Shocker East of Highland

By Dave Fratello | November 23rd, 2011
Completely amazed.

That's how we felt upon seeing the new closed sale price at 305 18th: $2.050m.

It's a virtual mint for a quirkily laid out duplex that needs help.

$2m views from 305 18th
Only the property's uniquely sweeping ocean views offer an explanation for why someone went so deep into this odd property.

Here at MBC, we already expressed our surprise when this one went pretty quickly into escrow when the third agent took over. (See "A Little Crow" from about 6 weeks ago.) List price then was $2.189m.

Not so long before, in "Quick Change, Small Change, we had documented the property's history of overly ambitious list prices and quick triggers with listing agents. We concluded then: "A property with this many questions doesn't just need a new agent to market it at an unrealistic price."

Last laugh goes to the seller, who did ultimately come down $139k from the recent start price, and $275k from loftier heights, but a 2+ price for this one – it still amazes.

The duplex is flawed, despite some updates from its 1964 original construction. We recently summarized the case: "it will take considerable effort to make this a good house... [h]eck, it will take considerable effort to attach a bathroom to any bedroom." This, you may recall, is the home with a top-floor, unattached "master" bath whose jacuzzi tub gets world-beating ocean panoramas, but where the shower is in a dark corner with a plastic curtain. (For more, see our August review.)

For comparison, consider a few other east-of-Highland neighborhood properties.

329 19th
329 19th (4br/4ba, 3625 sq. ft.) is a sleek, conceptual modern built in 2001 with some good ocean views up the hill a ways.

The home last sold near the market peak in March 2006 for $2.950m – call it $3m.

But it's about to sell for about $2.2m.

For background, you may recall that this one ran part of this year as a regular listing near $3m, then became a shortie and found a buyer. In August, after being in "pending" status for quite some time, the listing returned, priced at a bank-approved short sale price of $2.380m, soliciting new buyers because the one who had the property in escrow was "playing chicken with the bank." (MBC's words.) Ultimately, that buyer walked, the price came down again to $2.295m and a new buyer came in. That's where the deal stands now.

We said a few months ago that "a 2.3-ish price for this fairly big architectural home could look like a steal and have ramifications around the neighborhood."

Guess what? No ramifications for 305 18th.

408 17th
408 17th (4br/4ba, 3600 sq. ft.) was a short sale on a recently remodeled (almost rebuilt) home near the end of the walkstreet overlooking Live Oak Park.

Like 305 18th, it's got a rental unit in back, with a total of about 500 more square feet of living space overall.

It closed in September for $1.550m (public records), or $431/PSF.

Sure, it doesn't have any ocean views – the primary asset of the property we're comparing to here. But it also doesn't have a Highland liability, which leads to a deduction for 18th. Plus, the  house at 17th is in very good condition.

We've already said 17th is "shaping up as one of the deals of the year in the Sand."

By contrast, 305 18th... not so much in the running for deal of the year.

337 16th
337 16th (4br/5ba, 4550 sq. ft.) is a huge home with ocean views from a quiet, downtown location. Unlike the other properties we're discussing here, it's still an active listing – albeit one that has run 13 months consecutive now.

16th has got a hundred pluses over 305 18th, including luxuries like a master suite, attached baths, 3 legit levels, tons of enclosed parking. It feels like a move-in-ready home. Those sorts of things.

With a price at $2.699m, the PPSF is substantially below 305 18th – $591/PSF compared to $656/PSF for 18th. Lots are the same size.

Sure, it's very different from 305 18th, and the sellers want at least $650k more right now, but when you look at the price for a completed home – the day you can sit down with a glass of wine and say, "hey, here we are" – the final trade on 16th is going to be compelling, we'd bet.

Then again, don't take predictions here too seriously. There's always some must-have buyer out there who will confuse and confound our estimations of market value – as it should be in a flawed, imperfect market like real estate, right?

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