Close the Books on 815 2nd

Posted by Dave Fratello on Tuesday, December 29th, 2009 at 5:21am.

This time of year, most of the action is in closed sales. And so, again, we're wrapping up the story of a longtime local listing that had hit the rocks, but finally has new owners.

815 2nd was a speckie that flopped badly and recently sold in bankruptcy court for $2.650m. That's -$2.145m/-45% off the home's start price from nearly 2 years ago.

It's big (5br/5ba, 4725 sq. ft.), modeled in the increasingly popular Cape Cod style, and offers ocean views – better than expected given the location just partway up the hill from Ardmore. All that and more, as MBC noted in a previous story:
  • a cool lower level (too bright to call a "basement") with a tiered home theater;
  • lots of crisp finishes and fine details;
  • the design favors lots of cozy, private spaces over the huge megarooms you would normally find in a Hill manse;
  • a unique family layout with... unfortunately, some pretty small bedrooms; and
  • surprisingly modest (in a good way) overall.
With all that going for it, what was the problem?

In no particular order: price, timing, location and layout.

Price began at $4.795m in February 2008, nearly $1,000/PSF, a premium price you'd expect on a home that has it all, including a great location. But no.

Timing? The dirt was acquired for $1.8m in September 2006. That was late to get rolling with a spec project.

Then, as the finished product was ready to offer up, the local market had begun to quake from the Summer/Fall 2007 financial troubles. Yet 2nd launched at a high price, as if all was well, and premium demand would remain unaffected. Incorrect.

A year passed before the price was down a full million – and by then it was a short sale at $3.799m. (See "First Hill Newbie to Go Short.")

That location was an issue neglected when the project was greenlighted, but prominent throughout the attempt to sell the home. 2nd St. is among the busiest streets in the Hills, and at this particular spot on the way up, engines roar.

And layout – we were charitable above. The "unique" layout with the "cozy" spaces was not a big draw. In the multi-million-dollar range, people expect grandiosity, not cozy. Related: The footprint of the home on the lot wiped out any chance for a yard. The paved back patio is nice for entertaining, but it's not a yard.

Those issues combined in a perfect storm of sorts, throwing the partnership that built the home into bankruptcy and, no doubt, costing investors a bundle.

On the bright side, savvy buyers just grabbed a huge home for just a couple ticks above what they could have paid for a new home in the Tree Section with a third less living space, no ocean views and no Robinson school district. Nice catch. 

Because there was an MBC pricing poll on this property, it's worth a quick check-in to see how many MBC readers suggested the general neighborhood in which the property would sell. (Click that story link for reader comments on the property.)

For this one, we have to reach all the way back to April 2008, when the home was at $4.495m, just a minor adjustment from its start price. As our results story shows, only a trifling 11% were bearish enough to vote for "below $3.5m." 

That's another curious result in the series of MBC pricing polls, where there's no clear pattern. Sometimes the mass of voters guesses too high, sometimes much too low. 

In April 2008, it was pretty hard to foresee this outcome. Maybe not quite as hard, though, as it was when the project was first drawn up.
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