14 Years New

You have to love the breathless optimism of home listing language.

Where else can you find beauties like:

This home was 99% new in 1993.

Wow, so was Bill Clinton's presidency.

This from the pre-owned home at 132 18th St., asking $4 million in today's dollars.

Thanks to Shorewood agent Fred Zuelich for a morning chuckle.

Appreciation Has Ended, S&P Says

There's a reason people believe that real estate values always go up.

For 16 straight years, home prices appreciated to some extent every year, according to a measure known as the Case-Shiller Home Price index.

Tuesday, Standard & Poors issued the newest version of the index, and it shows "negative annual returns."

If we dissolve down the fine print, that means that nationwide, homes sold in the first quarter of 2007 were sold for less money than homes sold in the first quarter of 2006. Home price appreciation has ended. (The graph doesn't show prices, but rates of change year-over-year. Click here for bigger version.)

According to S&P:

This is only the second time in the quarterly national index’s history that the annual growth rate has fallen into negative territory.

The last time was in 1991.

Of course, this is a national index (3 measures go into it), and all real estate is local.

Are Manhattan Beach home prices now generally below 2006 levels? That's one big question MBC is trying to address over time.

Let's not pretend that answer is easy, either way. Everyone seems to know that the market has turned strange (many realtors call it "normal") and there is contradictory, confounding evidence.

Clearly, the news that appreciation has ended will affect future resales. Buyers will balk at big markups on homes that were recently purchased, and they'll have even more reason to worry that their assets will depreciate, depressing their motivation – as if they weren't already hesitant.

MBC's next "Market Update" will be out shortly, along with analysis of the Spring Bounce (Bounce?) west of Sepulveda. What the tea leaves suggest, we'll share.

Maybe our price was too low, that's it

It's been five months since you listed your house, and no one is buying. What do you do?

Try price reductions. Try re-listing to hide the history of the house.

At 579 29th St., newer construction (2002) in the Tree Section, both tactics have been tried. Since the Dec. 7, 2006, listing at $2.575m, the sellers dropped the price to $2.400m and re-listed a couple times.

Since that didn't work, here's a new approach: A $120k price increase.

That's right. A house that had been at $2.4m is now re-listed at $2.519m.

Here's a hint to Tree Section buyers in the $2.5m range... they'll take 2.4!

MBC reported a while back about two homes that tried the price-increase tactic. One has subsequently dropped $250k. The other is still sitting out there untroubled by interested buyers. So let's see what happens on 29th St. – maybe the third time is a charm.

Slip-Sliding on Oak

Can a home lose $300,000 in value in little more than a year?

At 1313 Oak, the list price has been adjusted that sharply since the house first came up last year. Beginning April 11, 2006, these contemporary digs were offered at $2.799m.

Today: $2.490m, or $309k less.

The price was adjusted once last summer to $2.650m, but apparently that wasn't enough. With no takers, the home went off the market in December and only now has come back.

Reductions like this in asking prices tell us something, though there's no science to it. Chalk up this big drop to both an unrealistic seller and a softening market.

At Oak, you get 4br/4ba and 3550 sq. ft. for your $2.5m. In a twist, you get free furniture:

... being sold fully furnished (home has been designed w/custom furnishings totaling over $300,000 by participants from queer eye for the straight guy&re-design). No detail has been overlooked.

"Participants?" Like gaffers, or like the actual queer guys? Hmm.

There are about a dozen houses in the Trees with similar specs at prices within 5-10%, half of them new construction. But you have to bring your own furniture to those.

Location is iffy. It's a corner lot, but across from several businesses and their parking lots on the east (Sepulveda) side of Oak. And 13th St. right here is, unfortunately, a popular escape hatch for frustrated commuters on Sepulveda.

With so much supply at this price point, and so little activity, MBC will be pleasantly surprised for the sellers if they near that $2.5m. They paid $1.525m in Dec. '04 (was that before the Queer Eye furniture splurge?) so they ought to have room to move down, if need be.

Worth noting that when this one first went up last April, it was a case of the two-year itch too. Now it's a three-year itch.

Bad news: The often-optimistic Zillow thinks the value here is $2.066m.

Bogus relist of the week

MBC has commented before on the annoying practice of "re-listing" homes to conceal their recent market histories.

Today's offender is 3104 Maple, new construction in the Trees. Today marks its 246th day since first going on public offer (Sept. 20, 2006).

But with a fresh new MLS number, today it's got ZERO days on market!

There's not even a new price to go with the new listing. It's still at $2.549m, a token $50k off its initial list, but that reduction was made some time ago.

It boggles MBC: Who is supposed to be fooled by these relistings?

Let's assume a buyer is working with a competent realtor at some point – they're going to get the real story. If the property has been lingering like this, you're in a good position to seek some sort of bargain. Your realtor will tell you so.

So sellers, and seller agents, do you do the relisting to fool all those naive buyers who are out to spend $2m+? Aren't you really fooling yourselves?

Sure, it's a struggle to have your property out on the market for 100, 200 or 300 days. And new construction in the Tree Section is a bit glutted at the moment, so you'd kind of prefer to not look like the forgotten deadwood on the market.

So the solution is... wipe the slate clean and pretend history never happened?

MBC was chatting with a nice Seattle realtor the other day, who says their MLS doesn't allow relistings like this at all, not without a major price reduction and/or serious time off the market.

Maybe we had conventions like that in the South Bay too at one time, but those days are gone.

Getting the Two-Year Itch

There are any number of reasons people sell their homes.

But when you see one go up for sale almost exactly two years after it was last purchased, you might first guess that the sellers are thinking: Tax-free profit!

Thanks to our tax code, you can reap up to $500k in capital gains (for a couple) on a home sale tax-free. You just have to have made it your primary residence for 2 years.

Today in MB (west of Sepulveda), records indicate these active listings were purchased in late 2004 or in 2005:

• 3009 Highland – paid $1.225m in 7/05, selling for $1.369m
• 737 36th St. – paid $1.230m in 3/05, selling for $1.785m
• 2812 Elm – paid $1.584m in 6/05, selling for $1.769m
• 1800 Laurel – paid $1.6m in 12/04, selling for $2.35m (remodeled)
  
• 225 1st St. – paid $1.685m in 12/04, now selling for $1.995
• 746 31st – paid $1.7m in 1/05, now selling for $2.399m
  
• 718 Poinsettia – paid $1.85m in 9/05, selling for $2.199m (w/ plans)
• 601 Larsson – paid $2.0m in 9/05, selling for $2.395m
• 3011 Elm – paid $2.8m in 7/05, selling for $3.095m

Now, let's look at those again based on their markups, in $ and % increase in (perceived) value since purchase:

• 3009 Highland – $144,000 (12%)
• 737 36th St. – $555,000 (45%)
• 2812 Elm – $185,000 (12%)
• 1800 Laurel – $750,000 (47%)
• 225 1st St. – $310,000 (18%)
• 746 31st – $699,000 (41%)
  
• 718 Poinsettia – $349,000 (19%)
• 601 Larsson – $395,000 (20%)
• 3011 Elm – $295,000 (11%)

Now, we know not all of these have hit the 2-yr. mark, and they may not all be owner-occupied. Regardless, MBC is interested in these listings because of what they might tell us about market direction. Same-house sales are among the best indicators over time.

Based on these listings, sellers' opinions about the state of our market range quite a bit, from people thinking their homes have appreciated a modest 11-12% in 2 years to others who think they're up 20-40% or more.

Now that the sellers have let us know what they think, as these homes move, we'll see what today's buyers are saying.

Soon we'll have data from these recent sales with 2005 last-purchased dates:

• 2500 Pacific – paid $1.005m in 8/05, listed at $1.249m in 4/07
• 628 12th – paid $1.775m in 7/05, listed at $1.879m in 5/07
• 228 5th Pl. – paid $1.660m in 8/05, sold for $1.7m in 3/07

All three of the homes above are now in escrow.

5th Place was the only closed sale of the group we're studying, and it's interesting there that the sellers got just $40k more, 19 months after paying $1.660m. However, that house went right back up for sale and is now pending at $1.769m. (An informant tells us the buyer this March got a job transfer during escrow, and had to sell again.) So we have to wait for the new closed sale price.

We've also seen two sellers with the two-year itch apparently quit:

• 864 12th Ct. – paid $1.469m in 8/05, was listed at $1.549m in 3/07
• 2909 Laurel – paid $2.6m in 9/05, was listed at $2.85m in 4/07

Both of these homes were listed less than 45 days before they vanished. It could be that they got no nibbles and thought they couldn't get more than they paid, but MBC has no real info on these.

For what it's worth, MBC has seen several examples east of Sepulveda, too, but since our focus is on the beach side of Hwy 1, we'll stick to these.

714 MBB Quits

Just a couple of weeks after being undercut, the listing at 714 Manhattan Beach Blvd. (MBB) has been canceled.

MBC takes no pleasure in this. The seller just bought the home in April '06 for $1.355m and apparently needed to sell it again just months later, but now things are looking grim.

The neighbor at 710 MBB is still at $1.249m and they have room to cut further, having paid $849k in October '03.

Right now the pricing is controlled by a relocation company, and you don't want to compete with that.

Best advice: for now, lay low and wait for a sale at 710 before re-listing.

First Markdown for the Fishbowl

New construction at 300 N Dianthus has been marked down $100k now, after 5 weeks on the market.

Is that enough to compensate for the Master Bedroom?

List price is now $4.395m.

Update on 45th & Highland

Some time ago, MBC discussed new construction at one of the least desirable Manhattan Beach locations, 4419 Highland Ave.

Optimists might call it "The Gateway to Manhattan Beach," since it's the first house drivers pass coming from the north via Highland Ave.

Realists will note that the lot is very tiny, on a terribly busy street, and has a gas station for a neighbor. Yes, you can see the ocean, but you can also see a power plant, electrical lines and the Chevron refinery tank farm. Long lines of rush hour traffic snake by slowly, six feet from the house, for 3 hours every weeknight.


This home, still actively under construction (we checked after a commenter suggested there was a halt), is now listed for sale at $1.695m. This is only found in a print ad in the Beach Reporter thus far.

That list price is just a teeny bump up from the projected sale price once listed on a special website dedicated to selling this house – $1.650m. (Alas, that site, referenced in the earlier MBC article, is now defunct. But the info can be found by Googling "4419 Highland" and pulling up the cached copy.)

We're guessing that no one took the builder up on his offer, on Craigslist, to sell the project partway through for $1.4m.

Of course, we're really curious as to whether someone will pay $1.7, or $1.5, or $1.0m, for that matter, to live here.

Aiming High, Part II

There was a veritable buzz out this weekend concerning 1829 Poinsettia, the new listing MBC called a "maximally tricked-out cottage" the other day. Everyone wanted to know, what makes this 1,400 sq. ft. house (supposedly) worth $1.8 million? There was a steady flow of people asking that question through the open houses Sat. & Sun.

Turns out there's no good answer, though, as to why this is priced so high for its size. Since the sellers think so much of the place, they're not yet open to hearing negatives like:

• The remodel isn't even finished – no stove in the kitchen and a big hole in the cabinets where presumably an oven used to be;
• The floors are mostly original, circa 1950, which could be really sweet and charming, but mostly the flooring just seems to have been overlooked in the remodel; ooh, and the dark wood interlaced parquet in the hallways, yechhh;
• No yard to speak of, some nice landscaping out front but the only real outdoor space is a courtyard with a paving stone floor (see pic.) and that's it;
• The gigantic new construction across 19th St. fairly dominates the view from the living room and one bedroom;
• Two bedrooms are quite small with built-in drawers under closets that are original, kind of clunky;
• Master bedroom is nice but it's no palace, not lots of storage or extra space; and
• Walls were poorly plastered where electrical switches were added or moved; globs and uneven spots are noticeable.

The above is merely the opinion of this viewer, just one of many to sashay through the home's debut. There are nice things to say, too, about the overall quality of the remodel, from the aforementioned paving stones (nice) to the exterior carpentry and interior fixtures, tile and stone. Much was done well. But obviously, MBC is not convinced this house is worth anywhere near its asking price.

Are the sellers are delusional, or does MBC just not get it? Time will tell.

Also, a new listing at exactly the same $1.785m in the Trees (737 36th St.) has an extra 1,000 sq. ft., meaning buyers who want to pay that much have plenty of options.

A Threesome in Arbolado Tract

Bordered by Pacific School, American Martyrs Church and Manhattan Beach Blvd. in the Tree Section is the "Arbolado Tract," the name the city uses to refer to a couple dozen homes built in the late 1980s as a group.

You just don't see planned developments like this in MB. East of Sepulveda, we have Manhattan Village, a gated community of similar vintage, but that's it.

The Arbolado Tract's name is reflected in the private cul-de-sac street through its core, Arbolado Court – literally, "Treed" Court in Spanish, or "Tree-Lined" Court. Cute for the Tree Section.

If you're wondering what a home in Arbolado is worth these days, three listings will help to sort that question out. (Actually, none are situated on Arbolado Ct., just the periphery.)

The current contenders (listed in order of their photos above):

1140 Laurel: 3br/3ba, 2550 sq. ft. – $1,639,000
758 14th St.: 4br/3ba, 3050 sq. ft. – $1,899,000
752 14th St.: 5br/3ba, 3550 sq. ft. – $2,150,000

Of these, two are new this week, and one is, er, more well-traveled. 758 14th was purchased only last summer by the current owners, who closed for $1.695m on July 21 '06. They later rethought their purchase and sought a quick $295k profit (start price: $1.990m), as MBC has reported previously.

Besides 758 14th, there's only one recent sale to go by, 8 Arbolado Ct., a 4br/3ba, 3300 sq. ft. home sold in Feb. 2006 for $1.950m. We will consider that to be a peak price, given that the list price was $1.799m, there were multiple offers and, by Feb. '06, no one had quite yet figured out that the peak had come and gone.

All three of these contenders seem to be overpriced, starting with an analysis we'll call the "758 14th St. Test," using the price per-square-foot that this home sold for last summer to calculate prices for July 2006. That p/p/sq.ft. was $556. Using this standard:

• 1140 Laurel should be at $1.420m, $220k lower than current list,
• 752 14th St. should be at $1.9m, $250k lower than current list, and
• 758 14th St. should be at $1.7m, $200k lower than current list.

Now, if we were in early 2006, coasting on the momentum of the last several years' run-up, we might think these homes could command top dollar. Just to see what the list prices might be then, let's apply the "8 Arbolado Test." The p/p/sq.ft. there was $591. Using this test:

• 1140 Laurel should be at $1.5m, $140k lower than current list,
• 752 14th St. should be at $2.0m, $150k lower than current list, and
• 758 14th St. should be at $1.8m, $100k lower than current list.

So these homes are priced at least $100k too high, perhaps $250k or more too high. Now for the caveats.

First, the "8 Arbolado Test" clearly overstates the value of all three of these homes. Within the Arbolado Tract, a location on the private drive is clearly preferable. That's a peak price for the development at a peak time.

Next, location actually suggests a further discount for 1140 Laurel. This home has no neighbors; it is an isolated tail of the development facing 12th St. Construction is beginning on a lot next door. Worse, cars come down the hill at 12th St. with their headlights pointed at the living room of 1140 Laurel. Bad feng-shui. An extra 1,000 sq. ft. in lot size does little to compensate.

Remodeling could cut either way on 752 14th. The interior is jarringly modern, Ikea Metro, if you will. It's sleek, but not everyone will want to move their family in.

And then there's 758 14th. Is it not obvious that the price you paid last summer is pretty much the most you can expect today? No, apparently, it is not obvious yet.

Aiming High on Poinsettia

Shorewood's data for March '07 told us that average per-square-foot prices were softening in MB, now at $689 as compared to $789 in the same month last year.

But that is just an average.

If you're jumping into the market now with a hot new remodeled cottage, you might well demand almost twice that. That's what the sellers at 1829 Poinsettia are doing.

This low-slung, "[n]ewly transformed and completely modernized beach cottage" (listing) can be yours today for $1.8 million ($1.785m). [Pix tk.] In a nod to green living, the place is on the small side – 3 bedrooms, 2 baths and 1,435 sq. ft.

Price per square foot: $1,244.

There are some location pluses here – it's a corner lot in a sleepy part of the Tree Section. (Standard lot size at 4480 sq. ft.)

But if you're a Tree Section shopper today, you're bound to notice that nearly everything in the $1.5m-$2m range has at least 1,000 more square feet, and some have a pretty nice location going for them, too. (2812 Elm has been stuck for 8 mos. at $1.769m, but it has comparable location and greater size going for it.)

So what's the market for maximally tricked-out cottages this Spring?

Strange blips on the MLS

The MLS carried an odd listing today for, oh, several hours.

228 5th Place came up for sale, and then it was pending in no time flat.

You might think that's nothing strange – a nice house at a good price (for this market) could go fast. But check out the sale history:

New construction: 2004

Purchased 8/15/05 for $1.660m

Listed 2/23/07 at $1.700m (MLS #S943931)

Sale closed 3/23/07 at $1.700m

Listed 5/16/07 at $1.769m

That's right. This home had been legally in the hands of the current owner for 54 days, and now it was for sale again.

The new listing even featured modest remodeling:

The entire house has just been painted & perfected inside and out. The distressed Walnut floors have recently been buffed & stained, and also has brand new plantation shutters & window treatments so the house is in move-in condition.

One might infer that these tidy-ups were all that's been going on for 54 days – that not even toothbrushes were moved in.

MBC just knows there's a strange story behind all of this – the purchase at the peak, the recent sale at essentially the 2005 price, the sudden relisting and quick new escrow. MBC has featured other properties briefly held before being put up for sale again, but none have turned quickly.

There's a whiff of REO or relo here, but that doesn't fully add up. MBC invites your insights/info on the property, via comments or private email.

Market Update for 5/15/07

Check out the newest Manhattan Beach Market Updates for May 15, 2007, over at our twin sister site.

Whether you're buying, selling, watching, or just some random dude in India (don't ask!), you're likely to find useful data.

These detailed breakdowns of market activity (actives, pendings, solds) cover the 3 sections of 90266 west of Sepulveda.

Links to spreadsheets and discussions are here.

Privacy is Overrated

Manhattan Beach has more than its share of sports stars, entertainment industry figures and corporate mucky-mucks.

That's who's buying the homes at $3-$5 million.

A month-old listing, new construction in the Hill Section at 300 N. Dianthus, recognizes two things about this élite clientele:

• they've got the money, and
• they have little or no expectation of privacy.

Think about the lives pro athletes and corporate titans live. If it's not the trainers, coaches, fans and media hounding you day in and day out, it's the business press sniffing around.

All day, every day, you're surrounded by people demanding performance, decisions, explanations. It's exhausting. That's why you get the big bucks.


If you're used to living in a fishbowl, you will love the Master Suite at 300 N. Dianthus. Check out the photo of the front entry. That set of three arched windows next to the front door? It's your bedroom!

Your views from inside are of cars parked on the street, or stopping at the 4-way stop just outside. Soaking in the jacuzzi tub, you may hear some traffic noise, but don't worry, this part of Dianthus isn't terribly busy. It's doubtful that a person in a car driving by could see much inside, unless you have the lights on.

To be fair, this unique layout came about because the architects wanted to give you a home totally focused on entertaining others. The top level is more than 2000 square feet of living space – two dining rooms, a giant kitchen/great room combo opening onto a spacious patio, plus another living room. The spaces are well suited for large gatherings, truly lovely with very nice materials, and they all take full advantage of the location's main asset: its panoramic views to the north and east. On a clear day, you'll see downtown L.A., and perhaps your office in Century City.

Some people might view the position of this Master Bedroom as a ghastly mistake. Not only is it exposed to the world, but access to the upstairs living spaces requires everyone else on the main floor (3 other bedrooms) to pass the Master, coming and going. It's hardly a retreat.

But with a 3-car garage plus 4 bedrooms (total) on the ground floor, the layout decisions were tricky. Do you put the Master under the patio, opening onto the private, serene back yard? No, it'd be too small, because of the garage. Hence a Master Bedroom where you can see the FedEx driver drop off urgent documents, or where you can just slide open your window to ask solicitors to go away.

MBC notes that this 6BR/6BA, 5500 sq. ft. house is one of the most expensive now on offer in MB at $4.495m. The builder is asking top dollar despite a glaring error in design. Someone will buy the house, because it has many charms.

But if you're a builder and you want full price, MBC would think you don't want to make life difficult for the Master who's supposed to pay it. You might need to offer a discount.

A Tale of Two Townhomes

Neighbors can go to war over lots of things. Real estate pricing is increasingly the proximate cause of harsh words, and worse.

Curses are now being tossed around inside the townhome at 714 Manhattan Beach Blvd. (MBB). It's for sale, asking $1.349m, but today the neighboring townhome at 710 MBB dropped its list price to $1.249m – undercutting 714 MBB pretty badly.

The two townhomes are practically identical – same building, same beds/baths (3/3) and square footage (1675).

Actually, 710 MBB is the superior unit in the better location (714 is on busy MBB, 710 is interior). For two months, 710 MBB held its price a notch above 714 MBB at $1.379m, reflecting the location and the added value of its remodeled interior. (These pics show how an upgraded kitchen at 710 compares to the 1991 original you'll find at 714.)

But 710 MBB has gotta sell. The new listing language explains that this is a relocation sale. A third party with some smarts is now driving the pricing. Hence the aggressive, 10% move that also, not incidentally, destroys the price of the neighboring listing.

Here's where it gets worse for the sellers at 714 MBB...

They bought their TH in April 2006 for $1.355m. They put it up for sale 7 months later. Now, the neighbor has guaranteed them they will lose at least $100k if they sell.

If you're Mr. or Mrs. 710 MBB, you're glad to be somewhere else right about now.

This is how you get noticed

Just yesterday MBC noted that Tree Section builder/sellers seem reluctant to cut their prices in reaction to a slowdown in that segment.

The sellers of a new Sand Section home have finally gotten over the same sort of hesitation and made a real move.

A nice view home at 2816 Manhattan Ave. went up for sale on Labor Day last year.

The listing started near $3m (well, 2.899) and there it remained for almost 8 months.

Why would it linger so? The listing calls the home "fantastic," "magnificent" and "wonderful."

It's located on "one of the most prestigious blocks in manhattan beach sand," the listing says (and MBC tends to agree). "[T]his home will amaze your most discerning buyer."

The home is nice, but apparently the price was not. In eight months on market, you had to see some lowballs come in – $2.3m to $2.5m might be expected – but the sellers wouldn't go there.

Finally they began to move. Within the last 2 weeks, $100k was chopped off the top.

Today, on its 245th day on the market, 2816 Manhattan has dropped another $200k to $2.599m. That's 10%+ off the original price.

Finally, the sellers are communicating that they know they got the price wrong, they're willing to move, and you should come talk to them.

It's almost enough to make you forgive the bogus re-listing they did to hide the pricing history.

A Tree Section Glut?

The Tree Section of Manhattan Beach is named appropriately for many reasons – the streets named after several tree species, most obviously, and the canopy of tall trees that line many of those streets.

Yet another reason: it's where trees go when they're dead. A small forest has been converted into new housing in the last few years.

As you'll see in the Manhattan Beach Market Updates, the going rate for new construction in the Trees is $2.3 million plus. Typical size is 5 br, with an equal or greater number of baths and square footage in the mid-3000s. The higher-end homes reach almost $3.5m, while the high (dream) asking price now is $3.9m.

A busy cycle of lot-buying, house-scraping and new construction has gone on for quite a while in the Trees. A lot of people have made serious money. (And lots of people have moved into very nice homes.)

But as the real estate market slows, this business is looking squishy. In the 5 weeks of Spring thus far, since MBC began publishing detailed tracking data, only one new-construction home in the Trees has gone into escrow (758 27th). Sixteen more are lingering.

Just 7 of these 16 listings have been out for fewer than 100 days. Four have been on the market 101-200 days. And 5 have been listed more than 200 days. (These are actual days on market, not the phony DOM on re-listed properties.)

Interestingly, builders in MB don't seem to be discounting their products much to gin up activity.

Only 7 of the 17 listings have made any reductions at all, including reductions of $30k-$70k on homes priced well over $2m – pointless, token cuts. The second-most expensive listing in the area (2104 Palm) has cut $226k off asking, but it's still near $3.5m. A home that's been listed for 53 weeks (2609 Oak) has been reduced by just $100k (5%) .

There are warning signs here of a market that's glutted. High prices, no buyers, no movement by the seller/builders, long DOM. The air seems very still.

But that's just part of the story. There are now at least 60 more new homes under construction in the Tree Section alone. If just two out of three are spec homes headed for the open market, there are 40+ homes likely to come online in this segment in the next 3-12 months. Here are the current construction sites:

Tree Section Homes Under Construction

60 as of 5/8/07

1820 Elm
1417 Elm
1144 Elm
1814 Flournoy
2100 Flournoy
2107 Flournoy
1130 Laurel
2603 Laurel
3305 Laurel
605 Marine
1709 Oak
1825 Oak
2105 Oak
2901 Oak
2209 Pacific
2301 Pacific
3104 Pacific
3413 Pacific
2204 Palm
2701 Palm
1813 Pine
2005 Pine
2504 Pine
2802 Pine
1901 Poinsettia
2504 Poinsettia
3307 Poinsettia
3309 Poinsettia
646 Rosecrans
652 Rosecrans
2829 Valley
3113 Valley
1821 Walnut
2509 Walnut
604 15th
608 15th
613 15th
610 17th
650 17th
529 18th
645 18th
747 27th
708 29th
624 30th
712 30th
754 30th
757 30th
712 31st
660 33rd
664 33rd
668 33rd
724 33rd
742 33rd
767 33rd
594 35th
601 35th
644 35th
648 35th
560 36th
577 36th

MBC wonders if the intransigence of the seller/builders is borne of experience and confidence, or necessity. That is, do they refuse to cut prices because they know they don't have to, and a buyer will come along some day? Or are they unable to cut because their house-by-house business model requires a sale price at or near their initial list?

Let's be honest: This game was easy for a few years, when market prices rocketed upward while homes were under construction. Investors made a lot of extra money when their projects were completed. Everyone looked smart.

Now, perhaps the opposite dynamic is beginning to take hold. If you bought a lot to build on at the market peak (Summer/Fall 2005) and are just now finishing the house, maybe you can't profit at the level you had planned for. Your 10-15% margin might have evaporated in a cooling market. Now what do you do?

MBC will be watching listings of new construction as they come out to see if new market entrants are pricing more aggressively. And of course we'll report on any real movement – price reductions or sales – that are suggestive of the future of pricing in the area. We can count at least 76 groups of people who are wondering about the same things.

Tree (Section) trimming

Several Tree Section sellers have made price reductions for the weekend.

With a lot of stagnant inventory, some price moves were inevitable.

Recall that 2104 Poinsettia went into escrow moments after making a serious reduction – its second $150k reduction down to $1.799m.

Buyers notice that sort of thing.

Nine more of the 33 active Tree Section SFRs cut their prices May 1 or after. Here they are in order of their new prices:

Address_____WAS_____ IS______ CUT

2507 Valley__$1.999m___ $1.850m__$149k
758 14th____$1.925m ___ $1.899m__$ 26k
1800 Laurel__$2.499m __ $2.350m__$149k
628 Marine__$2.425m ___$2.375m__$ 50k
579 29th____$2.499m___ $2.400m__$ 99k
637 35th____$2.699m___ $2.629m__$ 70k
2310 Palm___$2.689m___$2.639m__$ 50k
3212 Maple__ $2.679m___$2.649m__$ 30k
2104 Palm___$3.499m___$3.449m__$ 50k

True, some of these are token moves, done more for effect than to find the right price. But it's notable that few Tree Section listings had made cuts in the previous month.

Two of the big movers were previously discussed by MBC. 1800 Laurel was priced on a lark by live-in remodeler/flippers. They didn't get their lucky price after a month, so they're moving. They have more room to go if necessary.

And 2507 Valley has made a real move after some fake moves. More importantly, that seller has faced the fact that this home will wind up a short sale, and they're telling the world instead of hiding it.

579 29th has now dropped $175k from the initial list in early December 2006. This cut was accompanied by a bogus relisting. It seems significant that this is one of very few $2.4m+ listings that is not new construction – builders do not yet appear to be aggressive on price.

As detailed in the most recent Manhattan Beach Market Update, much of the current Tree Section inventory has been lingering quite a while. Of the 33 homes for sale as of April 30, actual days on market broke out this way:

0-30: 4

31-100: 12

101-200: 9

201-300: 6

301+: 1

So there are several listings that might need to keep moving to find their buyers.

UPDATE 5/6: 628 Marine is now pending after making its price reduction.

A quick $100k-$200k

Here's a nice business to try out if you can...

Buy a $4 million lot in the Hill Section, hold it a couple months, and sell it for more than you paid.

This appears to be the strange but true way that someone is realizing $100k-$200k about five minutes after buying 721 9th St., a large 10k sq. ft. lot in a very sweet location with big views.

Purchase closed at $3.95m on Feb. 15, 2007. The lot went up for sale 30 days later at $4.195m. Today, the property is in escrow.

The listing offered "conceptual plans" for an 8,000 sq. ft. home.

Presumably the holder of the lot was willing to slog through actually building a new home on the way to earning even more money. But why bother if you can flip the lot and sweat not a bit?

More on March '07 Sales in MB

Last week's headlines referenced a nationwide drop in sales of existing homes – "used" houses, as opposed to new construction. Sales fell 8.4% between Feb. 2007 and March 2007, the biggest month-to-month drop since 1989.

The LA Times wrote this up in appropriately somber terms, noting that the drop in California was comparable at 8.1%. Despite stable prices so far, the story noted:

[E]conomist Lesli