Drought Ends, Glut Continues

Posted by Dave Fratello on Thursday, July 26th, 2007 at 5:08am.

A sales drought in the Tree Section $2m+ segment has now ended after 25 days.

MBC's records show that the last sale was 3005 Poinsettia, posted on June 29 and discussed here.

Today comes the news that the new construction at 3113 Valley is pending.

This home is 5br/4ba, 3400 sq. ft., on a slightly larger-than-usual lot (5000 sq. ft.). Last price was $2.299m – or $674/sq. ft., the lowest among Tree Section new construction.

Bonus feature: Solar electric generating system pre-installed. Nice.


But 3113 Valley has been immediately replaced by a new home at 3104 Pacific (pictured), which begins at $2.149m, $150k below the other new construction in the Trees.

That probably seems like aggressive pricing for a newbie that, by profile, is a lot like the others that are close in price (5br/4ba, 3200 sq. ft.).

But 3104 Pacific also must consider two new homes on Pacific sold within the last year that sat around awhile and took real reductions.
  • 2512 Pacific (5br/4ba, 3600 sq. ft.) began in March 2006 at $2.350m. It stuck around and the listing language got more pleading – "Waiting For The Bubble? Seller Will Negotiate Now!!!" County records show it sold for $2m (plus $4k) in Nov. '06, down $345k (-15%).
  • 3405 Pacific (4br/4ba, 3200 sq.ft.) also began in March 2006, at $2.149m. It sold one year later for $1.775m, down $375k (-17%).
With neighboring new construction selling for $1.775m and $2.0m, all of a sudden, the price on 3104 Pacific looks quite high.

The home at 2512 was bigger, but went for $150k less than the start price here. All things being equal, at the same square footage price ($556), 3104 should sell for $1.780m – about the same as 3405 Pacific.

Of course, those sales closed long ago. We need not consider them now. It's a different market already.
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