We're seeing the bar being lowered time and again as new homes sell in the Tree Section.New case in point: 2309 Pacific
. This one hit the market last Spring (in May) at a time when a moribund market had hit an unexpected patch of new enthusiasm.
The listing began at what seemed like a lower-end price at the time for new construction: $2.299m
. But the buyers that were out were picky, and virtually any excuse was good enough to pass on a home – a Pacific location being an obvious strike.
So 2309 Pacific hung around. And hung. Around.
It was staged, then un-staged. It was re-listed.
As the months passed, the action finally happened only after a recent, seemingly reluctant price chop to $2.099m
. But oh, what action.
A buyer swooped in at that point and said something like, "nice enough house, nice new price cut, now take another $200k off now
and we're in." And soon a deal was inked.
The home closed for $1.890m
last Friday. It's a new (recent) low for new construction in the Tree Section. We're now under $1.9m, when recently seeing new homes sell below $2m was news.
Here are some recent sales (last 6 months) in order of their closings with their drops from initial asking:
- 2310 Palm – $2.200m (-$499k/-18%)
- 2807 Elm – $2.100m (-$799k/-28%)
- 648 35th – $2.075m (-$375k/-15%)
- 3104 Pacific – $1.950m (-$199k/-9%)
- 2709 Oak – $1.950m (-$445k/-19%)
- 1901 Poinsettia – $1.999m (-$500k/-20%)
- 2309 Pacific – $1.890m (-$409k/-18%)
We also note that one new home was recently listed
for sale below 2309 Pacific's closed price, but it has canceled. 1144 Elm
had begun at $1.999m last November, and was last at $1.879m
. (We're assuming it's rented but we don't have info yet.)
Above, we have selected sales that exemplified the recent trend toward substantially lower sale prices, including cuts below $2m. Sizes ranged from 3200-3600 sq. ft. We'll cover the rest in a moment.
There was some argument when 2807 Elm first sold in December 2007 as to whether it was a bellwether or an anomaly. Now it appears that it was, in fact, the leading edge of a trend toward lower sale prices for new homes. Its $592/PSF
price was exceeded only twice in the subsequent 5 sales (from this list), though not by much ($625/PSF being the highest, on 1901 Poinsettia).
In the same span of time, here are the other closed sales of new homes in the Trees:
- 2612 Poinsettia – $2.199m (-$200k/-8%)
- 604 15th – $4.200m (pre-market sale off MLS)
- 613 15th – $4.050m (-$129k/-3%)
- 2100 Flournoy – $2.750m (-$450k/-14%)
- 644 33rd – $2.949m (-$301k/-9%)
Most of these are higher-end sales that don't tell us as much about the fate of smaller, less-well-located new homes that have been the majority of sales and which continue to dominate the lingering inventory.
2100 Flournoy is the rose in this group of sales, a home only a bit bigger than the standard 3200 sq. ft. Tree Section home at 3600 sq. ft. That home netted the highest PPSF of new homes offered on the open market ($764/PSF
). Here's a theory:
Quality construction in a nice location will still fare well, even if the builder does have to reduce his ambitions.
2612 Poinsettia is an outlier because, while tax records do show $2.199m
($687/PSF) as the closed price, the property appears to have been purchased partly in exchange for a Torrance property that went to the builder. That complicates an exact valuation.
So where does this discussion leave us?
The leftover twin of 2309 Pacific, 2611 Palm
, would appear to be in deep trouble. It began at $2.495m last year, and cut to $2.285m
after Pacific went into escrow. Its location is plainly superior to its now-sold twin, but can you really say it's $395k
better, as the current price implies?
Two other twins, 2509 Walnut
) and 2509 Palm
), each offered for more than 250 days, face some price pressure as well. It would not be a surprise, given recent activity, to see one go for close to $2m, or under.
There are several more new homes of comparable size (3200-3400 sq. ft.), many newer to the market, currently priced between $2.3m-$2.7m. As always, there are adjustments to make for location, build quality, etc., but as the bottom moves down, so, too, do the higher-end properties.