Sales Stats from 1st Half of 2008

We're happy to offer a new data compilation of SFR sales west of Sepulveda for the first half of this year (Jan. 1-June 30, 2008).

Click here to download the new spreadsheets, or, at any time, use the link on the front page in the upper-right under "MB Market Info & Updates."

You'll find 3 separate sorts of data on 82 SFR sales:

• By closing date
• By price
• By home condition (new, remod, etc.)

In our first-quarter data set, we covered 33 sales, so this period saw 49 sales added.

With a dataset of 82, we have a sizable, if not huge, database from which to calculate a median price. And the median among SFRs is really up there: $1.9m. (See pages 3 and 4 of the new spreadsheet. FWIW, the actual figure is $1,899,500 – the midpoint between two sales a bit above and below that median.)

Intriguingly, the median sale price among the 2007 sales that MBC tracked (131 sales spanning about 9 months of 2007) was $2.050m.

Medians are funny things, because they are somehow supposed to represent vast ranges of prices. In this 6-month dataset, our lowest price recorded was $772k (a 1br/1ba, updated home at 626 Rosecrans) and the highest price was $5.6m, for a new home near the water at 200 19th.

Please note that these new compilations delete interesting info you might like to see – start prices, cuts from start, DOM, etc. That information does appear in our regular (twice-monthly) MB Market Updates.

What to Do with All the Unneeded Houses?

There are some unloved, unwanted homes – even new ones – in MB, but we don't have it nearly as bad as some parts of the state, or the country.

A fascinating article the other day over at Calculated Risk used Census Bureau data and other sources to estimate that, as we speak, nationwide there are "about 1.75 million excess housing units in the U.S. that need to be absorbed over the next few years." (See "Q2: Homeownership and Vacancy Rates.")

That 1.75m figure breaks down to:

• 825,000 excess vacant homes;

• 200,000 excess new home inventory; and

• 710,000 excess rental units.

If these numbers are anywhere near accurate – and CR is sort of a stickler for stats, so we won't second-guess him here – they are an important measure of how greatly the housing boom/bubble led to wild, speculative overbuilding. What CR is saying is that there is just simply far too much housing for the people we now have in America who will actually pay for housing.

You can take another measure yourself next time you are flying in central or northern California, or over Las Vegas or Phoenix – check out the partway-developed new housing tracts.

They look different now, because you know they've stopped work on most of them.

You'll see the cleared, flattened land, dirt outlines of roads (with signature cul-de-sacs) and foundations, but no homes. Often, there's one model home sitting like an island amid the dust.

Nearby, perhaps Phase I has been built – a dozen families or so have bought into a new development, but they won't have any neighbors any time soon. Bonus: The kids will always have plenty of open space.

Leave it to the Wall Street Journal to propose a radical solution – "buying unsalvageable houses and demolishing them." That's the concept pushed by Holman W. Jenkins Jr., in Wednesday's edition (see "How to Shake Off the Mortgage Mess").

Jenkins notes, approvingly, a suggestion by Pimco's Bill Gross that, "in an ideal world," the federal government would "buy one million new/unoccupied homes, blow them up, and then start all over again."

Jenkins completes the rationale for utter destruction of bubble building thusly:

Fannie and Freddie's strength is housing market software: They could be put to work devising a least-cost, maximum-bang strategy for demolishing unoccupied homes to preserve as much value as possible for the homeowners and mortgage creditors who remain.

There you go. Part of the Darwinian unwinding of the housing bubble should include the actual, physical destruction of orphan housing to preserve market prices, equity and credit for the overwhelming majority of Americans who own homes and for banks and investment firms who play in the credit markets.

We would note that no one is (yet) proposing that homelessness could be solved by tapping part of this overbuilt inventory. Well, no one expected the WSJ to suggest that.

Somehow, destroying homes doesn't seem a fringe concept. And yet, the day that first FDIC/FHA/Fannie/Freddie bulldozer starts its tango with a McMansion – probably somewhere in the southwest, perhaps Stockton – we'll know we've reached a new stage in this bubble, or, more properly, its aftermath.

Bargain Month

Several of the SFR sales that have closed in July have reflected double-digit discounts off their start prices.

With a couple of days left in the month, MBC has seen 14 sales close west of Sepulveda, 6 in the Sand Section and 8 in the Trees. Of those 14, 8 saw chops of at least 10% from their initial public-offer prices. They're listed here by home condition, with highest prices first:

• 473 31st (new), start: $3.250m, close: $2.8m (-$450k/-14%)
• 3500 Blanche (new), start: $2.549m, close: $2.125m (-$424k/-17%)
• 2509 Walnut (new), start: $2.449m, close: $2.025m (-$424k/-17%)

• 534 14th (remod), start: $3.350m, close: $2.7m (-$650k/-19%)
• 737 36th (remod), start: $1.785m, close: $1.435m (-$350k/-20%)
• 125 El Porto (remod), start: $1.699m, close: $1.395m (-$304k/-18%)
• 2904 Laurel (remod), start: $1.449m, close: $1.299m (-$150k/-10%)

• 3612 Poinsettia (dated), start: $957k, close: $849k (-$108k/-11%)

Of course, in the same month, there were exceptions. Like the huge overbid situation at 117 7th that saw a smallish 2br home near The Strand go from its $3.995 asking price up to $4.325m. Less spectacularly, one of Mrs. MBC's favorite new homes at 516 24th simply held its own, despite 200+ DOM, suffering only a 7% discount off its start at $2.495m to close at $2.312m.

And we should note that it is possible to sell new construction in the Trees quickly and pretty much for asking – that happened for the new "coastal plantation" home at 664 33rd, which garnered $2.605m against a $2.689m asking price, with just 9 DOM.

We've wondered aloud about how best to interpret ask-close spreads (see this chatty article from Feb. this year) in light of the fact that delusional sellers can make very big mistakes to start.

But we continue to believe it's relevant that folks who are making deals were quite far off in pricing their homes to begin. Three brand-new homes above all began at least 14% above their ultimate sale prices, and there should have been less emotion attached to those start prices.

The Plan Came Together

If you know who Mr. T is, you might recall that, in the early 1980s, he was part of an NBC series called "The A-Team." In the show, his boss, Hannibal (George Peppard), made famous a catchphrase that he used near the triumphant end of each show: "I love it when a plan comes together."

Now, the agent who recently sold Peter Brady's old house at 737 36th is no gruff old cigar-chomper – she really bears no resemblance to Peppard. But you can still imagine she may have felt the same sort of boastful satisfaction Peppard's character did and maybe, just maybe, said something like "I love it when a plan comes together" when multiple bids came in on the house last month.

Multiple bids might have seemed unlikely. Before June, 737 36th had been on the market for most of the last 2 1/2 years. (See "Peter Brady Sells, But His Old Home Won't Go" and "Surrender on 36th.") It was always badly overpriced. It had crept from $1.795m down to $1.538m before the seller, a realtor, punted and gave the listing to a prominent local agent.

The new agent's price was $1.299m, but that wasn't supposed to be the sale price. The goal was to spark a bidding war, pushing the price back up to whatever the market would bear.

It was a bold move. Could a stale and left-for-dead listing really become a sensation overnight? If the bidding war didn't materialize, would the seller even take offers at or below the new list price?

Alas, the move wasn't a big gamble, not from the new agent's perspective. She had just sold an East MB home that was listed at $1.299m and drew a dozen bids. Surely some of those bidders would be interested in a comparably sized home west of Sepulveda. (737 36th is pretty charming in its own right.) And there were plenty of sidelined buyers who would recognize the deal on 36th.

That was the plan, and that's exactly how it came together, with those multiple bids bringing the final sale price on 36th to $1.435m, where it closed last week.

That was a chop of $100k from its previous list price, -$350k/-20% off its start price, but $136k higher than the bait price that drew all the interest this time.

The closed price was also a decent $185k higher than the March 2005 purchase price. While that $500k+ payday sought by the seller never arrived, this one still wound up in the black: 15% over early 2005. There are a few resales still active on the market that aren't even asking 15% more than their 2005 purchase prices.

The whole episode at 36th proved to be a pretty nice trick. Underpricing other listings might work, too, drawing lots of interest and a deal. Or the plan might prove hard to repeat, kind of like Mr. T's early success.

Open Forum (7/28-8/3)

There's plenty to discuss this week, including the anemic sales pace of the second half of July. (That's just because everyone's on vacation.)

But we'll kick off the week here with a measure of surprise from our most recent poll results. In a poll that generated more votes than any that came before, the winner for biggest problem on The Strand was – KIDS. (See "Troubles in Paradise.")

Kids in strollers. Kids who toddle along, clueless to traffic around them. Kids with toys, kids with skateboards, kids with dime bags for sale, kids with other kids making trouble.

It was a bit of a shock to see the next generation overtake the year-round problem that seemed to generate the most comments – dogs.

That was your blog author's top concern. It's not the barking or the hair, it's mainly the excrement. Unless and until dogs learn to pick up 100% of their own messes, it's the dog owners', um, duty. Even in our high-class neighborhood there are just enough low-class dog owners to muck up our little treasure by the sea. Here's hoping just a couple of them got a message this week.

Voters were more annoyed by Tourists (27%) than by Locals (7%) – no big surprise there. (Click graphic to enlarge.) Trash and Parties scored fairly low (10% each), and, on the former issue, we really do owe some credit to the city service folk who keep The Strand pretty tidy.

Meanwhile, wheeled individuals (on bikes and blades) also scored a tame 11% – in comments, we heard more about walkers disrupting the bike paths.

Home Prices outpaced dogs in the final stretch, garnering just 1 more vote as a big Strand problem. And yet, high prices work nicely as a barrier to entry. Seems the place would be a dream if they could keep the kids, dogs and tourists out, too.

Sunday Opens (7/27/08)

Our theme for the week might be "flat." Three featured listings here (2 of them new) are priced very close to their purchase prices in Feb. 2005, March 2005 and March 2007.

No pick from Mrs. MBC this week – she said, "Wow me," and frankly there wasn't anything new this week that could do that. She's smart to hold off.

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

Nothing new in the Hills this week after we had two neighbors come on last week. But here are some options of interest:

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. Still at $2.249m after about 6 weeks and 1 failed escrow. Open Sun. 2-4pm.

717 10th is a sharp, appealing modern home with big ocean views. Offers 5br/4ba and 4250 sq. ft. on a 5800 sq. ft. lot. Still at $3.850m, a tad more than $1m above the Oct. 2004 purchase price. Open Sun. 2-4pm.

Almost neighboring 755 11th (the Georgian) and 724 11th (contemporary) are both priced at $3.199m, and both open Sun. 1-4pm.


Sand Section

232 5th Place (first pic) is back only about a year after it was last purchased (March 2007).

It's a pleasant, shingled beach home with 3br/3ba and almost 2050 sq. ft. on a half lot (1350 sq. ft.).

The owner paid $1.750m and now requests $1.825m. Open Sun. 1-4pm.

532 6th, a warm contemporary on the walkstreet at Valley, this week sports a new agent and a new price ($1.999m), really gearing up for its third full run at this market. It offers 4br/4ba and 2700 sq. ft., tidy spaces and a warm environment. The master is a retreat with treetop views to the west.

532 6th first hit MBC's radar last November (see "6th Street Is Turning Over"), when it began at $2.7m. Given that the home had been purchased in March 2005 for $1.818m, we noted:

532 6th is pushing the envelope seeking almost 50% above the price from about 2 1/2 years ago

But that was a brief experiment. It came back this June for $2.350m. The new price, $1.999m, is just +$181k/+10% above the March 2005 price. It's a real charmer if you can handle the Valley location. Open Sun. 1-4pm.


Tree Section

3212 Blanche was new a few years ago (2004) and sold twice quickly, the most recent occasion being Feb. 2005 ($1.800m). It offers 4br/5ba, 3100 sq. ft. on a 4400 sq. ft. corner lot (on Blanche). Very sunny with some treetop views. Now priced at $1.899m, pretty flat from 3+ years ago. Open Sun. 1-5pm.

Someone has to live across from the Belamar hotel, because there are homes like 3513 Oak there. The nice tradeoff is the discount. You get a fairly well updated 3br/3ba, 1800 sq. ft. home with a decent yard for $999k. Bonus: The "wonderful open floor plan ... feels warm and happy" (listing). Open Sun. 1-4pm.

Choice Dirt

Here and there, intriguing lot sales are coming on the market.

Partly that's because builders aren't able to snap them up like they once did – business is a drag. And partly we're seeing these lots come up on public offer because the sellers are looking to push the boundaries for what ought to be paid for choice dirt.

Last week, MBC featured two candidates for splittable lots, one in the Hills at 222 N. Poinsettia ($7.9m) and one in the Trees at 2900 Maple ($2.7m). (See "Just Split 'Em.")

Now, a new, dreamy Sand Section lot has just come up – 320 Manhattan Ave. (Click highlighted address for pics & details via Redfin.)

There's a ho-hum old duplex there now, but you know that's not what the $4.2m pricetag is all about.

320 Manhattan has a 33' frontage on Manhattan Ave. and goes back 100 feet all the way to Bayview (a sorta-street, sorta-alley).

Here's the big draw: That 100' stretch fronts the 4th St. walkstreet. No neighbors on one side, a gently upsloping walkstreet, ocean views. Yeah, nice.

There's probably just one thing that could make this South End lot better – if it were on the north side of the walkstreet, rather than the south, meaning the whole house could bask in sun for more of the day. Trifles.

Some fairly recent, comparable, open-market South End lot sales would include two slightly smaller (2700 sq. ft.) lots west of Manhattan Ave.:

• 120 2nd, $3.810m, 4/30/07

• 129 6th, $3.625m, 2/14/08

Also, 128 5th tried in Fall 2007 for $3.975m (see "Sand Lots," Nov. 2007), hung around a while, cut just a bit to $3.9 and canceled after nearby 129 6th sold for less.

All those lots were closer to The Strand, but were a bit smaller (2700 sq. ft.) and, of course oriented differently, with narrow walkstreet frontages. Adjusting for everything, 320 Manhattan might be just about right.

Your blog author is no big gambler, but we'll put aside our aversion to the Lottery and give it a play this weekend, just in case...

Troubles in Paradise

You don't need to convince your blog author that MB is a great place, or that The Strand is one of our town's fine features. We've already declared as much (see "Great Streets: The Strand, Part I").

Yet, for all the joyous beauty of a public, beachfront thoroughfare like The Strand, there are issues. Frequent visitors will have their own pet peeves.

Think about that a little and vote in our new poll. This is meant to be a bit lighthearted, though some will think us crotchety for even suggesting it.

The poll is multiple-choice: you can vote for any number of issues you think are problems on The Strand. We prefer that you vote only once or twice for the big problems, but there's no enforcement.

Maybe for you, the big problem is beach visitors crossing The Strand without looking. Or bicyclists who can't be bothered to use the bike path. Or loud parties to which you are not invited.

The city recently took action against "private-looking" benches on the soil on the western, public side of The Strand. Private use of that land is a no-no, so they removed some benches. (Was that on your short list of peeves?)

Please vote in the poll and add your views in the comments.

Your blog author has a definite first choice among the poll options, but we'll hold back on disclosing that one for now so as not to skew the vote.

The poll closes Saturday at 7pm. Who knows, we might really learn something of great civic value.

And yes, for those who will ask, we're working on Part II on The Strand, also.

Palm Blues

In the past week, the number of new-construction offerings in the Tree Section priced below $2m has doubled – from 2 to 4.

And now, in a sign that we've reached a new stage in the working-off of stale, new-construction inventory, both of the new sub-$2m listings are in the early stages of foreclosure. Notices of default were filed on both properties July 8. (See PropertyShark.com.)

2611 Palm (pictured; click address for more details via Redfin) is the longest-running new ("new?!?") home on the market, 560 days at this writing. (It began Jan. 10, 2007.)

This week's cut was $196k. At $1.999m, it's down $496k (-20%) from its start at $2.495m.

2509 Palm isn't far behind, at 460 days (April 19, 2007).

This week's cut was $200k. (See the listing price history below.) At the same $1.999m, it's down $450k (-18%) from $2.449m.

Both homes were developed by the same builder – he of the "Crystal Ball" ad. Money quote: Prices "will not and cannot come down another 10% this year."

And both were financed by the same bank – yes, the one whose name has festooned so many green construction fences around town for several years running.

We'll take it as a given that this partnership was quite profitable for both parties for several years, but, in these two cases, things have broken down as the market has turned.

Why have these two homes stuck around while others have been able to sell?

Location doesn't seem like a big strike for either home. 2509 Palm is on a short, private cul-de-sac street. It is, however, sandwiched between Marine and Ardmore. 2611 Palm is on a fairly isolated part of Palm north of Valley, but perhaps too close to Valley for most tastes.

Both homes are clearly subject to the criticism that they're "cookie-cutter," a complaint we hear often about various new homes in the Trees. They each squeeze 5br and 3200 sq. ft. onto a 4480-sq.-ft. lot. The layouts are familiar, some bedrooms a bit cramped, and you get just a tiny back yard. 2611 Palm included some, achem, unique touches to the upstairs baths – creative uses of glass block – which were not a big hit.

Problems can be overcome with pricing. But until this week, neither listing was aggressive. Both actually seemed to lag the market substantially, which just meant more time on the market.

This year, 3 newbies in the Trees have sold for less than $2m:

• 1901 Poinsettia (5br/5ba, 3200 sq. ft.) was the first to be priced below $2m and to go into escrow, dropping $500k over about 6 months to close at $1.999m in March;

• 3104 Pacific (5br/5ba, 3200 sq. ft.) closed before Poinsettia at $1.950m in late February, having fallen just $200k; and

• 2309 Pacific (5br/4ba, 3200 sq. ft.) – literally the twin of 2611 Palm – sold for $1.890m in late April, down $400k from its start.

Also, the twin of 2509 Palm, 2509 Walnut, is in escrow – last listed at $2.099m.

It may also be worth noting that another long-running (443 DOM) new-construction listing on this street, 2310 Palm (5br/3ba, 3150 sq. ft. with very distinctive Spanish styling), closed in December 2007 for a big discount – $2.2m, fully $499k off its $2.699m start price. (See "The Mystery of 2310 Palm.")

The gradual decline of the lower end of the new-home market has been striking to watch. Equally striking is the fact that there are new homes selling – several near $2.7m in recent weeks:

• 570 27th ($2.680m)
• 2701 Palm ($2.749m)
• 2705 Palm ($2.689m)
• 668 33rd ($2.738m)
• 742 33rd ($2.7m)
• 664 33rd ($2.605m)

Only 2 of those 6 homes were substantially larger than the 2 Palm listings that are now below $2m. Indeed, the neighboring newbies on Palm listed above (2701 and 2705) are both just 3300 sq. ft. Obviously, build quality is a major factor in these higher-priced sales.

2509 Palm and 2611 Palm are now priced to draw interest they just haven't had so far. And yet, they're still both asking $2m while in default. Who will have the last word: bargain-hunting buyers or the auctioneer on the courthouse steps?

Open Forum (7/21-7/27)

The local dog trainer this weekend carried a vital, investigative piece suggesting that MB is chock-full of pro athletes.

We here at MBC assume you catch these things on your own, but just in case, here's a link and a money quote:

What Silicon Valley is for programmers and Nashville is for musicians, Manhattan Beach has become for professional athletes. Besides [Maria] Sharapova, there are Lakers and Clippers, Dodgers and Kings. There are pro volleyball players, soccer players and football players.

Yes, that's right, we are wall-to-wall athletes. Except for the B-list actors, producers, writers, money managers, lawyers, run-of-the-mill CEOs, and, oh, hey, various other hardworking folk. If there's a celebrity requirement for entry, we haven't seen it on the city gates.

Sure, MB has changed, is changing. Thanks, LAT. We're with you on that.

So, can you tell us who is paying too much ($4.3m+) for a 2br near the Strand and $11m for that gargantuan home on the Hill?

All things in time.

Warmer than Expected

The first half of July saw some big, scary developments in the mortgage market. IndyMac, a prime source of jumbo and Alt-A loans popular in higher-cost communities, imploded. Fannie and Freddie were thrown to the ropes, leading to some new guarantees of U.S. government intervention.

But MB’s RE market did alright during this challenging two-week period. This is clear in the new MB Market Update spreadsheets (click here to download the 7/15/08 edition, or use the link at the top-right of the front page anytime).

MBC previously noted that the month of June saw significant imbalance – 40 new listings and 19 sales (new escrows) that stuck. Last month, inventory of SFRs west of Sepulveda crept up to 113, the highest yet reported by MBC in a year-plus of public market tracking.

In early July, we saw a more balanced 10 new listings and 12 sales (new escrows) that stuck for at least a few days. (At least 3 new escrows failed quickly in this period.) There were 7 cancellations – more folks dropping out rather than sticking it out.

That left SFR inventory in our subject region at 107 as of July 15. (There are 5 new listings since then.)

The Tree Section, our biggest submarket, also saw the most escrows open up – 7, with 4 in the Sand and one in the Hill Section.

Among these new sales:

• 953 9th in the Hill Section moved quickly, starting May 29 at $2.650m and cutting quickly to $2.3m, which netted a deal. Sellers were determined not to hang around.

• 225 Homer in the South End made a deal after cutting 20% from its March 21 start price, down to $1.850m (see “Poor Homer”).

• 465 30th, a newer Sand Section home up on the plateau that had begun at $2.799m, way out of line, but perhaps a rescue price for what turned out to be a short sale – last at $2.399m, and we’re thinking lower when it closes.

• 3119 Valley, a 2br/1ba, 850 sq. ft. cottage whose price was right near $799k.

• 3600 Flournoy, almost a diamond in the rough, a 4br/3ba gorgeous remodel with 2300+ sq. ft., priced at $1.425m.

• 1901 John, a newer gem on a corner lot, which moved from $2.695m down to $2.499m before making a deal.
  

Let’s look at some other highlights of the first half of July, by region. As always, click any highlighted address to see pics & details via Redfin.


Hill Section

• 222 N. Poinsettia challenges the world to define a new high for a lot price – $7.9m for a 13,800 sq. ft. double lot just up the hill from Ardmore, with ocean views. It would be no surprise if this one chopped $2m before making a deal. (See "Just Split 'Em.")

• Chopping $1m was 700 8th – yes, $1m all at once (see "One Cut: One Million"). And that one may have room to go, too.

• 808 Highview is down a quick $400k (-8%) to $4.850m.

Sand Section

Just 3 new listings in the beach-adjacent parts of town. Two marginal listings (516 Ardmore and 215 S. Valley) were joined by one big-dollar, newer manse west of Highland (220 19th) priced above $5m.

Maybe the big news in the Sand was the dropouts:

• 228 29th Place, a newly custom-built home (ca. 2007) that began last year at $3.049m, and quit after months of cuts to a low of $2.279m.

• 224 32nd, a new (99% remodeled) home offered at $4.999m for just 3 weeks.

• 445 30th, a very decent and spacious Spanish (3br/3ba, 2600 sq. ft.) that tried for 4 months from $1.999m down to $1.795m, but found no takers.

• 532 6th, a warm contemporary at the corner of Valley and the 6th St. walkstreet, last at $2.35m.

• 132 2nd, a large (4br/6ba, 4300 sq. ft.) newer home on the walkstreet at Manhattan Ave., which was rumored to have made a deal above $6m which failed, then hit the market at $6m even and trickled down to $5.695m before canceling.

Closed sales in the Sand:

• 401 3rd (pictured), a big remodel in the South End, shaved just $15k off to get $2.670m;

• 473 31st, a new home on the plateau, chopped 14% (-$450k) to net $2.8m; and

• 117 7th, a couple doors off the Strand, proved a shocker, nabbing $330k more than asking to close at $4.325m for a small (2br/3ba, 2350 sq. ft.), newer walkstreet home. Wow.
  

Tree Section

Among the more intriguing new listings, we saw:

• 560 35th, a delightfully designed Craftsman whose illusion breaks down only a bit inside with the 90s-vintage baths – starts at $2.425m;

• 3314 Laurel, a sizable remodel (4br/3ba, 3450 sq. ft.) that started at $1.879m and made a deal immediately, but that didn’t stick; and

• 1208 Oak, a newer home without neighbors, unless you count a preschool and some business parking lots (see “This Home Is an Island”).

Among the closed sales:

• 3612 Poinsettia, a little starter with a location problem, got $849k for a 2br/1ba, 850 sq. ft. home on a full lot (4480 sq. ft.), down $108k (-11%) from start;

• 534 14th, a very odd contemporary in the Martyrs neighborhood, fell $650k (-19%) below its ambitious $3.350m start, closing at $2.7m; and

• A new home at 3500 Blanche took fairly quick cuts, closing at $2.125m – a a total of $424k (-17%) off a start at $2.549m.

Weekend Opens (7/19-7/20)

This week we have next-door neighbors hitting the market and a couple of longer-term listings that are open for the first time.

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

Up in the hills, a strange coincidence – two next-door neighbors hit the market on the same day:

914 2nd is Mrs. MBC's pick for the week. Her take: if you're going to spend $3m in the Hill Section, you ought to get a lot of house and big views. 914 2nd offers that in a spacious (4br/4ba, 4300 sq. ft.) and recently built home (2000) that is high enough up the hill to garner those prized big-blue-marble views. Décor is a big plus in parts.

The lot, at 8600 sq. ft., is quite big, though you don't end up with much yard. Yes, the location on 2nd St. is a strike – this is one of the busiest through streets in the Hills, though there are many busier streets in MB. The 2nd St. discount is part of what makes it a deal at $3.250m. Open Sun. 1-4pm.

910 2nd is smaller than its neighbor, with 5br/4ba, 3400 sq. ft. It's just one year older (1999). Classy, on a smaller lot (4500 sq. ft.), starts at $2.895m. Open Sun. 1-4pm.

312 S. Dianthus is a custom home that shows its age (ca. 1991) in parts but gives you your views and much more space than the two listings referenced above (5br/5ba, 5500 sq. ft.). Pricewise, it has run the gamut – starting in April at $3.490m, boosting up to $3.749 and getting into escrow, then dropping out and dropping down to the current $3.270. The one day open this weekend is the first we've seen posted in the BR. Open Sat. 1-4pm.


Sand Section

215 S. Valley may be a classic example of a home that's great for the family that lives there, but will have trouble finding someone else who feels the same. At $1.650m, it is very pricey for a 4br/3ba, 2500 sq. ft. home that needs all kinds of updating. The home is at the corner of Valley and Francisco (hello, school traffic), and borders the fields at Robinson School (huge back yard!).

The listing itself is confused: Are we selling the home or the lot? When the listing says, "Enjoy now and build your dream home in the future," we think they're talking about the lot. Open Sat. & Sun. 1-4pm.

3020 Alma is one of roughly 45 listings on Alma these days – okay, 7, but what about all the other adjacent stuff on the plateau? This one is a small (3br/2ba, 1300 sq. ft.) remodeled 1930 Spanish on a corner lot at 31st that offers some sweet, secluded outdoor spaces and ocean views. Now in its fourth week at $1.545m Open Sat. & Sun. 1-4pm.


Tree Section

There's not a bunch you can do with a skinny 2-story on a 2000 sq. ft. lot, but the remodel at 625 13th might just be the max. It's got a great contemporary flair. The very crisply designed exterior is a bit weathered now, but the interior spaces are great. One of the better updates of a standard-issue 70s beach box that we've seen. Starts at $1.499m. Open Sun. 1-4pm.

1705 Pacific is a very nicely remodeled home (4br/4ba, 2650 sq. ft.) whose location near Pacific School is either perfect for a family, or a big strike. Though we can't deny the home's appeal, its layout is peculiar (downstairs master off the living room). The exterior, while spiffed up, is a mishmash, design-wise. This one began at $1.875m and got the fewest votes (out of 3 listings) in an MBC poll asking "Who's Most Delusional?" Now at $1.799m, and open for the first time this weekend. Open Sun. 1-4pm.

For our "Weekend Opens" feature, we're often confronted with the question of when to re-mention a home we've referenced before. In the case of 757 30th, the occasion is a new price cut that brings it down $420k/-15% from its Thanksgiving 2007 start at $2.699m.

The new price, $2.279m, gets you a quality new Mediterranean in a quiet location with 5br/4ba and 3350 sq. ft. Oh, there are issues, but they can be worked out through price. Open Sat. 2-4pm, Sun. 1-4pm.

Poor Homer

For months, the market rejected 225 Homer.

It's a decent-sized 3br/3ba, 2300 sq. ft. home with substantial ocean views. Contemporary, clean, and nice, nestled in a very quiet part of the South End, it was Mrs. MBC's pick in early April.

225 Homer began March 21 at $2.3m.

That didn't seem crazy because a nearby neighbor, 207 Homer, was up for $1.779m at the time, and that one was older, smaller (1800 sq. ft.), crustier and at greater risk of losing those ocean views if a neighbor someday builds up. The combination of factors suggested a premium of $500k.

207 Homer sold pretty quickly for $1.715m, an impressive $953/PSF. (It closed May 2.)

But 225 Homer lingered. This week, after several previous cuts (see listing price history via Redfin), 225 Homer dropped to $1.850m (-$450k/-20%), which is a fairly low $808/PSF for a nicer, newer home.

But the world hasn't gone crazy. Finally, that price seemed a bargain, and 225 Homer is now in escrow. (We don't have the sale price yet.)

225 Homer has some flaws – a too-small master, awkward spaces upstairs. Still, if you had proposed, at any time recently, that it was worth only about $100k more than smaller, crustier, much more flawed 207 Homer, you would have earned the laughter directed your way. The sellers have rejected offers with a 1.7 at the start.

Now, don't cry for the sellers. They've moved uptown to a huge, brand-new home even closer to the water. So they'll do fine.

But the dropoff at 225 Homer offers a hint that the market has slipped in just the last few months. You can't generalize from one house, but you can call it a tea leaf.

Masons Would Frown

Faux stone veneers can make or break the look of a new home or remodel. (See "Stapled-On Stone" Part I and Part II.)

We recently passed an example of poor stone work that caused a double-take on a drive-by.

This new home features two pillars on either side of the walkway to the front door. But one of these pillars is not like the other, and vice versa. (This pic merges 2 separate photos; click to enlarge.)

Using the same materials, the crew installing the faux stone took different approaches to each pillar.

Each would be an individual. One would be more naturalistic, with a mix of stone sizes and widths. The other would go with the sleeker, moderne look, with much thinner veneers tightly packed together. (And slightly uneven, for an extra touch.)

If you're the homeowner, wouldn't you want these pillars to match, style-wise?

Maybe this sounds old-fashioned, but there used to be whole legions of stone masons who prided themselves in their work and their attention to detail. Aesthetics were part of the work, but function was a big part, too.

Now that function is out the window, aesthetics rule. And here's the problem – the aesthetic sense of things may vary from one member of your builder's crew to the next.

This is what can happen at the micro level of a construction project if no one is watching the details. Buyers, and homeowners, beware.

Just Split 'Em

Would you pay $8 million for a 1958 ranch house? Come on, even with granite counters?!?

How about $2.7m for a different rancher? It's 10 years older, part of the discount factor. Anyone?

You don't need the bed/bath/sq. ft. particulars on these... Of course you wouldn't go for these deals.

That's because these newer listings are selling lot size and, at least in one case, location. The deals only work if you split the lots or, alternatively, are so absolutely taken with the locations that you'll willfully pay a massive premium.

222 N. Poinsettia (pictured above; click address for more pics & details via Redfin) calls itself a Hill Section "trophy property." But they don't mean the house, they mean the dirt.

For your $7.9m, you'll get what is, essentially, a double lot (13,825 sq. ft.) with some ocean views partway up the hill in the Hill Section. It's got "an amazing 106' of ocean view frontage" (listing).

At about $8m, you've got 2 options. One is to build a $2m-$3m home, at which point you're in for $10m+, but then you might truly have a "trophy property" akin to 900 Pacific. That's a big project.

Or, you might split the lots and develop 2 separate homes (with a still-amazing 53' of ocean view frontage) valued at perhaps $6m each – you hope – upon completion. Any gamblers out there?

2900 Maple (click for details) is a Tree Section double-lot (9280 sq. ft.) purchased in Feb. 2007 by a prominent local builder for $2.555m. It's up now at $2.699m.

According to the current listing, the builder/owner has "started the process of splitting the lots." And yet, it is important for "buyer to verify potential for lot split."

Any bells ringing there? If the lot can be split (it would become 2 separate lots of 4640 sq. ft. – standard for parts of the Tree Section), it's worth whatever 2 lots are worth. Without a split, it's worth at least 40% less.

Are 2 smaller Tree Section lots north of Valley worth $1.35m each these days? We're skeptical.

A 4640 sq. ft. lot nearby (at 3009 Poinsettia) on one of our very favorite blocks, Poinsettia between Valley and 31st, recently went into escrow at $1.239m. (See "The Street Where Listings Don't Last.")

Interestingly, the builder/owner of 2900 Maple paid for an ad in the two neighborhood free-weeklies earlier this year arguing that prices in MB "will not and cannot come down another 10% this year." A point in support: builders buying lots in recent years had paid "in the ballpark of $1.3 million (cost to purchase an existing home as a construction site)," so new homes would generally need to go for $2.3m or so, the builders' "break even point." (See "A Builder's Take.")

In Feb. 2007, he did pay "in the ballpark of $1.3m" for 2900 Maple ($1.275m x 2). Can he get out now for that?

Open Forum (7/14-7/20)

The news could be interesting this week, with Fannie/Freddie stuff playing out, at least early in the week.

There's nothing like a fundamental threat to the 70-year-old structure of the mortgage industry to generate lots of chatter and increasingly polarized opinions. In response to Sunday's move by the Fed, we particularly liked this quote:

It's outrageous. It's offensive. Welcome to the socialist state. In capitalism, winners are supposed to reap rewards and losers are supposed to take losses for bad risk management. These are private companies.

That's Josh Rosner, managing director at Graham Fisher in New York, in this Reuters story, and not, as you might have guessed, Ron Paul.

Agree? Disagree?

Hmmm, those colors look sorta familiar. Nah, not going there.

There's plenty of other news to dig into, plus personalities on parade. Keep it clean.

Weekend Opens (7/12-7/13)

No question, this Fannie Mae and Freddie Mac stuff is scary. The enterprises are behind half the mortgages in America, and no one knows quite what will happen now that they're on the ropes.

Let's just say – fundamental problems in the mortgage industry may diminish enthusiasm for home purchases.

But that doesn't mean you can't window-shop. There are some nice new offerings worth 15 minutes this weekend.

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."

Also, the new MB Market Update spreadsheets are available now – click here to download the 6/30/08 spreadsheets or, at any time, use the link at the upper-right part of the front page.

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


Hill Section

717 10th (pictured) is a sharp, appealing modern home with big ocean views. Offers 5br/4ba and 4250 sq. ft. on a 5800 sq. ft. lot. Starts at $3.850m, a tad more than $1m above the Oct. 2004 purchase price. (See the "Sales History" on the Redfin listing for more.)

If you find that price a bit steep, the home's available for rent, furnished, for – gulp – $14,000/mo. Open Sun. 2-4pm.

724 11th debuted in late February at $3.449m, went quiet for a while, and now returns $250k lighter at $3.199m. Offers 4br/5ba and 3300 sq. ft. (4br/5ba, 3300 sq. ft.) and ocean views, but a bit of an East Manhattan look at the curb. (Thinking much further east, the listing says the home design has a "French influence.") Open Sat. & Sun., 1-4pm.

808 Highview has bumped down again, now at $4.850m. (That's -$400k/-8% in a month.) Open Sun. 1-4pm.


Sand Section

West of Highland, on a great street (next to 18th, officially one of MBC's "Great Streets"), 220 19th is gorgeous, and the sellers know it. That's why they believe the 2001 home will command $5.2m or so – a nice return on their $2.1m purchase price.

Bring that kind of coin, and you get a walkstreet home with 5br/4ba, 4325 sq. ft. on 3 levels with an elevator. The home boasts big views, but, surprisingly, most of the pics in the listing are blurry and pixelated. Well, you don't sell these sorts of properties online, right? Open Sat. & Sun. 1-5pm.

341 10th has been around more than 100 days, and is now down $500k from its start at $3.3m. It's a walkstreet home very near downtown that's stylish (nice woodwork) but also a bit broken up – only 2400 of the 3150 sq. ft. are in the main house; the rest is part of a less-improved, attached rental unit. The whole package stands now at $2.799m. Open Sun. 1-4pm.

Re-list of the week: This is at least the third time that 417 28th has been "new," courtesy of this week's bogus re-list. The real news is that the price has moved down twice in $200k chunks in the past couple of weeks. (See "Shaving for Summer.") Keep that up, and it might really sell. Now at $2.899m. Open Sat. & Sun., 1-4pm.


Tree Section

Mrs. MBC is a sucker for the promise of a true Craftsman. Tacking some shingles and prominent beams onto an otherwise plain home design is not going to convince her. But 560 35th, her pick of the week, takes some strides in the right direction.

Above all, the home is stylish, not cookie-cutter, doesn't suffer from garage-face syndrome, and offers a decent PPSF ($591) for 6br/6ba and 4100 sq. ft. The Craftsman style on the exterior is inspired, and some elements carry over well inside. (The listing's reference to the Gamble House vastly over-promises.)

Mrs. MBC would repaint several rooms (the current palette can't be authentic) and would try to figure out which period to place the master bath in – the 1990s look is a downer, but she might go for a 2008 look, instead of, say, 1890s.

560 35th starts at $2.425m. Open Sat. & Sun., 1-4pm.

640 30th is a 5-year-old Mediterranean with 5br/6ba and 3450 sq. ft. It's plush, with lots of extra details and great décor. Starts at $2.349m. Open Sat. & Sun., 1-4pm.

3404 Pine is an attractive newbie that has been around 10 weeks, and recently cut $150k to $2.295m. It's not so far from The Twins on Poinsettia (3307 and 3309), which just hit MBC's radar for cutting to $2.499m (see "The Twins Slip.")

3404 Pine is open Sun. 2-5pm. The Twins are open Sat. & Sun. 2-4pm.

East MB Bucket (2)

It's time again to talk East Manhattan.

Here we invite readers to start the discussion of East MB RE news, 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.

For some background, see the first East MB Bucket here.

MBC will restart these buckets occasionally 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.)

The Twins Slip

Four months ago, MBC readers weighed in on the asking prices of two new homes – The Twins in the Trees, 3307 and 3309 Poinsettia. (3309 is pictured; click addresses for details via Redfin.)

The homes are next-door neighbors built by the same developer after a lot split. They share a layout and are the same size, though they're not styled the same – one is Craftsmanesque and one is Caliterraneanesque.

The Twins have been priced exactly the same from Day One. They began at $2.795m, despite the proximity to the refinery.

Both homes started at $860/PSF – very high compared with most Tree Section new-construction sales over the previous 6 months. (A few special newbies have neared, but not exceeded, that threshold, in sales that closed in the time since The Twins hit the market. For more info see the current MB Market Update spreadsheets.)

In our poll, readers overwhelmingly felt that joint start price was at least $300k too high. And on Thursday, the developer agreed, dropping the prices on both to $2.499m.

This price move virtually guaranteed that 48% of voters in the pricing poll were right to guess $2.2m-$2.5m. (Click here for the full story on the results; or here for the original story about The Twins setting up the pricing poll.)

Of course, that assumes that they get $2.2m or more. There are now 17 active SFRs in the Trees between $2.2m and $2.5m. Not all will wind up on the high end of that range.

A Shorty with a Story

MB's newest short sale raises some intriguing questions.

1410 N. Ardmore is a little cottage (3br/2ba, 1600 sq. ft.) on a busy part of Ardmore, near the intersection at 15th. It's quite close to downtown, so that's a plus. (Note: No pics on Redfin or MRMLS just yet.)

Two years ago, the property was offered for $1.1m. It went quickly for $1.2m, closing in March 2006. The new owners spiffed the place up a bit shortly thereafter and folks moved in.

The home is on the market again now at $1.5m, with this note:

Property is a Short Sale, Commission and Price subject to Lender's Approval.

Wait, short at +$300k over the 2006 price?

You might be thinking that the owners went a little HELOC-crazy. But the truth promises to be stranger.

That's because about a year after that 2006 sale, 1410 N. Ardmore sold again for $2.5m.

That's $2.5m, more than double the earlier price.

The property wasn't redeveloped in the interim – just that spiffing-up we mentioned.

So how might such a thing happen?

Your blog host dashed off to the county recorder's office one day a couple months back when this property first popped up in default.

Turns out it's a $2m loan from that Feb. 2007 sale that has now gone bad. (You can see the same thing by looking the property up on PropertyShark.com now.) So $1.5m may or may not be a great price for this home, but it's at least $500k short to begin.

A clause in the $2m loan suggests that there was some intent to develop the property. But if so, those plans didn't get very far.

There's a lot more to this story. Call this Chapter 1.

Try Bidding 10% Below

Here's a nice dual success story.

A very odd contemporary home at 534 14th hit the market in late February at $3.350m.

There wasn't much interest at that level, despite the Martyrs location, proximity to downtown and ocean views. (The home has mostly been listed on the MLS as a Sand Section prop, but it's the Tree Section.)

Gradually the price came down to $2.999m (-$351k/-10%). And there it lingered a bit.

Last month, someone snapped it up. When the sale closed Monday this week, we saw that they had bid almost 10% lower. The buyers picked it up for $2.7m, another $300k off the discounted list price.

The final sale price is down $650k/-19% from that optimistic start.

Here's what's intriguing – this case shows that you can grab a listing for about 10% off its price, even a discounted price, if only you show some interest.

There are plenty of wallflower listings out there these days on which the sellers may welcome a 10%-off "lowball." They just don't want to shift their list prices now for fear of what 10% off of some new price might net them.

The caveat on this one is that the 14th St. home was unique – a little bit too much so. In April MBC said of it:

[534 14th is] a large contemporary (ca. 1990) with 4br/4ba and 4100 sq. ft. It's really two buildings. Guests & kids get the front tower with its 3br and small hangout rooms. Grownups get the entertainment spaces and a master through which the back yard pool is accessed.

That's right, one bedroom is in the main/entertainment wing, just off the pool, while the rest of the BRs, all small, are up front in a separate building, connected by a hallway. Not everyone's idea of a family home.

Still, the sellers made a deal. For a home with 4br/4ba and 4100 sq. ft., and a strange vibe, they got a respectable $659/PSF and, let's not forget: $2.7m. Maybe they shot too high to begin, but they were ready to get real when they had paper to sign.

One Cut: One Million

It's tough to price estates in the Hill Section these days.

No one doubts the appeal of a newer, grand home in the Hills. Add an ocean view and you're money.

Or, money you should be. Demand has been weak.

Just 3 homes listed above $3m in the Hills have gone into escrow in all of 2008. There are now 14 listings over $3m in the region. (We include 918 10th, which is "on hold.")

We can't overlook one of the big sales of recent weeks – 900 Pacific (click for pics & details via Redfin), a nearly new mega-manse (6br/7ba, 10,500 sq. ft.) boasting one of the best hilltop ocean-view locations in MB.

That one recently listed for $10.9m and found a buyer within two weeks. See, that was money.

Quite nearby, the sellers of 700 8th (pictured; click address for details) have been looking for money. The home was listed in mid-February for $8m.

That was a fairly astonishing $1,624/PSF for this charming, but not enormous, 5br/5ba, 4925 sq. ft. home (built in 2002). The views are actually comparable to those of 900 Pacific, but the home's more modest.

The price: Not modest. In fact, it just didn't seem serious. Smelled like a market-tester.

After more than 4 months with no action, on Monday, the price dropped by a million dollars. It was their first cut, but a biggie. That's a lotta clams for one chop.

In a year-plus of public market tracking, MBC has seen just 2 homes sell for more than $1m off their start prices – 570 27th recently sold for $1.219m less than its start (see "Bought: The Farm(house)") and 108 S. Dianthus last year sold for $1.250m less than its start. Both of those listings lingered for more than a year.

At $7m, is this one now more serious?

As we noted the first time we referenced 700 8th (see "MB Market Update for 2/15/08"), the apparent comp for this listing would be 863 6th (5400 sq. ft., 11,000+ sq. ft. lot), which sold off the MLS last August for $8.325m. We’ve called that one a “huge outlier,” and, with its $1,542/PSF sale price, we're still waiting to be proved wrong.

700 8th is now below that threshold at $1,400+/PSF, but may still suffer by comparison to some others (click any address for pics & details via Redfin):

• 617 6th and 218 N. Dianthus don't have all the views, but both are about 1000 sq. ft. larger and $1m less pricey;

• 808 Highview, a resale, is smaller (4125 sq. ft.) but also $2m lower; and

• 815 2nd is new and comparably sized, but $2.7m lower.

In a time of tighter supply, perhaps 700 8th could get that $7m-$8m. But this isn't one of those times. So what can they get?

Up or Down? It's a Toss-Up

Sometimes it seems the housing bears hog all the attention at MBC. But the readership is evenly divided over what the next few years might hold for local RE prices.

That’s the indication from our most recent reader poll. Exactly half the people participating said they thought local RE median prices would be down 5% or more in 3 years, at the end of June 2011.

That means half took a sunnier view.

Almost a third (31%) felt that prices would be up more than 5% in 3 years.

A bullish sliver said prices would be up 20% or more, while the plurality winner in this poll (the category with the highest single total) was the opinion that we would see an increase between 5% and 20%.

One-fifth of voters (19%) took the fence-straddling view that prices would be essentially flat, meaning +/-5%, in 3 years.

We did stipulate in the story setting up the poll (see “How Far Up OR Down in 3 Yrs?”) that prices should be projected in nominal terms, not adjusted for inflation. So it’s worth noting that a “flat” value for a home in 2011 might really mean the real value has degraded somewhat.

With half the MBC readership looking for a smooth landing, we are reminded that, in a different recent poll, about half the respondents said they own a home in MB. (See “More About You.”)

Now, about those bears. The folks expecting home price declines of some magnitude had 3 choices: drops of 5 to 20%, 20% to 35%, or 35% or more.

The smallest group was the one willing to project the most dire outcome – 13% of respondents thought prices would drop more than 35%. That would be worse than the 27.7% peak-to-trough drop in the local market median in the 1990s housing recession. (See “The 90s: What a Drag.”)

Let’s consider what such a drop might look like. Based on data posted in comments, which we consider credible, the MLS shows a median price of $1.8m for closed sales of SFRs in MB so far this year (Jan. 1-June 30, 2008).

Take 35% off that big number, and it’s a big number – $630k. That would push the median in 2011 down to $1.170m. Devastating. But then, the extreme bears tend to think it’s silly that prices nearly tripled in just a few years.

The rest of the bears pretty evenly chose between two other price-drop scenarios. There were 19% who felt that a mild drop in the range of 5% to 20% was reasonable.

A more pessimistic group looked at a 20% to 35% drop – in line with the 1990s drops – as the more likely outcome. A price decline on that scale would leave the median price between $1.170m and $1.440m.

Not listed as an option in the poll… is MBC going to be around to check back in, come July 2011? Interesting question and, like the subject of our poll, impossible to predict.