We had this sense early in 2011 that a few Strand properties were coming out overpriced, and that this would have negative ramifications for them down the road.
With the most recent closed sale on The Strand, that sense has proved out.
A second Strand property has now closed with a 5 in front.
|2504 The Strand|
That's 2504 The Strand
, touted as "exquisite," yet truly anything but.
We've called it "a dated if 'modernistic' home" on account of the remodel done roughly in the 80s.
It's actually 2 separate structures – the front unit which you see here, and a crusty 1br/1ba rental unit in the rear that dates way back, perhaps to the mid-1950s construction. (Note: We never toured the rear unit.)
2504 The Strand began at $7.190m in March, and 5+ months later it was down to just a hair under $6m.
The new closed sale price: $5.150m
, more than $800k off the last asking price.
That's more than a $2m error in the start price, a cascade of 28% from start to finish.
|3112 The Strand|
Moreover, this sale is even lower than the most recent Strand sale, up at 3112 The Strand
, which went for $5.350m
(Despite 7 months on the MLS, the sale at 3112 wasn't entered into that database – we had to dig out that price from public records for a story published a month after the sale wrapped up. See "Close the Books on 3112 The Strand
It's interesting to see that 2504 The Strand overshot even worse coming out of the blocks than 3112 The Strand, only to close even lower.
The start at 3112 was $6.9m. That means 2504 started almost $300k higher before closing $200k lower.
Both Strand sales, with their vividly dashed expectations, raise an interesting question about land values along The Strand.
A true scraper at 3216 The Strand
sold for $4.7m
in Aug. 2009, marking the bottom of the market – you would think. But both 3112 and 2504 have livable structures on them. They sold for 14% and 10% more than that low point.
But do you factor in any value at all from the buildings, or treat them as free add-ons to "land-value" deals? Most folks who track this micro-market closely are going to be of the "free add-ons" school, but the alternative view makes sense, too. Could we really be looking at dirt values near or below $5m for some locations on The Strand? Still on the market: 3308 The Strand
(technically 3309 Ocean), at $6.2m
after a start in March and a re-list in June. If they can seal that one up, maybe we'll get an answer to that (for now) rhetorical question up above.
Let's end this on a few positive notes.
First, the lot at 2504 was somewhat smaller than that at 3112. If we treat both sales purely as land-value deals, the dirt PPSF for 2504 was $1,472/PSF
, while the dirt PPSF for 3112 was $1,390/PSF
. That's a not-insignificant 6% boost that probably reflects the not-so-far-north location of 2504 as much as anything.
Second, as with any real estate, land values vary with location. Put up something on the Strand in farthest El
Norte and you'll get much less than you would for something near to, or south of, the pier. So not everyone needs to cry in their beer tonight about Strand values teetering near $5m.
Third, we can't put aside the fact that this year has also seen 2 very high-dollar Strand sales, 1600 The Strand
– before a pricey remodel – and 1800 The Strand
Someone just needed to get a memo to the more marginal properties that they weren't those.