That Rarest Feat: A Loss on an MB House

Oh-so-long ago, here at MBC, we would track the declining market of 2008-2010 by taking note of "same-house sales," cases where someone bought a home at bubbly prices before the crash, and later resold at a loss.

It was never to take pleasure in someone's misfortune. Real estate markets are hard to measure, especially those like Manhattan Beach, with a diversity of areas, lot sizes, and vintages of (housing) product. Same-house sales can be like lighthouses in a foggy sea of ambiguous real estate data.

Now there's a current example of a same-house sale at a loss. One can at least ask whether it is a market indicator.

Let's get to the facts of the case.

750 29th (7br/8ba, 4835 sqft.) is the home at issue.

It was new construction that debuted in April 2022. (Here's our first new-listings post referencing it.)

It was listed for $5.995M and sold very close to that at $5.985M.

The home and price were somewhat notable at the time. We stated in that new-listings post:

There's a crop of new homes, recent & coming, that are aiming to make $6M the new normal for Tree Section homes with basements, this being the current, active example.

After 750 29th closed just a hair shy of $6M, these new and newer construction homes in the Trees sold near or over $6M:

615 23rd (5br/6ba, 4388 sqft.) at $6.225M in July 2022 (bid up from $5.999M)

2100 John (5br/6ba, 5400 sqft.) at $6.450M in Oct. 2022 (it began higher, $6.995M)

641 27th (5br/6ba, 4700 sqft.) at $5.900M in Nov. 2022  (started higher at $6.149M)

644 29th (5br/7ba, 5077 sqft.) at $6.325M in April 2023 (started higher at $6.499M)

That's what happened in the market. What about at the house?

The buyers paid for the staging, so they could have a move-in-ready, furnished house. But they never moved in.

Instead, they rented it out for $18K/mo. for about 6 months, then put it back up for sale (staged/furnished) in December 2022, seeking a markup to $6.299M. That would have been just enough to get out of the house with no loss. They later cut the price to $6.199M for Feb.-May this year.

When the market wouldn't give these sellers their markup, they hired a realtor from TV who does not frequently sell in our area.

That new agent kept it at $6.180M for a few months, then posted a deal.

Were the sellers getting their price?

Nope. The resale happened much lower, closing last week at $5.625M (-$555K from asking).

(They had to hire someone from TV to take a big loss on their resale? - Ed.)

That was a remarkable drop of $360K from the acquisition price, a loss of 6% in value – not to mention another 5-6% in costs of sale.

Last year, 750 29th had kindled the trend for similar Tree Section homes to get around $6M.

This year, it fell closer to $5.5M.

Timing and Circumstances

It's worth noting that 750 29th first sold at a time that was near the peak of the most recent price rally. May 2022 was just a little before interest rate spikes first injected caution – or even shock – into the market, and effectively ended the 2020-2022 party.

So if the same house sold now, after a somewhat difficult 18 months in the market, for 6% less, that would not be too shocking.

Has the market shifted 6%? Actually, a 6% drop might be over-performing the market. 

The median price for all of Manhattan Beach in May 2022 was $3.075M, but at the end of Oct. 2023, it was $2.745M. That's a drop of 10%.

We're not here to say that the market is down 6% or 10%, based on a couple of data points. That's a bigger subject.

But 6% is still one data point.

It's worth asking, why did someone buy a $6M home, never live in it, then sell at a loss?

Life changes, man.

The May 2022 buyer was a young-ish NFL player (linebacker) whose 2021 season with an East Coast team had ended with an ACL injury. As 2022 dragged on, the East Coast team released him, and he signed on to play with the L.A. Las Vegas Raiders, on a contract worth about $1M.

But he reconsidered football after – and we are not making this up – selling a rare Pokemon card (a Picachu Illustrator card) for a reported $672K. (Image via Twitter.)

Indeed, he had launched his new Pokemon card business in July 2022, raking in $8.3M from that point through Spring 2023, with a team of up to 60 employees. (What, you missed both crypto AND Pokemon cards?)

He never played for the Raiders, focusing exclusively on selling the cards.

Now, a giant new house in Manhattan Beach would seem to be a great place to run your Pokemon empire from, but you go where you like to be.

At least it can be said that the loss a few hundred thousand in one place (750 29th) could apparently be offset by profits made someplace else (Pokemon cards!?!).

In the end, it's quite a juxtaposition to see someone take a loss on a generally stable asset (a Manhattan Beach house) while somehow profiting handsomely on high-volume trades of obscure, hard-to-value assets like Pokemon cards.