A recent Tree Section short sale took months to complete. Then again, it's not easy to make $900k disappear.
That's roughly what happened at 931 17th
(6br/5ba, 3425 sq. ft.), though, where a sale has now posted at $1.580m
, a full $720k below the June 2005 acquisition price of $2.3m
when the home was new.
It's a punishing 31% drop
from the price just 5 years ago.
Before we consider this one an object lesson in neighborhood prices – is everyone really down 31% since '05?
– we should note that new homes built by the developer of this particular unit during the bubble have occasionally sold for curiously high prices.
Just a few blocks away, the plain-vanilla, less-than-ideally located home at 2612 Poinsettia
sold for asking, exactly $2.199m
, in Feb. 2008 – after a whopping 481 DOM – at a time when the rest of the Tree Section market was seeing so-so spec homes drop below $2.0m. (You may recall that the bank recently took that home back, and a flipper put in some work and put it on the market for a while. It'll be back in early 2011. See "Sketchy Speckie Returns
So, $2.3m seemed high for 931 17th even in 2005. The bank didn't seem concerned. A glance at the tax records shows just 10% down on that purchase, $2.070m financed.
To judge from the records, the value only went up from there. A late 2006/early 2007 refi with a new bank brought the debt load almost $400k higher, to $2.462m. Nice equity extraction.
If the lender was estimating that the
borrowers maintained a 10% stake at the time, that suggests an appraisal at about $2.7m.
You might ask what everyone was thinking. But since those events, the developer, sadly, passed away prematurely, and both banks responsible for the loans – notorious for their bubble-lending frenzies – imploded and got folded into other institutions.
Eventually it was time for the
borrowers to get out. 17th first hit the market this year in April (see our review in "Weekend Opens (4/10-4/11)
") at $1.899m as a short sale. The listing went to "backup offer" status in late May, when down to $1.799m, and continued to post price cuts throughout the "backup" period.
The sale finally closed Friday, more than 6 months after the first notation that a deal was in hand, 17% off this year's start price, 41% below that hypothetical, rough $2.7m valuation from late 2006.
Shorties are notorious for the occasional long wait to get a deal OK'd. (See "The Trouble with Shorties
" from Dec. 2008.) You're buying a house. Do you want to wait 6 months?
But it takes time, lots of time, to burn, bury, shift, redirect, reclassify, or generally lose money at the rate of $150k a month. And then, one day, it's just gone.