Bought: The Farm(house)

Posted by Dave Fratello on Monday, June 9th, 2008 at 5:06pm.

A new Tree Section sale will help keep the comps high.

A new home that came to be called "The Farmhouse" at 570 27th closed escrow last week at $2.680m.

A $2.7m sale is generally good for business, unless you were the builder in this case. The unique, high-end, 5br/4ba, 4100 sq. ft. home began in mid-March 2007 at $3.899m, so the sale price is -$1.219m/-31% off that ambitious start.

In MBC's year-plus of public market tracking, that $1m+ haircut has been exceeded only once. A remodel in an ocean-view location at 108 S. Dianthus lingered for more than a year (March '06-April '07) and closed for $3.25m, fully $1.250m below its $4.5m start.

We'll remind you that Blake Roberts said this of the Farmhouse:
[T]his is just speculation, but I'd guess that the builder wouldn't have (or couldn't have) moved forward with the Farm House project had he known it would end up selling close to $3,000,000 bucks.
That comment came when the list price was $3.199m.

The lot, adjacent to Ladera School, was acquired for a tick below $1.3m in Dec. 2004. We see loans against the property in excess of $2.2m, but the all-important question of the builder's profit or loss is beyond our scope of information.

If you can make the layout work for you, The Farmhouse is a sleek home completely unlike any other that could be pretty cool, on balance. The main complaint is that all of the living space – dining, living and media rooms – are really one huge space, a Really Great Room that felt like a small basketball court. (We've got b-ball stuck on our minds, don't we?) The location was obviously more of a strike than the builders expected.

At $654/PSF, The Farmhouse was valued at the lower end for new construction in the Trees, but it wasn't the cheapest recent sale by this measure (2309 Pacific: $591/PSF, 644 35th: $625/PSF).

For buyers upset with the cookie-cutter nature of so much new construction, an unfortunate postscript from The Farmhouse sale is that builders (and lenders) are more likely to frown on innovative designs for new homes. Maybe they should just be careful how unique they're trying to be.
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