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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