White Elephant Finally Sells Out

Posted by Dave Fratello on Monday, December 27th, 2010 at 3:50pm.

A package of 5 modern, new condos we once called the "White Elephant of El Porto" has now mostly sold.

It has taken more than a year. The first listing hit the MLS in October 2009; all were up by Thanksgiving 2009.

MBC first took note of the project's launch in March 2008, when a steep, sandy hillside was being torn up and shaped for the development. (See "Coming Soon to El Norte.") It was a heck of a time to start a spec build, as the whole local market was, itself, on a major downslope. The land – a double lot with the legal address of 4321 Crest – had actually been acquired a year earlier, in Feb. 2007, for $3m.

We've checked in occasionally on these units. Some price records were wiped out in re-lists during 2010, but we've preserved the start prices here at MBC. Here's a look at where each of the 5 units stands:
  • 4321 Crest, #A (3br/3ba, 2050 sq. ft.) began at $1.599m and has been in and out of escrow throughout 2010. Last listed at $1.279m (-$320k/-20%) and in escrow most recently as of late November.
  • 4323 Crest, #B (3br/3ba, 2050 sq. ft.) began at $1.789m and sold in late November for $1.330m (-$459k/-26%).
  • 4320 Highland, #C (3br/3ba, 2250 sq. ft.) began at $1.859m and sold right before Christmas for $1.150m (-$709k/-38%).
  • 312 44th, #D (4br/3ba, 2675 sq. ft.) was the first of 2 units to begin above $2m – it started at $2.299m and is now in escrow with a last list price of $1.399m. UPDATE: The sale closed at $1.269m (-$1.030m/-45%).
  • 316 44th, #E (4br/3ba, 2650 sq. ft.) also began at $2.299m, was re-listed this year for $1.649m  and sold for $1.330m (-$969k/-42%) in mid-December.

With 3 of 5 units sold, it's clear that those start prices were far out of whack. The $2.3m units are both going to sell with a 1.3 in front instead, it would appear. Cuts of 26% to 42% were necessary to get deals made on the 3 closed sales.

And how's the new owner of unit B going to view the deal made at the much larger unit E for the same price of $1.330m?

We're also curious whether this project is going to work out to be profitable. It's certainly not close to how the project apparently penciled out at first.

The asking prices to start for the whole project totaled $9.845m.

The 3 closed sales to date have brought in $3.959m.

If the 2 pending sales were to close at their last list prices, that'd bring in $2.678m more, for a total of $6.637m. That's $3.6m above the cost of the land, but one-third off the ambitious asking prices from late last year (-$3.208m/-33%).

So can you build 5 units and almost 12,000 square feet for less than $3.6m and squeak out a profit? Definitely possible, but tight with an extra year's carrying costs.

Regardless, with luck, all 5 units will be occupied 4 years after their conception at MB's market peak.
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