We took note just the other day of a sale at 3307 Poinsettia
, a new Tree Section home of a somewhat standard size (5br/5ba, 3250 sq. ft.) that closed for $2.1m
. (See "A Twin Comes In
Its twin, 3309 Poinsettia
, is now at $2.195m
, and might be expected to go in $2.0-$2.1m territory when and if a buyer is found.
The bigger issue is what might be going on with Tree Section new-construction prices.
New homes in the Trees are clearly coming down in price, in adjustments that can take time and can ultimately be quite dramatic. Over the past 6 months, we have seen sales close on 5
other newbies in the Tree Section of comparable size on standard lots.
in the range of $2.3m-$2.75m
, but eventually clustered near $2.1m
when they sold:
- 1821 Walnut (pictured) (5br/4ba, 3400 sq. ft.) – $2.250 in June '08 (off from $2.750m); almost 1 year on mkt.;
- 3500 Blanche (4br/4ba, 3300 sq. ft.) – $2.125m in July '08 (off from $2.549m); 114 DOM;
- 2509 Walnut (5br/5ba, 3200 sq. ft.) – $2.025m in July '08 (off from $2.449m); 305 DOM;
- 1820 Elm (5br/4ba, 3025 sq. ft.) – $2.1m in Aug. '08 (off from $2.349m); 68 DOM; and
- 2408 Walnut (5br/4ba, 3100 sq. ft.) – $2.062m in Dec. '08 (off from $2.289m); 94 DOM.
A quick glance at those examples, and you see asking prices were too high by 10%-18%
. (Asking on 3307 Poinsettia was too high by 25%
.)So, how do those sale prices compare?
First, let's look at the second half of 2007. There are 3 more examples on standard-size lots:
- 3104 Maple (5br/4ba, 3350 sq. ft.) – $2.490m in June '07 (off from $2.599m);
- 3212 Maple (5br/5ba, 3250 sq. ft.) – $2.500m in June '07 (off from $2.679m); and
- 2310 Palm (pictured) (5br/3ba, 3150 sq. ft.) – $2.325m in Dec. '07 (off from $2.699m).
All of those sold for considerably more than the more recent examples from late 2008.
Also late last year, there were 3 more new homes on larger
lots that all sold for less
- 3113 Valley (5br/4ba, 3400 sq. ft., lot: 5000 sq. ft.) – $2.225m in Sept. '07 (off from $2.375m);
- 2807 Elm (5br/5ba, 3550 sq. ft., lot: 5600 sq. ft.) – $2.100m in Dec. '07 (off from $2.899m); and
- 648 35th (5br/5ba, 3600 sq. ft., lot: 5400 sq. ft.) – $2.075m in Dec. '07 (off from $2.450m).
These are very small datasets, but it is possible to see a trend, year over year, of generally lower sale prices for homes in reasonably good locations.
There is some interesting contrary evidence that makes firm conclusions difficult to draw.
For instance, look at the sale prices on comparable Tree Section new construction in the first part of 2008 (graphic drawn from MBC's "1st Half 2008 SFR Sales Data
" – click pic to expand; title to download):
sales under $2m, of which 3 were in subpar locations. These were the first to break the "floor" of $2m for new homes in some time.
Given the lower sale prices earlier this year, should the second half of the year be read as an improvement?
And then there are the big-time counterexamples. In cases of great locations and/or exceptional craftsmanship, $2.7m
looks more like the norm, at least it did in Summer 2008. There's no objective way to account for these factors, though everyone knows there's a difference.
In the past 6 months, homes of comparable size, but higher prices, include:
- 2701 Palm (5br/4ba, 3300 sq. ft.) – $2.749m in June '08; 34 DOM;
- 2705 Palm (5br/5ba, 3300 sq. ft.) – $2.689m in June '08; 49 DOM;
- 668 33rd (5br/5ba, 3250 sq. ft.) – $2.737m in June '08; 6 DOM;
- 664 33rd (5br/5ba, 3550 sq. ft.) – $2.605m in July '08; 9 DOM; and
- 1813 Pine (5br/4ba, 3400 sq. ft.) – $2.7m in Aug. '08 (sold off market).
Note the quick sales on these, too, a further indication that these were something different than the cookie-cutter speckies we have watched linger all over the Trees for 2+ years.
As to current offerings, there are now 11
newbies in the Trees priced below $2.3m – including the bottom-scraping 2509 Palm
(the failed auction house) now at $1.679m,
and ranging up to cute corner-lot 1901 Walnut
Of those 11, 6
are above the $2.0m threshold now, and 5
more are below – some well below. Some of these seem to suggest that next year's sales will pull the typical sale price for new construction down:
- The most interesting of the crop might be 2829 Valley (pictured) which delivers a lot of house for the money if you'll make the concession to living on Valley – less of a factor than you might assume, given the way this home was built. Currently at $1.799m.
- 2504 Poinsettia and 757 30th have both become aggressive, and are each down below $1.9m after starts at $2.5m or higher.
- 3413 Pacific and 3604 Palm are recent entrants to the market, at $2.095m and $2.189m, respectively, and both seem at risk of major adjustments and/or time on market due to location issues (see "Fighting the Future" for more on the Pacific home's pricing).
For a few years, it has been normal for new homes to go for at least $2m in the Trees. That floor was broken a few times this year. Looking at the trends and the lineup of active listings, it's possible that, in 2009, sales above $2m could be the exception, not the rule.