The 1-Year Club in the Trees

Posted by Dave Fratello on Monday, October 29th, 2007 at 4:31am.

No one really denies that there's a glut in the $2m+ segment in the Tree Section. And no one seems to have any big ideas about what to do about it.

MBC focuses here on the special problem of new construction that has lingered for more than a year. What might these homes foretell for the fates of others that don't get snapped up fairly soon?

Of the 30 homes now active in the $2m+ segment, 23 are newly built. Three have been offered for more than a year. Let's look at each, and see what might be holding people back:

2310 Palm (click for details) is a bit of a surprise on this list. It's lovely. No stapled-on stone. The location is good. Materials inside are well-chosen, carrying an authentic-feeling Spanish flavor throughout. It has tons more character than your typical specky.

This one started at a heady $2.699m in August 2006 – over $850/sq. ft. (5br/3ba, 3150 sq. ft.). With no takers, it has drifted down $300k to $2.399m ($760/sq. ft).

Why are buyers passing? For one, useless outdoor space – the entry courtyard is not really a yard or an entertainment space, and the back patio appears too cramped for a table plus barbeque. (And what's with the ledge and the dropoff back there?) In the end: No yard. Also, three bedrooms upstairs are teeny (an MBC peeve).

2612 Poinsettia seems all but forgotten. Few open houses, near-zero price movement. This one began September 5, 2006, at $2.399m, and almost 14 months later it's down all of $49k to $2.350m – $734/sq. ft. for 5br/5ba, 3200 sq. ft.

This home was built by a prominent regional realtor/builder, one whose stuff MBC generally frowns on, but he's been successful. In this case, it could be that the margins are too tight for price cuts, or we may be seeing a strategy and attitude – born of the go-go days – that amounts to "build it, and they will buy." (Also: wait for the market to come to you.)

Why are buyers passing? Location is an obvious answer – between Marine and Ardmore, Poinsettia is a bit noisy and isolated. The exterior has very little going for it. (Oooh, stapled-0n slate tile, grrnnhh.) Poor-quality materials inside, in many parts of the home, convey that this was a low-priority, perfunctory project. Zero warmth.

2709 Oak
is back, after more than a week off and a change of agents. (MBC wondered if it was a quitter and/or bellwether in this story; it could still be a bellwether!)

To recap, this one began at $2.395m in August 2006, and slid just a bit to $2.299m, where it lingered for months. The new price is $2.195m (with a bogus re-list, of course), down just $200k (-8%) in a year-plus. (Note: The movement matches that of a few others that all landed at $2.195m this week.)

Ah, but here's the real news. The new agent is going to try to help liquidate this one. From the listing (all-caps in original):
READY TO SELL. BRING ALL OFFERS.
Oak listings don't drive the market, but the final disposition of this one will be interesting.

This is the largest home in the 1-year club (3600 sq. ft.), and it's quite charming. The new set of photos (including some dupes) conveys this much better than before.

Why are buyers passing? Er... location, location, location.

Dear readers, you may not recall when great homes on Oak cost $800k, but you don't have to in order to see why folks can't wrap their minds around spending $2m+ to live 50 yards from Sepulveda, and a mile+ from everything else.
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