Discussion of MB Market Update for 8/15/07

Posted by Dave Fratello on Friday, August 17th, 2007 at 3:00pm.

With this Market Update we’re trying something new: Publishing it on the main MBC page, instead of on our sister site/data-dump page, Manhattan Beach Market Update.

Also, you'll see the newest update may now be downloaded from the upper-right corner of the MBC front page. The older updates are still at the other site, and the data and spreadsheets will continue to be archived there as well.

So, what can we say about the first two weeks of August?

This period began briskly, especially in the Tree Section (sub-$2m segment), and then 5-7 days into the month, everything got strange. Cue the Shorewood agent quoted by the LA Times:
"The market is very perplexing right now, and people don't know what to do."
News of a rate spike for jumbo loans (basically all MB transactions) jangled nerves, but it turns out it’s the rules for loan programs that are the biggest hassle. It’s been harder to qualify buyers – even very solid ones – for high-LTV deals, which are characteristic of our market, due to prices.

Also, lenders are vanishing or going bankrupt, and we’re even hearing of escrows collapsing (outside MB, so far) at the last minute due to lender problems.

These problems may sort themselves out (or not), but what’s clear is that these shocks froze the market for the second week of August. MBC has seen no new escrows begin after Aug. 7, while two escrows failed. (We focus on SFRs west of Sepulveda.) We’ll find a new equilibrium soon, one imagines, but this was a weird time.


Hill Section

There are 11 active SFRs.

There were some curious developments: 3 active SFRs were canceled, 1 more went inactive (on hold), a new listing simply vanished, and a previously canceled listing – nearing a foreclosure auction – returned as a short sale.

There were no sales since the 7/31 update, and 1 price reduction – on 916 9th, the second cut there in a month.

Does this sound like the Hill Section we know?

Adios for now: 3 properties at completely different stages.
  • 845 10th wanted $1.875m for the lot. It’s now canceled after 90 DOM, just like neighbor 903 10th ($1.8m), which stopped testing the waters in late May.
  • 603 11th was a very nice, newer home (with a master “perfect for royalty,” the listing said), asking $3m, off the MLS after a month.
  • 511 Pacific, now under construction (you can see it up off Ardmore), is not at this moment asking $8.150m anymore, after 90 days of marketing.
Also, 911 Duncan, listed at $3.77m for 2 months, went on hold.

Bienvenidos, otra vez: 601 Larsson is back. This one began March 20 at $2.695, dropped impressively to $2.395m, then dropped out a while. Backstory: Owner paid $2.0m in Sept. 2005. It’s been in and out of foreclosure this year, with auctions scheduled and canceled. Now they’ve got lender approval for a short sale at $1.999m or so. Also, though MBC does not track townhomes, we noted the return of another canceled listing, a townhome at 714 MBB, on which the owners are now certain to lose money.

Adonde vas? MBC is confused by 869 3rd. When this one came on the market at $3.995m (7/30/07), we noted that it was purchased 2 years ago by two realtors for $2.44m, so they’re saying it has appreciated 64% since then. Now the property is off the MLS, but there’s still a sign out. We’re keeping it in the update for now.


Sand Section

There are 19 active SFRs.

There was little activity in what has been a hoppin’ segment of the market. The update shows 2 new listings and 3 new sales, but one (513 21st) is actually a teardown that came on in mid-July and sold immediately, but skipped past our radar. That means in this period, we really saw 1 new listing and 2 sales.

That new listing is, intriguingly, a home that was in foreclosure and up for auction this past April. It’s 225 39th, 3br/3ba and 1600 sq. ft., freshly remodeled, on a slightly larger-than-normal lot (1525 sq. ft.) near Highland (steps to Sharkeez). A purchase closed 6/14/07 for $1.595m, and now it can be yours for $1.745m, exactly $150k more. Is it a foreclosure-shark flip? At $1,090 per square foot, that price does appear to be pushing on the ceiling.

Sold: 316 Highland, beautiful, newer and reasonably large (2500 sq. ft.) listed at $1.995m, went quickly. Further north, 469 27th, a superslick remodel tucked away near the cliff overlooking the Tree Section, went within a month – listed at $1.599m for 3br/3ba, 2100 sq. ft.

Ouch: At the high end of the market, there was rough sledding. A “landmark” home at 232 16th, no, 234 16th failed to sell at $4.55m and appears to have been rented out instead (at $9,500/mo.). New construction at 217 9th went into, and out of, escrow.

Cuts: Only one new reduction – the home formerly known as 3009 Highland (now “232 30th Place”) cut to $1.349m, though it’s debatable whether that was a $10k cut or a $20k cut. Perplexing. We also record here a $100k cut on the remodel-in-progress at 320 Rosecrans, a duplex next door to El Tarasco, now asking $1.999m – that didn’t get into the last update.

Closed sale prices: We have three new closed sale prices, including the cheapest sale in the Sand Section in about 15 years, er, well, in a while: 462 36th Place closed at $760k, down $39k, so that’s the price of half-lot in a pretty challenged location. Two brand new homes also sold, 233 30th St. ($2.250m, -$49k) and 3904 Ocean ($2.65m, -$100k).


Tree Section

There are 37 active SFRs. Of these, 13 are in the sub-$2m range, and 24 are above $2m.

Outta here: Five homes <$2m went into escrow at the beginning of the month; one (1409 Oak) later fell out. Of these, two were really super (2559 Valley at $1.999m and 3108 Poinsettia at $1.599m). Two were more downscale, but 1717 Pacific (at $1.479m, a remodeled flip) evidently had its charms and 1732 Pine, very tired, may simply be a lot sale at $1.295m.

Dropping in: Five new listings came up:
  • A lovable wreck at 790 Rosecrans ($1.585m),
  • A nice remodel at 2615 Valley ($1.699m),
  • A newer home one door off Ardmore at 3200 Elm ($1.949m),
  • A newer home on a busier street (2900 Blanche) joining all the newer stuf at $2.3m, and
  • New construction at 2509 Walnut, two doors off Marine, starting at $2.449m.
Did you notice the location challenges for all of these? Uh-oh.

Best-priced may be 3200 Elm, since the owners didn’t pay all that much less than they’re asking now when they took it in 2004.

Dropping down: Eight Tree Section homes reduced their prices, but one increased (2822 Ardmore) because the sellers found themselves temporarily alone – nothing else was listed <$1.585m. Closing: Three closed sale prices came in, all at or near asking: a lot sale at 3404 Pine ($1.2m), a quick-flip remodel at 3528 Poinsettia ($1.260m) and a large remodel, 2509 Laurel, with 3650 sq. ft., at $1.725m ($473 PSF).
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