Askew Down South

Posted by Dave Fratello on Thursday, April 30th, 2009 at 5:50am.

Listings in the South End of the Sand Section are becoming clogged with tiny, spiffy remodels held less than 2 years.
  • MBC has already discussed 325 4th at some length (see "When We Say Walkstreet..."). That one's a 2br/1ba and 650 sq. ft. on a half lot with no garage or street access. It began at $899k and remains there. Purchased in Jan. 2008 for $718k before the spiffing up.
  • This week, another half-lot walkstreet home joined the mix: 316 9th (pictured).
The home is officially smaller that 4th St. (1br/1ba, 600 sq. ft.), but there's a separate office out back. And at least there's a garage, and street access via Crest – the home is on the corner lot.
But oh, is the price higher: $1.299m. Yes, for 1br/1ba and 600 sq. ft. on a half lot.

This is a markup of $349k over the April 2007 acquisition price of $950k, reflecting the remodel.
  • Finally, 420 1st has just dropped in. It's the "biggest" home of the bunch we're mentioning here, 2br/2ba and 800+ square feet – including the space in a separate, rear guest house.
At 3300 sq. ft., the lot is much bigger than the others above, but it's got none of that walkstreet caché. Instead, the property backs up to a school and abuts a parking lot. (The parking lot is pitched as an asset; you decide.)

When this home was offered in Oct. 2006, it began at $1.350m and was marketed as a teardown. The current owners took it for a nice discount, $1.075m, in June 2007 and cleaned it up instead, saving the little cottage.

Now, the listing says of the marked-up price of $1.275m: "Property is listed for lot value but is livable and rentable." If that were literally true, the land value has increased 19% in the past 2 years. Mmmmm...
It would appear that the memo has not reached the South End.

Short-term holds of very small houses should not be expected to be profitable here in 2009.

We'll grant you that each of these homes has been upgraded from its prior condition to some degree. But the market has been moving down at the same time, so markups of 19%-37% on these listings appear completely out of touch. Does anyone even talk about "flipping" houses anymore?

Who are the buyers for these Sand Section cottages?

Entry-level MB buyers have almost a dozen options below $1.3m in the Tree Section, all of them bigger – some much bigger. Only the 1st St. house has a chance of accommodating a family, and even then, it's tight.

The 4th St. house is offered for rent, and the 1st St. listing says the seller "may consider" renting out instead. If they don't want to take losses, that may be the best option for both sellers.

Meanwhile, all 3 listings are helping to feed the perception that our market is slow because sellers refuse to acknowledge reality.
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