High/Low Prices for 2008

It's almost time to say goodbye to 2008.

As the year heads to the rear-view mirror, MBC offers the first of a few year-end roundups – this one covering the highest and lowest prices paid in MB west of Sepulveda this year. (Click any picture to expand.)

In case we forget to say it later: Happy new year to all MBC readers and their families!


Hill Section

Highest Price: 900 Pacific: $9.85m. This home is a quintessential Hill Section estate – absolutely vast (6br/7ba, 10,500 sq. ft.), luxurious and boasting one of the best hilltop, ocean-view locations in the Hills. (Pacific in the Hills is one of MBC's "Great Streets.")

900 Pacific was just about a year old when it was put up on public offer in June at $10.9m. The sale happened quickly and closed in mid-August.

It's little wonder that this one set a new record for a sale price in the Hill Section. That million-dollar discount was also worth noting...

Runner-Up: 116 N. Dianthus: $7.2m. This large (5br/7ba, 6600 sq. ft.) corner-lot home was purchased off of the MLS during construction in late 2007; the deal closed in April of this year.

The location near the peak of the Hill offers some of the biggest ocean views around.

But there is a downside: one side of the house abuts 2nd St., one of the busiest streets in the Hills.

The owners offered up the home as part of the annual Sandpipers Holiday Home Tour. (See MBC's story, "A Look at the Sandpipers Tour Homes" or go directly to the HHT site.)

Lowest Price: 1100 John: $975k. Speaking of corner lots in the Hills – 1100 John had that going for it, too. But it's an older cottage (3br/2ba, 1550 sq. ft.) that unfortunately backs up onto a new commercial building and is only steps to MBB.

The dated home began at $1.259m but cut $284k (-23%) to make a deal over the span of just 4 months.



Sand Section

Highest Price: 200 19th: $5.6m. Everyone knows there is something about those walkstreets west of Highland.

Take one of them near downtown and add a new, fully realized Cape Cod with loads of luxury features, and you've got the priciest deal in MB's Sand Section for the year.

This one offers 5br/4ba and 4200 sq. ft. (essentially the max on a full lot [2700 sq. ft.]), complete with a 3-stop elevator and very nice ocean views from the patio and balconies.

The listing came up in January and the property sold quickly, closing in March.

The buyer got a terrific home. For the builder, this was also a nice payoff – the lot was acquired for $2.9m in June 2006.

Runner-Up: 220 19th: $4.85m. Look at that – there's another 19th St. address. Nice block, eh?

Here you have a newer, but not new (2001), large and luxe home (5br/4ba, 4325 sq. ft.) on 3 levels, also with an elevator.

After a July start at $5.2m, 220 19th closed for in December at a minor 7% discount.

Lowest Price: 462 36th Place: $825k. Let's start this on the brighter side by pointing out that someone found a way into a beach-close house for much less than $1m. You get the weather, the schools, the uptown (El Norte!) amenities...

MBC did label this 3br/2b, 1150 sq. ft. home "A Real Turkey" in late 2007. That was due to its tiny size, poor remodel(s) and, well, the unfathomably large range of options a person might have for $800-900k all over the world, besides this house. But remember, now, they do say: Every house has a buyer.


Tree Section

Highest Price: 850 18th: $4.4m. One of the most surpassingly beautiful, newer homes in the Trees broke the $4m barrier this Spring.

This 6br/6ba home offers 5950 sq. ft. on a vast 8,000 sq. ft. lot – those are Hill Section numbers.

An extra attraction was the way the home had been outfitted and decorated. As MBC remarked in writing up the sale:

[W]here do you start with the superlatives? Lush. Posh. Gigantic. Highly stylized (in a Spanish vein). You could melt into this home. Yum.

Lowest Prices: In a fairly narrow price range, there were really 3 lowest-priced sales in 2008, all at different lot sizes. All of these were livable homes, not scrapers:

• 3119 Valley: $720k. A small home (2br/1ba, 850 sq. ft.) on a half lot (2500 sq. ft.) near the northeastern edge of MBC's coverage area. MLS-reported price was $760k, but now we're seeing $720k in official records.

• 626 Rosecrans: $772k. This might be literally the smallest house we have seen sell this year or last – 1br, 1ba and 600 sq. ft. The lot, at least, was a bit bigger than our previous entry at 3625 sq. ft. (a two-thirds lot?). The home was updated nicely, great for someone who needed virtually no space. And free to the buyer: Plans for a 2000 sq. ft. addition, evidently abandoned.
  

• 1400 Oak: $780k. This dated home on a full lot (4480 sq. ft.) in a challenged location opened at $975k in mid-May. "Challenged?" The 3br/2ba, 1400 sq. ft. home is on the "wrong" side of Oak, backing up on a business and abutting two "cut-through" streets. (Oak and 14th, a bailout street for drivers on Sepulveda who don't want to wait for the light at MBB.)
  

Turns out, 1400 Oak made a quick 20% adjustment and set a new, recent low for full-lot sales west of Sepulveda. There will be challengers for that title in 2009.

Finally, Finally – A Newbie Sells in the Hills

A Christmastime deal in the Hill Section marks just the second purchase of a new home in the Hills this year.

930 John (the listing can still be viewed while in "backup offer" status) is a large (5br/6ba, 5400 sq. ft.) new home near downtown with city views. It started up in April at $4.995m and cut, over time, to $3.999m.

It'll be some time till we get the final price, but you might imagine the buyers took a bit more off the top. That would put the total cuts over $1m, and that's increasingly common in the Hills.

The only other purely new home purchased this year off the MLS was 911 Duncan (5br/6ba, 3700 sq. ft.), which closed in February at $3.190m (-$580k/-15% from start). (See "Such a Deal on Duncan.") Another new home closed in the first half of January, based on a deal from 2007 (853 6th at $4.5m).

As we bid farewell to 930 John, there are 5 new homes left in the Hills (click for pics & details via Redfin):

• 815 2nd ($3.875m)

• 852 8th ($4.250m)

• 617 6th ($4.995m)

• 218 N Dianthus ($5.495m)

• 511 Pacific ($6.675m)

Of those, 4 of the 5 are down something near $1m from their starts ($955k-$1.325m), and 3 have been around more than 8 months as we enter 2009.

So they didn't get it done this year, but hope – in the New Year – springs eternal.

Trends in the Trees

We took note just the other day of a sale at 3307 Poinsettia, a new Tree Section home of a somewhat standard size (5br/5ba, 3250 sq. ft.) that closed for $2.1m. (See "A Twin Comes In.")

Its twin, 3309 Poinsettia, is now at $2.195m, and might be expected to go in $2.0-$2.1m territory when and if a buyer is found.

The bigger issue is what might be going on with Tree Section new-construction prices.

New homes in the Trees are clearly coming down in price, in adjustments that can take time and can ultimately be quite dramatic. Over the past 6 months, we have seen sales close on 5 other newbies in the Tree Section of comparable size on standard lots.

They started in the range of $2.3m-$2.75m, but eventually clustered near $2.1m when they sold:

• 1821 Walnut (pictured) (5br/4ba, 3400 sq. ft.) – $2.250 in June '08 (off from $2.750m); almost 1 year on mkt.;

• 3500 Blanche (4br/4ba, 3300 sq. ft.) – $2.125m in July '08 (off from $2.549m); 114 DOM;

• 2509 Walnut (5br/5ba, 3200 sq. ft.) – $2.025m in July '08 (off from $2.449m); 305 DOM;

• 1820 Elm (5br/4ba, 3025 sq. ft.) – $2.1m in Aug. '08 (off from $2.349m); 68 DOM; and

• 2408 Walnut (5br/4ba, 3100 sq. ft.) – $2.062m in Dec. '08 (off from $2.289m); 94 DOM.

A quick glance at those examples, and you see asking prices were too high by 10%-18%. (Asking on 3307 Poinsettia was too high by 25%.)

So, how do those sale prices compare?

First, let's look at the second half of 2007. There are 3 more examples on standard-size lots:

• 3104 Maple (5br/4ba, 3350 sq. ft.) – $2.490m in June '07 (off from $2.599m);

• 3212 Maple (5br/5ba, 3250 sq. ft.) – $2.500m in June '07 (off from $2.679m); and

• 2310 Palm (pictured) (5br/3ba, 3150 sq. ft.) – $2.325m in Dec. '07 (off from $2.699m).

All of those sold for considerably more than the more recent examples from late 2008.

Also late last year, there were 3 more new homes on larger lots that all sold for less:

• 3113 Valley (5br/4ba, 3400 sq. ft., lot: 5000 sq. ft.) – $2.225m in Sept. '07 (off from $2.375m);

• 2807 Elm (5br/5ba, 3550 sq. ft., lot: 5600 sq. ft.) – $2.100m in Dec. '07 (off from $2.899m); and
  

• 648 35th (5br/5ba, 3600 sq. ft., lot: 5400 sq. ft.) – $2.075m in Dec. '07 (off from $2.450m).

These are very small datasets, but it is possible to see a trend, year over year, of generally lower sale prices for homes in reasonably good locations.

There is some interesting contrary evidence that makes firm conclusions difficult to draw.

For instance, look at the sale prices on comparable Tree Section new construction in the first part of 2008 (graphic drawn from MBC's "1st Half 2008 SFR Sales Data" – click pic to expand; title to download):







That's 4 sales under $2m, of which 3 were in subpar locations. These were the first to break the "floor" of $2m for new homes in some time.

Given the lower sale prices earlier this year, should the second half of the year be read as an improvement?

And then there are the big-time counterexamples. In cases of great locations and/or exceptional craftsmanship, $2.7m looks more like the norm, at least it did in Summer 2008. There's no objective way to account for these factors, though everyone knows there's a difference.

In the past 6 months, homes of comparable size, but higher prices, include:

• 2701 Palm (5br/4ba, 3300 sq. ft.) – $2.749m in June '08; 34 DOM;

• 2705 Palm (5br/5ba, 3300 sq. ft.) – $2.689m in June '08; 49 DOM;

• 668 33rd (5br/5ba, 3250 sq. ft.) – $2.737m in June '08; 6 DOM;

• 664 33rd (5br/5ba, 3550 sq. ft.) – $2.605m in July '08; 9 DOM; and

• 1813 Pine (5br/4ba, 3400 sq. ft.) – $2.7m in Aug. '08 (sold off market).

Note the quick sales on these, too, a further indication that these were something different than the cookie-cutter speckies we have watched linger all over the Trees for 2+ years.

As to current offerings, there are now 11 newbies in the Trees priced below $2.3m – including the bottom-scraping 2509 Palm (the failed auction house) now at $1.679m, and ranging up to cute corner-lot 1901 Walnut at $2.289m.

Of those 11, 6 are above the $2.0m threshold now, and 5 more are below – some well below. Some of these seem to suggest that next year's sales will pull the typical sale price for new construction down:

• The most interesting of the crop might be 2829 Valley (pictured) which delivers a lot of house for the money if you'll make the concession to living on Valley – less of a factor than you might assume, given the way this home was built. Currently at $1.799m.

• 2504 Poinsettia and 757 30th have both become aggressive, and are each down below $1.9m after starts at $2.5m or higher.

• 3413 Pacific and 3604 Palm are recent entrants to the market, at $2.095m and $2.189m, respectively, and both seem at risk of major adjustments and/or time on market due to location issues (see "Fighting the Future" for more on the Pacific home's pricing).

For a few years, it has been normal for new homes to go for at least $2m in the Trees. That floor was broken a few times this year. Looking at the trends and the lineup of active listings, it's possible that, in 2009, sales above $2m could be the exception, not the rule.

A Twin Comes In

The first of the Twins in the Trees to make a deal, 3307 Poinsettia has now closed at $2.1m.

It took 8 months on market and a price concession of $699k (-25%).

It was apparent when both 3307 and 3309 Poinsettia (click for more pics & details) hit the market in early 2008 that the $2.795m start prices were overly ambitious. (These are 2 new homes developed on the same (split) lot by the same developer with the same layout, but different styles – hence their twinness.)

MBC called a poll 9 months ago (see "Pricing Poll: Twins in the Trees") and found that 70% of readers generally believed the properties were overpriced, but would probably sell for $2.2m or more. (See "Poll Results: Twins in the Trees.") Such optimism was obviously not well-founded. The 27% who said "Below $2.2m" were the most prescient.

The sale here will have some spillover effect, of course, on the price for leftover 3309 – now at $2.195m.

The $2.1m closed price is also consistent with a downward trend among much – but not all! – new construction in the Trees this year. More on that shortly.

Sales Activity for Nov./Dec.

Regular readers know that we typically publish MB Market Updates twice monthly. Our November sheets were posted, as usual, but only one story about inventory referenced them.

We’re now into December and our 12/15/08 update is now available for download here, or by using the link in the upper-right corner of the front page at any time. We have kept the 11/30/08 update posted as well, for reference.

After a quick inventory update, we’ll look at sales activity for November and the first half of December. A little further analysis of the submarkets west of Sepulveda will follow late this week.

First things first: a quick inventory correction. Our final count for Dec. 15 was 121, not the 123 we reported previously. This was still 2 higher than the end-November total, a surprising development in this month. The mid-October update saw the high for 2008 at 124. (See “A Li’l Uptick,” now revised.)

How active was our market over the past 6 weeks? We saw a total of 14 sales (new escrows) that have stuck, including 9 in November and 5 so far in December.

So, on average, that is a tad better than 2 deals per week west of Sepulveda. Well, we already knew that the "4th Quarter [Is] Often Quietest."

The list of deals from these past 6 weeks is easy enough to provide in total. Here they are, in order of month, then closed price or last list price.


November – New Escrows

All but one of the new deals in November was in the Tree Section. The non-Tree sale was probably the deal of the year, up in the Hills (last on this list).

• 2907 Pacific (pictured) (3br/2ba, 1900 sq. ft.) – last at $1.099m after almost 6 months on market; the listing canceled off the MLS but we have word it’s in escrow and almost a wrap;

• 2622 Pacific (3br/3ba, 2300 sq. ft.) – last at $1.299m (see closed sale info below);

• 1948 Ardmore (3br/2ba, 2000 sq. ft.) – drew quick interest and sold within a week; it was at $1.240m;

• 2601 Walnut (pictured) (3br/2ba, 1925 sq. ft.) – was at $1.329m, has closed for $1.323m (after Dec. 15);

• 2408 Walnut (5br/4ba, 3100 sq. ft.) – a new home that began at $2.289m and closed in December 10% down at $2.062m;

• 659 31st (4br/3ba, 3175 sq. ft.) – a rehab-and-flip on one of MBC’s “Great Streets” in the Trees; not a hugely profitable flip, though – sellers paid $1.950m and got their $2.189m asking within a few days, closing in December;

• 3307 Poinsettia (5br/5ba, 3250 sq. ft.) – the Cape Cod of the Twins in the Trees, last at $2.195m, a full $600k off the start;

• 1801 John (pictured) (5br/4ba, 4000 sq. ft.) – a gorgeous, remodeled home on a corner lot, last at $2.675m; and

• 808 Highview (5br/5ba, 4575 sq. ft.) – the only Hill Section sale here, which saw an all-cash offer and a quick escrow that closed in late November at $3.6m, a big discount of $1.65m (-31%) from start, and not all that big of a markup over the Dec. 2002 purchase price of $3.1m (see “High Up, But Below Trend”) – this could be the deal of the year.

December – New Escrows

The mix of 5 sales here is interesting – a short sale, 2 lot sales and 2 new homes (neighbors directly across an alley) that took big cuts:

• 629 36th (pictured) (4br/4ba, 3500 sq. ft.) is one of a few short sales in the neighborhood, a flawed home close to Blanche and Rosecrans, but who can resist a bargain? The PPSF is just $400 at $1.399m (including the guest quarters in the square footage); this listing can still be viewed via Redfin while it is in “backup offer” status;

• 1900 Laurel – a larger-than-normal 6000 sq. ft. corner lot in a great location in the Trees sold quickly after listing for $1.499m – an indication of some health in the market where prime dirt is concerned;

• 128 6th – a standard 2700 sq. ft. lot that found its third buyer this Fall, and finally cinched a deal after 2 failed escrows; a noted agent/developer picked it up and closed the deal Dec. 3, but we don’t have a price yet – last at $2.9m, after a start in August at $3.5m; you can estimate a sale price of about $2.7m based on the loan; and

• 221 34th (pictured) and 220 35th are both brand-new moderns and both appear to be good or great deals for the buyers – 34th has been around much of 2008, starting at $5.4m and moving down about $2m lower to make a deal; 35th moved quickly from $5m to about $4m to complete the handshake (see “Deals in the North End”).

Those are the deals that have remained solid or have closed. We did not see too many failed escrows in this period, but we don’t have a total.

Here are the sales that closed over the past 6 weeks, again, ordered by month and price.


November – Closed Sales

Citywide (not just west of Hwy. 1), MB saw just 11 SFR sales close in November, an all-time low.
Of those, we saw 6 close west of Sepulveda. One was 808 Highview (see above). There’s space to list the other 5 (in order of closed price):

• 1807 Highland, a dated home on a half lot (possibly tear-down) got $1m even, a drop of 13% from start;

• 2905 Valley (3br/2ba, 1500 sq. ft.) came in at $1.052m, just $47k off (-4%) its most recent start, and $187k (-15%) off its start earlier this year;

• 2622 Pacific (pictured) (3br/3ba, 2300 sq. ft.) took $1.215m, a bit off its $1.299m asking – this from the third set of buyers this year. (Three is the magic number.) This was a big reality check against last year’s attempt at $1.699m by the same sellers (see "Price War Starting on Pacific?");

• 913 8th (4br/3ba, 2925 sq. ft.) got $2.091m, a modest 7% off its start at $2.249m and after 2 failed escrows; and

• 312 S. Dianthus (5br/5ba, 4475 sq. ft.) got $2.6m, fully $890k off (-26%) its start at $3.490m and even further below its mid-listing boosted price of $3.749m (see “It Pays to be Flexible”).

It may be worth noting here that both of our November lists (new escrows and closed sales) end with significant chops in the Hill Section.


December – Closed Sales

Among the 4 sales to close in December so far, 2 were referenced above: 2408 Walnut and 659 31st. The other 2:

• 220 19th (pictured) (5br/4ba, 4325 sq. ft.) went like a gorgeous west-of-Highland walkstreet home is supposed to go, netting nearly $5m after just a few months on offer; the closed price of $4.850m is just 7% off the start at $5.250m – lesson: it helps to be near downtown; and

• 2305 Pacific (4br/4ba, 2825 sq. ft.) an average, peculiar remodel, grabbed $1.3m, or 15% off the start at $1.525m; at $460/PSF, that’s the lowest PPSF in the Trees over the past 6 months.

Sunday Opens (12/21)

This time of year there are two kinds of people you might see at open houses: bargain-hunters trolling for deals, and tourists all ga-ga over these pricey Manhattan Beach homes and their high-end amenities.

We dedicate this edition of "Weekend Opens" to the tourists – your out-of-town guests, perhaps, who you might want to first send over to the computer (to consume a little MBC, of course) and then send out for part of the afternoon. We'll give them something to do while you watch vital football games, or head out to another holiday party.

If you (or your guests) happens to visit one of our recommended listings, be sure to tell the agent there that MBC sent you.

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

The Hill Section is famous for big, luxe, ocean-view estates. We have several on public offer, and a couple open Sunday.

218 N. Dianthus is the biggest Hill Section estate open this weekend. The listing even calls it "[o]ne of the most beautiful homes ever built in Manhattan Beach." Now, who wouldn't want to see what the hype is all about?

The ocean views aren't as sweeping as are those found in others, but the Mediterranean home is quite big (4br/5ba, 5600 sq. ft.) and the entertaining spaces upstairs are huge – the kitchen island is the size of an aircraft carrier.

Your guests will enjoy the sense of opulence. They may get lost on the first floor, however – it's a bit of a puzzle, so bring breadcrumbs. Asking $5.495m, down $1.255m from its start in March. Open Sun. 1-4pm.

815 2nd is the other Hill Section estate, a Cape Cod sporting surprisingly good ocean views for a home so low on the hill. This one could not, perhaps, be more different from 218 N. Dianthus, because a roughly comparable amount of space (5br/6ba, 4550 sq. ft.) is chopped up into a series of smaller, intimate spaces. A great East Coast feel, overall, and some nice details, but just one really big room – a tiered home theater in the basement.

This one hit the market in February at $4.795m and is down almost $1m now to $3.825m. 815 2nd was the subject of an MBC pricing poll, and with its fresh price cut, it has now moved into a big sweet spot where the plurality of voters (37%) thought it might sell – $3.75m-$4m. (See our poll results story for a chart.) Of course, it's a small step down to the next tier from the current price. Open Sun. 2-4pm.

856 11th is not at all a typical Hillie, but it's a comfortable family home set humbly amidst all the luxury. What it's not is large (4br/3ba, 2225 sq. ft.), new (1975 construction) or offering any ocean views (city views instead). But it's nicely updated and warm and boasts a very large yard, all-too-uncommon around these parts. Problem: Master bedroom upstairs, kids' rooms downstairs. Priced at $1.479m. Open Sun. 1-4pm.


Sand Section

No doubt, the beach-adjacent walkstreets west of Highland are the Sand Section's big boast. Two offerings there are up this weekend, and we offer 2 other suggestions as well.

224 7th (pictured) is a pristine new Nantucket that's maxed out sizewise (5br/5ba, 4200 sq. ft.) and offers extravagant detail and a location right near downtown. Your rich uncle who has had it with the weather back east may just want to take a look.

New construction like this on the South End is still a pretty rare find. This home has only been offered for 10 days; it has a chance to go fairly quickly despite the start late in the year.

Priced at $5.695m. Open Sun. 1-4pm.

A very different kind of walkstreet home is 133 17th. This one offers a smaller front house and a rental unit in back. The updates are very nice in the main house. The whole package is up at $3.650m. Worth a quick shuffle over after a long, lazy brunch at Uncle Bill's. Open Sun 2-4pm.

465 30th is your way to teach the out-of-towners about the plateau – a series of flat, quiet streets at the top of the hill north of Marine. Though it's crowded here, plateau residents have generally responded by creating a friendly, neighborly enclave with a classic beach-town feel. A well-kept secret part of MB.

465 30th also serves as an entree to a discussion about short sales in town. (See "The Trouble with Shorties.") Now at $2.150m, a lender-approved short price. Open Sun. 1-4pm.

233 20th Place is a great example of what you get for a million bucks these days in the Sand: Not much. The home offers 3br/2ba and 1365 sq. ft. in a 2-story box built in the 1950s, with a few updates, and more dated parts. Did we mention the location on busy Highland Ave.?

Hard to believe, but this is the cheapest home in the Sand Section at $1 below $1m – $999,999. Open Sun. 1-4pm.


Tree Section

The Tree Section is the 'burbs west of Sepulveda, with plenty of average homes on average lots, some really too close to the giant refinery for comfort. But the jewel of the Trees is the Martyrs Hill area, where 2 new homes stand out this week.

665 17th (pictured) (6br/5ba, 4600 sq. ft.) is on one of the quietest blocks around – a short street that dead-ends above the American Martyrs school. It's tricked-out with all kinds of extra details – maybe a few too many.

This one was custom built for a local builder who decided not to move in. (Don't you hear that story pretty often, somehow?) Still at the start price of $5.0m. Open Sun. 2-4pm.

529 18th is a large (5br/5ba, 5600 sq. ft.) new Crafstman-inspired home that, like the home above, also boasts a fairly low-traffic street with great breezes. The home, though it offers most of the basic elements of new construction in the area, has some great details and 2 surprises – a home theater with stadium seating and a laundry room with some of the best views from any part of the house. Still at $4.279m. Open Sun. 2-4pm.

The Trouble with Shorties

If you're looking for bargains in MB, foreclosures are all but off the table.

Compare MB to the rest of the Southland. According to DataQuick:

"[F]oreclosure resales" ranged from 44.1 percent of November existing home sales in Los Angeles County to 70.4 percent in Riverside County. In Orange County foreclosure resales were 44.2 percent of sales; in San Diego 52.1 percent; San Bernardino 67.8 percent and in Ventura County 47.8 percent.

That's a torrent, and we have barely a trickle at this point in MB.

The deals – such as they are – among troubled properties are short sales. Of those, we have a few.

(Short sales require a lender to accept less than the full balance on a loan from the homeowner to transfer the property, but they expect to take less of a hit than if the property were to move to foreclosure. Indeed, it's common to see shorties that aren't in default; the whole process is cleaner.)

But the problem with shorties is often the wait. Getting the lender's attention and approval can take months.

And these days, the longer you wait in limbo, the less of a "deal" you might feel you got in the first place.

Take, for example, 465 30th up on the plateau in the Sand Section.

Here's a 5br/5ba and 3350 sq. ft. home we've called "voluptuous." It boasts a quiet location and a spacious outdoor room/deck on the 3rd floor.

This one first hit the market in March at $2.799m. That seemed high to plenty of folks, but it had some basis in prior sales.

Maybe more importantly, that price looked like a "rescue price" that might have helped a bad situation end well for the sellers.

No takers, though. The home lingered, switched agents, dropped to $2.399m this Summer and posted as a shortie. (We don't yet have the total amount owed; purchase in '03 was at $1.5m, but loans were taken against the home later.)

In mid-July, 30th got a buyer.

This week, the lender approved that sale, short, at $2.150m.

Did you notice the problem?

That deal was made almost 5 months ago. The buyer has long since walked.

Five months is longer than what's typical, but then again, what's typical in the financial world these days?

We've heard tales of Herculean efforts to reach the top brass at some lender to close a deal. (Successful.) We've heard plenty more tales of annoyance and frustration. (Unsuccessful.)

465 30th is now a unique opportunity – you can grab it at the approved price ($2.150m) within the next week, maybe longer, while the "approval" of that July sale is still good. (Incredibly, the lender offers a very small window for a final acceptance after 5 months of navel-gazing.)

A shortie with short wait – there's something different.

Open Forum (12/18-12/31)

Everyone's trying to get into shape, and often falling behind.

Why should Santa be an exception? (Or HBO's "Tim," for that matter?)

On occasion of the upcoming holiday, we just had to share this pic from a little marketing blog. The point of the post there being that "fat Santa" is a bad role model and – more critically – outdated and "a brand in trouble." Obesity isn't cool. It can't be good for Santa, either:

[I]f Santa eats just one cookie for every child he delivers a gift to in the U.S.A., he will gain 3.7 million pounds in just one night!

Bad Santa. Maybe this year, we'll call off the toys-and-cookies deal while you train for a marathon. All we want is lower and lower mortgage rates – and jobs. Not necessarily in that order.

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A note about this longer-term Open Forum: We're entering perhaps the slowest couple of weeks of the RE calendar. Add to that the strategically placed holidays this year chomping big holes in the next couple of work weeks. We know lots of readers will be occupied away from MBC. (But you never know.)

MBC will still have regular stories during this period, but this will be the last "Open Forum" of 2008.

As always, please use this week's "Open Forum" thread for news clips, off-topic questions & discussions of (virtually) any nature. Keep it clean.

Holiday Discount: $1.325m

There's a gorgeous, huge new Craftsman at 511 Pacific, at the lower end of the Hill Section but boasting big views nonetheless.

Last year, pre-completion, it was offered at $8.150m. It began last month at a flat $8m.

When these big-dollar listings cut, they really cut.

How about $1.325m in one swipe?

Suddenly an $8m listing is not even a $7m listing. It's at $6.675m.

So if you haven't yet completed your holiday shopping, and you find interest rates favorable...

This is not the only Hillie with a $1m+ chop. The new home at 218 N. Dianthus has cut $1.255m to $5.495m, and the lot sale at 222 Poinsettia is down $1m to $6.9m. Very close: 930 John has chopped $960k to $3.999m.

The tactic can work. In the past 6 months, 3 other sales in the Hills have chopped $1m:

• 900 Pacific, the grand estate near the peak of the hill, grabbed a cool $9.85m, but that was $1.050m off the $10.9m start price.
• 700 8th cut $1.1m and closed at $6.9m, but it's actually back now, lower, at $6.75m (change of plans for the new owner).
• 808 Highview cut $1.65m to close at $3.6m (see "High Up, But Below Trend").

We Want Candy

The Federal Reserve has set a target rate of 0.00-0.25%.

Rates will stay at these "exceptionally low levels" for some time, we hear.

Woo-hoo!

Mortgage rates – even on refis – are dropping into the 5's, indeed, as low as 5%, as a result of a separate Fed action to manipulate long-term rates, er, to buy mortgage-backed securities and long-term Treasury bonds.

Woo-hoo!

The outgoing national government has socialized trillions of dollars in losses and has tried, almost against all hope, to "restore confidence" in the financial markets. (A certain recently revealed gigantic, titanic, unfathomably huge Ponzi scheme may serve as another blow to "confidence.")

But, face it, the more you hand decisions about economic action back to individuals, the more action you'll see.

Which is what makes free money such a boon.

Keep pushing rates down, and homeowners will re-fi in droves. (A wave has already begun.) Give those actors another $300-$3,000/mo. to spend, and they might well spend it.

Make houses more affordable, and more people (with jobs) might take the plunge. And that might reverse declining house prices, which, after all, started this mess.

We want candy.




So thanks for giving it to us.

Even if it meant "abandon[ing] free-market principles to save the free-market system."

We like candy.

Don't tell us that it makes us act crazy. We're not listening, anyway.

A Li'l Uptick

Maybe you remember when, not so many days ago, MBC said of SFR inventory west of Sepulveda:

Inventory of homes for sale has most likely peaked for the year...

Whoops.

That was 2 weeks ago (see "Inventory Higher This Year"). Inventory has actually grown since then.

Not by much, mind you. We were at 119 SFRs west of Sepulveda at the end of November. (Click to download the MB Market Update Spreadsheets for 11/30/08.)

Our tracking now shows us at 121 as of Dec. 15. That's higher than any end-of-month total so far, and just 3 shy of the mid-October total.

As our forthcoming spreadsheets – still in progress – will show, this modest growth is the result of some activity that wasn't entirely predictable. Among that activity: 7 new listings, but just 2 cancellations in this 2-week period.

It seems the frenzy of holiday-season dropouts is all but over. Yet some bold and daring sellers are choosing this time to enter the market. (Some are clearly new construction that just finished.)

Remember when we boldly predicted that the end-of-month inventory record of 124 (for 2007-08) would not be exceeded this year?

What's the over/under now?

Love Math?

If you drop by MBC from time to time, you are not just interested in real estate. You might have a nerdy math geek side, too.

Here we love data, and the crunching thereof.

So we'll call out a particular listing now in part because it goes all geeky.

Over at 590 36th (click for pics & details via Redfin), they've been trying to sell a quite large (5br/4ba, 4275 sq. ft.) remodel for almost 6 months.

MBC featured it the first weekend it was open (see "Weekend Opens (6/28-6/29)"). It remains, to this day, listed for the start price of $1.989m.

There's language now in the listing – we don't know when it got dropped in – that will answer a couple of questions you may have:

• How many SFRs are there in all of MB?

• How many of them have more than 4277 sq. ft. of living space?

The first question is more common. The answer: 9,235 SFRs in all of MB – according to the listing.

The second answer: 546 (13%) homes with that kind of square footage.

Natural question: Of all the homes in MB, how many are now for sale?

A Redfin search shows 196 SFRs for sale citywide – that's 2.12% of total inventory.

We'll observe that 590 36th has kept a stiff upper lip even while the market has shifted significantly. You can get a pretty big new home for less, and a sub-$500 PPSF is no longer unheard of.

This home is quite pleasant, and doesn't suffer as much as one might expect from its proximity to the refinery, once you're there. But location is clearly punishing the listing, as is its staleness.

A pleasant, spacious home in the Trees will find a buyer one day, if the sellers will take offers seriously. In the meantime, we welcome a data point or two that more of us can find useful.

Weekend Opens (12/13-12/14)

Our "Weekend Opens" feature is back after a one-week hiatus, because now, incredible as it seems, we have plenty of new offerings – just 10 days before Christmas.

That's a quirk of timing. New construction is ready when it's ready, and many of this week's first-timers are new homes getting a little jump on the New Year by starting now.

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 on any highlighted address for more pics & details via Redfin.

We ask MBC readers who visit these homes to also report back. Tell us what you see, what you like and what you don't like. Use the comments here to discuss the homes we've highlighted.


Hill Section

852 8th (5br/6ba, 4650 sq. ft.) is a big new Cape Cod to the west of Poinsettia.

They're showing ocean views, but we're going to need to see that ourselves.

It's a pristine, traditionally styled home that carries plenty of East Coast flavor.

And lots of white paint. We gave this one a little ribbing last month because the pics then (and now) featured action shots of the painters. (See "Road to the White House.")

852 8th starts at $4.250m. Open Sun. 2-4pm.


Sand Section

224 7th invites the question: Can the South End show itself to be a healthier market for new construction than the North End?

The size here is the max (5br/5ba, 4200 sq. ft.) and the location is right near downtown.

Put it on the north side of the walkstreet and you might have utter, complete perfection. In theory, this one has so much going for it, you wonder why it didn't pre-sell.

Recall that the highest price we saw this year for new construction in the west-of-Highland walkstreets was $5.6m for 200 19th (see "Spectacular, But Shifting Fast").

Now, 224 7th starts at $5.695m. Open Sat. & Sun., 1-4pm.

517 21st gives us 3 Cape Cods in a row this week. This one also boasts a "certified green home" status thanks to materials and some efficiencies, which will be worth a second look.

They've squeezed 4br/4ba and 3400 sq. ft. onto a 2700 sq. ft. lot with a big basement/media room. Though this feels like the Tree Section, it's the Sand, and it's priced as such. Starts at $2.675m. Open Sat. & Sun., 1-4pm.

517 24th is just a few blocks over, in the gaslamp area, a bit larger that the 21st St. offering at 5br/5ba, 3600 sq. ft. on a significantly larger 4000 sq. ft. lot.

They're calling the style on this one "Plantation," and it does have a very different feel. (But that ends our run of Cape Cods.)

The listing for 24th has been active since June, pre-completion, at $3.275m.

Now it's at $2.995m. Open Sat. & Sun., 2-4pm.


Tree Section

1900 Laurel offers the opportunity to tour a vintage cottage before it's scraped. Not to be cruel, but this corner-lot location in one of the sleepier parts of the Trees cries out for a dream home. The lot's even 25% larger than most Tree Section lots at 6000 sq. ft.

Not so long ago, a builder would have grabbed this for about the $1.499m start price, but the dirt market is different today. Open Sat. 2-4pm, Sun. 1-3pm.

2829 Valley is the only listing we're featuring this week that's not up for viewing for the first time. It is, however, nearly the lowest-priced new construction west of Sepulveda at $1.799m, which bears some notice. (It's also another Cape Cod, which fits with our accidental theme of the week.)

In tough times like this, location matters more, and Valley is a strike. But this 3-level home (5br/4ba, 3425 sq. ft.) doesn't suffer much from being near the road once you're inside. It's fairly tranquil, in fact, and the layout is refreshingly different. Open Sat. 1-4pm, Sun. 2-4pm.

Deals in the North End

It's bargain-hunting season.

Just the other day MBC noted that someone grabbed 808 Highview in what may well be the deal of the year. (All cash and a super-quick 10-day escrow will help in a case like that.)

That's great for the Hill Section, but what about the Sand Section, which went 0-for-November in SFR sales?

Suddenly, two good deals have been struck.

The new modern at 221 34th is in escrow now (not yet posted), and the discount from start looks to be greater than the $1.65m chop at Highview.

How about $2m or more off the start price of $5.4m?

The exact deal price is a bit of a moving target; it'll be around $3.3m or $3.4m. We'll know more in a couple of weeks.

It was about time for 34th to go. Since it began in April, we've always liked the home. We've called it an "ultra-contemporary showpiece, stunning, cool, clean, and featuring world-class ocean, PV & pier views."

Perhaps we were seduced by those views. Moderns just aren't crowd-pleasers. There was less enthusiasm among other commenters here at MBC, particularly for the price.

The sellers have been working on it, though, getting very aggressive over the past two months. It was last at $3.599m, down $1.8m and -33% then. They've taken one little step further down to reel in a buyer.

The lot at 34th was acquired for $2.150m in June 2005.

At almost the same time, neighboring 220 35th (pictured) has also made a deal. (Listing can still be viewed while in "Backup Offer" status.)

This one hasn't been around long, but the seller's determination to find the price soon was evident. (See "Spectaular, But Shifting Fast," which discussed both of these homes.)

35th is a daring custom build that reflects the taste of a noted custom builder who intended the home for himself. Problem once it hit the market: North End homes just don't have the same draw as downtown or South End walkstreets, and this particular street is, er, less improved than others. Two strikes on an otherwise great ocean-view location.

The listing for 35th began unofficially at $5.5m in early October, officially at $5.0m several days later, and was last at $4.395m. Look for 10% more to come off that in the final deal. That would be $1m, or 20%, off the start – and an admirably quick effort to find the current market.

We'll close here with some observations from a reader, posted on the thread for "Spectacular, But Shifting Fast" –

[Both homes] are a relatively good value at their current prices especially 221 34th which is now priced well below replacement cost, something rarely seen for a new ocean view home and also a short term phenomenon. After these places sell you won't be able to buy a new home below replacement cost because builders won't break ground on deals that don't pencil. These two got caught in the whipsaw and some buyers with a big picture vision will figure this out and pick up quality homes at a discount.

That was 2 weeks ago.

More Under $1m

The median price for SFRs in MB hasn't been at $1m since the second half of 2002. (See "How're Median Prices Doing?")

Indeed, there have been very few offerings at or below $1m for a few years running. This year, supply below $1m is not yet a flood – west of Sepulveda, anyway – but there are more now than last year at this time, when we had just 2.

The 6 actives today (click any highlighted address for more pics & details via Redfin):

• 2500 Oak (3br/2ba, 1350 sq. ft.) (pictured) is a dated cottage at the busy intersection of Marine/Sepulveda (see "A New Low"). It began at $824,900, and is now at $789k.

• 772 Rosecrans (2br/1ba, 884 sq. ft.) is a dated (proudly "original") little home that has been a rental for quite a while. Homes along this particular part of Rosecrans do not back up to the alley, unfortunately, but the lot is a bit larger than your average Tree Section offering at 5350 sq. ft. Started recently at $798k.

• 1102 Ardmore (2br/1ba, 1150 sq. ft.) (pictured), technically the Hill Section, just across from the Vons and near MBB, just hit the market at $849,900. It's a bank-owned property – apparently a HELOC from late 2006 gone bad.

• 1733 Elm (3br/2ba, 1325 sq. ft.) boasts a green construction fence and gutted baths and kitchen – a demo/rebuild stopped midstream. Now selling short at $850k, after a purchase at $1.050m in Oct. 2004. Said to have offers in hand already.

• 2602 Pacific (3br/2ba, 1500 sq. ft.) is dated, uninspiring, and obviously overpriced at $995k with no bites after 4 months. (Don't believe the reset DOM; it began Aug. 1.) How uninspiring? The listing agent didn't write a single word for the description.

• 422 21st Place (3br/3ba, 1825 sq. ft. and now a non-conforming duplex) began before Thanksgiving at $1.1m, but is now down to $999k.

Add to those 6 another lower-end offering, 3529 Walnut (2br/1ba, 900 sq. ft.), which hit the market in early November at $789k but almost immediately went "on hold." Owner appears to intend to sell, but has some issues.

So that's 3 under $800k, 2 at $850k and 2 more under $1m. Seems like the beginning of something new.

Last year in mid-December, the only 2 active SFR listings under $1m west of Sepulveda were 462 36th Place, the Turkey, and 3612 Poinsettia (2br/1ba, 850 sq. ft.) then-fresh at $957k, and eventually sold at $849k in July of this year.

Dare to cross Sepulveda, and you'll find 14 more listings under $1m today, including one at $549k. That's too much for this story, but we'll open up another EMB Bucket soon with that list.

Forget 'Qualified' – Auctions Failed

Two weeks have now elapsed since the vaunted auctions of 5 new local homes.

Every one of them is now back on the market.

It's fair to say, now, that MBC held back too much in calling the auctions a "qualified failure." At this point we've got just the "f" word left.

All 5 homes have returned to market priced well above their auction start prices. (The "reserve" prices for each property remained secret.) This hardly seems to be a good way to encourage quick sales.

We probably don't need to tell you that the DOM figures on these listings are all, at this point, purely fictional. In fact, the old listings had their clocks reset. (Go back to our late-October story, "Name Your Price?" and click on those links to see for yourself.)

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

2509 Palm (5br/5ba, 3150 sq. ft.) was offered at auction for a start price of $1.499m; it's now at $1.699m, but there's no hurry. It's deep in the foreclosure process, facing a different kind of auction – a public sale – next Monday, Dec. 15, on the courthouse steps in Pomona. (Minimum bid: $1.677m – good luck with that.)

1211 11th (5br/5ba, 3550 sq. ft.) came to auction at $1.450m; it's now at $1.799m.

1405 Faymont (5br/5ba, 3550 sq. ft.) returned to the market Tuesday. It was at $1.399m during the auctions; the markup now is smaller than the other 2 MB homes, up to $1.499m.

Meanwhile, the 2 Hermosa homes are back, also – neighboring 540 21st (5br/4ba, 3550 sq. ft.) and 544 21st were offered at $1.649m and $1.669m, respectively, and are now both back at $2.199m.

The auctions were an experiment. The properties didn't sell at auction, but there was a buzz and there were said to be qualified buyers who began negotiations on some of the offerings.

Alas, the experiment has failed, and the market will have to find another way to absorb these speckies, as well as several other holdings of the builder who rolled the dice in this case.

Holidays in Town

It's a quick ride from the Hometown Fair to the Pumpkin Races to the Holiday Open Houses downtown and uptown.

Before you know it, contractors are sweeping through MB hanging up everyone's Christmas lights, the Hills are set to twinkling, Sandpiper tours begin, Santa is driving around town and The Pier gets lit up amid music, cookies and cider.

Next up: Christmas fireworks, then school vacation, gift-giving and "Auld Lang Syne" at Ercole's. (Or wherever else you may be.)

Throw in a couple of year-end beach days for good measure.

Great stuff, MB.

Open Forum (12/9-12/15)

We are going to try not to be surprised about grim tidings from the local RE market in the coming weeks. The writing is on the wall.

It's also on the blogs.

Two local realtors with fairly active blogs have turned in some bearish posts this week.

Kaye Thomas, whose straight-shooting we often praise here at MBC, says that the 11 closed sales in all of MB in November were "an all-time low." (She's right, for as long as anyone can tell – MLS data from 2000-2008 show 13 as the previous low, reaching in Nov. 2007 and Jan. 2008; our DataQuick numbers going back to 1988 show nothing even close to that low.)

Kaye also frets that lower mortgage rates aren't helping many buyers, as fewer can qualify or want to jump into a purchase as the economy worsens.

Blake Roberts offers two great tidbits from the world of appraisals. Banks don't trust them anymore, so they're getting multiples.

And there's this – a not-uncommon rule of thumb now is to discount comps by 1% per month that has elapsed between that comp's sale date and the new appraisal date on a home in escrow.

Put that another way: Appraisers are baking in expected price declines at a rate of 12%/yr. That would be a stunning reversal of the cheerleading role we often saw appraisals play during the boom.

That's where we are, heading into 2009.

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As always, please use this week's "Open Forum" thread for news clips, off-topic questions & discussions of (virtually) any nature. Keep it clean.

High Up, But Below Trend

There is absolutely nothing wrong with making a $500,000 profit on the sale of your home.

There's plenty to celebrate. There aren't even taxes to be paid on those gains (for a married couple filing jointly).

Still, $500k must be something of a letdown if, when first you spun the wheel of fortune, you were thinking it might land on $2m.

The vagaries of real estate pricing often leave successful home sellers wondering: Could we have gotten more? An extreme case is 808 Highview, whose sale price posted late last week.

In June, this terrific, large (5br/5ba, 4575 sq. ft.) ocean-view home hit the market at $5.250m.

The basis for that price: The home was purchased new in Dec. 2002 for $3.1m, really at the onset of the local RE price boom/bubble that continued, almost unbroken, for 5 years thereafter.

If this year's markup of $2.150m and 69% seemed ambitious, consider this: From Dec. 2002 (purchase date) through June 2008 (listing start date), the median price for all SFRs in MB rose 68%. (This is based on the 6-month moving average as presented in "How're Median Prices Doing?" last month.)

In other words, you could argue that 808 Highview was almost perfectly priced when it began.

But that start price was in jeopardy. By Summer, it was clear that the market wasn't acting like it was during the boom years.

For one thing, scarcity is not a problem in the Hills these days. Everybody loves an ocean-view Hill Section home, but the fact is, there have been plenty available this year.

Within several weeks, 808 Highview took 2 steps down to $4.850m (-$400k/-8%). That worked, sorta. By late August, the sellers had a deal. (See "A Hilly Hat Trick.") The deal failed, however (see "Down Hill"), and the home returned in late September at that price.

A month later, the sellers began broadcasting messages. In October, $350k came off and Highview was at $4.499m. In November, another $500k was chopped, and it was at $3.999m. (It was our "Featured Chop" in the Hills Nov. 15-16.)

The last cut worked quickly. They got a buyer, and a deal that closed fast, too.

The results are in: The new owners grabbed 808 Highview for $3.6m.

Overall, the price fell $1.650m and 31% from the start. Who woulda thunk it was so far out of line to begin?

Both figures represent spectacular downward adjustments over the course of just 5 months. Indeed, that chop of $1.650m is lined up to be the chop of the year, unless one other deal we're hearing about gets sealed and closes within 2008.

Meanwhile, that $500k markup represents a rise in price for 808 Highview of just 16% above the purchase price 6 years ago – well below the citywide trend. Resales of homes purchased in late 2004/early 2005 are typically going for markups like that.

It's a bit of a statistical irony that the Highview sale will help to hold up median prices for MB in 2008. That $3.6m sale price is in the upper tier, so the median moves up a notch in response. The sale hardly looks disappointing in that mix, but it's another warning of what it can take to close a deal today.

A Look at the Sandpipers Tour Homes

It's time for that seasonal rite of local real estate, the Sandpipers' Holiday Homes Tour, Friday-Sunday, 10am-5pm.

This year, there are only 3 homes on the tour (-1/-25% from last year) but the ones they've got are all interesting.

It's mostly too late for pre-sale tickets, unless you know a Sandpiper (we trust many of you do). You can go to any of the 3 homes listed below and pay $30 (cash or check) for the whole tour.

Also, the Holiday Boutique runs Fri.-Sun., 10am-5pm, at the American Martyrs gym on 15th St. – no admission tickets necessary, of course.

First up on the tour, east of Hwy. 1 on one of the truly great, private blocks in town, 208 Terraza is an older home that was radically remade a few years ago.

It's got classic East Coast styling with some nice bonuses, like a wine cellar and a high-concept back yard. Also, one of only 2 wishing wells we've seen in MB.

As is the Sandpiper tradition, professional interior design is supplemented with holiday decor to create a showplace for the weekend.

Next up is one of the newer homes in the Hill Section, 116 N. Dianthus (at the corner with 2nd St.).

This home was purchased during construction last year, and closed for $7.2m in April. As such, the Sandpipers tour will be the first public viewing opportunity for this vast (6600 sq. ft.), new ocean-view home.

As a comp, Dianthus has been vexing – almost no one else is getting $1,100/PSF. Given the home's lineage (high-caliber architect and builder), expect the highest quality.

The final stop, 512 John, has a bit of a history on MBC.

Someone paid $4.075m for the home in Feb. 2007 and then tried to turn it around for considerably more – prices running as high as $4.75m last year. That didn't work. Ultimately, the current owners took it for a discount: $3.8m last November.

We have always found this house stunning. One MBC review called it:

a striking masterpiece of a home, built in 2000 in a great location, the kind that some folks are just dreaming about when they write "panoramic ocean views." The home is set high above the street and takes good advantage of the added privacy.

The challenge is how to make this home's style work for you, or vice versa. As we said:

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

Professional design – out with the old, in with the new – was the only way to go. We're eager to see how the designers tackled these challenges for the new owners. Holiday decor will run with a New Year's theme, going along with that design mandate.

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

Ticket sales are down a bit this year, so if you're on the fence: Go.

And if you go at MBC's suggestion, or because of our reminder, make sure to tell some Sandpipers. Our promotional efforts last year were recognized with a pleasant thank-you.