Another New Low in the Hills

By Dave Fratello December 8th, 2009.

New and newer construction in the Hill Section keeps getting cheaper. Well, less pricey.

Witness the newly closed sale at 903 10th, a new home as of about a year ago in which the builder has been living a while.

903 10th closed for $2.475m on Friday, and for a big home (6br/7ba, 5120 sq. ft.) on a sunny southwest-facing corner lot, that's a remarkable $483/PSF. That's well below the PPSF for the past 3 closed sales of new construction in the Hills (click any property address for more pics & details via Redfin):

Of these, smaller 1023 10th (pictured) is just a couple blocks away from our subject property, edging close to the Post Office and Sepulveda. Same size lots (7500 sq. ft.). It's not a bad comparison, on balance.

That sale was in August, but now, 4 months later, someone has just paid essentially the same price (+$20k) for almost 800 more square feet plus the corner lot. Not a friendly comp if you just unpacked in the new home.

Of course, 903 10th was not exactly new. And one somewhat older home (2003 build) did scrape out a new bottom by the PPSF measure earlier this year: 1042 2nd (5br/4ba, 4425 sq. ft.), which closed for $1.810m in August, a PPSF of $409/PSF. (See "Atypical Deal on the Hill.")

One of the more noteworthy deals of the year in the Hills was right across the street from 903 10th, where 881 10th (5br/5ba, 4000 sq. ft.) sold in September for $2.150m. That was down $650k/-23% from its April 2006 acquisition price of $2.8m.

That was a stunning drop in value for the 2005-built home, but 881 10th actually closed $55/PSF higher than the newer, 25% larger home at 903 10th.

We can also just compare 903 10th to itself.

Back in August 2007, the lot was acquired for $1.725m. (You can see the old listing here via Redfin; you may have to "log in" to see it, though.)

The goal, then, was clearly NOT to build a 5000-plus-square-foot house and sell it for just $700k more, which is what has just happened. Why, that'd just $135/PSF to build. Uh-oh. Those aren't the numbers you see for new construction around here.

Upon completion in 2008, the home was offered, informally, for $3.7m. Sky-high, sure, but that's some measure of what the builders thought it was worth. This year, the listing began at $3.195m in July.

The final price was down $720k and 23% from there. Probably not the profitable project that penciled out in Summer 2007, but a late-season deal for the folks who relieved the builder of this burden.

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