Closing an REO Loop

Last week we got the closed price at 958 Rosecrans ($650k), the first of "Two New REOs" mentioned here in early May. (See "Tree Section Closings.")

Now the companion (from that story) has closed.

543 24th (3br/2ba, 1225 sq. ft.) (pictured) was offered as-is, and that meant a cottage that was pretty original (early 1950s) and pretty dark. The lot size (3640 sq. ft.) was decent for the gaslight area.

The bank put this one up at $891k, accidentally under-pricing the property.

Closed price, after several offers: $1.080m (+$189k/+21% over the start).

That still seems low, as we write. So bravo to the buyers.

The most immediate reference point has to be a home around the corner, 539 23rd – a little bit spiffier and larger (4br/3ba, 1900 sq. ft.) home of similar vintage – which went for $1.330m in late February.

Sure, 24th is smaller and less livable, but what does this sale say about lot values?

Worth noting: The bank took back 543 24th for $978k in February. Though they priced it low when offering it for sale, they got $100k more.

However, the original suggested minimum bid at auction in December was $1.256m. That's a reflection of the debts owed, not necessarily the market price.

Bottom line: This REO was resolved quickly by means of a low-priced, multiple-offer sale. This is characteristic of REOs, and also a fantastic method of price discovery. All the better if the buyers come out thinking they have scored, and we tend to agree.

Sand Loses One, Gains One

Not every coming and going among local RE listings deserves a mention, but today, two do.

It's hard to believe, but it was more than 300 days ago that a double-lot on a flat walkstreet was proposed for a mega-new dream home project at 412 8th. (That's an artist's rendering of the possible new home on the right.)

MBC wrote that up in "2 Are Better Than 1," openly wondering whether maybe a "Hill Section home" like this one really belongs in the Hill Section, not on a cozy walkstreet near downtown.

The project has been listed at $8.5m all along, but it canceled Monday. We're not sure why; will report back when we know more.

One high-end loss was met by another high-end gain.

There's another new Strand listing: 2920 The Strand (7br/7ba, 5675 sq. ft.).

It wasn't so long ago that we saw zero listings on the beachfront. Nothing was for sale, or homes were sold off-market. Options keep growing now.

2920 is the biggest (home size and lot size), the oldest (1988 build) and the, achem, cheapest of 3 roughly similar Strand listings, coming out of the gates at $12.5m. Check that decimal point – yes, $12.5m.

The others are a resale at 1800 The Strand ($13.5m) and a new home at 3516 The Strand ($13.999m). (See "Another Week, Another Titan.")

Worth noting: 2920 The Strand was purchased somewhat recently – in July 2006, for $9.0m. Yes, that'd be a 39% markup over the 2006 price. Great deal?

A 2nd Deal?

It has been only a week since we last mentioned 132 2nd, and they've now got a deal. (Property can still be viewed while in "backup offer" status.)

As you'll recall from "Riches Slip Away," the sellers here have seen a $6m+ deal come and go.

Last list price: $3.795m.

Acquisition price (April 2005): $3.5m.

Do what you have to do, you might get a deal.

That's not the only recent west-of-Highland sale in the Sand Section.

The other is 209 16th, a sorta-duplex listed with SFRs, last at $2.699m. (Property can still be viewed while in "backup offer" status.)

Interestingly, this one, like 2nd, was also acquired in early 2005 (March) for a little less than the most recent list price: $2.535m.

So there's some action near the beach, and we'd bet trades pretty close to 2005 prices, again – assuming they close.

Close the Books on the Crazy Craigslist TH

A couple months ago, we discussed a townhome that was in utter unloading mode at 432 24th. (Click for property history via Redfin.)

MBC doesn't cover THs much, but this one hit the radar due to serial, daily re-listings on Craigslist – often with different prices. (See "Craigslist Craziness.")

We can now report that as of late April, this TH – a 1995 build with 3br/3ba, 1975 sq. ft. – did make a deal.

The listing was off the MLS by then, so we only now came across the closing price. Here's the full progression:

• Jan. 2005 (last purchase): $1.247m

• Dec. 11, 2008 (listing start price): $1.299m

• Dec. 12, 2008 (listing changed price): $1.199m

• March 16, 2009 (listing changed price): $1.099m

• March 23, 2009 (listing changed price): $1.075m

• April 29, 2009 (sold/closed price): $1.030m

You may recall that the "Craigslist Craziness" story was partly about the fact that, while the home was offered on Craigslist at $1.199m and $1.299m, it was on the MLS at the same time for less. That fairly mocked the idea of Craigslist as some kind of bargain bin. You'd be paying more if you paid one of the Craigslist prices.

As things wound up, the buyer took a little more off the lowest MLS price.

More significantly, this buyer took a substantial bite off the early 2005 acquisition price: -$217k/-17%.

Interestingly, the same TH sold in Nov. 2002 for $810k. This puts the April 2009 value almost precisely at the midpoint of the two previous sales, which occurred 25 months apart (Nov. 2002, Jan. 2005).

We say often here that MB is largely living in 2005, pricewise, though we frankly doubt that our town will hover in that era for much longer.

Distress sales with location challenges will often lead the way. In MB, townhome values fall faster, too. These sales become the new comps and will keep pushing the market adjustment.

Weekend Opens (6/27-6/28)

We're not sure when, exactly, Summer is supposed to kick in. School closed and that was one solid week of marine-layer action afterward.

We're trying to draw people to the sunny, beach lifestyle. Forecasts say we'll finally have some sun for this weekend's open houses. Which, unfortunately, may mean fewer people at open houses. What a puzzle.

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 – or any open houses – to also report back in the comments here. Tell us what you see, what you like and what you don't like.


Hill Section

718 Poinsettia (6br/5ba, 5725 sq. ft.) is a new home that's much bigger than it appears from the road, including ample yard. We like that the kids' bedrooms aren't all squished like you see all over town – indeed, they have walk-in closets. (Just like you had as a kid.)

On top of a raft of nice standard features, there are plenty of extras, including the "oversized 3 car garage... with raised roof to accommodate a lift for a 4th car." That also counts as thinking big.

The builders know they're entering a market overloaded with inventory and lacking much action. The location is no big plus – fairly busy Poinsettia at a 4-way stop with no views – so they'll be competing on price.

The listing calls this home the lowest priced new construction in the Hills, but that's not literally true – that lowest-priced badge belongs to troubled 815 2nd, a short sale now at $3.349m and pushing 65% LTV lender financing. 718 Poinsettia is 1000 sq. ft. bigger and priced lower by PPSF, despite a start price half a mil higher at $3.849m. Open Sun. 1-4pm.

Close by, and also at a stop on Poinsettia, is 881 10th (5br/6ba, 4000 sq. ft.) – a fairly big custom home with a great kitchen and study. After previous open-house mentions, we heard some describe the home as overfull, but the owners have moved out and it's now empty – and improved. Sellers paid $2.8m new in April 2006 and started in early March this year looking for more. It's now at $2.699m. Open Sat. & Sun. 1-4pm.


Sand Section

305 20th (5br/5ba, 4100 sq. ft.) adds something new and spa-tacular on a walkstreet east of Highland.

The listing calls this a "warm contemporary" twice, so we get that point. Features include disappearing walls that open the living space out to a big ocean-view deck. Starts at $4.2m. Open Sun. 1-4pm.


3216 The Strand is a lot sale that got a mention here at MBC on Friday (see "Guessing Games"), again, thanks to the newest price cut to $5.199m.

Try not to look at the house so much as the views. Open Sat. 2-4pm.


Tree Section

521 12th (4br/3ba, 3000 sq. ft.) is a near-total remodel near downtown that seeks a bump of $535k over the Jan. 2006 acquisition price.

We can all agree that you add value with a remodel, but we might also add that the rest of MB is in 2005 prices these days. Yellow light.

A commenter recently asked MBC readers about this listing, which your blog author hasn't yet seen, besides the pics. Here's hoping we can muster the troops to get it a thorough review. It's open both days this weekend.

For our part, we'll express concern that the home is what it appears to be: A skinny 80s home with updates that are particular to the owners' tastes. Yellow light.

We also note that just across the street stands smaller 512 12th (3br/3ba, 2300 sq. ft.), also a recent remodel, that began at $2.149m and just made a deal with a much-reduced list price of $1.695m (-$454k/-21%), a blow to the plans those sellers had, evidently, made. Yellow light.

521 12th starts at $2.295m. Open Sat. & Sun. 1-4pm.

Here's a 2-for-1 option on Saturday only:

2405 Elm (3br/3ba, 2175 sq. ft.) (pictured) is an improved late-40s cottage that still feels cramped and dated. Starts at $1.250m. Open Sat. only 1-4pm.

2404 Elm (3br/2ba, 1200 sq. ft.) is also among the less-pricey of Tree Section offerings. That square footage understates things a bit, since there is some bonus square footage (about 600 sq. ft.) in a finished basement. Now at $1.169m. Open Sat. 2-4pm.

Guessing Games

Quick: What's a double lot in the Hill Section worth?

Go ahead and guess – anything.

OK, ready?

Now, did you come closer to $8m, or $5m?

Last year at about this time, 222 N. Poinsettia, a double lot totaling 13,800 sq. ft. with some views, hit the market at $7.9m.

That was a guess.

There have been adjustments since.

This week, it's down yet again – $700k in one chop. Now all the way down to $5.295m.

This, at least, is an educated guess.

Experience showed that the dirt wasn't going to fetch $8m, or $7m, or $6m. So it was time to get closer to $5m.

As the property history (via Redfin) here shows, a cut of $700k was the smallest yet. The previous cuts were each at, or near, $1m.

Total chops to date: $2.605m (-33%). That has to be some kind of record.

It's still the priciest of several lot offerings in the Hill Section (see "More Hill Dirt Options" from February).

Earlier this year, when the listing for 222 N. Poinsettia was still at $5.995m, your blog author tiptoed out onto a limb and said:

At this point, we would not be shocked – though the sellers might be – to see another $1m shaved off before a deal is made.

The price is still $300k above the level that would make that sorta-prediction turn out to be correct.

Off the hill, down by the sand – well, right on the beach – there's a similar situation at 3216 The Strand, another would-be trophy property that has been working on finding its market price.

Briefly, try the same exercise as before. A Strand lot in the 30s. What's the value?

$7m? $5m?

The current listing began at $5.9m in early March, but that wasn't the opening bid.

Last November, this one was touted as "charming and livable" and yet listed "for lot value" at $7.3m. (See "And Then There Were 4.")

Now 3216 The Strand is at $5.199m – down $2.101m from that high start.

It's still listed for lot value – $2m later – and now touted as the "Best priced piece of land available on The Strand in Manhattan Beach."

Unlike the Hill Section double-lot, which suffers partly from a lack of recent land sales or other comps, there are a few recent Strand sales, including scrapers, providing some data.

Most significant among them is nearby 3404 The Strand, which closed for $5.35m in early May. But at 3404 the buyers got a big, unique home that just needs updates if they keep it. At 3216, no such luck – that duplex has to go.

Both of these lot sales could go near $5m. Just a guess.

Tree Section Closings

We see a couple of recent closings that help fill out a picture of Tree Section activity...

958 Rosecrans (2br/1ba, 975 sq. ft.) on a 6000 sq. ft. lot, was one of "Two New REOs" we mentioned in early May. It has now closed for $650k, a token $100.00 over the list price.

The same property sold for:

• $422k in Jan. 2001

• $580k in March 2003 (+37% over 2001)

• $977k in July 2006 (+68% over 2003, +132% over 2001)

There was something wrong with that 2006 sale – few payments, if any, were made. The bank took it back in May 2007, and only this year sought to unload it.

Admittedly, this sale doesn't tell us much about the market, because it's such an outlier. The other home mentioned in "Two New REOs," 543 24th, hasn't closed yet.

We also just saw the sale close on 2300 Laurel, a 4800 sq. ft. corner lot.

That listing began at $1.399m, despite the clear evidence that this was an overreach. A better-located lot-and-a-quarter (6000 sq. ft.) at 1900 Laurel had closed for $1.25m in January. (See "Dirt Cheaper?" for more on that one and other lot sales.)

2300 Laurel closed Wednesday for $1.160m, about $120k below the last list price, and $90k below the bigger lot at 1900.

Also, we've been meaning to offer some news on 2 other lower-priced Tree Section homes, 2111 Valley and 2500 Oak (3br/2ba, 1350 sq. ft.). (2500 Oak pictured.)

Valley seemed to be a very cheap lot sale when listed for $638k in late February; we have once previously noted that it closed for $725k in mid-April. But here's where we got an assumption wrong: The home (3br/1ba, 925 sq. ft.) is not being scraped, but redone.

That makes Valley part of a growing (and welcome) trend – homes that would have been teardowns not so long ago are being spiffed up to be lived in instead.

Much the same for 2500 Oak, which closed for $738k in late February. (See "New Lows Achieved in Trees.") As anyone who passes the corner of Marine and Sepulveda can plainly see, the home is getting new life with a remodel.

Trees en Fuego?

Last week we noted that the Hill Section was having a nice little rush of sales, while the Sand Section was, well, not being warmed by the sun just yet.

The Trees – they're practically on fire. Even since we last checked in 3 weeks ago in "Quick is Quick in the Trees."

The sales pace is nothing like in the bubble-driven heydey, or even the last rally in Spring 2007, but there is plenty going on. We'll separately look at some fairly quick sales and some that finally scrubbed some aged inventory off the books.


Kinda Speedy

• 1825 Oak (4br/4ba, 3136 sq. ft.) (listing may be viewed while in "backup offer" status) is almost new, custom-built for the owners, who then decided to sell last year – starting at $2.399m. That was never going to happen.

They brought it back last week $700k lighter, at $1.699m, and had a deal within a few days. Comparable new and new-er homes have been closing in the $1.55m-$1.7m range recently.

• 1805 Poinsettia (3br/2ba, 1250 sq. ft.), a little traditional cottage with some updates, entered the market 2 weeks ago in escrow at $1.180m, but fishing for more buyers, just in case. (Can be viewed while in "backup offer" status.) Worth noting: That list price is down $170k (-13%) from the April 2006 acquisition price of $1.350m.
  

• 620 30th (4br/3ba, 2975 sq. ft.) (pictured) started out priced well below its Feb. 2006 purchase price ($1.995m) at $1.545m(-$450k/-23%). The home is a 1992 build that was being called "remodeled." They made their deal within 3 weeks of hitting the market.

• 662 Rosecrans (2br/1ba, 600 sq. ft.) is just about as tricked-out as 600 sq. ft. can get, and was offered for one of the lowest prices west of Sepulveda in a while at $695k. Had a deal within 2 weeks. (Can be viewed while in "backup offer" status.)

• 2400 Poinsettia (4br/5ba, 3650 sq. ft.) has its second deal now, both within about 3 weeks of the listing's start. (Can be viewed while in "backup offer" status.) The start price of $1.599m (PPSF: $438/PSF) looked to MBC to be "realistic," and drew a prominent mention in "Learning, and Not."

• 1600 Elm (3br/3ba, 1975 sq. ft.) is just a cute, traditional Cape Cod, not too big but well-priced at $1.339m, enough to nab a deal in about 2 months' time.

• 864 14th (3br/2ba, 1350 sq. ft.) ran away from the competition in our "Best Priced?" poll in mid-May, when offered for $1.125m. MBC tracked about 34 DOM but the MLS shows 61.

• 595 36th (4br/5ba, 3325 sq. ft.) offers a lot of space for the money (last at $1.499m) with a compromised location. Last list price was below $449/PSF. Made their deal just before 90 days had elapsed. (Can be viewed while in "backup offer" status.)

Finally, in addition to those 8 sales (new escrows), we already mentioned 1812 Palm (5br/4ba, 3225 sq. ft., $1.899m) and 2200 Palm (4br/4ba, 3650 sq. ft., $2.195m) in "Quick is Quick in the Trees."


Clearing Out the Old

• 1708 Pine (2br/1ba, 760 sq. ft.) was really about the dirt, and the pics surveyed the grounds fully without so much as one interior shot, as MBC noted in "Glam Dirt." The price began at $975k, and then, some time later, nearby 1733 Elm closed for $801k (see "Dirt Cheaper?"). We expect the neighbors are looking for a nicer price here to prop up land values. The deal was made after about 5 months.

• 1813 Pacific (4br/3ba, 2125 sq. ft.), a remodel with a very open first floor, attractive and sunny back yard and a bonus room out back as well, tried last year at $1.599m, came back this year and gradually moved to $1.399m.

During this listing, loans worth $1.180m went bad in mid-May, hinting at a possible must-sell situation. Sellers paid $935k about 5 years ago (Jan. 2004) before the re-do. They made a deal after about 5 months on market this time. We'll see where they close.

Of note: Neighboring 1817 Pacific, larger (5br/4ba, 3320 sq. ft.), newer construction (2005) just closed for $1.710m, below the April 2005 acquisition price of $1.925m (-$215k/-11%).

• 512 12th (3br/3ba, 2300 sq. ft.) crossed 250 DOM recently – please ignore the re-lists – but now has a deal. The home was purchased in 2006 as 1148 Ardmore for $1.360m. That version of the home suffered from an 80s vibe; the current owners gutted the home, reconfigured it and remodeled substantially. (Can be viewed while in "backup offer" status.)

Looking for a nice profit, they offered the home for $2.149m in late September. The price recently dropped to $1.695m (+$335k since the remodel) before a deal was made.

• 3309 Poinsettia, the second of the "Twins in the Trees," is the Spring chicken among 3 consecutive old spec homes to recently make a deal. It had logged about 450 DOM and finally changed agents before a quick series of cuts and a deal. Last at $1.9m, fully $200k below the first twin's closed price, and down $895k from the start.
  

• 757 30th (5br/4ba, 3350 sq. ft.) (pictured) has its second deal (at least), after 550+ DOM.

The listing suffered one of the bigger drops from start – $900k from an opening price of $2.699m back in Nov. 2007 to $1.799m recently.

• 2509 Palm (5br/5ba, 3150 sq. ft.) had a long, strange trip on the market spanning more than 2 years. This one was discussed in detail last week in "Failed Auction, New Deal." Last at $1.699m.

Finally, we don't generally cover townhomes, and there are rarely any in the Trees to cover, but it's worth noting that both new THs at 1126 and 1130 Laurel made deals recently after just over 3 months on the market – last priced at $1.189m and $1.279m, respectively.

Riches Slip Away

A few years back, your blog author placed a lottery ticket under a scanner at a local store to see if it was a winner.

A digital readout on the machine said something completely new, which we recall as "prize cannot be paid in store; call attendant" – or words to similar effect.

The effect is what mattered: For a moment there, it seemed like the ticket might possibly be a big winner, and that this stilted message on the machine was supposed to keep the reader calm while the counter help phoned some kind of special hotline.

Alas, no. The prize was about $10, but it could not be paid yet in the store, because the draw results were too fresh – about 15 minutes old. Payouts are held for a while after the draw. So, a few days later, we pocketed the $10, not the mega millions.

That brief flirtation with garish wealth comes to mind on occasion of a new price cut at 132 2nd (4br/5ba, 4300 sq. ft.) that leaves the home up only a few percent over its April 2005 acquisition price.

Sure, the idea that we're now living 2005 prices in MB is common enough. But it must feel like a spectacular fall for the folks selling 132 2nd.

An off-market deal was said to be in hand early in 2008 to sell 132 2nd for $6.225m. Alas, the escrow fell through when the buyers took a home low down on the 16th St. walkstreet instead – for $5.6m.

Having glimpsed the market value at $6m+, the sellers put 132 2nd on the MLS at $6m exactly in late March 2008. Over the months they cut as much as $300k, but eventually quit.

When the listing returned this March at $4.5m, we took note of this price (d)evolution in "A 2nd Try at 2nd." (That story is worth another look for the property's price history and some further discussion of the location, etc.)

In mid-May, the listing canceled and was re-listed at $4.2m. Saturday, it took another significant step down to $3.795m.

From about $6.2m to $3.8m – that new list price is more than $2.4m less than the deal-in-hand price from early 2008.

Youch. That is a lot paper money to have slipped through one's hands like grains of sand.

More significantly for our local RE market, the price moves on 132 2nd provide an indicator. It would seem that Sand Section, walkstreet properties have, in fact, declined suddenly and substantially in value, amid burgeoning supply and little action.

The list price is now only about 8% higher than the $3.5m acquisition price from April 2005. That deal price from last year was 78% higher, and even if that was overheated, it was a market price, based on the willing seller/willing buyer approach.

Not so long ago, a broad opinion about MB RE was that while our town – as a whole – was holding up better than most markets, the beach-adjacent areas were holding up even better. You see some of that in these excerpted reader comments from a story last year ("Meet Francisco"):

South end news: I'm told 132 2nd (along Manh. Ave.) is under contract for $6.225m. Tax records say 5br/6ba, 4300 sq. ft.

If true, that's pretty amazing appreciation – it was purchased for $3.5m in March 2005.
_____________

This appears to be a damn strong data point that 2005 was *not* a peak for the prime areas of MB -

Prime areas UP very solidly since 2005.

Some neighborhoods are going up and some down

That's as crisply as you can state the bullish case for the beach-adjacent walkstreets.

A follow-up comment hypothesized that 132 2nd might sell for $5.5m. Now we know it won't even sell for a price with a 4 in front. And it might, or might not, sell for more than the owners paid in April 2005. That's a big change – for one property, and for the market sub-segment to which it belongs.


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Weekend Opens (6/19-6/20)

Dad deserves a break, so be gentle if he'd rather take Sunday off from the open-house grind.

Put him on duty Saturday instead. It's not like he can complain that he's missing a Laker game.

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 the featured homes, or any open house, to also report back in the comments here. Tell us what you see, what you like and what you don't like.


Hill Section

913 Highview is elegant, newer (2004 build) and relatively compact for the Hills (3br/4ba, 2350 sq. ft.). The location on Highview is on a quiet little block near downtown – sweet.

We're going to need to be convinced on the price: $2.399m. That's a bit over $1,000/PSF, a level we haven't seen in the Hills, even for new construction, in quite a while.

One marker everyone uses is past sales of the same property. 913 Highview was purchased for $1.910m in Feb. 2005. Today's price is up $489k (+26%) from there.

Maybe someone can draw up a list of other recent sales in MB with 25% markups over 2005 prices. That'd help with the convincing.

Open Sat. & Sun. 1-4pm.

If we tell you there's a new listing on a corner lot on John, you might find that kind of exciting. Measured against that initial thrill, you're bound to find 822 John a bit of a letdown.

Boxy brick homes are not all the rage these days; that's more of an east coast look. But here you do get plenty of space (5br/4ba, 3725 sq. ft.) in a home with some updates since its 1989 construction.

It's priced just a bit below Highview at $2.389m, but much lower for the space at $640/PSF.

Open Sun. 1-4pm.


Sand Section

502 24th is a big (4br/4ba, 3875 sq. ft.) and unique contemporary that, for some reason, we want to call "fun."

Several "disappearing walls" on the first floor create a completely open indoor/outdoor feel for the main living spaces – a joy on a mild, sunny day with a little breeze. (Saturday's open may be kind of grey.) The bedrooms are plenty spacious and there are bold, cool accents, like the orange paint on the steel staircases.

Problem: Location. Right across from Grandview School, and fronting somewhat busy 24th, location is a liability. (School's out for Summer, so you do get a break for a few months.)

And yet, this inspired (and "green") home was apparently built on the premise that you could get $5m for this kind of house. Then they dropped the price to $4m. Now it's at $3.495m, with the listing saying it's "priced at least $500,000 under the cost of construction." Ouch. What if that's not the end?

The home is open Saturday only, from 2-4pm. For lots more pics and details than Redfin can provide, see also the special listing website.

517 Longfellow merits another mention this week – it's the south-iest of South End listings – one of a very few MB homes on Longfellow, bordering Hermosa.

This newer (2000) home is priced way below comparable Sand Section listings at $534/PSF for a 4br/4ba, 3650 sq. ft. home on a rare 4000 sq. ft. lot. Starts at $1.949m. Open Sat. only, 2-4pm.


Tree Section

514 17th asks a lot ($3.599m) for a lot – a splendid, big (5br/6ba, 3975 sq. ft.) and sunny Cape Cod on a great block with some real outdoor space, to boot.

You almost can't be closer to the park and to town. Give us a truly special home that abets a walking lifestyle and we'll leave the Hill Section in the rear view mirror.

Again, on price here, we need some convincing. The start on this 2003 build is at $905/PSF, whereas we see PPSFs winding up in the range of $400-$700/PSF all around the Trees these days. Current owners paid the not-inconsiderable sum of $2.469m in Feb. 2004, so the markup now is $1.130m (+46%). The math doesn't work if the rest of MB is living in 2005 prices, though we concur that this one deserves a couple of premiums.

Open Sun. 1-4pm.

The 17th St. listing above is not the same as 523 14th, a new and even bigger Cape Cod (5br/5ba, 4900 sq. ft.) that we also mentioned last week.

While you're in the neighborhood, give this one a look, too.

Priced at $3.375m to begin. Open Sat. & Sun. 1-4pm.


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MB Market Update for 6/15/09

The new MB Market Update spreadsheets can be downloaded by clicking here or, at any time, by using the link in the upper-right corner of the front page.

We begin by noting that inventory of SFRs west of Sepulveda is down substantially from a month ago. By MBC's count:

In mid-May: 154

In mid-June: 138 (-16/-10%)

There are two major explanations for this dropoff.

First, sales have begun keeping pace with the rate of new listings coming on the market.

As our graph here shows (click to enlarge), April was perfectly balanced, while previous months were way, way out of whack – with far too much supply added amid very weak demand.

Those 21 sales in May were no huge feat, but they did make it the best month of the year so far.

The big reason for the inventory dropoff in recent weeks was a big rush of cancellations in the second part of May.

Let's look at the balance of new listings/sales (new escrows) balance for the past 3 updates, which each cover 2-week periods:

May 1-15: 18 new listings/11 sales

May 16-31: 8 new listings/10 sales

June 1-15: 15 new listings/14 sales

Without cancellations, those numbers would have resulted in a +4 bump up in inventory.

But there were 20 cancellations over this 6-week span, 16 of them in the second part of May. (A couple were just your blog author cleaning up inactive listings still on the spreadsheets.)

So there's no question, the sales pace has picked up recently, as you may have heard. May was the best so far, and June, with a start at 14 sales for the first half, shows promise to set a new high for the year.

And there's also no question that lots of would-be sellers are giving up. They don't want to wait forever to sell, and they don't want to (or cannot) sell at current market prices.

The short-term question: Can June keep it going, or are all the buyers headed out on vacation?

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Blog Note: 'Redirecting' issue

MBC just switched over 100% to the use of our custom domain at www.mbconfidential.com a couple of weeks ago, and now some of you may be seeing a new problem.

If you go to the "old" link (http://mbcon.blogspot.com), you will see a message from Blogger: "You're about to be redirected" with some slightly scary warnings about how MBC has not be checked for viruses, etc. Previously, the redirection was automatic, with no warnings like this.

It's OK to say "yes" to the question "Do you wish to be redirected?" You'll come straight to the site.

You may also see this message if clicking on a link to a past MBC story that has the "blogspot.com" root.

Word from the techies is that this is Blogger's new bug this week, nothing specific to MBC nor even to the fact that we switched to the custom domain recently. They're working on it. These are the Google guys, so we're thinking they'll fix it.

Meantime, it's not a bad idea to update your bookmarks to use the new URL.

Failed Auction, New Deal

There's a new act opening in the saga of 2509 Palm, one of the failed auction houses: It's got a buyer.

Oh my, a nice little pickup in sales in the Tree Section has actually spilled all the way over to one of MB's longest-running listings west of Sepulveda.

The backstory on this one goes way back... Back more than 2 years to April 19, 2007, in fact.

That's when this particular cookie-cutter speckie (5br/5ba, 3150 sq. ft.) was first offered to the public. Start price: $2.449m.

Just stop a moment to consider – what were you doing in April 2007? And how did you feel about the local RE market? Yes, things are different now.

For 2509 Palm, the clock ticked, the market changed, and eventually the home's twin at 2509 Walnut sold (for $2.025m, July '08). Still, they just couldn't get anyone to part with their money to move into 2509 Palm.

Enter the November 2008 attempt to auction 2509 Palm – along with 4 other speckies by the same builder. (See "Name Your Price?" from last October, setting up the auction, and "Forget 'Qualified,' Auctions Failed" for the postgame story.)

When that didn't work, Palm went back to the bank in the first days of this year.

The price history on this property is almost too complex to detail, but we'll focus on some of the recent prices that have been attached to Palm:

• $1.499m – auction start price (buyers would have had to add a 7.5% "buyer's premium," so the effective start price was $1.558m)

• $1.679m – last price on the active, post-auction listing, late 2008

• $1.504m – posted "sale" price as the bank acquired the property, Jan. 2, 2009

• $1.535m – quick sale price to an investor, Jan. 29, 2009

• $1.799m – start price on the new listing, Feb. 1, 2009

• $1.699m – last list price when escrow posted

Looking at that progression, a few natural reactions suggest themselves.

First, if the new sale closes anywhere near that $1.699m price, then buyers who walked away from the auction offering – assuming they'd get a better deal later – blew it.

Also, at or near that price, a high-wire-walking investor makes out with a 10% profit over 6 months. Not bad. Although, have you noticed that money invested straight-up in the market this quarter has far, far exceeded that kind of short-term return? (Yeah, but who knew?)

Alternatively, if the sale price nears $1.5m, the buyer calls it a deal and the investor wipes a tiny bit of sweat off the brow and moves on.

Either way, isn't it time for this saga to draw to a close?


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Some Sand Sales

The Sand Section is lagging a bit right now, even as Summer nears. This, as sales in the Hill Section have picked up suddenly and a lot more is going on over in the Trees.

Rather than look at the sales pace in the Sand Section, let's look at closed sales. Six have closed in the past few weeks. In them, we're seeing pretty much what you might expect.

Pretty much getting their asking prices: 3 sales in the teen walkstreets near the beach, plus one delightful home up on the plateau.

Taking hits: 2 homes with challenges.

Here's a look at these closed sales in more detail. First, the more desirable foursome that sold quickly and near asking:

• 312 17th (4br/4ba, 3525 sq. ft.) (pictured) is a recently remodeled contemporary with a huge roofdeck and – as is common on these walkstreets – a small guest/rental unit (included in square footage).
  

Lasted only about 2 weeks at $1.949m, closing for the asking price.

• 316 16th (5br/6ba, 3050 sq. ft.) is a 3-unit building that was listed among SFRs and which boasts a walkstreet location near downtown.
  

16th started with an attractive price in light of the location: $1.599m. Sold in about a month, closing for $1.540m.

• 132 19th (3br/3ba, 3300 sq. ft.) (pictured) is the only one of the walkstreet homes mentioned there that is west of Highland – down close to the water, in this case.

A Spanish charmer that, frankly, needs some modernizing but will suit the new family just fine. Oh, and another roofdeck.

This one is about 800-900 sq. ft. smaller than the max you see on new construction. That and the dated elements help account for the comparatively lower sale price, $3.315m ($1,008/PSF), and the 10% drop from its start at $3.695m. Sold in just about 6 weeks.

• 464 33rd (3br/3ba, 2550 sq. ft.) is a "sweet house" up on the plateau offering "the best combo of price, location and features in a long time" – according to MBC readers who toured the first (and only) open house. This one was featured in "Beauty Calls" shortly before a deal was struck. The sale price, $1.6m, was a thousand dollars over asking.

Now we look at 2 more sales of homes that needed to overcome some obstacles.

• 333 3rd (4br/3ba, 2750 sq. ft.) is one of the few South End, non-walkstreet sales recently. The home sports a Spanish exterior and plenty of space with a street-to-alley lot on a fairly quiet block near the beach. OK, check. So why wasn't it snapped up last year, when first offered at $1.999m?

The interior had some major issues: foremost among them a bizarre contemporary design with whitewashed floors. That modern look isn't for everyone, and it's really not for people who like Spanish exteriors. The transition was jarring.

The price was down to $1.7m by the time a buyer knocked, and the closing price was down another 10% to $1.531m. We hear contractors are on site now; here's hoping the promise of the exterior can be kept with a properly revised interior.

• 4104 Highland (3br/3ba, 2550 sq. ft.) is a contemporary with a giant location problem – on the isolated east side of busy Highland in El Porto. Your blog author considered dropping in on an open house a few times over the past couple of years, but just couldn't bear it. We're guessing lots of potential buyers just said "no" in a similar way.

The previous owner paid $1.450m in March 2005 before, shall we say, suffering a reversal of fortune. The home was offered for sale at times in 2007 as high as $1.719m, but drew no interest.

The bank took the property for $1.252m in April 2008 and seems to have held it a while. It hit the market in Feb. 2009 for $1.175m, but some savvy deal-seeker grabbed it for $200k less, at $970k, in a deal that closed early this month.

That's $380/PSF, not bad in the Sand, even if it is in El Norte. The market tells us this home cascaded down in value by $480k (-33%) over 4 years. That shows how poor location can be toxic when mixed with a little REO.

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Let's Hear It For the Hills

Rolling hills, big ocean views, MB's biggest prestige estates – that's the Hill Section.

But the sub-region also has the most tepid sales pace west of Sepulveda, and that's one reason inventory has been collecting.

There's some news, though – 7 sales (new escrows) in the Hills in just a few weeks, including two of the classiest of the high-dollar listings:

• 918 10th (5br/5ba, 4475 sq. ft.) is the longest-running listing to make a deal. It's an early-90s home with a fully updated kitchen. The location, on a flat street east of Poinsettia, has more in common with the Tree Section's suburban vibe, not the Hill's view estates.

This listing has been around since May 2008, and was down from a $3.2m start to $2.75m when a buyer knocked. That's good news, but we recall a bolder prediction in a print ad in the Beach Reporter in early September, as noted in our "Sunday Opens" feature then:

The Hill is Selling! This incredible home is next to go!

It wasn't "next" – that was more than 9 months ago – but now is as good a time as any.

• 1019 Duncan (4br/4ba, 4800 sq. ft.) is a new home that hits a lot of the basic notes with good style and space.

This was also one listing that appeared determined to get a deal done. After a start at $3.899m in January, it moved to $3.299m (-$600k/-15%) without dragging things out, becoming the least-pricey new home in the Hills. (406 Anderson was lower before it canceled.)

• 1042 2nd (5br/4ba, 4400+ sq. ft.), a newer (2003) home with views of the city, and a location right next door to a commercial building at Sepulveda. Last at $1.999m. Also mentioned, with pic, in last week's "Some Pickup."

• 717 Poinsettia (4br/5ba, 4175 sq. ft.) was last at $3.449m, down $1.2m from its start last November. It's a unique, incredibly landscaped and private corner-lot home that was priced $100k below the recent acquisition price of the equally sized lot next door. The interior needed some updating, but the basics of the home are sweet.

• 929 John (3br/3ba, 1875 sq. ft.) didn't hang around for long – a Hill Section home for $1.499m? No, that would go fast. The contemporary remodel offers a wide-open floorplan, plus a pool.

And now, a drumroll, please...

The 2 priciest deals of the year were made within days of each other:

• 612 John (6br/7ba, 7400 sq. ft.) is a true jewel on this list, a grand home with a big yard (nearly 10,000 sq. ft. lot) and ocean views – what you expect up on the hill.

The current owners updated this home (built in 2000) recently to make it more marketable, and they stuck it.

The listing logged 9 months on market, with a recent change of agents. Start price had been $7.3m but it has been at $6.3m for longer.

Current owners paid $3.3m new in 2000. We'd bet on a closed price this year with a 5 in front.

• 814 10th is ginormous (5br/7ba, 9000 sq. ft.) and dazzling on a double lot. (Listing can still be viewed while in "backup offer" status.) No views here, though.
  

Great Cape Cod styling, a delightful pool and cabana, and so much entertaining space upstairs, you could lose half your guests. An additional plus: a master closet suite that's something like a separate living room.

This home, which began at $6.995m in late February, is the complete package, but we haven't seen a sale in this price range for almost 9 months. Now it's one of two.

Now, about those 7 other listings priced above $5m...

New Comments 101

Our new comment system requires registration with Disqus ("discuss"), the outside provider, to post comments at MBC.

Many regular readers and commenters previously registered with Google (provider of Blogger, this blog's platform) to comment by name under that system. Others created usernames with Intense Debate, the now-departed comment provider.

Disqus allows you to create any screen name (username) you like for your commenting profile.

For convenience, the system also recognizes that you might want the ease of using login information from another service, rather than creating yet another new username/password combination.

You can still pick a unique Disqus screen name for comments, but there's an ease-of-use advantage here. By using other login info you may find – as your blog author has – that you stay "logged in" to Disqus and any time you go to comment, the system recognizes you. That makes it worth a try.

Click here to go to the Disqus signup page. Note that, in the lower left of the page (enlarged here), you can use an ID from Google, Yahoo, Facebook and several more OpenID options. This process is quick and could make your future comments simpler.

To be clear, your blog author has no stake in Disqus and we can't vouch for everything about the system. It appears to be superior to the past system and certainly beats the standard-issue system that came with Blogger.

So sign up and join the discussion! And while you're commenting, please let us know how this system is working for you.

New for $1.5m

Perhaps detectives at MBPD should not be surprised if they receive a few calls about the theft of a home.

Overstatement, sure, but what else can we say about the deal someone just got on the new modern at 560 36th?

The home was considerably larger than the standard Tree Section speckie at 4br/4ba and 3800 sq. ft., and someone got it for $1.555m earlier this month.

That's officially the new low for new construction in the Trees.

Dare we even mention the PPSF? Try $409/PSF if we go by that 3800 sq. ft. size (that was in the original listing; another source now pegs the square footage at 3456, which would make for $450/PSF instead).

And to think, back in August last year, MBC and several readers were starting to call this home a bargain – or at least a bargain in the making – at $2.2m (see "Not Holding Out" for a greater description of the home).

Everything is relative. At the time last year, 560 36th was down from a start at $2.999m. The momentum behind the cuts, plus the pleading language in the listing ("please submit all reasonable offers!"), suggested that we were going to see a real deal here eventually. As MBC wrote at the time:

what was supposed to be an elite-level, high-priced home at 560 36th is now heading to the bargain bin

The bargain bin, indeed. Try almost 50% off. Yikes.

The lot was acquired for $994,500 in June 2005. Obviously the home was not built for the $561k difference between the sale price and lot acquisition price. Loans against the property were around $1.85m last year, so we know it cost substantially more to build this home than the buyer just paid. (We never saw this labeled a short sale, though the lender must have taken a hit.)

It is no secret why this home slipped. Location and style both punished it, and those will be the factors cited as people treat this sale as a huge outlier.

We actually found the interior to be pretty nice for a modern and plenty spacious, but moderns aren't for most buyers and the location near the armory is subpar.

Could you get over those issues knowing that someone else paid for you to move in? A lot of people could.

Weekend Opens (6/13-6/14)

This is a weekend for new, big and audacious homes.

Thought the wave of spec construction was over? Not yet. This week, speckies launch priced from $3m to $8m.

That's not all we're featuring, but the big guns are going to dominate discussion here.

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 the featured homes, or any open house, to also report back in the comments here. Tell us what you see, what you like and what you don't like.


Hill Section

645 9th (6br/6ba, 7750 sq. ft.) is the first, and priciest, new home on our weekend list. It starts at $7.95m.

They're not giving much away in the pics as of yet – just 2 exterior shots as we write. All the more reason to drop in.

For now, the listing is heavy on the home's "green" credentials. But here, we're talking about responsible materials, not the carbon footprint. Hey, bravo on the construction, but, in all seriousness, no 8000-sq.-ft. home is "green" unless the residents swear a blood oath to wear sweaters and long johns all Winter and lay off the heat system. And even then...

OK, calmer now. We are sure it's beautiful. Check it out – report back.

Keep in mind, this home is competing – to an extent – with a larger, but less expensive home at 814 10th (5br/7ba, 9000 sq. ft., at $6.995m) which is also open (Sat. 1-4pm). (Can we say "less expensive" about a $7m home?)

645 9th is open Sat. 1-4pm, and Sun. 2-5pm.


Sand Section

517 Longfellow is the south-iest of South End listings – yes, there are a few MB homes on Longfellow, due to a quirk in the map. (Maybe you thought Francisco was the border?)

This newer (2000) home blows away all comparable Sand Section listings with a minuscule PPSF of $534/PSF for a 4br/4ba, 3650 sq. ft. home on a rare 4000 sq. ft. lot. (Few Sand Section listings are below $700/PSF; nearer to $1,000 is common.)

This one poses an interesting question to buyers in the near-$2m range: For about the same money, would you take a smaller home in the Trees, or be near the beach and Robinson?

Starts at $1.949m. Open Sun. 2-4pm.

We predict that 216 7th (4br/5ba, 4800 sq. ft.) will generate some strong opinions. You either like this sort of comprehensive Tuscan look and feel, or you don't.

If you do, we'll hint at the long list of extras in a moment. But first, check out this location – west of Highland, near downtown, running along Bayview with no neighbors on one side and more light and views. That's a top-tier lot.

Add to that a home design that was a labor of love, well over 2 years of painstaking effort to fill out the concept. Rustic stone floors, hand-plastered walls, 200-year-old beams from an old farm, custom-designed lighting... it's a complete package, meant to feel authentic wherever you turn.

The start price reflects the idea that this home is something above and beyond: $6.495m.

We must note that a sharp new Cape Cod just 2 doors up at 224 7th just sold for $4.9m about 5 weeks ago. Taking nothing away from 224, the reality is that 216 7th is bigger (by 600 sq. ft., plus extra deck space) and bolder. Open Sun. 2-5pm.


Tree Section

523 14th seems poised to shatter the notion you may first have when we say "new spec home in the Trees."

Low on 14th near downtown, but still high enough for some ocean peeks, this huge home (5br/5ba, 4900 sq. ft.) balances modern features with a traditional Cape Cod style. Good names on the design and build give us some hope that this one will be special.

Priced at $3.375m to begin, the listing says it's "below comparable properties currently on the market," which could be, in part, directed at 514 17th, a terrific, if slightly smaller, 6-year-old home now at $3.599m.

523 14th is open Sat. & Sun. 1-4pm.

607 23rd rounds out our feature here on a truly "traditional" note.

It is a little old cottage (3br/1ba, 1000 sq. ft.) on a full-size lot (4400 sq. ft.).

This tiny stretch of 23rd, east of Blanche, is isolated, though Blanche is a factor. The land is the asset here – priced at $1.225m. Open Sun. 2-5pm.

Some Pickup

There's a buzz that sales activity is picking up.

We don't see a big wave, with just 20 sales for all of May (among SFRs west of Sepulveda), some of which you'll see in the new MB Market Update spreadsheets for 5/31/09, which cover the second half of the month.

And we do see some failed-escrow comebackers, like 1308 Walnut, which has returned at $1.899m (down from $2.099m) and is now priced just $50k above the Nov. 2006 acquisition price. Also, 2400 Poinsettia ($1.599m), a 2-week-old listing that got a quick offer that appears to have fallen through.

But there is something happening around town, even a surprise or two.

The newest deals:

• 1600 Elm (3br/3ba, 1975 sq. ft.), which MBC called "just plain cute" with "some nice throwback appeal, and just. enough. space... almost." Priced at $1.339m. (Can still be viewed via Redfin while in "Backup Offer" status.)

• The second of the Twins in the Trees, 3309 Poinsettia, was recently taken over by a more aggressive agent – or so it would seem – who dropped the price a couple times, most recently to $1.9m.
  

The listing, a frequent mention here at MBC, had logged more than 450 DOM and had dropped from the silly heights of a $2.795m start. The first twin, 3307 Poinsettia, closed on Christmas Eve last year for $2.1m.

• Well, here's your surprise: 1042 2nd in the Hills has a deal.

It's a large (5br/4ba, 4400+ sq. ft.), newer (2003) home with views of the city, and a location right next door to a commercial building at Sepulveda. (Barely out of frame in this pic, to the left.)

Sellers paid $1.460m in March 2004. Last Summer, they started by asking almost a million more: $2.395m.

Last at $1.999m, but what's the over-under on this sale? We'll declare surprise with a closing over $1.65m.