Price Chops of the Year

It is looking like local home sales statistics for 2007 will show that the year was a bit slower than 2006, and definitely the slowest of this booming decade.

With the slowing market you see more and more cases of sellers – and agents, their advisers – getting list prices wrong. Sometimes, those beginning wish prices were quite far off from true market value.

Here are the biggest chops we’ve seen in Manhattan Beach in 2007. Keep in mind, these are cuts by folks who have actually made deals – bigger cuts may be on the horizon as other sellers get out of denial.


Hill Section

Top Chop: 108 S Dianthus (pictured), -$1.25m. This large (4br/6ba, 4550 sq. ft.), modern remodel with big ocean views was first offered in March 2006 at $4.5m. Thirteen months later, it closed for $3.25m, off 28% from initial asking price. (See "386 Days Later, A Sale.")

Runner-up: 512 John, -$950k. This Japanese-inspired modern home – a fully realized architectural vision built a few years ago in a great location – came on the market in Feb. 2007 at $4.449m. The price actually rose to $4.75m at one point, but it sold for $3.8m in October. (See "Cutting Losses on John.")


Sand Section

Top Chop: 1308 Manhattan Ave, -$750k. In what appears to be a lot sale in a cool location downtown, the sellers shot a little high in June 2006, seeking $2.85m for a 3000 sq. ft. patch of dirt. In October, it closed for $2.1m, down 26% from the start price.

Runner-up: 209 42nd (pictured), -$465k. New construction in El Porto (sorry, “North Manhattan Beach”) with 3br/4ba and 1950 sq. ft. that simply asked much too much, starting at $2.3m in a pre-completion listing. It crept down to $1.899m and closed for $1.835m in November. (See "Lucky 209s.")


Tree Section

Top Chop: 2807 Elm, -$799k. This home is lovely new construction (5br/5ba, 3550 sq. ft.) on a larger-than-normal lot that ultimately fetched $2.1m, down 28% from initial list. It’s almost unfair to give Elm top billing because the start price of $2.899m was blatantly excessive, and it came down consistently in $100k chunks to make up for that, with a sale finally closing in December. (See "Winner of the Race to $2.1m.")

Runners-up: 2104 Palm, -$650k; 2615 Valley (pictured), -$324k. Both of these homes were down 18% from their start prices. Palm was a large new home (5br/6ba, 4500 sq. ft.) that began at $3.675m and dropped to a hair over $3m. Valley was a 4br/4ba, 1950 sq. ft. remodel owned for just over 2 years by the sellers, who wished for $1.799m and got $1.475m. (See "Making It Happen (-$325k).")

Shadow Inventory

As we've mentioned from time to time, the holiday season is so slow, agents will often advise sellers to drop out a while if they can.

Maybe take some of that time to attend to issues you know your home has (or that you have) so you can come back on the market fresh and new later.

If you take your home off the MLS for 60 days or more, you can even pull a legit re-list, re-starting the DOM clock with no one carping about how you're trying to mislead potential buyers.

MBC has done a quick analysis of homes that canceled off the MLS in the last 6-8 weeks, partly to gauge how much shadow inventory we might have.

We'll look at 22 canceled (or expired) listings and opine about each listing's relative likelihood to return to the market in 2008. We use a scale of 1-5, with 1 being not likely to return, and 5 being "bet on it."

As always, these opinions are informed, but subject to error, so feel free to correct MBC if we've pegged one or more wrong. If you need more detail on any specific home, please download the MB Market Update spreadsheets.


Hill Section

916 9th– One of MBC's favorite family homes, in an off-the-beaten-path location. Last at $2.9m after 5 months on market. Likelihood to return: 3.

869 3rd – Modern home purchased for $2.4m just 3+ years ago by two local agents and put up for $3.995m in July. Marketed for about 4 months, last at $3.899m. Likelihood to return: 4.

230 Anderson – Giant home (6200 sq. ft.) with a seller in no hurry; lingered 6 months, mostly at $6,988,000. Likelihood to return: 4.

601 Larsson – A home in foreclosure repeatedly and listed as a short sale at $1.899m until recently. Could be headed to auction and an REO sale in 2008. Likelihood to return: 5.


Sand Section

453 36th – An overpriced lot sale in a pretty forgettable part of town. Sellers sought $1.8m consistently for 5 months. Likelihood to return: 4.

3505 Alma – This 3br/3ba, 1425 sq. ft. home was on offer just two weeks at $1.5m. Likelihood to return: 1.

532 6th – One of 3 walkstreet homes (all on 6th) to come up, this one canceled after less than 2 full weeks on the market. Priced at $2.7m. Likelihood to return: 1.

128 5th – A smallish (1700 sq. ft.) home on a premium lot, listed at $3,975,000 for 3+ weeks. Likelihood to return: 2.

228 29th Pl – A supercool new home with 4br/4ba and 2450 sq. ft., listed for 4 months, last at $2,729,000. Likelihood to return: 5.

505 3rd – A dated home built out to every inch of a 2700 sq. ft. lot, listed for 6 months at $1,949,000. Likelihood to return: 5.

320 Rosecrans – A remodel in progress (becoming a duplex), 1 door east of El Tarasco, listed 4 months, last at $1,999,000. Likelihood to return: 5.

616 Manhattan Ave. – A dated home with some quirks but a good location, this one spent a little more than 2 months at $1.999m. Likelihood to return: 5.


Tree Section

758 14th – This Arbolado Ct. home (last at $1.699m) was on the market 8 months. Canceled without a sale; was also for rent. Likelihood to return: 2.

3200 Pacific – One of the least-aggressively-priced homes in the Trees for almost 2 years now; began in '06 at $3.9m, worked its way down to $3.2m in 2007. Likelihood to return: 4.

3212 Palm – A pleasant enough 4br/3ba, 2300 sq. ft. home that hung around just 6 weeks at $1.585m, obviously high. Likelihood to return: 2.

616 19th – An overpriced lot sale, this one began at $2.1m and was down $300k when it canceled and a "for rent" sign went out. Likelihood to return: 4.

2404 Palm – A strange layout, great location. Home was vacant, marketed 2 months, last at $1.749m. Likelihood to return: 5.

3013 Oak – Smallish cottage just south of Ardmore (quiet), accrued 76 CDOM with stops and starts and a failed escrow, last at $1,249,000. Likelihood to return: 5.

3517 Elm – Cute remodel that spent almost 2 month on market just before the holidays, last at $1,349,000. Likelihood to return: 5.

2822 Ardmore – We stopped the clock on this dated cottage at 4 months, but it’s still got a sign out. Bumped its price up twice to $1,399,000. Likelihood to return: 5.

1829 Poinsettia – Maximally tricked-out cottage (3br/2ba, 1450 sq. ft.) shot the moon at $1.785m, flattened out at $1,599,000 and lingered 5 1/2 months. Likelihood to return: 4.

601 35th – New construction on market just over a month at $2.549m, pre-completion. Likelihood to return: 5.


At the end of this analysis, we're guessing that 17 of the 22 cancellations will be back, and if we discount that a bit, you can assume we've got more than a dozen listings waiting in the shadows now.

-------------------------------------

UPDATE: 117 Highland was removed from the list of Sand Section cancellations, on information that it has sold. The numbers were updated. Highland is the 3rd listing in recent weeks to sell and be canceled rather than get posted as being in escrow.

Success Selling Excess

Since mid-May, we've seen 6 Tree Section homes listed on the MLS sell for $3m+, with 2 more sold privately and reported for comps.

As we end the year, it looks like we have one more to add – 613 15th St., now in escrow after about 3 months on the market.

If you've been up near the top of American Martyrs Hill in the past year-plus, you've seen three neighboring lots that got snapped up, scraped and adorned with new Caliterraneans. All were sold for about $4.2m.

Here were the lot sale prices:

• 604 15th, sold 8/06, $2.020
• 608 15th, sold 2/06, $1.975m
• 613 15th, sold 5/06, $1.950m

On the south side of the street, 604 and 608 15th were both pre-sold during construction – a nice chance to tailor these projects to buyers' specific tastes.

613 was the outlier in a few respects – particularly because it fell to market. Is it great, for $4.179m?

It's huge. With 6br/8ba and 5500 sq. ft., the home features a kitchen/great room combo suitable for a kids' basketball practice. The vast living room up front (pictured) features high ceilings. Down below, there's a media room (a B-minus version, in our book) that offers two baths. Of course, the master is splendid.

MBC wanted to love this home more than we did. There was a palpable sense that the house was a standard Tree Section newbie that was just inflated a bit more to fit the larger (6250 sq. ft.) lot. There were great details, and pro forma details. Frankly the home begged for staging to make sense of its cavernous spaces.

There was quite enough here, nonetheless, to net a buyer. (Actually, this is the second contingent escrow to date.)

As we look at the price, it's worth a quick comparison to the neighboring pre-sales – note that all the lots are 6250 sq. ft.:

• 613 15th (6br/8ba, 5500 sq. ft. – $760 PSF) [based on last list of $4.179m]

• 608 15th (5br/6ba, 4775 sq. ft. – $880 PSF) [based on Oct. 26 sale price of $4.2m]

• 604 15th (6br/6ba, 4950 sq. ft. – $850 PSF) [based on pending price of $4.2m]

With a prestigious location, an ocean peek and a vast, quality house, 613 15th was going to go. We're curious as to why it began lower on PPSF – was it the excess of s/f, different architect or builder, limited views?

There are 3 business days left in the year. If this is the last hurrah for the Trees for now, it's fitting to have it be one of the highest-priced listings.

Mrs. MBC's Xmas List

Shopping? Browsing? Looking to upgrade? It's that time of year!

At MBC, if we were inclined to shake everything up a lot and try to grant all of Mrs. MBC's wishes, we might consider (click hyperlinked addresses for details via Redfin):

• New home: 516 24th (Sand Section) (pictured) – a true "beach house" with a cohesive style and smart family layout; draws in light beautifully; surprising treetop views to boot;
  

• Resale home: 916 9th (Hill Section) – a recently canceled listing (maybe to return); still one of our favorites for its vast great room/back yard combo; we could probably get over some 80s oddities for the right price (click here for MBC's story from October);
  

• Major rebuild: 408 6th (Sand Section) – nothing wrong with this mid-block, walkstreet location, but we'd rebuild and reorient the house toward the street, and update it in general– kinda tough if you start at $2.5m; or
  

• Teardown/lot: 3009 Poinsettia (Tree Section) – there are pros and cons to the Tree Section, but this block is a little dreamy... even better not to get stuck with the same-old, same-old layout by building yourself.
  

Maybe not this year, though.

We'll take what we've got – great home, healthy family, peace.

And we wish the same for you.

Last-Minute Lot Shopping

If you're late finding the perfect gift, you might want to check out 3009 Poinsettia (click for details via Redfin).

It's a teardown on a great Tree Section lot on a block that MBC admired this past Summer (see "The Street Where Listings Don't Last") – a cute little oasis between Valley and 31st. The sellers request $1.399m for the lot.

3009 is the neighbor of three homes that sold this year for $2.5m or so (3005: $2.525m, 3001: $2.49m and 2805: $2.549m). It's one door off the corner with 31st.

The timing of the listing is bizarre – who starts Dec. 21?

And the one photo is so dreadful you'd almost think this block is much less cool than it is. (Well, the charms of deciduous trees are less apparent in Winter.)

But put those things aside and work out a price ASAP if you're ready to jump and build for yourself.

We're sure builders have passed already for any number of reasons – the glut, the difficulty of projecting out this market 18-24 months from now and the high lot price.

The owners – they'll do fine. The last recorded sale was for $19k, 42 years ago. Adjusting for inflation, that'd be $119k in today's dollars. So even if they don't get their full 1200%, someone's taking home a nice bag of cash in the New Year.

Open Thread to Discuss 'Go Pro, Or No?'

As some readers know, MBC now has a weekly column in the Easy Reader.

The first few columns cribbed from blog content. Now we're reversing the flow.

Below is the text of this week's all-new column and a link to the Easy Reader site. FYI, if you read the story there, the ER online provides an easy-to-use letter-to-the-editor form.

The comments here are an open thread to discuss and debate. Here's the column:

The changing local real estate market is opening up a new debate over the value of using a full-service real estate agent in a home transaction.

Your humble correspondent has had satisfactory experiences working with Realtors. At the same time, there’s a lot of discussion on the blog at MBconfidential.com that draws out the questions of what, exactly, an agent is for, and what level of compensation seems fair.

A longtime MB resident says of days past:

"All I expected from my Realtor was neighborhood knowledge, a tour of nice houses in my price range, advice on an opening offer, and to get the paperwork straight. Granted, that was 20+ years ago, but their scope of duties has sure expanded exponentially since then!"

If the responsibilities have increased, so has the compensation. In California, agents draw a percentage of each home transaction – some for the buyer’s agent, some for the seller’s. As home prices have spiraled upward at a rate far higher than the cost of living, the amount of money going to realty firms has ballooned.

The standard fee of 6 percent on each home transaction can be adjusted by agreement, and it often is, but it’s hard to get the total expense below 4-4.5%, simply because the buyer’s agent will almost always take 2.5%.

To some, that rate of pay on the expensive homes in our local markets amounts to too much money, given the role an agent might play.

One commenter at MBC, who describes himself as a highly paid financial-industry worker who recently relocated to Manhattan Beach, says he’s preparing to buy in the $2.5m-$3.0m range in the next year or two. He’s skeptical that he needs a full-service agent and is dubious about where the $150,000 in commissions on his purchase might go:

"… Assuming my broker gets half, or 75k, I can assure you that I expect more than [for] somebody to tell me MB schools are some of the best, the tree, hill, or sand sections are pretty cool, that there are some homes I can show you besides the ones you can look at on my own time during open houses, and take care of my paperwork. That's the easy part."

Part of what’s driving this buyer’s skepticism is the fact that he has independent access to information about the real estate market. Until the last couple of years, home listings were not easily available online. Now they are. Also, it is only recently that various websites have sprung up in specific markets to provide independent data tracking. (Self-plug!) These developments tend to undercut some traditional roles played by real estate agents.

The other big factor is a slowing market. Sellers can expect their properties to linger a while, no matter what they do or whom they hire, and buyers feel very little sense of urgency. If you don’t feel like you need to be wired in with an old boys’ network to sell your home, or to find the right home to buy, you’ll probably want to pay less to the people who play intermediary roles for you. That attitude can translate to interest in discounters like ZipRealty, Redfin or Catalist.

The main-line RE pros say that a down market is precisely the time when you need a big-name firm and/or a big-name agent – that it's no time skimp on services. They are best qualified, you'll hear, to help establish the right price for a home, to market it and/or to help you find a home that isn't yet on public offer. They also know the neighborhoods, submarkets and histories of various builders and properties far better than the average person could ever hope to. After all, they're the pros. Finally, you may hear dark warnings that working with a discounter will lessen the chances that agents will show a home for sale or work amicably with a potential buyer.

Those are interesting arguments, but, of course, you’ll hear their parallels in an up market, too. Funny how the big boys always have a reason they’re indispensable.

Meanwhile, the fact is that many self-confident, well-informed professionals feel they can do much of the job themselves. If it were possible, many might hire a lawyer to run the negotiation and handle a home transaction – perhaps at a fraction of the cost. So, as the market shifts, will more of these higher-end professionals try to go it alone, accepting fewer services to do more of the work themselves, or will they continue to go to the big names and the pros?

(Click here to go directly to the story on the ER website.)

UPDATE: The original version of this story posted only an excerpt; the whole column now appears at MBC.

MB Market Update for 12/15/07

The new MB Market Update spreadsheets are available for download by clicking here, or by using the link at the upper-right corner of the main MBC page. Information in this update closed Dec. 15. This and older updates are archived at our data-dump/sister site here.

Total SFR inventory west of Sepulveda was at 70 on Dec. 15, -3 from the start of the month, in part due to 6 cancellations. Upon publishing this update, we note that inventory has dropped further to 65.

There were 5 sales (new escrows) in the first half of the month among SFRs listed on the MLS. (In our subject region west of Sepulveda.) One was a big-dollar sale of new construction in the Hill Section, one was a lot sale in the Sand Section and the remaining 3 were lower-priced homes in the Trees.

Let’s look at our region by section:


Hill Section

There are 7 active SFRs.

Our new sale in the region was at 853 6th (pictured), a large new home (6br/4ba, 4925 sq. ft.) with those great Hill Section ocean views. Pretty cool features – a covered outdoor entertainment room and separate “casita” in the back with an office/bedroom. This one was quiet, waiting around for 6 months at $4.795m. Rumored sale price: $4.5m.

We also saw our second $3.5m lot sale in the Hills close during this period. 645 9th offers an ocean view on a 9750 sq. ft. lot. Previously, someone paid $3.5m for a larger lot (12,000 sq. ft.) on Pacific with no views (1012 Pacific).

No news among the actives, really, except that 402 Larsson (click for details via Redfin), whose foreclosure status is well known, popped up in the Beach Reporter legal notices with an upcoming auction date.


Sand Section

There are 27 active SFRs.

The one sale (new escrow) in the Sand Section was a strange bird that left a little egg on MBC’s virtual face.

On Dec. 5, 233 20th St. came on the market at $1.849m, offering a full 2700 sq. ft. lot. Less than a week later, the offering changed – 233 20th was suddenly down to $1.249m and the lot was down to 1600 sq. ft. This led to an MBC story (see “Whiplash”) in which we wondered aloud what the heck was going on. Alas, the whole lot was still for sale – the back half had simply been posted by its legal address, 2007 Highland, at $879k.

The whole package was now at $2.128m, shooting up +$279k and +15% from the week-earlier price. And boom: it was in escrow. (Note: We’re showing both property addresses separately in the spreadsheets, but we’re calling it one sale.)

There were 3 new listings in the Sand Section. One is a remodeled home with a bit more than 1,000 square feet at 329 10th Pl (pictured, click for details), seeking $1.5m. This “hidden jewel” (listing) is downtown just behind the Vons and west of Morningside. Sellers paid $580k seven years ago in Jan. 2001.

Two pricey homes held for rather short periods by their current owners came up in mid-December. As we discussed in “Stuff Our Stockings (Please),” 468 33rd (2nd pic, click for details) is big and luscious at 5br/5ba, 4200 sq. ft., and just a couple of years old.

Commenters at MBC who recalled the home from its last time on the market called it nice but said the location was not great, with views of the refinery and not much of an ocean view. One recalled that this home lingered for 6 months or so last time out. It finally was purchased for $2.775m just 18 months ago. The current asking price of $3.495m is +26% (+$720k) over that.

Meanwhile, 317 17th is a walkstreet home just north of downtown, an older building that has been updated. You’ve gotta love that location, but there’s talk that the layout is peculiar (we haven’t toured it). What caught MBC’s attention was the fact that this one was purchased last year (Nov. ’06) for $2.050m, and here it is up again at $2.799m – a 36% markup over last year’s price (+$749k).

We haven’t yet seen any homes appreciate as much or as fast as the sellers of either 468 33rd or 317 17th seem to believe theirs have, but we’ll see what happens.

There were two price cuts – one at 408 6th, a funky walkstreet home, which cut $126k (-5%) down to $2.499m after less than a month. And long-timer 3009 Highland (currently 232 30th Pl) cut $10k down to $1.289m. Sellers paid $1.225m 2 1/2 years ago, so we’re looking at about a break-even sale at that price.

Vanishing from the MLS, for now:

• 505 3rd, a dated remodel in a nice location – sellers paid $1.6m two years ago, and tried for 6 months to unload it at $1.949m, with a couple of escrows that failed (see "What's Right for 505 3rd?");

• 228 29th Pl, a shockingly cool, custom modern home with 4 levels and big views; this one began at $3.049m about 4 months ago and quickly came down to $2.729m, but the sellers could not reel anyone in at that price; and

• 128 5th, a superb location that was offered as a lot, more or less, at $3.975m (see “Sand Lots”). We have to imagine there was interest, but the seller was also offering the home up for rent. We’re not sure why it’s gone after just 4+ weeks.

Tree Section

There are 36 active SFRs. Of these, 13 are priced below $2m, and 23 are above $2m.
In this report, 3 of the 5 sales west of Sepulveda happened in the Trees, all in the <$2m range. The sales (new escrows) were all on homes that had dropped their asking prices by about $200k:

• 2623 Palm, featured just days ago by MBC for its segment-hopping price cut (see “Modest House, Bold Move”), went into escrow at $1.399m (see “It’s Rosy on Palm”);

• 2413 Elm, a modest but large home (4br/3ba, 3300 sq. ft.) very near Marine that began way up at $1.799m and made its way down to $1.625m; and

• 725 12th, a small home (3br/2ba, 1300 sq. ft.), very nicely remodeled inside, on the non-ocean side of the hill of 12th, near MBB, began at $1.4m and was at $1.199m.

Two new listings came on, one a returning veteran:

• 2507 Valley (click for details), discussed earlier this year at MBC as it proceeded to an announced short sale and escrow (see “Short Sale Pending on Valley”) back in June, apparently never closed on that sale and instead wound up selling at a foreclosure auction. It was last at $1.799m, and it’s back at $1.790m. (See “Our First Shorty is Back.”) The listing now memorably begins "NOT A SHORT SALE!"
  

• 652 36th, a smallish home (3br/2ba, 1525 sq. ft.) in a so-so location, is up at a modest price of $1.389m. It’s supercute, though (that's the kitchen pictured here) – the listing calls it a “[p]erfect remodel, owned by a professional decorator.” The decorator paid $1.175m in March 2005, so the markup is substantial, if not extreme (+$214k/+18%). The home sports a pool, too.

Six final sale prices came through in this period, and here’s a contrast worth noting. The sales in the lower end (<$2m) all sold very close to list price – in one case (1725 Oak) a bit above asking. At the high end, discounts were 14%, 14% and 28%.

• 2509 Poinsettia secured $1.970m upon asking $1.999m – the home was purchased for a tick more ($1.980m) in April 2006 (see “A Year and Out” for the complete sale history, from 1999-present – hint: the value really flattened out);

• 2208 Poinsettia, an OK remodel in a location MBC just didn’t like, got $1.250m after asking $1.329m;

• 1725 Oak, a world-class beauty, overcame the location and got $2.050m, above the asking price of $1.979m;

• 2310 Palm, new construction with lots of special Spanish details, lingered for more than a year before selling for a reported price of $2.325m, a chop of $374k from its start at $2.699m;

• 3011 Elm, by all accounts superb construction, nonetheless lost money for the seller, who paid $2.8m in July 2005, but got $2.65m this time; and

• 2807 Elm, a breath of fresh air in the glutted Tree Section, took huge cuts of $799k and 28% from its much-inflated start price, winding up at $2.1m. MBC asserted that this sale had ramifications for the lingering inventory, and found some sharp disagreement in “Winner of the Race to $2.1m.”

The closed price on 2310 Palm has rung the bells on the BS detector. Tax records evidently show the reported price at $2.2m, whereas the MLS-reported price was $2.325m. MBC will report on this separately when some facts are wrapped up tight. For the moment, don’t take that price at face value.

The Guru Wants to Try Gov't Green

Do you remember those days when every utterance of Alan Greenspan was eagerly anticipated, carefully parsed and highly influential?

He does. And the growing sense that the Guru made some mistakes is only increasing his desire to talk. (See Monday's NYT on his indifference to warnings on the subprime crisis.)

These days, he's got his book, he's courting press coverage and he's doing sit-down interviews on TV. (Bonus question: Do you remember Jon Stewart? The Guru sat with him before darkness set in.)

In his most recent interview (on ABC's "This Week"), he tilted to the left of the mainstream debate on how to fix the mortgage mess, advocating some kind of government-funded bailout (er, assistance) to troubled borrowers. As the NYT summarized the Guru's remarks:

“It’s important to recognize that there are a very large number of people who are in very major stress and having great difficulty in paying off their mortgages,” Mr. Greenspan said.

“Cash is available,” he added, “and we should use that in larger amounts, as necessary, to solve the problems of the stress of this....”

Mr. Greenspan said, “It’s far less damaging to the economy to create a short-term fiscal problem, which we would, than to try to fix the prices of homes or interest rates.”

Either of those efforts, Mr. Greenspan said, would “drag this process out indefinitely.” [all emphasis added]

Just to be clear, in the boldface phrases above, the Guru is talking about government money.

ABC News offers this additional quote:

"It's very critical that this thing reach a selling climax -- if I may put it in other words, exhaust itself," Greenspan said. "It's only when the markets are perceived to have exhausted themselves on the downside that they turn. Trying to prevent them from going down just merely prolongs the agony."

Obviously the Guru recognizes that there is some kind of housing bubble and that this bubble is in a correction phase, as we speak.

Somehow, he is staking out a position that the bubble should be allowed to pop, with all the damage that implies, even as he is suggesting government assistance to homeowners affected by the pop.

Make no mistake, Greenspan is telling us that lots of proposals for dealing with the bubble amount to efforts to prevent home price declines. He finds those efforts foolish in the sense that they "prolong[] the agony" – a nod to recent historical lessons from Japan.

This is hardly the same Guru we knew. And we obviously don't live in the boom times he's associated with. What's his word worth these days?

Fireworks

If it's Christmastime, that means it's time to blow stuff up!

Seriously, xmas fireworks are a great local tradition. Downtown's fun, but this year found MBC down at the South End on the Strand, where this is even more of an event than maybe we realized. (Valet parking!?!)

The show was quite good this year; we overheard folks saying it was "the best ever," and who are we to be contrary?

Now, it turns out MB didn't think this tradition up. All over the world, people shoot off fireworks around this time of year. Hey, not everyone celebrates July 4th, for some reason. You've got these in the UK, in the Dominican, in El Salvador... the list goes on.

MBC does not know precisely how this got started in MB, and we would love additional insights.

If you'd like something a tad more than our (poor) snapshot, "Dan90266" offers a couple from the north side here at Flickr.

Winner of the Race to $2.1m

If you've got to sell, one theory is that you've got to move the price enough to convince buyers you're flexible. Certainly, 2807 Elm did that.

The movement on Elm, a new home that only entered our glutted $2m+ segment in the Tree Section in late June, was stunning. It went from dramatically overpriced at $2.899m, down, down, down in $100k chunks, to $2.299m.

Now it has closed escrow at $2,100,000, fully $799k down (-28%) from start, an extra $199k off the last (reduced) list price.

This officialy makes 2807 Elm a winner of the "race" toward prices around $2.1m we saw developing in October (see "The Race to $2.1m, and Then...") – noteworthy at the time because previous clustering of comparable listings had been around $2.3m instead.

Man, did they unload this puppy. Though it wasn't super-quick (139 DOM), by comparison with other new construction, this sale happened in a flash.

2807 Elm boasts 5br/5ba, 3550 sq. ft., on a larger-than-normal 5600 sq. ft. lot that afforded a quite decent back yard. In our tour, MBC found the home charming and a bit unique. We must concede that we've received some private feedback that wasn't so positive, but we loved it and we've said so.

Now look at something else: 2807 Elm's price per square foot was $592. We haven't recorded a PPSF less than $650 since June in this segment, and mostly you see $730+.

No question, this sale has ramifications. We'll return to this with more analysis later in the week.

It's Rosy on Palm

Two weeks ago, MBC noted that a price move by the sellers of 2623 Palm sent a message: We are ready to deal.

Message received. They're now in escrow. Bravo.

As we said in the recent story (see "Modest House, Bold Move"), the sellers appeared to have equity, flexibility and motivation. (The home was vacant.) That's a good combination if you can find a willing buyer.

2623 Palm, a one-story mid-century home that's been polished up in parts, offers 3br/2ba, 1950 sq. ft. on a corner lot. It began at $1.599m, which must have seemed reasonable at the time (it's all relative), but it shot down to $1.399m when it became clear that price wasn't going to work.

The listing sold in 76 days, no small feat this time of year, with all but a couple days being in October-December.

Another modest, much larger Tree Section resale went into escrow last week – 2413 Elm (4br/3ba, 3300 sq. ft.), also down about $200k from initial list.

Here's to happier holidays for at least the 4 families involved in these deals.

Stuff Our Stockings (Please)

It's almost Christmas, and a couple of new market entrants are asking for stockings full of cash – nah, trunks, really – for homes they've held less than 2 years.

On one, the markup is 26% over the price paid 18 months ago; on the other, 36% on the price paid 13 months ago. (Let's call it a year.) Of course, they're both multi-million-dollar homes.

We all know the Sand Section has been hot, but these markups are pretty astonishing.

The more modest markup is at 468 33rd (click for details via Redfin) for a newer (2005) home up on the plateau above Sand Dune Park. It's big and luscious at 5br/5ba, 4200 sq. ft.

The gubmint (LA County Assessor) says the owners paid $2.775m, closing May 25, 2006.

And yet, now, if you'd like this home, you'll be asked for $3.495m. That's a markup of $720k (+26%), enough to net the sellers $500k+ before taxes (assuming 6% cost of sale).

We're trying to imagine other investments that might earn 26% over 18 months in which you can live, but we're coming up short.


If those sellers seem optimistic, you'll be dazzled by the folks offering 317 17th (click for details).

You'll love the location – the 300s near downtown, a walkstreet, sincerely big ocean views... It's a home we frankly can't wait to see (the pics are plentiful and nice) given its heritage (1929 initial construx) and plentiful updates.

Extra bonus (we think) – there's a unit over the garage you can rent out.

What's not to like? Initially, we'd say the highway-robbery price. Y'see, the same old gubmint source (the assessor) says the current owners paid $2.050m on 11/07/06.

Golly, that wasn't long ago at all. So how did they decide that a new owner should pay $2.799m? That's a whole $749k (36%) more – $581k profit, pre-tax, assuming a 6% cost of sale.

Maybe the owners got a deal last year. Maybe they just appreciate how much funny money is flying around MB these days in RE purchases. Perhaps they're selling now because they face imminent court-ordered institutionalization.

Tree Section Sales & Medians, Apr-Oct '07

It's time to finish our series on sales data from April-October of this year. This is the third of three data releases, this time covering the Tree Section. (Click here for the story on the Hill Section report, and here for the story on the Sand Section report.)

As our regular readers know, for several months, MBC has been publicly tracking market activity among SFRs west of Sepulveda. While there is a wealth of information in each of MBC's twice-monthly updates, these new sales reports feature different compilations and sorts of that data.

Readers also know it's MBC's convention to break up the large Tree Section into two market segments, one with homes priced below $2m, and one with those priced above $2m. We continue that practice in these reports.

You'll need to download a 6-page PDF, either by clicking here (Tree Section Sales) or by using a link in the upper-right corner of the front page under "MB Market Updates." The report has 2 separate 3-page sections – one for the <$2m segment, one for the $2m+ segment – looking at the same data on 54 closed sales that occurred in the April-October span of the report in 3 different ways:

• Sorted by Home Condition
• Sorted by Median Price
• Sorted by Median Price Per Square Foot (PPSF)

Note that a sort by date closed is already included in each of our twice-monthly updates.

What do these various sorts show us?

First, the median price for Tree Section SFRs in this period was $1.42m for homes listed below $2m, and $2.5m for those above. (See pages 2 and 5.) If you're interested in a median for the whole Tree Section (all 54 sales), that's $1.775m.

There were 29 sales below $2m, and 25 above. And that last point is worth an extra comment. The number of homes sold in the higher-end market in the Trees was just a tick below the number sold in the <$2m segment. That's impressive. The reasons that the higher end feels slow to everyone include the greater inventory overhang and the fact that new construction has stalled so spectacularly.

Sale prices in the whole of the Trees ran from $925k to $4.2m.

The median price per square foot was $722 in the <$2m segment, and somewhat close at $746 PSF in the $2m+ segment. In our previous reports, we gave the Hill Section's median PPSF as $714 and the Sand Section's at a much bigger $941.

Finally, looking at new construction, all but one of the homes offered on the open market wound up selling for at least 92-94% of their initial asking prices. (The exception was 2104 Palm, which had to cut 18%.) Resales in that segment held up well, with 7 of 12 taking no cuts, and 3 with cuts of 13% or more. Resales in the <$2m segment hewed impressively close to list prices, with just 4 of 29 sales taking 10% or more off initial list. The bottom line: In Spring and Summer, resales in the Trees were hot. In both segments, well-priced homes did alright. When you look at the lingerers and quitters in the Trees, a noteworthy contrast is apparent – a poor start price is correlated with a failure to sell at all.

Whiplash

We've seen price cuts before, but nothing quite like Tuesday's cut on 233 20th St.

Would you believe a 32% cut after one week on the market?

It's true. This one began Dec. 5 at $1.849m, got canceled and reborn with a new bogus re-list today at $1.249m – down $600k. That chop alone is almost enough to give you whiplash.

But it's not just that the price was wrong by one-third. The new listing offers 39% less of the same lot. (Wait now, maybe that's not a "bogus" re-list if you are literally changing what's offered so fundamentally.)

We kid not. The Dec. 5 listing (MLS #S959135) offered a "Full 30 x 90 lot" (2700 sq. ft.), including an owner's unit "plus 3 additional units."

The new one (#S959378) offers a 1633 sq. ft. lot and a "legal non-conforming duplex." Oops, we lost two units!

Tax records indicate that these buildings were, for years, on separate lots. In 2005-06, they were joined as 2007 Highland Avenue. If we're reading this right, thereafter someone went further to get "Highland" out of the address, switching to a 20th St. address.

Everything was tidied up and we were ready to see the whole thing sell as a package, most likely to a builder, and then someone had a beef.

Even on Highland (no, no, 20th St.!), this is a decent midtown location, frontage on the walkstreet, ocean views, steps to beach, etcetera. The listing agent knows local lots. And we all know this one is much more valuable as a street-to-alley lot.

Oh, you backlot folks, what's your price?!?

MBC is prepared to declare this case stranger than the mid-listing change of address at 232 16th, cum 234 16th, which we covered in June (see "