How Near, How Far

Posted by Dave Fratello on Friday, October 8th, 2010 at 4:07am.

Taking a look at just some of the most recent price cuts around town, you see some that are reluctant because the homes are probably nearing their market value.

Other cuts seem tentative because the sellers haven't quite gotten the message that they're far out of whack.

Whatever the motivation, you have to think some sellers are noticing that Halloween's around the corner, and after that, do you want to still be on the market in February 2011?

Let's look at a few in that vein. Who's near market value? Who's far off? Which listings might we still be talking about at St. Valentine's?


NEAR

2513 Elm (4br/4ba, 3150 sq. ft.) is a late-90s home with a safe Caliterranean look and feel. It's not all that different from 1821 Poinsettia, which got a quick deal with a list price (after one cut) of $1.699m – obviously with a better location.

Elm started high at $1.730m over 100 DOM ago, and just cut to $1.625m. The cuts have been about $30k, $30k again and $40k to reach this point – none of those moves being dramatic.

2513 Elm sold in Aug. 2004 for $1.599m. 

301 35th (4br/5ba, 3100 sq. ft.) is on Highland, which hasn't helped at all during its 150+ DOM. Neither did it help when the sellers started in the stratosphere.

The early-90s Mediterranean home's big, with ocean views, and steps to El Norte's restaurants. But if you're not into beach-urban living with the compromises of Highland, you're not even looking. And if you're looking, you expect a discount.

After 5 months the sellers have chopped $400k (-17%) from the start price of $2.297m. The new price of $1.897m is now barely above the March 2005 acquisition price of $1.880m. We're seeing this one as "near" market though it could easily fall another 10% if they let it linger.

The listing now concludes, blandly, "Owner says sell." There are louder ways to say that.

801 11th (4br/3ba, 3025 sq. ft.) in the Hills and right near MBB has drawn our notice a few times this year. Priced at $1.6m as a shortie, it earned an MBC mention as "a veritable steal for a fairly large Hill Section house" in a post earlier this year.

Alas, it later foreclosed, and an investor grabbed it for $1.320m. (See "2nd Foreclosure Flip in a Week.") After trying for a higher markup, the seller's now at $1.499m

If it was a steal at $1.6m, it must be better at $1.5m. But don't ignore two factors: 1) buyer pickiness is growing, and 2) the holidays are nearing. Neither factor is bullish for a property with a location liability.


FAR

2803 Pacific
2803 Pacific (5br/4ba, 4425 sq. ft.) is oversized for the Trees and on an extra-big 8400 sq. ft. lot.

But it suffers from a time-warp problem – it's a bit too perfectly preserved from its mid-80s vintage. To consider it now, you first think of the extra space as a liability for all the remodeling you'd want to do.

And of course the home's on Pacific, as location issues are growing in importance. (See two of the "near" listings above.)

For $2m or so, Tree Section buyers have lots of options, just not many quite so big.

The start was $2.099m, and the first cut brings it to a similar $1.999m.

We're guessing this one needs a much bigger discount to provide relative value for a buyer. Sheer size isn't quite the asset on Pacific that you might wish it were.

747 26th
747 26th (4br/4ba, 2825 sq. ft.) has been seeking a premium-type price for a home that needs quite a bit of work and is also difficult to contemplate.

The late-70s build feels like a home that's been sporadically remodeled from room to room, but never completely. Some parts are original or barely improved. The layout poses challenges. The back yard has a pool, which some buyers really want, but many find to be a challenge.

The listing began at $1.649m and just cut to $1.599m after 6 weeks. That suggests too much confidence in a $1.5m+ price.


TOSS-UP

We're not sure where to put 473 29th (5br/5ba, 4150 sq. ft.) a newer (2003) home on the plateau with views to the southeast over the Tree Section that we've called "mesmerizing."

It's a big and fun family home near the end of a good block, a quality build – even if we don't like the stapled-on stone – with some bonuses like a big first-floor media room.

The sellers paid $1.570m new in Aug. 2003, then upgraded the home further. 29th was offered for about 5 months last year at a start of $2.699m, came back this year at $2.649m and has now shown its first serious moves, coming down to $2.499m.

If you've been watching the plateau, you've seen a couple of steals over the past couple years that undercut that price a lot. But a full-size home in the Sand surely commands well over $2m, does it not?
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