One Cut: One Million

Posted by Dave Fratello on Tuesday, July 8th, 2008 at 5:13am.

It's tough to price estates in the Hill Section these days.

No one doubts the appeal of a newer, grand home in the Hills. Add an ocean view and you're money.

Or, money you should be. Demand has been weak.

Just 3 homes listed above $3m in the Hills have gone into escrow in all of 2008. There are now 14 listings over $3m in the region. (We include 918 10th, which is "on hold.")

We can't overlook one of the big sales of recent weeks – 900 Pacific (click for pics & details via Redfin), a nearly new mega-manse (6br/7ba, 10,500 sq. ft.) boasting one of the best hilltop ocean-view locations in MB.

That one recently listed for $10.9m and found a buyer within two weeks. See, that was money.

Quite nearby, the sellers of 700 8th (pictured; click address for details) have been looking for money. The home was listed in mid-February for $8m.

That was a fairly astonishing $1,624/PSF for this charming, but not enormous, 5br/5ba, 4925 sq. ft. home (built in 2002). The views are actually comparable to those of 900 Pacific, but the home's more modest.

The price: Not modest. In fact, it just didn't seem serious. Smelled like a market-tester.

After more than 4 months with no action, on Monday, the price dropped by a million dollars. It was their first cut, but a biggie. That's a lotta clams for one chop.

In a year-plus of public market tracking, MBC has seen just 2 homes sell for more than $1m off their start prices – 570 27th recently sold for $1.219m less than its start (see "Bought: The Farm(house)") and 108 S. Dianthus last year sold for $1.250m less than its start. Both of those listings lingered for more than a year.

At $7m, is this one now more serious?

As we noted the first time we referenced 700 8th (see "MB Market Update for 2/15/08"), the apparent comp for this listing would be 863 6th (5400 sq. ft., 11,000+ sq. ft. lot), which sold off the MLS last August for $8.325m. We’ve called that one a “huge outlier,” and, with its $1,542/PSF sale price, we're still waiting to be proved wrong.

700 8th is now below that threshold at $1,400+/PSF, but may still suffer by comparison to some others (click any address for pics & details via Redfin):
  • 617 6th and 218 N. Dianthus don't have all the views, but both are about 1000 sq. ft. larger and $1m less pricey;
  • 808 Highview, a resale, is smaller (4125 sq. ft.) but also $2m lower; and
  • 815 2nd is new and comparably sized, but $2.7m lower.
In a time of tighter supply, perhaps 700 8th could get that $7m-$8m. But this isn't one of those times. So what can they get?
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