How Far Up OR Down in 3 Yrs.?

No one can reliably predict anything in financial markets.

But anyone can try their hand at predicting. That's why we have pundits. And blogs.

So let's try some predicting. Read the story here for context and vote in the new poll. We'll keep the votes open until Saturday, July 5, at 7pm.

When a subject is really close to home – like, for instance, your home – you would like to think that you could predict its value more reliably over time than you might be able to guess, say, whether that hot biotech stock you picked up 2 years ago is ever going anywhere.

But predicting the future of Manhattan Beach home values is looking more difficult by the day. There's an interesting confluence of indicators in both directions: some signs that we're possibly on the verge of noteworthy declines, and other signs suggesting MB is weathering the storm very well.

You have to pick a timeframe to make a prediction. So, we'll call the question this way:

Where will the MB median price sit 3 years from now, at the mid-point of 2011?

Please answer with nominal prices in mind (i.e., the dollars of the day), no adjusting for inflation in this case.


THE BEARISH CASE

• Home values dropped 27.7% in nominal terms in the slump of the mid-1990s – 34.6% in real-dollar terms. A new down cycle could be comparable.

• Home-value appreciation was out of whack in the runup of the early 2000s. Nominal values nearly tripled in just a few years (+161%). (See "Charting MB's Bubble" and "The Whole Enchilada.") A new down cycle could set new records, too.

• Home values are down sharply in general and in LA County specifically.

• The sales pace in MB is down nearly 50% from last year, much lower than years before.
  

• Some MB homes are listed for or selling for the prices paid in 2005-06, sometimes lower.

• The credit crunch is stifling willing and able buyers. People don't think they can sell their homes at a good enough price to "move up."

• The national economy is poised for recession, the stock market has given up all the gains since Summer 2006, and much more pain may be coming our way.

THE BULLISH CASE

• There is little reason to think that a new down cycle should be comparable to the mid-1990s housing recession in MB. Then, aerospace layoffs took a huge bite locally. The population has changed. Newcomers overwhelmingly have the money to live here, regardless of other trends.

• Home-value appreciation in the early 2000s partly reflected changes in MB and changes in fundamentals. There's more new construction, a more attractive downtown and more new residents of greater means.

• MB cannot be compared to LA County or other markets. Luxury markets like ours are not taking the hits that far-flung regions or inner-city areas are taking.

• MB's median prices are holding firm. They are essentially flat for 2-3 years. This is even shown in the "bubble" graphs published by MBC. (See "Charting MB's Bubble" and "The Whole Enchilada.")

• Most resales continue to be above their in 2004-06 prices.

• The sales pace reflects more of a "normal" market, if not the overheated sales pace of recent years.
  

• The credit crunch is a non-issue for many current buyers.

• The national economy is not in recession yet, and the Fed has shown it will intervene appropriately to keep damaging trends from taking hold.

OK, that's our best summary of the case for and against a declining market over the next 3 years. Now, where do you think we'll end up 3 years from now? Vote in the poll and support your position in the comments.

Open Forum (6/30-7/6)

OK, all, it's a short week.

Plenty of chances for fireworks, though. Keep the news and views a-comin'.

On that bitterly controversial issue of cut-and-paste articles, here's your host's best attempt at a Solomonic suggestion – post the meat, probably the first 3-8 grafs with a link (tinyurl is best). Put the link at the top if you can.

It seems that, more often than not, the average reader would not have already seen the story you're posting, so we'd like to see you go with that instinct to share.

The mobile crowd is gonna hate it. And we hate to kick 'em while they're down, but remember, starting Tuesday, everyone must use handsfree devices in cars. Apparently there is lots of free law enforcement time all over LA to deal with this scourge.

Now, back to our regularly scheduled programming.

Weekend Opens (6/28-6/29)

Inventory's building again. Plenty of new options on the market, and several are debuting this weekend. We highlight a few 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.

Also, this week we're offering a new feature: the "re-list of the week."

Longtime readers know that a founding rationale for MBC was that MLS data fail to provide accurate DOM counts. We've crusaded on the issue our share, ruffled some feathers. (See "How to Hide the Truth About Your Listing.")

Earlier this year, we were briefly hopeful that Mr. MLS – the new system replacing the South Bay MLS – was going to solve the issue with its strict "data integrity" policies. No more free DOM resets without 60 days off.

But the new sheriff is a bust. Properties are being re-listed for all kinds of reasons, getting new DOM clocks in ways Mr. MLS said would never happen.

That doesn't make them bad properties, it just makes some of the marketing a lie. So this week we feature 3 "re-lists of the week" – one in each section – to highlight the issue.


Hill Section

913 8th (pictured) ain't much, stylewise, from the outside, but the home is warm, sizable (4br/3ba, 2925 sq. ft.) and has a comfortable 7200 sq. ft. lot with treetop & city views. Starts at $2.249m. Open Sun. 1-4pm.

234 Larsson requires special mention for a few reasons. First, it's not on Larsson, it's actually on 3rd near Sepulveda. Next, it's actually a detached TH, marketed as an SFR last year and this year. Third, someone paid $1.075m last May, and here it is, really spiffed up, a serious remodel job, at $1.5m. Didn't they used to call these "flips?" A word to the wise: Last time on the market, in less spiffy condition, this one lasted 271 days. Open Sun. 2-4pm.

Re-list of the week: The new, huge home at 218 N. Dianthus is now down $755k from its March 6 start, but it's not cheap at $5.995m. Open Sun. 1-4pm.


Sand Section

224 23rd Pl. (pictured) is a newer home west of Highland, albeit on an alley, with nice ocean views. Offers 3br/4ba and 1800 sq. ft. at a $999/PSF – $1.799m to start. Open Sun. 2-4pm.

No one has grabbed 225 Homer yet because the whole pro-con equation is so dicey. Location is great and the views are nice. But the spaces are too chopped up, the space weirdly used, and the original build reflects some bad compromises. No action at $2.1m? Probably time for another chop. Open Sat. & Sun. 1-4pm.

Re-list of the week: 317 5th, a contemporary on a corner lot on a walkstreet, was once a Mrs. MBC pick. A lot of folks thought it competitively priced at $3.2m. That was then. The South End walkstreet homes just seem not to sell. After a bogus re-list, this one's back $100k lighter at $3.1m. Open Sun. 1-4pm.


Tree Section

Mrs. MBC finds herself intrigued by 590 36th (pictured), a pre-ZORP, 5br/4ba, 4300 sq. ft. home just a few doors west of Blanche on a street-to-alley lot.

Maybe the big deal is the square footage. You might need room for mini-MBCs to run around, do homework, host band practice, etc. All that plus room for the out-of-towners.

At $1.989m, the PPSF to start is a modest $465, much lower than the PPSF for all but one other SFR listing west of Sepulveda.

The most direct comparison is nearby 561 35th, which, frankly, hung around for almost 2 years, but closed at $1.850m this February for 6br/5ba and 4350 sq. ft. ($425/PSF). This one is open pretty much the max this weekend, Sat. & Sun. 1-5pm.

700 35th is newer (2003) construction, offering 5br/4ba and 3675 sq. ft. Pretty lovely with some quirks. Has it appreciated since July 2006? Sellers paid $2.483m then, and now seek $2.689m (+$206k/+8%) to start 2 years later. Open Sun. 1-4pm.

Re-list of the week: 1412 Elm is back at $1.299m after a few weeks off. Open Sun. 1-4pm.

Shaving for Summer

Up on the plateau – the flat Sand Section streets above Sand Dune Park – there's a great home that's moving closer to, well, moving.

417 28th was purchased new in Sept. 2005 by a local realtor for $2.550m. (We note this because, at one time, the ads on Craigslist highlighted the fact that the agent was selling his own home.)

It's a huge house (5br/6ba and 4600 sq. ft.) for the area, with big ocean views from the top floor. It's warm with nice cabinetry, flooring and other finishes. The corner lot is a nice bonus.

28th hit the market April 3 this year at $3.495m. Someone was looking for about a mil in profit 2 1/2 years later.

That, however, was not in the offing.

No takers after 6 weeks, so the agent/owner pulled a bogus re-list in mid-May, while dropping the price $200k. Hence the current, alleged "44" DOM. (Golly, if it only started in mid-May, how come MBC was talking up the first weekend's open house in early April?)

This week, another $200k came off. They're shaving for summer. It's at $3.099m. And now you can start to see 2 things:

1) The sellers are bending; and

2) Maybe the sellers are serious, not just testing the market.

At the current price, 417 28th is marked up $549k/21%. Still pretty sweet.

But where should it end up? The only real recent comp is the "Brownstone" nearby at 428 27th. It was not as big (4125 sq. ft. vs. the 4600 for 417 28th). That one began at $2.899m and sold for $2.712m – $658/PSF.

Meanwhile, 28th is a tad higher at $674/PSF. At $658, it goes to $3.015m.

If it ultimately sells in that territory, 417 28th would be the priciest Sand Section SFR sale east of Highland in 2008. Can they do it, or do they need a bigger haircut?

East MB Bucket (1)

Folks, it's time to talk East Manhattan.

As regular readers know, MBC doesn't provide full coverage of the local RE market. We focus our data tracking and stories on SFRs west of Sepulveda. No condos or townhomes, nothing east of Highway 1.

No disrespect intended – your blog author simply doesn't live in EMB and doesn't know the market at all. To give the area the kind of coverage we give to the western parts would make this little project all-consuming, instead of just pretty darn consuming.

So we invite readers to start the discussion of East MB RE news here, and keep it up, too. Agents are invited to post info on listings. Neighbors are invited to wonder aloud about the homes for sale near them. Market watchers are invited to post critiques, updates, price cuts, sales info, etc.

MBC will restart these buckets each Thurs. morning for so long as readers show that they're useful. Hey, readers – now's the time to let your friends know MBC is expanding in this way. (Use the "Email this" link at the end of the story – no spam to either party.)

We will get you started with a few items (as always, click any highlighted address for more pics & details via Redfin):

• 1514 5th St. (pictured) – New this week, purchased 10/06 for $2.690m, now up at $2.890m. Claims to be on "the MOST DESIRABLE STREET in East Manhattan Beach." So, what's up with the short hold? How's that price? And is 5th really the "most desirable" street?

• 1712 Curtis is a new listing – or, wait, it's not, is it? Looks like it had MLS #S08026236 for the last 4 months or so, and just re-listed with #S08091777 and a $20k price cut to $2.079m. And it's 2007 construction. Hmmm. How long has it been around? Has anyone ever lived there?
  

• The longest-term current listing in EMB is also the priciest – 1201 6th, at $3.6m, and 343 DOM, officially. Looks like a purchase price of $2.3m in June 2002. Great house?

MB Market Update for 6/15/08, Trees

The MB Market Update spreadsheets are available by clicking here, or at any time by using the link on the upper-right corner of the front page.

This article summarizes SFR activity in the first half of June in the Tree Section. Information in this update closed June 15.

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

Tree Section

There were 44 active SFRs as of June 15, with 22 priced below $2m, and 22 priced above $2m.

Among 6 new listings, 2 sold quickly within the 2-week report period:

• 2825 Valley (pictured), a shrimpy, remodeled cottage squeezing 4br/2ba into 1400 sq. ft., though with a larger-than-normal 5000-sq.-ft. lot. They were only asking $1.129m; and

• 3314 Laurel, a good-sized remodel (4br/3ba, 3350 sq. ft.), sought $1.879m – a very substantial markup over the May 2003 purchase price ($1.158m – +$721k/+62%). We're assuming these folks accomplished the remodel.
  

Those 2 sales were part of 6 sales (new escrows) in the Trees that stuck (3309 Pacific went into and out of escrow). Other sales included:

• 3505 Pine (pictured), a dated home (3br/3ba, 2400 sq. ft.) with some layout quirks but surprising beauty to the location, last at $1.380m;

• 794 27th, Teri Polo's Asian contemporary on a busy street (see "You Can Lose in MB"), last at $2.099m, or $400k below the acquisition price 2 years ago; and

• New construction at 664 33rd (5br/5ba, 3550 sq. ft., the "Coastal Plantation" home) priced at $2.689m that had been on market less than 2 weeks.

Other new offerings were:

• 3600 Flournoy, a home with limited curb appeal where they've turned lemons into lemonade with a very tasteful update and nice interior spaces in an older 4br, 2350 sq. ft. remodel. Starts at $1.425m;

• 2105 Walnut, a dated, 3br/2ba, 1625-sq.-ft. home offered at $1.299m (almost $800/PSF, luxury pricing);

• 3409 Maple, a pretty grand, newer home with 5br/3ba and 3200 sq. ft., starting at $1.815m; and

• 633 15th, which many of us know as the local Santa's house, offers 6br and 6000 sq. ft. on a double-plus lot (12,500 sq. ft.) near American Martyrs; some harsh initial reviews for the home, though, particularly with its $5.495m start price.

The biggest rumble in the Trees came from a price-chopper:

• 737 36th has been for sale for most of the past 2 1/2 years, but was always substantially overpriced. (See "Surrender on 36th.") Enter a new agent with a bold strategy: Price it like the deal of the year, and they'll mob your door.

Guess what? They did. Last price: $1.584m. New "deal" price: $1.299m. At this writing, it's in escrow after multiple offers… rumored sale price: $1.43m.

Other cuts:

• 2509 Walnut sold quickly after chopping to $2.099m – and "quickly" was never a word that applied to this standard-issue newbie, with 300+ DOM. Started at $2.449m in late July 2007, crept down to $2.199m, and finally got a deal with the latest cut.

• A longer-term newbie at 2611 Palm cut $90k more to $2.195m, so it's now down $300k from start, but list is still much higher than this one's twin – 2309 Pacific – went for recently ($1.890m). Is the location adjustment really $300k?

• An impressive new Spanish at 769 33rd cut $450k quickly to $3.950m (see "No More at 4"); and
  

• 621 Marine cut below its March 2007 acquisition price ($2.436m), now at $2.349m (see "Job Transfer Blues").

Meanwhile, 6 sales closed in this period, all above $2m. They included:

• 850 18th (pictured), a lush, huge (6br/7ba, 5950 sq. ft.) newer home that had sold quickly when offered (see "We Hardly Knew 850 18th"), closed at $4.4m;

• Neighboring new construction at 2701 and 2705 Palm, at $2.749m and $2.689m, respectively; and

• 570 27th, a new home known as "The Farmhouse," closed for a whopping $1.2m and 31% off the start price, down to $2.680m (see "Bought: The Farm(house)").

Don't Worry, It's Clean

You fully expect that a newly constructed home will be clean and nice, ready for occupancy. No bugs, no mold, no overgrown landscaping.

At 646 Rosecrans (click for pics & details via Redfin), it's as if they really want you to know this place is spic and span.

So they've featured a gallon jug of one cleaner (mostly used up!), a spray bottle of another, even a used paper towel – all in one photo of the newly built kitchen.

Hate the way that fingerprints seem to collect on stainless steel? No worries, they're not even going to rip off the protective plastic coating from the new Viking fridge. The buyer can do that.

The microwave? Someone started to strip off the coating from that, but that guy is on the unemployment line. You can expose that food window whenever it suits you.

That's just a part of the attention to detail you'll find in the new home (4br/3ba, 2550 sq. ft.) on this refinery-adjacent, slim, 3650 sq. ft. street-to-alley lot. Start price: $1.9m.

MB Market Update for 6/15/08, Sand

The MB Market Update spreadsheets (with revisions on the Sand Section closed sales page) are available by clicking here, or at any time by using the link on the upper-right corner of the front page.

This article summarizes SFR activity in the first half of June in the Sand Section. Information in this update closed June 15.

Sand Section

There were 37 active SFRs as of June 15.

There were 8 new listings in the period, including these:

• 500 7th (pictured) is a corner-lot on a walkstreet in the South End, and, hey, it's even one that MBC recently labeled one of MB's "Great Streets." There are 3br downstairs and one debatable "bedroom" (now a living area) off the kitchen and dining room.

Pluses: Very high ceilings, bright rooms, roofdeck. Negs: A 80s/90s feel, small kitchen, minimal outdoor space, too-open floorplan that needs more definition. Started at $3.195m.

• 532 6th, with 4br/4ba and 2700 sq. ft., is for folks who want the South End, the walkstreet appeal, tidy spaces and a warm environment, but don't mind being on Valley. This cuts both ways. You've got greenbelt views, but also cars whooshing by at all hours. The master is a retreat with treetop views to the west. Priced at $2.350m, after a very brief try at $2.7m last November.

• 1501 Crest, a 3br/3ba, 3-story, 2100-sq.-ft. home with some tight spaces but big ocean views. Very near downtown and one door off of Highland on fairly busy 15th. The news is that someone paid $1.368m just a bit less than 2 years ago in July 2006, and now looks to get back out for about $1.549m (+$181k/+13%). As we write, Crest is in escrow.

There were 2 sales (new escrows) in the first half of the month:

• 117 7th, a 2br, newer home with 2350 sq. ft. of living space, went quickly priced at $4m – rumor is overbids drew it above $4.3m. Location, location.

• 473 31st is new construction first offered last Fall, most recently at $2.999m.

Several cuts this period, including:

• 228 29th Pl (pictured) cut twice in our 2-week window, from $2.499m to $2.379m, and then again to $2.279m. This is behavior commonly associated with trying to sell a house.

This essentially new custom home began its most recent public offering at $2.629m, so it's down $350k/-13% from there. Last year it started at $3.049m. It's down $770k/-25% from that point, which must have seemed reasonable at the time.

MBC has offered lots of "wows" about this 4-level home in the past, not least those commanding ocean views from a stunning top-level kitchen/dining/living room. Sellers built the place for themselves and then realized they needed a yard for their small kids more than they had expected. It's starting to look like they're very serious about making the move.

• 400 3rd is a dreamy shingled beach home on a corner lot in the South End that we've mentioned before, too. Now, new agents, new paint, new price: $3.299m.

• 4419 Highland, the Gateway to MB, is now at $1.265m. Remember the builder wanted to unload the project before the home was built for $1.4m. Still simultaneously available for lease.

• Dreary 505 3rd made a token move down to $1.829m, but that hardly shows any recognition of the fact that comparably sized, comparably located and cleaner, fresher 437 1st just sold for $1.610m.

Among the closed sales in this period were a couple of overbids on lots:

• 125 31st is a clean contemporary west of Highland that grabbed $3.35m, down a modest $199k/-6% from its start after 3 months on the market;

• 204 38th was offered as a lot sale for just $899k. It was new in this period and it closed at $1m in this period; and
  

• 2312 Grandview drew lots of interest before and after it hit the MLS, selling for $1.610m, above its posted $1.5m asking price.

______________________________________
UPDATE: The original version of this story said 204 38th would be torn down; we're now informed that it will be fixed up instead.

Open Forum (6/23-6/29)

Here's what we're learning about the Open Forum threads...

They work. For a few days.

That is, they draw the random discussions, off-topic issues, news clips and discussions-unto-themselves. Then, by late in the week, the Open Forums have played out.

Possibly we need more than one per week, but we'll not go there just yet.

What MBC will begin now, starting each Thursday morn, will be an "East MB Bucket."

This will be the place to post info on new listings, stale listings, open houses, price chops, and, perhaps, the occasional reference to a certain new home under construction as an "Olive Garden."

We'd even say you could use the EMB thread to chat about the best pizza joints, but that discussion would end rather quickly, wouldn't it? (Valentino's.)

Weekend Opens (6/21-6/22)

Bad weather: Bad for open houses. Good weather: Bad for open houses.

This is the received wisdom.

So what about high-80s plus getaway weekend with schools now closed for Summer? Good for open houses?

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.


Hill Section

1100 John (pictured) is a corner lot in the Hill Section, but it's not that exciting – it backs up onto a new commercial building and is steps to MBB.

It's freshly below $1m (at $995k, down from $1.259m). Now that's a little more exciting. Open Sun. 1-4pm.

953 9th is easy to miss, but don't. Offers 5br/4ba and 4100 sq. ft., a nice family layout and surprisingly sweet back yard. Offered for $2.650m, a mil below where it'd be with a better location. Open Sun. 1-4pm.

815 2nd has cut again, now at $4.275m (-$520k from start). It's still high by the opinion of MBC readers – only 12% thought it would sell over $4.250m, but it's moving where it needs to go (see story on pricing poll results). Open Sun. 2-5pm.


Sand Section

In a week when all the MB RE chatter is about a grandiose estate sold for $11m, Mrs. MBC is suddenly nostalgic for simpler times. (She's a real contrarian.) She's grooving on the tidy, mid-century beach cottage at 3404 Alma (pictured).

Not a Cape Cod, not a Mediterranean, just a nice 50s-vintage place with a short walk to the beach. Caveat: The listing touts a "massive, perfectly private easy care yard," which is actually a nice concrete patio. "Massive?" Hmm, we suppose it depends on your frame of reference.

At $1.199m, 3404 Alma is offered for about $10m less than this week's hot property in the Hills. Open Sun 1-4pm.

508 3rd is a nice family home, 20 years new. Main assets are the location and size – 4br/3ba and 3050 sq. ft. Sellers are going for the max – $500k tax-free – as they paid $1.8m in Sept. 2005. Now offered at $2.299m. Open Sat. & Sun., 1-4pm.

Don't need a house so much as a location? How about the central downtown half-lot at 129 12th? Sellers would like $2.1m, or thereabouts. Open Sun. 2-4pm.


Tree Section

2305 Pacific (pictured) is a pleasant surprise with 4br/4ba and 2800 sq. ft. Remodels are just a bit dated. Starts at $1.525m. Open Sat. & Sun. 1-4pm.

2700 Pacific is posted as open for the first time after almost 2 months. Offers 4br/4ba and 2900 sq. ft. for $2.099m. Open Sun. 2-5pm.

751 26th offers 5br/5ba, 3500 sq. ft. Purchased new in Apr. 2001 for $1.475m, unloaded for a tidy $2.1m 4 years later. Come 4 years further down the road, it's at $2.350m. Open Sat. & Sun. 1-4pm.

Finally, Santa's 633 15th is open again Sun. 2-4pm.

MB Market Update for 6/15/08, Hills

The complete MB Market Update spreadsheets for the first half of June are available for download by clicking here, or by using the link in the upper-left corner of the page at any time. This article provides highlights from the Hill Section in this period.

Hill Section

There were 24 active SFRs in the Hill Section at the close of the period, easily the highest total MBC has recorded in a year-plus of public market tracking. We've seen the total as low as 6 at the start of 2008, with the total often hovering near 12-15.

But that's not the big news here. The headline is everything about our first featured listing below.

There were 5 new listings in this period (click highlighted addresses for pics & details via Redfin):

• 900 Pacific (pictured) is bigger than big, even for the Hills, with 6br/7ba and 10,500 sq. ft. of living space on a 12,000 sq. ft. lot.

There are few homes bigger in our town, and even fewer that would pretend they have a better location. This is one of the truly outstanding view points in the Hills.

Start price was $10.9 million – no misprint – and it's in escrow as we write, taking "backup offers."

• At less than half the price, 808 Highview gives you most of what you could ask of a Hill Section estate: newer construction (2002), a good-sized house (5br/5ba, 4100 sq. ft.) and nice views in a quiet location. Asking $5.250m.

• 
• 755 11th (pictured) offers 5br/5ba and 5200 sq. ft. on an ocean-view lot with a sports court. The "Georgian" style on the exterior gets points for uniqueness. The 80s interior – wait, is that blue shag? – requires a deduction. Starts at $3.399m.

• 1022 1st is a teardown with some ocean views now, more when you build. The lot is fairly small at 4800 sq. ft. Asking $1.9m.

• 408 N. Dianthus, a 3br/3ba, 2175 sq. ft. spiffily remodeled home with city views and a pool. The current owners paid $1.7m in March 2006 and were offering it for $1.799m, but they withdrew it after 15 DOM, just after this report period.

Also, returning to the roster was 312 S. Dianthus, which began in late April at $3.490m, quickly rose to $3.749m and went into escrow, but dropped out – it's back at the original price, $3.490m.

A few cuts:

• After 30 DOM, 619 9th (fairly large, quite sweet, dated) cut $225k to $3.969m;

• The new construction at 930 John slashed almost $300k to $4.699m; and

• 612 11th, the "flag lot" home purchased for $1.275m last year and offered, at first, for $1.599m, chopped below the acquisition price to $1.199m, prompting MBC to speculate that maybe the owner actually lost the bidding war when grabbing it last year (see "Maybe They Lost the War"). It sold quickly after that, but please don't tell us there was a bidding war again.

Two closed sales:

• 916 9th, an admitted MBC favorite that began last year at $3.275m, took time off and returned at $2.895m, closed for $2.825m, a cool 40% profit for the sellers after 4 1/2 years (see "Call It a Modest 40%"); and

• 811 Boundary, a newer home with a big location issue, snagged $2.025m, a boost of $236k (+13%) over the Sept. 2004 purchase price, but considerably less than the $2.599m the sellers wished for when the listing began a year ago (6/19/07). That was high by $574k/22%.

MB Market Update for 6/15/08

The new MB Market Update spreadsheets are available. Click here to download or, at any time, use the link in the upper-right corner of the front page.

Data in this update closed 6/15/08.

Overview:

• SFR inventory at 105.
• 20 new listings in this 15-day period.
• 10 sales (new escrows) in this period.

Overall inventory was flat due to cancellations and a few adjustments to the MBC spreadsheets as well. More info by sections to come.

Yielding the Floor

Over in the current "Open Forum" thread we spotted a comment summarizing the evolution of life in MB that we found so compelling, we've decided to re-publish it as a story.

Just a piece of the start and end have been trimmed off, and some paragraph breaks were added; otherwise, it's unedited. Of course, the comment is anonymous. (Our pic is courtesy of Dan90266, who has some nice MB images on Flickr.)

Enjoy, and discuss. Here it is:

I believe the reason for the huge run-up in MB is a result of a major demographic shift in LA County.

I've lived in LA since the 50's. At that time, within the LA/San Gabriel/San Fernando basin there was a lot of vacant land. This includes PV.

During the 50's, 60's and 70's most of the easy stuff was developed. Also, in the 70's you had the boomers coming out of college looking to buy houses. You had the echo beginning in the late 90's.

In the 50's thru 70's Manhattan Beach was viewed as a funky beach town. When I moved here in the 70's one couple asked me why I wanted to live in the fog and be sick all of the time. My parents said I could get twice the house for the price in West LA/Culver City. I was a professional. My neighbors were a mix of retirees, non-college employed with families, and college graduates. Houses were small and old. The median income of MB was slightly above the LA average.

There were no taxi cabs in downtown MB. There was a gas station, hardware store, appliance store, auto parts store, book store, pharmacy and movie theater 2 blocks from the pier. Two clothing stores that were on the corner of MB Blvd and Highland ultimately went bankrupt. Rosecrans had a stop light at Aviation and one at Sepulveda.

East of the tree section was a Chevron tank farm (hence "there is no life east of sepulveda"). No one famous lived here. When I traveled no one knew where Manhattan Beach was or had even heard of it. El Porto was, well, El Porto.

By the 90's all of the above mentioned businesses were gone (except Ercs, thank God). A few sports people moved here (Mike Piazza and other Dodgers, LA Kings and Shaq lived in the hill section for a couple of years) Pam Dauber (Mork & Mindy) bought a house on the Strand.

That's when we started noticing the first taxi cabs, now a staple of downtown. The tank farm was replaced by housing, the Marriot and shopping center (life east of Sepulveda). The 105 was completed and all of a sudden MB started showing up in magazine articles as a place to be seen. Also, the beach became popular as a place to live, not just visit.

My neighbors now are all college grads +. One is ceo of a public company, another in house counsel for a public company, others are professionals and then there are the finance people and some celebs.

I was working with a guy who lived in Pennsylvania and he mentioned some reality TV show with Jessica Simpson filmed up the street from me. He said he wished he lived here, because of what he saw in the TV show. Because of the new people moving in, and the advancement of those already here, the median income in MB has soared above the national average. This story may have been repeated elsewhere in LA but not on the level of MB.

So why is the median price holding? Because everybody and their fricken grandma wants to move here. It doesn't mean they will but MB of 2008 is not MB of '78, '88 or '98. MB is now on the map (movies, tv shows, sports shows). More people, and especially people with cash and large incomes, want to live here than there is available housing. As long as that is the case, prices will hold firm and ultimately go up.

Job Transfer Blues

A Hill Section listing has now officially joined a small parade of $2m+ listings on which losses will be incurred due to job transfers.

701 Dianthus (click for pics & details via Redfin – note: all links now fixed) was purchased for $2.53m in Feb. 2006, but became available all over again just less than 2 years later, in late January this year.

The explanation was that the owners faced a job transfer.

Despite the need to sell, the listing started with a nice markup. At $2.775m, the sellers sought a boon of $245k (+10%).

Part of the rationale? The owners had spent $150k+ on upgrades and custom paint.

The listing has spent the most time $200k lighter than the start, at $2.575m. Monday it dropped to $2.499m, meaning the sale price will definitely be lower than the acquisition price two-plus years before.

A couple of other listings of newer homes in the Tree Section, both reputed to be job transfers, are in similar boats:

• 621 Marine (5br/4ba, 3100 sq. ft.) was purchased for $2.436m in March 2007, about a week ago in real estate time, and came right back in March 2008 at $2.489m. That was already flat, but it's at $2.349m (-$87k) now.

• 616 29th (4br/5ba, 3500 sq. ft.) could wind up as the most severe case of job transfer blues. Almost 3 years ago, the home was purchased for $2.425m. It's now done 7 weeks of service time at $2.475m – a hair above the 2005 price, but obviously a net negative after costs of sale.

The problem for 29th is that resales aren't coming in that high these days. The best comp may be nearby 612 30th, a bit older and comparably sized, which grabbed $2.270m in late February. The 29th St. home itself is clean and newer, but it is not blowing anybody away, and may have farther to fall.

In recent years, relos could actually be profitable to the sellers who were moving. (Thank you, RE bubble.) But the best case for these sellers is that their employers will cover any losses. Sometimes on a relo, commissions and any losses are picked up by the company requesting, or ordering, the transfer; indeed, the whole sale process may be managed by a relo company. Relos have a reputation for slashing prices quickly to get out of a property, but we haven't seen much of that yet on these 3 listings.

Meanwhile, these 3 offer examples of prices that are flat or declining after 1, 2 and 3 years.

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UPDATE: The links to the 3 properties mentioned in this story did not work properly at first; they are now fixed.

Call It a Modest 40%

We can close the books now on one of the homes MBC has expressed some appreciation for more times than many others – 916 9th in the Hill Section.

Our first story noted that the sellers were hoping for a a "modest" 50% markup over their Nov. 2003 purchase price. As that story began:

It's not crazy to ask for ask for 50% appreciation over 4 years, right?

Not these past 4 years.

It didn't happen fast – that story (see "A Modest +50% in the Hills") was published 8 months ago – but the sellers got most of their demand: a 41% markup, selling at $2.825m, a cool $825k more than their purchase price ($1,999,500).

We would note that the listing first started out at $3.275m in 2007, so the sale price does reflect diminished ambitions (-$450k/-14%).

Still, the take-home is perfectly impressive. And we know the new owners have a great new home.

For some added perspective, we went back to our DataQuick charts and determined:

• The increase in median prices in MB (based on a 12-month moving average) over about the same period (Nov. 2003-Q1 2008) was 56% in nominal terms (dollars of the day), meaning these sellers did somewhat less well at 41% appreciation than you might have expected based only on median price data.

• The sellers paid the equivalent of $2.366m in current dollars (actually Q4 2007) when they bought the home 4 and a half years ago. Of course, that doesn't mean they had any less than $825k in their hands at the close of escrow last week, just that the value rose only about 20% in real-dollar terms in the time since they moved in.

Nerdy note: Our inflation adjustments use the deflator for residential investment, a separate data series from the consumer price indices for other kinds of goods.

Open Forum (6/16-6/22)

Our first couple of "Open Forums" have been largely successful, so here we go again.

Please use this thread for random musings, news clips and off-topic ideas, and let the debates unfurl as they will. We will try to further limit comment deletions here, as moderating is not one of your blog author's favorite things. A new thread like this starts each Monday morning.

Also, we'll ask that readers interested in East MB try this thread out as a forum for discussing listings and activity east of Sepulveda. Though it's not in the cards for MBC to expand full coverage to EMB (or to THs/condos), we might offer a weekly "East MB Bucket" if there's interest.

Please show some interest here and maybe we'll open such a thread anew soon.

Remember, in recognition of the fact that there's an Open Forum thread, we are asking that comments on the regular stories hew closer to the subject of those stories.

Weekend Opens (6/14-6/15)

After seeing how much ink Easter and Mother's Day got in the Beach Reporter RE ads recently, please understand a certain peevishness on the part of your blog author now.

It's like Father's Day doesn't exist.

Just one ad offers "Happy Father's Day" wishes, and just one more suggests that a person might purchase a home for a dad in recognition of this Hallmark holiday. By contrast, in recent years, all kinds of routine ads suggested you should buy a home for mom on Mother's Day.

Surely there are lots of "kept men" around MB who would very much like for their wives to buy them new ocean-adjacent homes to accentuate their leisure lifestyles. But the wishes and desires of these people are completely ignored in a pedestrian round of RE ads. Thanks for nothing.

It's not like agents aren't aware of the holiday. Many open houses are only open Saturday, and it's not because of a conflict with the Laker game (cue deflated, depressed feelings – sorry), but out of respect for the paternal elders.

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.


Hill Section

808 Highview gives you most of what you could ask of a Hill Section estate: newer construction (2002), a good-sized house (5br/5ba, 4100 sq. ft.) and nice views in a quiet location.

You'll need $5.250m to move in. Open Sat. 1-4pm.

You might amble down the road to 619 9th, between Highview and Ardmore, which now sports a new price: $3.969m – down $226k from start. Sweet, a bit dated and flawed. Open Sat. 12-3pm.


Sand Section

She doesn't want to be predictable – no one does – but Mrs. MBC is picking another South End walkstreet home this week, 532 6th.

It's for good reason. This home, with 4br/4ba and 2700 sq. ft., was briefly offered last year around Thanksgiving, and she was taken by it.

You might have to see it to see what Mrs. MBC sees. On paper, it's a stark contemporary backing up on Valley. The exterior pics may be a turnoff.

But inside, the spaces flow very nicely, the home is warm despite the modern touches, and the master is a retreat with treetop views. The home felt clean and efficient, not "modern" in the imposing, stylistic way that neighboring 528 6th did. (That one had the same architect; it recently quit the market.)

532 6th is up at $2.350m this time, having tried for a couple weeks at $2.7m last year. The sellers purchased it for $1.818m in March 2005. If you like numbers, here's a coincidence – 532 6th is now priced $532k higher than the purchase price – that's 29% over 3 years. Open Sat. 1-4pm.


Tree Section

Oh, Santa, say it ain't so. 633 15th has become a bit of a local treasure because, at Christmastime, the owner goes all-out – no, wait, way above all-out with neon – with a bright display and life-sized characters and a beach theme and... all of that will end if he sells the house, as he apparently intends to do.

Some harsh initial reviews for this $5.495m home – the style ain't special, the spaces are just inflated, the kitchen a low-end mismatch, the furniture forgettable. Surely there are redeeming qualities to a 6br, 6000 sq. ft. home on a double-plus lot (12,500 sq. ft.) near Martyrs. Open Sat. 2-4pm.

No doubt 737 36th is going to draw interest this weekend for the first time in months. As MBC noted a couple of days ago (see "Surrender on 36th"), the home has been on the market almost continuously for 21 months, but always at preposterous prices. Frankly we can't recall seeing it posted as open.

Now it's down $240k from its last price to $1.299m. With 4br/4ba and almost 3000 sq. ft. (including the guest quarters), 36th appears to be the cheapest home by price-per-square-foot ($435/PSF) in all of MB. That will help. Open Sat. & Sun. 2-5pm.

Just as we liked 532 6th in the Sand, we found 560 36th to be a warm version of a new contemporary. This one began at $2.999m, slashed to $2.499m, and is finally open again. Worth a look. Open Sat. 12-2pm. (Yes, 12-2pm.)

Maybe They Lost the War

It seems like several characters in our local real estate drama want to get noticed this week.

In the Hill Section (kinda), a 1950s-vintage house on an odd "flag lot" at 612 11th has hit the MBC radar twice in the past year or so.

In April 2007, the owners tried – oh, they tried – to sell the home for less than $1m; actually $975k, to be specific. They failed. A bidding war broke out, and it went for $300k more.

The new owner apparently spiffed up the home a tad and rented it out, but several months later decided it was flippin' time. On Feb. 20, 612 11th hit the market at $1.599m. (See "Flag It As Overpriced.")

We wondered if maybe they were kidding. They weren't. No improvements, a 10-month hold, and suddenly a 25% ($325k) increase in value?!?

Here is what is great about 612 11th – the flag lot, which is sort of a way of saying the location. You're surrounded by other people's yards. It's quiet. It's near downtown.

But the house is a bit of a dog, and the current owner overpaid.

This is not just MBC's view, it's the owner's view, now, too. On Thursday, the price dropped to $1.199m, $76k less than last April's purchase price.

A year ago, the owner won the bidding war. Or maybe lost.

Surrender on 36th

It was 3 years and 3 months ago (March 2005) that the current owner of 737 36th closed escrow at $1.250m and moved in.

A year and a half later, in Fall 2006, it looked like time to cash out. Up went the for sale sign, and up, up, up went the value ascribed to the place – it began at $1.795m. Holy soap suds, was that ever a dream price: +$565k/+45% in less than 2 years.

Needless to say, that didn't work.

During the Spring Rally of 2007, the owner – a realtor, for what it's worth – tried again, this time chopping just $10k ($1.785m).

The home sat, and sat, and the credit crunch hit. Another $145k more came off and it was at $1.645m by Labor Day. MBC said then that the seller was "starting to look less crazy. Slightly." They got it into escrow last September, but it fell out.

By March 2008, the price was down again to $1.538m. But, as we say here sometimes, homes that don't sell have a way of not selling. You take a price problem, add a huge DOM problem and the everyone-assumes-there's-something-wrong problem, and you're really stuck. The listing canceled in April.

To the rescue: A new agent with no stake in the property and no emotion tied to the price.

Mission: Unload this thing.

Price: Flat after 3 years – $1.299m.

The custom southwestern home was once owned by Peter Brady, er, Christopher Knight. (Though we keep learning that celebrity ties don't translate to value-added around here.) The main home offers 4br/4ba and 2500 sq. ft. or so, with another 400 sq. ft. in guest quarters above the garage. (Not accounted for in the tax records.)

Make no mistake, there are buyers out there who can stomach the $1.2m-$1.3m range a lot better than the $1.5m-and-up range. Suddenly, 737 36th gets into the game.

Meanwhile, the seller has provided ample demonstration of the perils of overpricing in a shifting market.

Instead of a $500k payday, or any kind of payday, the seller chased the market down over the last 21 months and will now get out flat or, just as likely, with a modest loss. After owning in MB for 3 years.

No More at 4

Homes listed in the Tree Section at $4m or higher are rare, but not unheard of. As of today, we have none.

That's because 769 33rd yesterday dropped $450k off its list price, so it's now at $3.95m. That's a total of $550k (-12%) off the start price of last September (pre-completion). (Click highlighted address for details via Redfin.)

The two most recent sales above $4m were both new homes on 15th St. by American Martyrs:

• 613 15th closed for $4.050m in March
• 605 15th, a pre-sale, closed for $4.2m three weeks ago in May

Behold, a new listing of a 7-year-old home on that block, even closer to the church, hit the market today at $5.495m.

That's 633 15th, boasting a double lot (12,500 sq. ft.) and 6br/4ba, 6000 sq. ft. So that's the priciest offering in the Trees by $1.5m, skipping past the 4s completely.

Here's some bad news: This is the home where the Christmas season is typically celebrated in spectacular form with bright lights, a Tommy Bahama theme, a life-size dancing Santa and, occasionally, the homeowner himself sitting atop a giant Santa throne waving to passers-by. We had begun to take the display for granted. Kinda wish they'd let us know 2007 was the last year.

You Can Lose in MB

It's a moment of quiet, hopeful contemplation over at 794 27th.

The seller has accepted an offer and the listing has shifted to "backup offer" status, which is to say: now's the time to make a move if you were even thinking of it. (The Redfin link still works at this stage.)

We very rarely mention names here, but we feel freer to mention that the seller is actress Teri Polo, because one of her agents (of some kind) got the listing into the local dog trainer's "Hot Property" column one Sunday. (Their Sunday readership remains higher than MBC's.)

And the listing begins by calling it a "[f]abulous, celebrity owned" home – a strange pitch, to our ears, anyway. ("Pay more because of who's selling it!" is what we take from that.)

We wish buyer and seller well, but the story here is the home's dramatic drop in value.

Two years ago (May 2006), the home was purchased for a cool $2.5m. That was much too much then.

The listing began this February at $2.599m, but that was much too much again.

MBC's brief on the home when it was first open said:

[It's] a supercool Asian-modern remodel. Given what they're asking ($2.599m) you should have plenty of chances to see it in the future.

And here was that rare case of an MBC prediction absolutely coming true (!). The listing hung around 4 months and dropped to $2.099m (-$500k/-19%) before it got sold.

On the face of it, that's a loss of $401k, and that's before we get the deal price.

No, we don't actually think the local RE market dropped 19% in the past 2 years. (Give it time; we'll talk.) Ms. Polo overpaid.

And the best explanation is expressed in a simple equation:

Emotion + Cash = Overpayment

No question, 794 27th is a stunner. A very sharp local design/build firm crafted it, technically as a remodel, a few years back. Though it's not our cup of tea, there's no doubt that the "wow" factors could overwhelm a person – enough to overlook the busy intersection that hosts the property, and a couple of other strikes.

If it's a "must have," you "must pay."

Remember that May 2006 was not a bad time in our local market. Just the first hints of buyer skepticism and flattening prices were beginning to be heard. There was plenty of contrary evidence – maybe the local market would keep rocketing forward.

It didn't. Fall 2006 saw a real slowdown, and the Spring 2007 rally was quickly subsumed by the credit crisis last Summer.

794 27th suggests a corollary to the equation above:

Overpayment + Short Hold = Loss

Oh, that seems elementary today. Could MBC have even contemplated this story in 2002-2006?

Short-Term Holds (Sand)

It is said that you can buy a home in almost any market conditions and you'll be fine if you hold onto it for 5, 7 or 10 years.

If you're not sure you'll be in the home that long, you've got some risk of selling at a loss, in nominal or real terms, if you need to get out sooner.

Such a risk appears higher for today's buyers, as prices soften. But what about people who bought in the last few years? Some bought near the local market peak, no doubt.

Of the 25 resale SFRs on offer today in the Sand Section, more than half (14) were purchased or substantially remodeled by the current owners within the past 3 years.

All are marked up from their acquisition prices, though one (444 33rd Pl.) is barely so at +$29k over its Oct. 2005 price.

Some listings seek large premiums. Not surprisingly, they're also among the better-located of the bunch.

For this analysis, MBC considered 35 active SFRs in the Sand. Of these, 7 are new and 3 are being marketed as teardowns, so we dropped them out. The issue here is resales: If someone acquired and/or spruced up a property recently for sale, how well will they do?

Here is our list, sorted by the amount of time held by the owners. Click any highlighted address for pics & details via Redfin.

For shorthand, we provide the acquisition month and price [if known] in parens, then the current price and markup:

About 1 Year

462 36th Pl. (Aug. 2007, $760k) – listed at $899,900 (+18%)
317 17th (Nov. 2006, $2.050m) – now at $2.199m (+7%) [began Dec. 2007]

About 2 Years

217 35th Pl. (March 2006, $990k) – now $1.495m (+51%)
468 33rd (May 2006, $2.775m) – now $3.495m (+26%)
1501 Crest (July 2006, $1.368m) – now $1.549m (+13%)
448 27th (2006 remodel) – now $1.899m
3421 Manhattan Ave. (2006 remodel) – now $6.5m

About 3 Years

132 2nd (Apr. 2005, $3.5m) – now at $5.695m (+63%)
2719 Manhattan Ave. (Apr. 2005, $4.3m) – now at $6.275m (+46%)
3607 Bayview (Sept. 2005, $1.2m) – now $1.649m (+37%)
505 3rd (Sept. 2005, $1.6m) – now $1.829m (+14%)
417 28th (Sept. 2005, $2.550m) – now $3.3m (+29%)
444 33rd Pl. (Oct. 2005, $1.260m) – now $1.289m (+2%)
224 31st (built 2005, assessed at $2.85m+) – now $4.495m

Both of our 1-year holds appear to be misguided flips. 462 36th Pl. is noteworthy for its strangeness (see "A Real Turkey") and poor location. 317 17th began at $2.8m after a year, but that hasn't worked out (see "A $600k Reality Check").

Among the 2-year holds, 468 33rd is a not-so-urgent sale by a pro athlete who faced a job transfer (trade), 3421 Manhattan Ave. (Errol Flynn house) was always meant for sale by the investor/owner (see "Art Deco on Manhattan Ave."), and 448 27th provokes questions because it was recently custom-remodeled to have just 2 real bedrooms, and now invites potential buyers to convert a terrific family room back to a bedroom to make it livable. (Or you can keep the bar in the new bedroom, your choice.)

The would-be big-gainers among the 3-year holds are both on Manhattan Ave. (132 2nd and 2719 Manhattan Ave.), with sellers believing that beach-close properties have gone up in value by nearly half – or more. That segment is warm, if not hot, but both listings appear to be pushing for a new ceiling. At least one could come close – after all, 2nd was initially in escrow for more than $6m, we're told.

The most modest of the 3-year holds are 505 3rd, which just took a hit when comparable, spiffier, neighboring 437 1st closed for $1.610; 444 33rd Pl., which is already flat; and 3607 Bayview – a very pretty remodel accounts for much of that boost.

We'll track these in our regular market updates and in future stories. And if a look at the data for Hill Section or Tree Section listings is interesting, we'll write those up separately.