") This one began last year at $3.275m and was last at $2.895m (-$380k/-12%).

• 811 Boundary, often referenced here because it had been for sale for 9 months. Boundary began last June at $2.599m and was last at $2.099m. The sellers paid a bit less than $1.8m in Sept. 2004.

There were 3 price cuts, including:

• 815 2nd (pictured), a new home that began at $4.795m in February, has now cut $300k to $4.495m; and

• 612 11th, the dated home on the "flag lot" purchased last May for $1.275m, offered anew this year for $1.599m.Now $200k has been chopped and it's at $1.399m, still +$124k/+10% over last year (see our review at "Flag It As Overpriced.")

Finally, an unremarkable home in a challenged location at 1019 11th, which had a recent, flat pricing history, sold for a bit less than its July 2005 price. Here's the recent sale history:

• July 2004: $1.150m
• July 2005: $1.165m
• Apr. 2008: $1.110m

Weekend Opens (4/19-4/20)

It should be a Sandy weekend if you're going out.

In the Hill Section, they refuse to replace the 3 recent sales with any new listings. In the Tree Section, the only new offering isn't totally new. But in the Sand, it's a storm. (See below.)

Click here for the complete list of opens published in the Beach Reporter, or at any time use the link in the right-hand column under "Prop. Search Tools."

As always, click any highlighted address below for more pics & details via Redfin.

And be sure to tell them MBC sent you.


Hill Section

There's nothing new in the Hills, again, but there's a noteworthy price reduction on 815 2nd. This one shaved $300k off the top and is now at $4.495m for a 5br/5ba, 4625-sq.-ft. new home. That cut has got them calling this the "best-priced new construction" in the Hills. (It's certainly the least expensive.)

We agree that the finishes and details on 2nd are above par, and the home seems surprisingly modest (in a good way) overall. The design favors lots of cozy, private spaces over the huge megarooms you would normally find in a Hill manse. And the views are better than expected, just a little bit up the hill off Ardmore. Check it out Sunday, 1-4pm.

By way of comparison, the new home at 930 John (mentioned a couple weeks ago) offers 5br/7ba, 5400 sq. ft. for $4.995m, now a full notch up over 815 2nd. Open Sat. & Sun. 1-4pm.

Also, 218 N. Dianthus is the 3rd of 4 new homes in the Hills, asking $6.75m for 5br/6ba, 5725 sq. ft. Open Sun. 1-4pm.


Sand Section

429 29th St. is Mrs. MBC's pick of the week. (Click address for pics and details; now up.) This one's further north and just about 180 degrees different in style from her contemporary walkstreet pick last week (317 5th). It's a little beach cottage (3br/2ba and about 1300 sq. ft. per the assessor) with an updated kitchen, yard (it's a full lot) and, they say, ocean views. (Really?) This one is not to be confused with 429 29th Pl., which just sold. Start price here: $1.579m. Open Sun. 1-4pm.

Also new on the plateau above Highland:

• 452 32nd, a new "French country" home that's larger than most in the area – 6br/4ba, 4600 sq. ft. Starts at a somewhat remarkable $2.999m ($667/PSF). It was offered from Oct. 2007-Feb. 2008 at $3.199m, pre-completion. Open Sun. 1-4pm.

• 444 33rd Pl., a smaller home on a double-wide, half-deep lot that amounts to a full 2700 sq. ft. For $1.289m you get a 2br/2ba, 900 sq. ft. home. No surprise that it's pitched as "perfect as a future building site." Open Sun. 3-5pm. (Unusual.)

• And, heck, why not make it a foursome up on the plateau? 448 27th is a new listing (also not on the MLS yet) that, tax records say, offers 3br/3ba and 2300 sq. ft. – the slug for the open says it's a "complete remodel" priced at $2.089m. Open Sun. 1-4pm.

The big, pricey debut of the week in the Sand is a sleek new home at 221 34th, maxed out with 5br/5ba and 4200 sq. ft.

Being west of Highland and a bit higher up, it's got those big ocean views. They're thinking a bit about 200 19th, the gorgeous new home that recently sold at $5.6m – here, the start price is $5.4m. Open Sun. 1-4pm.


Tree Section

There is very little new this week in the Trees.

Indeed, the freshest listing is one that flashed onto and off of the market last year: 500 14th (pictured below), which offers 3br/3ba and 2250 sq. ft.

The listing pitches the location, which is certainly close to downtown, but it's also partly on Ardmore. Cute for $1.849m. Wait – $1.849? Open Sun. 1-4pm.

Also, maybe take a second (or a first) look at 2310 John, a slightly out-of-place contemporary. It's not new, but it did take $100k off this week – now $2.099m. Open Sun. 1-4pm.

Failed Flip is Back, Short

A new listing practically begs "steal this home."

Just the other day we wrote about 225 39th (click for the new listing via Redfin), which was in default a year ago and got sold in a "rescue" sale for $1.595m. (See "Foreclosure Flip Fails.")

After a try at $1.7m+, the price came down to $1.525m.

If you waited on this one, you'll be glad. Because today it's up at $1.1m, with this important caveat: "Price subject to lender's approval."

It's a shortie, now, folks. Let the bidding begin.

We Hardly Knew 850 18th

When someone decided to put up a nicely located, stylish, newer Tree Section home at $4.6m, we figured we'd have some time to discuss and debate the listing.

Nope.

850 18th was put on public offer just 2 weeks ago, on April 1, and it's already in escrow. (No joke.)

It's another dramatic case of the persistent demand for higher-end listings in town.

850 18th is just 2 years old, and offers 6br/6ba and 5950 sq. ft. The lot is a comfy 8,000 sq. ft.

And where do you start with the superlatives? Lush. Posh. Gigantic. Highly stylized (in a Spanish vein). You could melt into this home. (Click the smaller pics for larger versions.)

Yum.

You hear it said that the best homes are going to just keep selling regardless of broader conditions. Here's some supporting evidence.

Nearby, 826 18th, a 10-year-old, slightly larger home (6br/5ba, 6175 sq. ft.), sold for $4.45m in April 2007. 1718 Pacific, a 2003 rebuild with a (comparatively) huge 10,000 sq. ft. lot plus a 5br/4ba, 3550-sq.-ft. home, sold for $4.037m last November.

So, the folks coming into the immediate area find $4m+ to be the norm for big homes on big lots in the Trees. And while you know that these are not mainstream homes or buyers, there's no doubt that these sales help to anchor the MB market, skewing everything upwards. If you're selling, that seems like great news. If you're buying, you need to understand how dramatically the market is bifurcating as we speak.

Options Grow on South End Walkstreets

Last November, we noted the dearth of listings of South End flat walkstreet homes during MBC's first several months. (See "6th Street is Turning Over.") Just 4 such walkstreet homes had come on the market by then, and one was so overpriced (404 10th) that it never seemed to catch a nibble before the listing ended.

The only 2 South End walkstreet homes that sold between March-November 2007 were on 6th St. And then, all in the space of a week, 3 more homes on 6th St. came out. As we said at the time:

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.

With the presumed pent-up demand for walkstreet homes, you had to like the chances for all 3 of those 6th St. listings to sell. But that is not what happened (as always, click any live address links to view pics & details of active listing via Redfin):

• 532 6th, a newer, modern home on Valley, came on at $2.7m but hung around just a couple of weeks before quitting;

• 528 6th (pictured), a newer, bigger modern home built at the same time as its neighbor, came on at $3.449m and has lingered since – 5 months, no price changes; and

• 408 6th has fared the best, and the worst – apparently getting two offers – but it's still around today, and has taken big reductions (more on that one shortly).

Not only did those 6th St. homes fail to sell, now there are a few more South End walkstreet offerings:

• 316 10th (pictured), an extreme modern home on the alley corner (at Crest), asking $3.999m and now 200+ DOM with no price cuts so far;

• 317 5th, a more moderate contemporary (circa 1993) of comparable size, also on the alley corner at Crest, priced competitively at $3.2m, just a week on market; and

• 341 10th, a warm, classy beach home remodel with a quirk: almost a quarter of its listed square footage (3150) is tied up in a rental unit – currently asking $3.195m after a month.

All that pent-up demand seems to be remaining pent-up, but it can't last, right?

One of these homes is not like the others, and it's 408 6th. Of all the listings mentioned here, it's just 1 of 2 that are situated mid-block on flat walkstreets – potentially one of the best kinds of locations to enjoy the full walkstreet lifestyle.

It's also not a newer home like the rest. 408 6th is a compromised remodel. The original build date is given as 1977, and that won't surprise anyone. The home has been tweaked and improved and modernized in parts – particularly the kitchen – but it's still chaotic and strange.

You get the sense that people have lived in the home and loved it, particularly the true "outdoor room" off the 1st-floor living room. But the layout is a real challenge. There are 2 dark bedrooms downstairs that face the walkstreet – behind a tall fence – where, by rights, there ought to be a living space that opens to the walkstreet. The master is a minor disaster, a dark, cramped space with a bath that cries out for updating (maybe ditching the horrid wallpaper would help).

In those heady days last year, 408 6th began at $2.625m, reflecting the idea that scarcity would command a higher price. The first $125k came off after less than a month. Twice, the property went into escrow at $2.495m. When it returned from the second (apparently failed) escrow in mid-February, another $150k came off, and it was at $2.340m.

This month, the property dropped first to $2.249m and then, quite suddenly, to $2.099m. (There was also a bogus re-list this week. Should we cut them some slack since they're now down 20%?!?)

Let's be honest, the property is now rapidly approaching lot value.

Down 6th St. a bit further, at the corner with Ingleside, you'll find a home under construction at 440 6th. That lot was offered publicly at $1.9m last July, and sold for more – $2.050m.

So, $2m for a livable home or a lot on a flat walkstreet seems reasonable these days. Just like $1m seemed reasonable when the current owners picked it up in Summer 2001 (for $1.050m).

Our prediction: The South End walkstreet drought ends soon. Tossup: 408 6th or 317 5th.

Foreclosure Flip Fails

There are not many properties going into foreclosure in MB these days, but there are some, and there's a story to each one.

How about one that is facing the prospect of foreclosure for the second time in one year?

Almost exactly one year ago, MBC wrote about a few properties in MB that were in default and apparently headed to foreclosure (see "Foreclosures in the News, and in MB" for a strut down memory lane). They included:

• 601 Larsson, which was for sale at the time for $2.499m; it never made it to auction, but sold short in December 2007 for $1.710m, well below the Sept. 2005 purchase price of $2.0m (see "Close the Books on 601 Larsson");

• 958 Rosecrans, which had been purchased in July 2006 for $977k; went sour in less than a year, and ultimately sold at auction for $828k in May 2007; and

• 225 39th St. (pictured), which hadn't changed hands recently, but which apparently had a $1m loan against it go bad, and was headed to auction.
  

Well, 225 39th is back in the foreclosure news.

It didn't get to auction last year – instead someone overpaid for it: $1.595m, in a private sale closing in June 2007. The buyers fixed up the home nicely and put it up for sale in August at $1.745m, looking to turn a tidy profit (+$150k).

Problem: That was far too high for an unremarkable 3br/3ba, 1600-sq.-footer one door off of Highland in El Porto. (As the area was once known, way back when.) Shortly came the credit crunch, and a slowdown in sales that has hit El Porto especially hard, and this listing hit the rocks.

The sellers allowed the price to come down, and even left it at $1.525m – a price that guaranteed a loss on the investment – for several weeks this year.

But long before then, they must have seen the writing on the wall. They stopped making payments on their $1.2m loan and were in default by December last year. Late last month, the lender decided to move toward a foreclosure sale, and the listing was canceled. (For more, use PropertyShark.com; it allows 6 free property searches a day.)

This must have looked like a deal to the would-be flipper buyers, but they all but sealed their fate when they paid $1.6m, miscalculating the demand for the home at resale. The case is reminiscent of that of 2507 Valley, purchased at auction last October for $1.643m, put up on offer for $150k more at year's end, and sold 2 weeks ago for a loss at $1.5m.

As 39th proceeds down the foreclosure road, the loan in default is $1.2m, and the home is in better condition. It will be some time before there's an auction, but you can almost see the "bargain" bells ringing again for someone else in the future. A word to the wise: Flippers, beware.

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UPDATE: The story has been updated; the original version erroneously reported that 225 39th had sold at auction last year. Instead, it was "rescued" with an off-market private sale before the trustee's sale.

Hills En Fuego

We noted the other day that several weeks had passed in the Hill Section without a sale, and then, boom, two homes near each other on 9th St. sold (916 and 943). (See "Action on 9th.")

Now there's a third sale, almost enough to qualify as a trend: The Hill Section is on fire!

The lucky sellers this time have paid their dues – 811 Boundary Pl. has been on public offer for almost 9 full months, since mid-June 2007.

But let's dial back further first. In Sept. 2004, the current owners paid $1.789m for a property listed as new in 2003.

Just 2 1/2 years later, they sought $2.599m (+$810k/+45%).

And yet, as great as a newer home in the Hill Section might sound, the sellers were repeatedly snubbed. Maybe it's that location, barely up east off of Ardmore, on a tight street facing a series of older, beaten-up Hermosa MFRs. Maybe it was the home itself. As buyers got pickier, 811 Boundary was passed over.

The price came down. Over the months, it dribbled a bit at a time, gradually reaching $2.199m. (Still +$410k/+23%).

At the end of March, the last big reduction hit: $2.199m to $2.099m (+$310k/+17% over the 2004 purchase price). That's where it was when a buyer was found.

Of course, that last price was a big cut off the dream price of last Summer (-$500k/-19%) and the final price may or may not leave the sellers in great shape. But you know they'll be better off with a sale this Spring than they would have been hanging around any longer.

Close the Books on 742 27th

We have results now from a sale on a home that was the subject of a prior MBC pricing poll.

At the time we featured 742 27th (see our story from late January), it was already pushing 4 months on market and had been marked down $300k (-12%) from its start at $2.4m.

The listing lingered for another month or so after that, dropped to $1.999m, and then went into escrow twice (one apparently failed).

The final price, closing last Friday: $2.075m, actually higher than the list at the time. (Someone pulled a rabbit out of their hat.) That closed price was only $25k below the price at the time of our poll.

Most of our poll respondents were much more downbeat about the home's pricing prospects – just 16% guessed right, that the home would sell within 5% of its adjusted $2.1m list price. (Click for the story on the poll results.) The bulk of voters thought it would wind up between $1.75m-$2.0m.

We'll remind you that MBC liked 742 27th quite a bit. It's a spacious and classy home in a quiet Tree Section location with a nicely integrated Great Room/Back Yard combo and terrific upstairs bedrooms. The sellers had upgraded the home inside so completely that it befitted comparisons to new construction in the area, in our view, though several readers disagreed, citing low ceilings and the exterior as the main beefs.

In comments on the first story, we also saw a baffling controversy emerge over whether the back yard fence was somehow violating the property line. (It wasn't.) At the sellers' request we addressed the issue directly after a survey confirmed there was no problem, and now thankfully (for all) we see that the confusion did not, apparently, cause much harm.

This is the first home that was the sole subject of a pricing poll to close. (Click the "label" of "pricing polls" in the left-side column for all of the stories to date.) The others still on the market are:

• 1829 Poinsettia
• 1413 Pine
• 332 20th
• 3307 Poinsettia
• 3309 Poinsettia

We'll gear up for another poll soon.