Close the Books on 420 1stPosted on Wednesday, April 11th, 2012 at 8:40pm.
A property near the beach, purchased at the peak – how would that fare on resale 5 years later?
Let's start with a backstory on the home we're talking about, 420 1st (2br/2ba, 1000 sq. ft.).
It's a unique little cottage – well, 2 little cottages – with a unique location liability. The property backs up to a school and abuts a parking lot. (The parking lot has been pitched as an asset in listings – "extra after-hours parking [shhh! it's a neighborhood secret.]")
That, plus the location on 1st St., one of the busier avenues of the South End, make this particular plot problematic.
The little old place, mostly a wreck 6 years ago, was offered in Oct. 2006 at $1.350m and was marketed as a teardown. Eight months later, someone grabbed it for a nice discount, $1.075m (in June 2007).
It may have seemed the buyers were baking in the price risk from a then-teetering market by taking $275k off the top, but the property only grew less valuable over time.
Nice to see, the buyers didn't tear it down, they gussied up the cottage and moved in.
But less than 2 years later, the new owners were looking to get out. At a time when the local market could fairly be described as in depression (for MB), April 2009, they sought a nice markup. The start price of $1.275m came with this note: "Property is listed for lot value but is livable and rentable."
Values had not gone up from mid-2007 to Spring 2009, and they didn't get that markup.
That '09 listing quit after 90 days. The property came back for basically all of 2010 at prices from $1.2m down to $975k. Still no takers.
But proving the (new) rule that what didn't sell before can sell in 2012, this property did find a buyer within a month back in January. The sale has just closed at $899k.
That $899k is a solid 16% off the June 2007 acquisition price, pretty much in line with the market's movement over time, where the average discount from peak to 2010-12 seems to be 15-20%. And remember they took a discount way back in '07 when no one else would bite.
That's 521 2nd (3br/2ba, 1425 sq. ft.), a dated house on a smaller lot (2700 vs. the 3000 at 420 1st). The structure itself is bigger and the remodel may be more feasible than a re-do at 1st, but it's a project by any measure.
Take it away from 1st and the school parking lot, though, and you get a start price of $1.329m.
South End values were also boosted recently when 421 3rd sold quickly when listed at $1.809m, and that house has a special layout challenge of its own. (UPDATE: 421 3rd closed Wednesday at that asking price, just 2 weeks after the listing had launched.)
But $899k for a challenged little cottage now joins the comps for the area. Is that finally the land-value trade that gets the home redeveloped?
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