Maybe it just wasn't clear enough by mid-2007, or even mid-2008, that the "flipping" phenomenon was finished.
Here and there you still see examples of homes that were purchased in need of an update, spiffed up and returned to market. They're not faring well, as a group.
Approaching break-even, or worse, is 704 Highland
(3br/3ba, 1625 sq. ft.), newly cut Monday to $1.329m
That's a markup of only about 10% over the $1.199m
acquisition price from last June. Yes, the June in 2008.
At the time Highland was bought, it was a wreck. It got a ground-up revivification, with everything
redone, from wiring to kitchen and baths to a new coat of smooth stucco outside.
That overhaul was finished quickly, and Highland hit the market near Labor Day 2008 at $1.549m (+$350k).
No takers on the purchase, though, so the home rented out. It came back to market again in late April.
A full-price purchase now would be $130k above acquisition. About $30k would go to buyer's agent commissions. (The listing agent is the owner.) So if remodel costs and holding costs were less than $100k, this one might work out. And yet, the math on our cocktail napkin here is not looking so good.
In the Hill Section, rather near Sepulveda, is 234 Larsson
. (The home fronts 3rd St. near Hwy. 1 despite the Larsson address.)
This stand-alone townhome (3br/3ba, 2300 sq. ft.), marketed as an SFR, was tired, tired, tired in Summer 2006 when it was first offered. After 9 months, someone with big plans grabbed it for $1.075m
in May 2007.
Here, another soup-to-nuts makeover – except exterior – was pushed through, and the results are, objectively, beautiful. The remodeler thought so, too, pricing the home at $1.500m
At this writing, Larsson has now exceeded its previous 9 months on market by reaching 11 months
on offer in its new, improved form. The price has been slow to adjust, now down only $201k to $1.299m
. [ UPDATE:
Price dropped to $1.199m
the day after this story first appeared. ]
A recent sale at comparably sized 509 N. Dianthus
(3br/3ba, 2250 sq. ft.) could be illuminating as to Larsson's market value. That one – not as fully updated as Larsson, but boasting a significantly better location – went into escrow at $1.199m
We might guess that Larsson is worth $1.150m or so in light of the Dianthus sale (whatever price it closes at) and Larsson's poor location. But a $75k markup wouldn't be much reward for the Larsson remodel or a year's holding costs. Quite the opposite.
A third example seems to have rented out recently. 2211 Highland
(3br/3ba, 1950 sq. ft.) was acquired in May 2008 for $1.325m
. And you know what happened next.
That's right, a classy remodel.
The results are featured with high-quality pics on this custom listing website
Once the work was done, the listing popped up at a fairly remarkable $1.949m (+$624k/+47%)
in late Sept. 2008.
Once the price came down to $1.699m
, the listing (and the website) screamed:
Just reduced $250,000! This is a steal!!!!! This amazing home is priced to sell fast.
But the market determines what is a "steal," not the volume of exclamation points.
It wasn't too long before the "for rent" sign was competing for space with the "for sale" sign. With the property having dropped off the MLS, we take it this one is not building equity for anyone right now.