Some of the Biggest We've Seen

Posted by Dave Fratello on Wednesday, July 15th, 2009 at 5:37am.

One of your blog author's quirky professors once used to repeat phrases like "25 percent of a very big number is still a pretty big number."

That's been our reaction to a few recent sales. Like with the prof, old habits die hard with some of the price cuts we've seen.

Check out 612 John, a 2000 build (6br/8ba, 7400 sq. ft.), really a quintessential Hill Section beauty (John! Ocean views!). It had been thoroughly remodeled recently, to boot. MBC recently called it a "true jewel." (See "Let's Hear It for the Hills.")

The owners knew they'd be selling. They poured bucks into updates. Then, they priced it at a giant markup from their acquisition:
  • Dec. 2000: $3.3m (new)
  • Sept. 2008: $7.3m (+$4m/+133%)
A great house, pre-bubble. A great house, post-bubble. What would the final markup be?

Last week, the market settled somewhere in the middle: $5.45m.

That's +$2.2m/+64% over 8 1/2 years.

Not a small profit, even after the costs of rehab.

From the start price, it's also -$1.85m/-25%. That's a discount of almost $2m.

Like we heard somewhere before, 25% of a very big number is still a pretty big number.

Also in the Hills, consider 218 N. Dianthus.

Here's another enormous house (4br/5ba, 6100 sq. ft.) with ocean views for which the sale just didn't work out quite as expected.

This home was a great, high-end speckie with horrific timing. The home was completed in March 2008, as the aftermath of the late-2007 financial crisis was freezing up the gears of the economy.

Priced too high to begin at $6.75m, it lingered until the late-2008 financial meltdown. By Sept. 30, 2008, it was down to $5.495m, but that wasn't nearly enough.

This week, at last, this home has a buyer. But that's after a cut to $4.249m, nearly another $1.25m.

Just based on the list price, that's a chop of $2.5m/-37%.

Can we spell that out? That's TWO.POINT.FIVE.MILLION.

Dollars, not pesos. We doubt we've seen cuts that big before, and that's before we get the closed price.

At this very high end of the market, there aren't many points of reference. But here are 2 that happen to come from the Sand Section:
  • 221 34th (5br/4ba, 4200 sq. ft.), a spectacular, brand-new contemporary, began at $5.4m in April 2008 and wound up at $3.315m in January (-$2.085m/-39%). This one is quite near to the recent record for chops in general, on a percentage basis, in particular for new construction. It was also MBC's "Best Deal" of 2008.
  • Nearby 3404 The Strand, the 2-building Spanish in need of a little rehab, began at $7.8m last November, but sold for $5.35m this May (-$2.45m/-31%). Oooh, just $50k shy of the apparent record at 218 Dianthus. (See "Strand Adjustments.")
We should not disqualify the Tree Section. Maybe the high end doesn't go quite so high in the 'burbs, but there are still big chops worth a mention.

On a relative scale, you have to start with 560 36th. Here is a big (4br/4ba, 3800 sq. ft.), brand-new contemporary speckie that flopped completely.
  • Start price (March 2008): $2.999m
  • Sold price (June 2009): $1.555m
That was nearly a 50% cut from the initial asking price (-$1.443m/-48%). (See "New for $1.5m.")

That chop of 48% appears to be the biggest we have seen percentagewise.

Not so very far behind, on a dollar scale, was the Fisher Queen – 1208 Fisher.

As we noted just last week (see "More Tree Closings"), this one was down $1.345m (-27%) from its start at $4.995m (see "The Fisher King (& Queen)" from last September) by the time it closed at $3.65m.

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UPDATE:
Within hours of this story's posting online, another marvelous Hill Section listing took a big cut.

218 Anderson made its second cut of about $1.5m, putting this once-$10m listing a few dollars short of $7m.

Total cuts so far in the 6-month life of this listing: $2.989m. And that's before a buyer knocks.

When this listing was new, we heard plenty of people say something like "now that's what a $10m house should be like." Now it's a $7m house. And it's likely to set the record for dollar chops if they make a deal.
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