Tree Lots Around and Under $800k

By Dave Fratello | December 20th, 2010
As we approach year end, there are still 2 homes for sale in the Trees priced below $800k, and one that maybe could be, but isn't yet. These and a few other listings may redefine lot values in the area to the downside, even as other data herald something of a rebound.

When looking at Tree Section lot values, you're always going to find the least-pricey values on difficult streets (Oak, Pacific, Rosecrans) or out on the periphery, often near the refinery.

Of the actives we're looking at today, 2 fit that "periphery" definition:

3401 Palm (2br/1ba, 820 sq. ft., 4640 sq. ft. lot) is within a couple blocks of Rosecrans, but doesn't seem overwhelmed by the refinery-adjacent location. Plenty of newer, nice, bigger homes are found up and down the block. In short, it's not a profoundly challenged location, just not a top-shelf one, either.

The very small home needs too much to be considered by most for a remodel. This is a lot sale, and it will take time and patience to establish what the value is here. In early October, the sellers requested $860k, but that's down 9% now to $779k.

3608 Maple (2br/1ba, 930 sq. ft., 4640 sq. ft.) is much closer to Rosecrans on a less spiffy block than Palm. The dated, downtrodden house – a bank-owned property – is wildly oversold as "amazing" in the listing description. (See "'Amazing' REO, Or Not.")

It's conceivable that someone could choose to pay the asking price of $759k to live here, just unlikely. But it's also an unlikely bet as a development opportunity anywhere near this price. It's astonishing to think this one traded for $1.250m in 2005, but it did.

The third active listing that looks like it will carry over through the holiday season is 1605 Pine (3br/2ba, 1050 sq. ft., 4250 sq. ft. lot). In our first review of the home, the phrase "deferred maintenance" led the entry.

The home needs just about everything, including extra space, but you can almost see it as an ambitious remodel rather than only as a scraper. The big difference at Pine, from the other two referenced above, is a more desirable location – near Pacific School but off the beaten path otherwise. The listing began at $959k in August and is down about 11% to $855k, and even that still seems ambitious.

The lot at Pine may be worth $800k or so, roughly where you'd put most full lots in the Trees now before adjusting up or down for location. But you still need to find someone who'll pay that and do the work of a teardown or a huge remodeling project.

For a time this Fall, there was one other entry that could have made this list: 1801 Elm (4br/1ba, 1350 sq. ft., 4480 sq. ft. lot), the probate-auction house that –  by appearances – someone bought last year to remodel, then gave up. The sale closed in January for $805k, while this year's effort by the new owners to get out saw the same home come up for $45k more, $850k. (See "Probate Auction Home is Back.") The listing quit after 2 months, just after Thanksgiving.

Looking to recent sales, you have:
  • 3312 Palm (3br/2ba, 1175 sq. ft., 4640 sq. ft. lot), an "original" 1950s cottage needing everything, which closed in May for $820k. It's just a few doors down from 3401 Palm, mentioned first above.
  • 3529 Walnut (2br/1ba, 900 sq. ft.) is also a small, original 1950s cottage in somewhat tidy shape. It sold for $765k in September this year. About 6 doors off Rosecrans.
  • 1417 Walnut (3br/2ba, 1125 sq. ft., 4250 sq. ft. lot) has more in common with 1605 Pine than the other north Tree Section offerings. It closed in August for $865k, just a notch over where Pine is priced now.
  • 2700 Elm (3br/2ba, 1275 sq. ft., 4480 sq. ft. lot), a corner-lot home on the eastern periphery of the Trees, which was said to need "a major rehab" in the listing, or expected as a tear-down. It sold in October for $835k.
In musing about Tree Section lot values, we have to hark back to that great gift, now given quite nearly 3 years ago: the "crystal ball" ad by a local spec builder.

In January 2008, the builder paid to place his message to local homebuyers in the free weeklies. (See "A Builder's Take," from Jan. 2008 – if you've never seen the ad, you're missing something.) He noted that several spec builds on the market then were built on Tree Section lots purchased for $1.3m or so. He urged buyers to "make the best deal you can on existing inventory now," rather than wait for new-home prices to dip under $2m. His logic:

In order to sell new homes under $2 million, the price of building sites needs to drop 40%, down to $700,000-$800,000. This will not happen in Manhattan Beach because there are too many investors and home buyers willing to pay much closer to $1 million for a site to build their dream house and still manage to accumulate equity. There are currently no homes in Manhattan Beach for sale under $900,000.
That was then.

Look back at that story, too, for a list of recent could-be/would-be lot sales from late 2007.

So much for that crystal ball. Now, as to 2011...

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