Spring Rally Casualty

Posted by Dave Fratello on Monday, March 9th, 2009 at 10:14pm.

We've referred a few times to the great Spring Rally of 2007. For those just tuning in, that period of fairly brisk sales and rising median prices was probably the last gasp of the local RE bubble.

A strange and slowing Fall 2006 had suggested that the peak had come and gone, but Spring 2007 defied the bears.

In the rush back then, MBC observed a bidding war that broke out for an odd "flag lot" in the Hill Section. In April 2007, someone tried to sell 612 11th (4br/2ba, 1500 sq. ft.) for $975k. They failed. The flag went to someone ponying up $300k more$1.275m.

Soon, plans changed for the new owners, and the home was right back on the market in Feb. 2008. (We have heard, but not confirmed, that the front half of the lot could not be purchased and that redevelopment in back was tougher than expected.)

Perhaps believing that everyone should pay $300k more than this home's value, the sellers began at an even bigger markup, +$324k/+25%, at $1.599m. That looked unlikely, as MBC noted in "Flag It As Overpriced."

The sellers spent months thereafter testing the waters and making grudging adjustments. When they finally cut below the acquisition price for the first time, MBC concluded that "Maybe They Lost the War." (Referring to the bidding war they had "won" previously.)

Even more months later, the sellers did nab a buyer. The final sale price just posted: $1,023,750, a smidge above the previous seller's opening price in 2007.

The price here dropped $251k (-20%) from that bid-up Spring 2007 sale price, and $575k (-36%) from that what-were-they-thinking start price from Feb. 2008.

In the end, 612 11th was a casualty of the last big heady days of the local market. On the bright side, someone new got a decent-sized home in a nice location near downtown for about a million – not so bad, and kind of new for MB.
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