MB Market Update for 4/15/08, Sand

Posted by Dave Fratello on Monday, April 21st, 2008 at 4:57am.

This is the second of 3 articles summarizing data in the MB Market Update spreadsheets for 4/15/08 (click to download), focusing this time on the Sand Section.

As we noted in our first story, with this edition, the Sand Section now spans 3 separate sheets, instead of 2, a change made necessary by growing inventory in the area.

At this time last year, SFR inventory in the Sand Section was less than half the April 15, 2008, figure – 17 last year, versus 35 this year.

Indeed, SFR inventory in the region peaked at 23 in the Summer months, and only hit 27 in mid-December, so it's now up substantially by any measure. (At this writing, SFR inventory is at 39.)

One factor behind ballooning inventory is, obviously, slipping demand. While that's true in all parts of MB, the combination of low demand and booming inventory is becoming acute in the often-hot and always-desirable areas near the beach. Supply is coming on like it's Summer, while demand seems to be stuck in Winter.

Just 10 SFR sales closed in the Sand Section in the first 3 1/2 months of the year (some, obviously, from deals made in late 2007). Our twice-monthly tracking has recorded 19 new escrows in this same 3 1/2 month period, in a period with 36 new listings hitting the market.

The good news is that much, if not all, of the inventory lingering in the Sand Section is pretty decent, occasionally spectacular – just pricey. So you can imagine the equation for fixing that problem.

New this period (as always, click any highlighted address for pics & details via Redfin):
  • 317 5th is a South End walkstreet home on the corner with Crest that offers the max – 4br/5ba and 4150 sq. ft. The early-90s contemporary style is pretty sleek but some details (tile work, kitchen) may strike buyers as dated. The start price seemed a bit aggressive at $3.2m, and that had one apparent effect – a $100k+ cut at nearby 341 10th (to $3.195m).
  • 417 28th is a huge newer home with big ocean views from the top floor. Unlike the modern-art feel of 317 5th, this one is warm with nice cabinetry, flooring and other finishes. It offers 5br/6ba and 4600 sq. ft. on a corner lot. Owners paid $2.55m 2 1/2 years ago, and they're thinking the market's booming. The listing starts at $3.495m (+$945k/+37%).
  • 437 1st is a short-term hold that has been rehabbed. (It hit the market 50 weeks after the previous purchase – a private sale off the MLS – had closed at $1.45m.) It's spacious (4br/3ba, 2600 sq. ft.) although peculiar in some ways, and the remodel isn't so high-end.
One of those bedrooms is teeny, while one closet (off the master) is nearly the size of a whole room – a quirk of a prior remodel. This one began at $1.740m and is at $1.680m at this writing.

The price at 1st pretty clearly undercuts a nearby listing: long-stuck 505 3rd, still holding at $1.899m – but no longer, as the language for 3rd says, "The LOWEST Priced Single Family Home in the South Manhattan Sand Section, West of Valley, on a Full Lot." Nope, not anymore.
Also, returning to the market after a brief hiatus (and sporting a new MLS #) was 468 33rd, held only a short time (18 months) before it first hit the market near Christmastime. Same price, $3.495m, still +$720k/+26% over the May 2006 purchase price.

There are some terrific homes available in the Sand Section – 26 of them priced above $2m. But in this 2-week period, the only 2 sales (new escrows) were on lower-end, marginal properties:
  • 704 Highland, a dated 3br/3ba, 1550 sq. ft. home that defied the usual market wisdom – spruce up the place before trying to sell. The new owner gets peeling paint along with 3br/3ba, 1550 sq. ft. and a close-to-everything location. Last price: $1.279m after 5+ months on market.
  • 429 29th Pl., a little Spanish cottage on an alley with an ocean peek and 3br/2ba, 1300 sq. ft. It lasted just 2 months; last at $1.199m.
There were several price reductions, none more significant than that at 408 6th, a mid-block flat walkstreet home that began last November at $2.625m. After the latest $150k cut, it's at $2.099m (-$526k/-20%) and rapidly approaching lot value. (Interested parties are told of an issue that helps to explain the listing's long time on market and price reductions, but we have decided not to cover the details here.)

224 31st made its first cut – $200k – after almost 8 months on market. This large (5br/5ba, 4200 sq. ft.), newer, ocean-view walkstreet home west of Highland is now at $4.795m.

Only one sale closed in this period, that of an SFR on about 2/3rds of a lot, 233 20th – on Highland fronting the walkstreet on 20th. This home, with 3br/2ba and 1700 sq. ft., was offered in 2007 along with the back part of the lot, as a separate but simultaneous sale, and the two properties went quickly. But that deal ultimately was scratched and just 233 came back, selling for $1.275m, just $14k off its list price.
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