Big Changes North & East

Posted by Dave Fratello on Thursday, July 22nd, 2010 at 1:45pm.

Bringing unique new homes to market in 2009 was bold and challenging.

Halfway through 2010, some of those spec projects are still with us, angling for attention and buyers.

We'll look at a few of those, each carrying its own special burden – some mix of price, location and style – that has made deals especially hard to come by.

3516 The Strand first drew MBC's attention in April 2009 in "Another Week, Another Titan," when it launched at $13.999m. (The current version of the listing began in November, after a long break, at $12.999m.)

The ambitious 6br/5ba, 5550 sq. ft. home features lots of extra details meant to give it an authentic Italian feel. They brought in reclaimed materials (beams, bricks and tiles), old fountains and sinks from Cyprus and had other pieces custom-made in Italy as well.

Not to forget the preferences of big-dollar buyers, the home sports modern flourishes like a giant home theater. (You thought you would have to skip that at the beach?)

With nearly a full year of market exposure – deducting for the time off last year – the home needed a bold move to draw attention. On Wednesday, a single cut of more than $2m brought the price to $9.850m.

That's -$4.149m (-30%) off the start, maybe moving into the right territory now.

Further north and up along Highland is a package of 5 modern El Porto Norte condos that have sat and sat since their debut in November 2009. The project has begun to look like the White Elephant of El Porto – though now one unit's under contract, so that's a start.

 This week the sellers added a new agent and the remaining listings were all rebooted:
  • 4321 Crest, #A (3br/3ba, 2050 sq. ft.) began at $1.599m, cut to $1.299m and is the one that is now in escrow.
  • 4323 Crest, #B (3br/3ba, 2050 sq. ft.) began at $1.789m and is now at $1.499m
  • 4320 Highland, #C (3br/3ba, 2250 sq. ft.) began at $1.859m and is now down to $1.299m.
  • 312 44th, #D (4br/3ba, 2675 sq. ft.) began at $2.299m and is now down to $1.649m.
  • 316 44th, #E (4br/3ba, 2650 sq. ft.) also began at $2.299m and is also now down to $1.649m.
That's a blizzard of price changes, so let's try to simplify.

The one unit that has a buyer cut 19% from its start before a deal was made – and we don't yet know the actual contract price. Prices on the others are down 16%-30% after more than 7 months on market.

Maybe you could have seen this coming. In MBC's writeup on the project as it broke ground in March 2008 (see "Coming Soon to El Norte"), we said:

It's an ambitious project starting up at a rough time for the local market. (Let alone the credit markets.) Give the developers credit for having cojones.

The units will have ocean views, and they'll be new, but the location is going to be a problem... buyers are steering clear of the area while they have options.
Of course, one case in point for buyers avoiding the area was the famous Gateway to Manhattan Beach, 4419 Highland, whose travails have been well-documented here. The trapezoidal tower is currently listed at $999k on a second attempt to sell, after a period as a rental.

Might these new condos be profitable? The land was obtained for $3m at the peak in Feb. 2007. If every single unit sold for its current list price, that'd be $7.4m. Though that's nearly $2.5m less than the total of all the start prices, the big question is what the build cost – if it was well south of $4m, they've got a chance to squeak it out once all the units sell.

For our last entry, we look east of the highway to 116 Terraza  (7br/9ba, 10,500 sq. ft.), a big new courtyard home on a flag lot on a quiet, prestigious East MB street.

This one launched in Sept. 2009 officially at $10m, though this was a cool $1m discount off the pre-completion price suggested at the builder's website (yes, that's still posted). Last price we saw was about $7.3m.

After 6 weeks off the market, Terraza's back at $6.999m, fully $3m (-30%) off the start price.

It wasn't a $10m home, but is it a $7m home?
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