Oh Dear, John

Posted by Dave Fratello on Thursday, January 8th, 2009 at 5:35am.

A gorgeous corner-lot home in the Tree Section recently closed for $2.550m.

What's more, 1801 John was not a new home, it was of mid-90s vintage.

A counterexample in a weak market? Yes and no.

First, this was not your average lot – the 5300-plus sq. ft. lot is about 20% bigger than you'll find in most parts of the Trees.

The location is also pretty swoon-worthy on a quiet, tree-lined block that's nonetheless near everything. Seems like no big coincidence that 850 18th, the priciest sale in the Trees in 2008 at $4.4m, is just a few doors down.

The home itself is more spacious than today's typical new construction. The 5br/4ba home offers 4000 sq. ft., about 25% more living space than today's standard newbies. It has also been luxuriously and professionally updated.

So it's not hard to see how 1801 John would stand out amid much of the rest of the inventory in the Trees late in 2008.

Great home, great location – and a sale at a robust price after less than 2 months on market. Indeed, it was the only home in the Trees to sell for more than $2.45m since mid-July.

Because the home is so large, the PPSF was somewhat lower than we've seen recently. At $638/PSF, John ranked 17th out of 22 sales in the Trees over $2m since June 1.

But here's the surprise. The final sale price on 1801 John is just 7% above the previous sale price from 3 and a half years ago.

That's right. In July 2005, the former owners paid $2.375m, no doubt beating most new construction at that time, too.

Great home, great location, and 7% appreciation over 3+ years.

That's what's happening to some of the really great homes.

We took a look at our trusty median-price graphs for this decade (see "How're Median Prices Doing?"), and we see that 7% is just a bit off from the 10% increase in the citywide median price for SFRs between July 2005 and Sept. 2008, when this home was first listed. (We're using MBC's 6-month moving average in this case.)

And we might mention here that the sellers started quite a bit higher – John began at $2.850m, or $300k more than the final price. They were looking for a 20% markup. Fortunately for the sellers, they gave up that pursuit quickly to make a deal.

Less fortunately, they would clear just 2%, or about $50k, after 5% costs of sale.

These things, we think you'll agree, are unexpected. A great, multi-million-dollar home in a great location that appreciated less than 10% and netted the sellers about $50k after 3+ years.

When we consider our market to be strong against the tide, those numbers demand a reality check.
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