Monday, June 11th, 2007
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Monday, June 11th, 2007
Dated, forlorn and a bit musty, 524 15th St. is nonetheless quite the rage in town. The entry fee is $2.2 million, but that's just the beginning for whomever takes the keys.
The home is being marketed simultaneously to builders and to "move-in buyers." A clever strategy that might, just might, draw top dollar.
The big reason: Location, location. This isn't the best or highest part of American Martyrs hill, but it is where it is – 6300 sq. ft. of dirt on the beach side with some sparkling views of downtown, PV and Catalina from the rear.
The other reason this might get expensive quickly: If you can get a second party bidding, madness could break out. Say what you will about builders, but they're smart. They don't want to pay $2.2m for this lot. They won't get into a bidding war with other builders. But if you suck "move-in" buyers into this mix, the lot value does go up. Who comes out on top then?
Recent lot sales up the street suggest that $2.2m is high by 10%, probably more. Here they are:
- 608 15th, sold 2/06, $1.975m
- 613 15th, sold 5/06, $1.950m
- 604 15th, sold 8/06, $2.020m
So the bad news for 524 15th is that the lot location is worse, by comparison, than those lots sold last year at $2m or so.
And there's this: Builders are starting to wonder about the prices they can get at completion. Today's $4.2-$4.5m house might not fetch all that in two years. So do you pay more for the lot while worrying you'll get less when you're built out?
Would-be "move-in buyers" have a different calculus. To walk through is to realize there is no way that paint, floorings, windows and countertops will modernize this house. Unh-unh.
The master is an insult, by today's standards. It's the only bedroom (out of 4) with room for more than a bed and dresser. Not much more room, though, and the "master bath" is small and cannot be expanded without huge changes in the floorplan.
The highest-quality space – the second floor living room with the views – really fails to impress. To capture the potential here, you're going to take out the fireplace, raise the roof, build a deck – generally treat the existing layout like a bad first draft.
At 2,200 sq. ft., the house is positively tiny for its price range. If you're remodeling, you have to fix various flaws and probably add square footage. At the end, you're in for close to $3 million, assuming that the guts of the house (45 y.o.) are intact. You might wind up with 3,000 sq. ft. of nice home in a plus location, but for all the hassle, why not buy something newer?!?
That's why, here, MBC is betting on the builders. In this market, we need someone to start over on this lot.
Even if the current owners have found their home lovely, the family committing $3m to buy and remodel has better options. The builder hoping for $4m can probably pull that off if he moves quickly.
Saturday, June 9th, 2007
One of MBC's favorite poems about real estate, sort of... courtesy of McSweeney's (frequent visits suggested):
What the People
Who Used to Live in My House
Apparently Said to Each Other
Before Selling it to Me
BY JESSY RANDALL
- - - -
"I think wall-to-wall beige carpeting is the way to go."
"How can we beige it up even more?"
"Let's paint all the walls the exact same beige as the beige light-switch covers at Home Depot."
"Still not beige enough."
"We could paint the moldings beige, that might help."
"Everyone loves beige!"
If you need something a little more substantive, check out the new graphs of active/sold ratios for Spring over at our MB Market Update subdivision.
Thursday, June 7th, 2007
So builders all over MB will be choking on their lattes, er, scotch, when they open up their copies this week and see, right on page 2, columnist Paul Silva's piece. In "The Stains of Speculation," Silva bemoans the continuing redevelopment of Manhattan Beach by profit-seeking speculators.
Now, MBC is neutral on the subject, but here's Silva's take:
[I]f you build an ugly, ostentatious house just for profit, you deserve to go broke doing it....Silva's complaint isn't just about garishness, but size. Building out to every allowable square foot means no yards, and changes the flavor of a neighborhood.
It's hard to think of another form of profit-seeking that leaves us with as many public stains as real estate speculation... an ugly house can last 40 years or longer....
The builders will tell you that maximum square footage is what sells these days, but it's a circular argument because few developers have the courage to place a bet on open space.Builders are yella!?!
What prompted Silva's outburst? The writer lives near a large new house in MB that's been sitting on the market for months. He's not-so-secretly happy that the builder has had trouble finding a buyer – maybe it will be a lesson to others.
Silva worries that there isn't much that can be done. "[W]e are at the mercy of the taste and discretion of spec builders," he sighs. Unless, that is, the buyers in the $3-$5m range turn their backs on these new homes, and insist that less is more:
If these wealthy newcomers demand more yard space and less grandiosity, and a few developers lose their shirts on some mini Taj Mahals, we're all better off.Wow, that's twice Silva is openly hoping for builders to lose money. It's for a purpose, of course: a desire for a better-scaled community. But what do you think the business department at BR said when they saw the piece?
Thursday, June 7th, 2007
Wednesday, June 6th, 2007
In the three regions west of Sepulveda, it's an average of 98 DOM.
The chart says it all, but for more detail on how the chart was created and other considerations and analysis, please see the full, nerdier post here.
Tuesday, June 5th, 2007
Sunday's New York Times Business section featured this article by Floyd Norris discussing the history of housing booms and declines. Norris notes:
There are few economic trends harder to measure than home prices, given that every home is unique, and a house in one area can cost far more than an identical one in another location. All such measures show the market has weakened, but some do not yet show a broad national decline.One index does show national declines, the Case-Shiller index, mentioned here last week. Norris compares today's national data to those from a previous downturn that began in October 1989:
Prices are falling more rapidly this time, just as they rose more rapidly coming into the 2006 peak than they had a generation earlier...(Follow the NYT story link above to see some graphs you'll find terrific and a bit scary.)
Norris reports that it was not for 99 months – achem, 99 months – that prices returned to their peak levels.
To some of us in MB, all that talk sounds like it's from another planet, not just another time. Price declines? Eight-year slumps? Not here!
No question, MB seems to be insulated from some of the nastier trends out there today, but can we really defy the national market completely? Local RE leaders would say yes.
FYI, if you are inclined to read more doom-and-gloom, er, analysis, on the national housing market, a mid-year analysis over at Calculated Risk provides both chat and charts worth your time.
Monday, June 4th, 2007
As MBC has said before, if the data back it up, it's fine to sound as bullish as can be. If South Bay sales have really increased year-over-year in three consecutive Aprils, that's something to crow about.
And yet there's a stretch beyond the data here, too. A statement attributed in the release to Shorewood's co-owners, Arnold Goldstein and Larry Wolf (apparently they were speaking at the same time), says:
We believe we’re seeing a renewal of confidence among both buyers and sellers that the housing downturn which began in the fall of 2005 has more or less run its course in the South Bay. Prices are holding steady for the most part and smart buyers have decided not to wait for further downturns, which frankly we don’t think will occur, so long as mortgage rates hold steady.Let's examine this a bit further.
First, has the record really been clear – has Shorewood always said a "downturn" began in Fall 2005? Good research question.
Second, does Shorewood believe the slump, however mild, has "run its course?" Oh no, that's the "buyers and sellers" who have "confidence" that the "downturn" is over, not Shorewood. Don't blame us if we're wrong.
"Further downturns" will not occur, in the Shorewood owners' frank view, so long as rates are steady. Hey – that is an opinion. We'll check back on that one.
OK now, "smart buyers," remember, you're the ones who are not going to wait any longer. Any buyers who are waiting, sorry to insult your intelligence, just please call Shorewood when you're ready to make a move.
Monday, June 4th, 2007
The listing notes that you will have a "White water view!"
Not so much emphasized: Power Plant View, or Gas Station View.
Previous posts about this home, which MBC has taken to calling "The Gateway to Manhattan Beach," are here and here.
Monday, June 4th, 2007
MBC tracked 126 homes (SFRs) listed west of Sepulveda this Spring (which we define as, essentially, April and May – actual date range: March 27-May 31).
36% of the listings wound up pending or sold by May 31.
The data by section:
- 45% of listings in the Sand Section were pending or sold, as were
- 32% of listings in the Hill Section, and
- 32% of listings in the Tree Section.
And if you hear that things are slow in the Trees above $2m – where a lot of new construction is lingering – well, the data back that up, too. Just 25% of the listings over $2m in the Trees sold or went pending. In raw numbers, that was 9 out of 36 of the $2m+ listings.
MBC is not in a position to offer comparative data. It'd be great to set 2007 data alongside 2003, '04, '05 and '06 data. But we go forward with the data we have.
We're aware of markets near and far where much more inventory is going unsold despite desperate measures. And yet, don't we all know that MB used to be a bit hotter than this?
A local realtor who blogs regularly, Kaye Thomas, offers her own "market snapshot." She also observes:
The market is showing signs of slowing down a bit... which is normal for this time ofNote: All the data referenced above, and to come this week, is easily compiled from the most recent Manhattan Beach Market Update. MBC offers it to you in a PDF but we're (obviously) working from a spreadsheet, and we'll offer analysis from several angles. Graphs and charts are on the agenda as well.
UPDATE 6/7/07: The graphs for actives/solds are up here at MB Market Update.