Bought: The Farm(house)

A new Tree Section sale will help keep the comps high.

A new home that came to be called "The Farmhouse" at 570 27th closed escrow last week at $2.680m.

A $2.7m sale is generally good for business, unless you were the builder in this case. The unique, high-end, 5br/4ba, 4100 sq. ft. home began in mid-March 2007 at $3.899m, so the sale price is -$1.219m/-31% off that ambitious start.

In MBC's year-plus of public market tracking, that $1m+ haircut has been exceeded only once. A remodel in an ocean-view location at 108 S. Dianthus lingered for more than a year (March '06-April '07) and closed for $3.25m, fully $1.250m below its $4.5m start.

We'll remind you that Blake Roberts said this of the Farmhouse:

[T]his is just speculation, but I'd guess that the builder wouldn't have (or couldn't have) moved forward with the Farm House project had he known it would end up selling close to $3,000,000 bucks.

That comment came when the list price was $3.199m.

The lot, adjacent to Ladera School, was acquired for a tick below $1.3m in Dec. 2004. We see loans against the property in excess of $2.2m, but the all-important question of the builder's profit or loss is beyond our scope of information.

If you can make the layout work for you, The Farmhouse is a sleek home completely unlike any other that could be pretty cool, on balance. The main complaint is that all of the living space – dining, living and media rooms – are really one huge space, a Really Great Room that felt like a small basketball court. (We've got b-ball stuck on our minds, don't we?) The location was obviously more of a strike than the builders expected.

At $654/PSF, The Farmhouse was valued at the lower end for new construction in the Trees, but it wasn't the cheapest recent sale by this measure (2309 Pacific: $591/PSF, 644 35th: $625/PSF).

For buyers upset with the cookie-cutter nature of so much new construction, an unfortunate postscript from The Farmhouse sale is that builders (and lenders) are more likely to frown on innovative designs for new homes. Maybe they should just be careful how unique they're trying to be.

Newbies Slipping in the Trees

We're seeing the bar being lowered time and again as new homes sell in the Tree Section.

New case in point: 2309 Pacific. This one hit the market last Spring (in May) at a time when a moribund market had hit an unexpected patch of new enthusiasm.

The listing began at what seemed like a lower-end price at the time for new construction: $2.299m. But the buyers that were out were picky, and virtually any excuse was good enough to pass on a home – a Pacific location being an obvious strike.

So 2309 Pacific hung around. And hung. Around.

It was staged, then un-staged. It was re-listed.

As the months passed, the action finally happened only after a recent, seemingly reluctant price chop to $2.099m. But oh, what action.

A buyer swooped in at that point and said something like, "nice enough house, nice new price cut, now take another $200k off now and we're in." And soon a deal was inked.

The home closed for $1.890m last Friday. It's a new (recent) low for new construction in the Tree Section. We're now under $1.9m, when recently seeing new homes sell below $2m was news.

Here are some recent sales (last 6 months) in order of their closings with their drops from initial asking:

• 2310 Palm – $2.200m (-$499k/-18%)

• 2807 Elm – $2.100m (-$799k/-28%)

• 648 35th – $2.075m (-$375k/-15%)

• 3104 Pacific – $1.950m (-$199k/-9%)

• 2709 Oak – $1.950m (-$445k/-19%)

• 1901 Poinsettia – $1.999m (-$500k/-20%)

• 2309 Pacific – $1.890m (-$409k/-18%)

We also note that one new home was recently listed for sale below 2309 Pacific's closed price, but it has canceled. 1144 Elm had begun at $1.999m last November, and was last at $1.879m. (We're assuming it's rented but we don't have info yet.)

Above, we have selected sales that exemplified the recent trend toward substantially lower sale prices, including cuts below $2m. Sizes ranged from 3200-3600 sq. ft. We'll cover the rest in a moment.

There was some argument when 2807 Elm first sold in December 2007 as to whether it was a bellwether or an anomaly. Now it appears that it was, in fact, the leading edge of a trend toward lower sale prices for new homes. Its $592/PSF price was exceeded only twice in the subsequent 5 sales (from this list), though not by much ($625/PSF being the highest, on 1901 Poinsettia).

In the same span of time, here are the other closed sales of new homes in the Trees:

• 2612 Poinsettia – $2.199m (-$200k/-8%)

• 604 15th – $4.200m (pre-market sale off MLS)

• 613 15th – $4.050m (-$129k/-3%)

• 2100 Flournoy – $2.750m (-$450k/-14%)

• 644 33rd – $2.949m (-$301k/-9%)

Most of these are higher-end sales that don't tell us as much about the fate of smaller, less-well-located new homes that have been the majority of sales and which continue to dominate the lingering inventory.

2100 Flournoy is the rose in this group of sales, a home only a bit bigger than the standard 3200 sq. ft. Tree Section home at 3600 sq. ft. That home netted the highest PPSF of new homes offered on the open market ($764/PSF). Here's a theory: Quality construction in a nice location will still fare well, even if the builder does have to reduce his ambitions.

2612 Poinsettia is an outlier because, while tax records do show $2.199m ($687/PSF) as the closed price, the property appears to have been purchased partly in exchange for a Torrance property that went to the builder. That complicates an exact valuation.

So where does this discussion leave us?

The leftover twin of 2309 Pacific, 2611 Palm, would appear to be in deep trouble. It began at $2.495m last year, and cut to $2.285m after Pacific went into escrow. Its location is plainly superior to its now-sold twin, but can you really say it's $395k better, as the current price implies?

Two other twins, 2509 Walnut ($2.199m) and 2509 Palm ($2.299m), each offered for more than 250 days, face some price pressure as well. It would not be a surprise, given recent activity, to see one go for close to $2m, or under.

There are several more new homes of comparable size (3200-3400 sq. ft.), many newer to the market, currently priced between $2.3m-$2.7m. As always, there are adjustments to make for location, build quality, etc., but as the bottom moves down, so, too, do the higher-end properties.

Poll Results on 815 2nd

We've got word back now from the readership, and it's good news/bad news for the builder/sellers of 815 2nd, a new Cape Cod in the Hill Section.

The good news: A third of voters in the poll (34%) think it's now priced within 10% of its likely final sale price or, in other words, its market value. Given that our polls run to the bearish side, that's still a good vote of confidence.

More good news: A solid majority (61%) think it's now priced within 15% of its market value.

Bad news: Very few (12%) think $4.5m or so is the right price.

The largest response, a healthy 37% plurality, thinks this one goes between $3.75m-$4.0m, which would mean the start price of $4.795m was high by nearly $1m.

Still, if a sale closes in that range, you have to imagine that the builder still clears a tidy profit. The lot was purchased for $1.8m near the peak in Sept. 2006 – a warning sign. But if the costs of construction came out below $2m ($439/PSF), this one's likely to be in the black, and that's more than we can say for the newbies lingering and selling in the Tree Section these days.

45th/Highland for Rent

It's a saga seemingly without end – the effort to put some warm bodies into 4419 Highland, by any means necessary. (Click address for pics & listing details via Redfin.)

Longtime readers will recall that we've been wondering about this home since it was but a hole in the ground, more than a year ago. It's one of the more prominent houses in town simply because thousands of commuters pass this landmark each day; it's the first house they see coming home. That's why we called it the Gateway to Manhattan Beach.

It's also one of the worst locations in town, thanks to traffic, tank farms, utility lines, a gas station, etc. (Click the smaller pics to enlarge.)

We concluded our first story on the house with this question: Was this really such a good idea?

If the plan was to make it a rental, then sure, it's working out fine, as evidenced by the giant "For Lease" banner that went up this week. But you know that wasn't the plan.

We're told they're asking $6,500/mo. for the privilege of living in this new construction with 4br/3ba and almost 2000 sq. ft. It's just steps to the beach. There's also a convenient snack shop just across the street (at the Chevron). And you can check the waves, or the traffic, right there from your bedroom. Such a deal.

The rental option is another twist in the story that included these stages:

• Aug. 2005: Builder buys the lot for $730k

• Feb. 2007: Construction begins

• March 2007: The whole project is offered on Craigslist, midstream, for $1.4m; the pitch says that comps are in the $1.6m-$1.7m range

• June 2007: Listing begins at $1.695m, pre-completion

• Sept. 2007: Exterior is finished, price cut to $1.580m, listing touts "Three Levels of Bliss!"

• Oct. 2007: A taxi skids on rain-soaked roads and hits the fireplug at the corner, showering the front of the home; the listing soon gets a new agent and the price drops to $1.499m

• Nov. 2007-Jan. 2008: In $50k increments, the price comes down to $1.350m

• Feb. 2008: The exterior stucco gets a two-tone paint job

• March 2008: Price slips to $1.299m

• April 2008: Giant "For Lease" banner goes up

It's all kind of amazing. Two and a half years have passed since the lot was purchased; 14 months have gone by since construction started; and the completed home has been marketed for 6 months. There's a serious need for some cashflow ASAP.

Long ago, commenters here at MBC declared that this home would wind up a rental. Spot on. Bravo.

Now that we have a proposed lease price, it's possible to compare renting vs. buying 4419 Highland.

If you were to buy the home, one mortgage calculator gives a rough monthly payment of almost $7k – assuming a 30 yr fixed at 7% with $260k down (20%) on $1.3m, its current price. Add property taxes, too ($16k+/yr.; $1,350/mo.) and you're at $8,350/mo.

But let's not be short-sighted. Buying often proves the better deal over time, doesn't it?

Another mortgage calculator spits out this rent/buy advice, when we say we have $260k to put down and want to spent $6,500/mo. on a mortgage payment (same assumptions as above):

After 30 Years you will own a $ 3,472,001.54 house and have saved $381,640.23 in Income Taxes on Interest Payments of $ 1,363,000.81

Renting Analysis

Instead we take your downpayment and let it grow

After 30 years your $ 260,000.00 has increased to $ 3,005,145.43

You see, if you take the long view, in 2038, this charmer will be worth $3.5m. Clearly, it's better to buy.

Coming Soon to El Norte

They're tearing up one of the last big lots in the land formerly known as El Porto (officially, "North Manhattan Beach," but we prefer El Norte).

On the way: 5 new condos in 2 technically separate, simultaneous projects. (See artist's rendering from the developer's website).

The development is at 44th/Highland, on the east side of the street, where for years you may have noticed a giant hill of sand. Up at the top was an older home at 4321 Crest.

You might have wondered, in passing: When are they going to unload that land? And what's it worth?

Well, recently the green construction fences went up. The home at the top came down. And this prompted some questions: What finally happened? What's coming?

The answers: The land was sold quite nearly at the local RE market's peak, with a sale closing for $3m a year ago, in late February 2007.

The parcel is considered a double lot. (Photo: Microsoft Virtual Earth via Zillow.com.) On that space, zoning would allow up to 9 units, but the developers plan only 5, which is a nice stroke for lower density, we suppose. (It's 4 more units than previously occupied the space.) Approvals were mostly worked out late in 2007.

It's an ambitious project starting up at a rough time for the local market. (Let alone the credit markets.) Give the developers credit for having cojones.

The units will have ocean views, and they'll be new, but the location is going to be a problem.

Nearby, an SFR at 4104 Highland has sat on the market, unwanted, for more than 8 months. (It has technically canceled but there's still a sign out.) 305 Gull, a dated (and bright green!) duplex just a tad north on Highland, has now dropped below $1m after 5+ months. The most spectacular new entry, a trapezoidal tower at 4419 Highland, hasn't sold after 9 months and is now available for rent.

SFRs aren't a perfect comparison, but it's noteworthy that buyers are steering clear of the area while they have options.

There are condos further down the block (nearer to 41st) that have had their issues in recent years, but which all got sold and filled up, mostly in 2006. It can be done.

These builders are like toros, bullish on the future. The question is whether they'll find buyers in a year or two, or whether this project will offer some of El Norte's most splendid new rentals.

Poll Results: Twins in the Trees

We've run a few pricing polls now, but we haven't yet seen results quite like we got regarding The Twins in the Trees (3307 and 3309 Poinsettia). (Click any address for details via Redfin.)

In this case, a very small number of voters said the homes were well-priced, and that tiny fraction (4%) nearly equaled the number saying the homes won't sell at all. (The latter position being a bit of a stretch, since these are newly built homes that can be expected to sell, somehow.)

Add to that the fact that 75% of those who thought the homes would sell believed that the start prices are at least 10% too high. Nearly half thought the final prices would be in the $2.2m-$2.5m range – between $300k-$600k below the ambitious start prices of $2.795m.

Here at MBC, when we saw the start prices on these two new homes, one of the first similar cases that came to mind was 1821 Walnut. It's a comparably sized new home that hit the market in May 2007 with its own ambitious start price: $2.750m. For quite a while the price lingered near $2.6m, but now it's down to $2.495m – pretty much the same fall readers expect for The Twins.

We'll also note that two other new homes at 27th/Palm are nearly ready; one is on the market (2705 Palm at $2.699m – no pics in the listing). It's a different builder on those two, but there may be an opportunity to watch the twin pricing on those as well. (It is to be hoped that those two are not identical homes with different finishes, like The Twins covered in this poll.)

A final note: We haven't yet seen a home close escrow that had been featured in a pricing poll, but there's progress. One of 2 homes featured in a story about the west-of-Highland premium is in escrow, and 742 27th is in its second escrow of the week now. On the latter, the vast majority of voters thought the price would come in below $1.9m, but that wasn't true of the first deal. We'll see.

More Blown Price Points

A couple of months ago, we featured a two new homes that had slipped from one symbolic price tier down a rung, from $3m+ to under $3m, and from $2m+ to under $2m. (See "Blowing Their Price Points.")

742 33rd had opened at $3.295m, but slipped below $3m to $2.995m, where it remains today.

1901 Poinsettia had started at $2.499m, but was then newly priced at $1.999m. MBC speculated that it would become the first new home in the Tree Section to sell for less than $2m in quite a while. (Poinsettia is pending, but 3104 Pacific has closed for $1.950m, giving that one the dubious distinction of being first to come in under $2m.)

There are some new examples. Recently, 2100 Flournoy dipped from its pre-completion price of $3.200m to a rumored sale price of $2.750m.

But no active listing has tumbled quite like 570 27th. This new home (which Blake Roberts calls "The Farmhouse" – and he loves it) hit the market March 14, 2007, at $3.899m. Wishful thinking. When it was down to $3.299m, MBC took note (see "The High End Gets Lower.")

And now The Farmhouse, formerly a ceiling-pusher looking for almost $4m, is finally priced below $3m (actually one dollar below $3m). Time will do that to you – the listing is one year old next Friday.

Is it a "deal" now, as Blake proclaims? Hard to say. We know from previous stories that people have mixed reactions to the home. Even booster Blake calls it a "square-peg house in a round-hole neighborhood." That's to say: it's different, and off-putting to some.

The home is one of 6 in the Trees with 4000+ square feet; the new price brings it to $731/PSF, somewhat more in line with recent sales.

Blake intimates that the home could be unprofitable to the developer at a price in this range, but that's an open question. The lot went for $1.3m, so there would seem to be some room for profit – just $900k less than that initial dream price. So much for that reach for $4m.

Such a Deal on Duncan

When 911 Duncan first hit the market in June 2007, the builder/seller had high hopes. The listing began at $3.770m.

The build was a unique, custom design, memorably touted for some time as a home that supposedly evoked Frank Lloyd Wright's "Fallingwater" – with a grass driveway on Duncan apparently subbing for the forested setting of the Wright home. (We kid.)

By the 6-month mark, 911 Duncan wasn't moving, so the price did – down $470k to $3.299m. As MBC noted in "Fallingprice," this was the greatest drop in new-construction pricing in the Hill Section in 2007.

Now, with a closed price coming in at $3.190m, we can shut the books. The final price was -$580k/-15% off that optimistic start. That's the new record for cuts on new construction in the Hills.

And yet, to those who thought the home would wind up selling for closer to $3m, or perhaps below, the builder had the last laugh. With land acquisition costs of just $950k, and a home built with 5br/6ba, 3700 sq. ft., we're confident that the builder made some real money. Such a deal for both parties, no?

Half the Question is Settled

Just 10 days ago, we took note of a $1m disparity between two new homes in the mid-town walkstreets – 200 19th ($5.849m) and 332 20th ($4.795m). (See: "$1m to Cross the Street?")

We quickly heard that 200 19th was in negotiations, but y'know – that can go anywhere. In this case, it seems to have meant a real deal was in the works. Now the home is in escrow. Bravo.

That helps fill out the first half of the equation. MBC asked readers to gauge the west-of-Highland premium in a poll. (See "Poll Results re: The Highland Divide.") In that poll, 26% thought the premium was $1m or more, as suggested by the start prices. They're looking good for now.

Any takers for 332 20th?

Weekend Highlights

If you're hanging around for the long weekend – and what a "February" weekend it's shaping up to be, with this weather – there are some newer offerings worth a visit.

For a complete list via the Beach Reporter, click here or, any time, use the link under "Prop. Search Tools" in the right-hand column. As always, click any address for pics & details via Redfin.

New in the Hill Section is 815 2nd (5br/6ba, 4550 sq. ft.) – a few doors up off Ardmore. There are ocean views on 2 levels, a cool lower level with a tiered home theater (finally, one that lets you can see over the heads of your friends and family seated in front of you!) and lots of crisp finishes and details. A unique family layout, not your typical grand estate. Some small bedrooms, unfortunately. Starts at $4.795m. (Sat/Sun, 1-4pm)

A new listing in the Sand Section is 428 27th (pictured), which we mentioned the other day (Mrs. MBC's pick), an east coast brownstone-inspired home with a feature brownstones in the "real" Manhattan would kill for: side windows. Offers 5br/5ba, 4125 sq. ft. Starts at $2.899m. (Sat only, 1-4pm) Across the street, 429 27th might also be open to take advantage of the traffic.

Also intruguing in the Sand: 125 31st, a contemporary style home built in 1999, at the corner with Manhattan Ave. Offers 4br/4ba, 2900 sq. ft., and starts at $3.549m. The real price is $10k less, because the sellers will credit you that much to repaint the interior. What's the story there? (Sat/Sun, 1-4pm)

In the Trees, two new homes are open: 1825 Oak, a custom Spanish ($2.399m), and 3500 Blanche, a very busy Spanish ($2.549m). Also, if you've never dropped in on 570 27th, nearing 1 year on market and down $700k from its start (now $3.199m), think about it, because there's a buzz that it could go soon. (All Sun. 1-4, except Blanche, also open Sat.)

Be sure to tell them MBC sent you.

Poll Results re: The Highland Divide

A few days ago, MBC noted ("$1m to Cross the Street?") that we were struck by the fact that two new midtown walkstreet homes of the same size, just one street away from each other, were priced $1m apart.

The most obvious explanation for the higher price ($5.849m) on 200 19th is its location west of Highland. The lower-priced property (achem) at 332 20th ($4.795m) has big ocean views due to its higher-up location, but that location is east of the Highland divide.

We asked you to imagine that all things were more or less equal between the two new homes, and tell us what the west-of-Highland premium ought to be. Was it $1m, as the start prices suggested, or some amount less?

As you'll see from the three chart segments in shades of green, fully 2/3rds (66%) believe the premium is at least $500k in favor of 200 19th. About one-quarter thought the $1m level was just right.

The dissenters consisted of about one-third (32%) who believed that there is a premium to be paid, but it's less than $500k. Only 2% chose our option for no premium or the possibility that, in this specific case, 332 20th might actually fetch more than 200 19th, in the end.

The consensus in comments seemed to be that 200 19th was the superior home. They're both great – of course, at this price point – but we didn't see much debate on the point. A mild surprise to your humble correspondent, whose first reaction was the opposite.

There was chatter to the effect that 200 19th is already in negotiations, but who knows what that really means. We'll follow up when one or both homes has sold.

A special thanks to our readers for voting on what was, admittedly, a question that was difficult to phrase and, therefore, perhaps, tough to answer. But you got the point and the participation level on this one was close to our other pricing polls.

$1m to Cross the Street?

Face it: Highland Ave. sometimes seems like the Sepulveda of the Sand Section.

To be anywhere west of Highland is to be quite nearly on the beach. From 2nd St. to the 30s (i.e., not El Porto), west of Highland also means walkstreets. Ocean views. Heaven.

To be east of Highland means you have to cross a dreaded, busy street just to shuffle down to the sand. (And good luck to you or your kids crossing Highland safely, by the way.) Depending on where you are east of Highland, you might not even have an ocean view, even in the low-numbered addresses.

There's no question there's a disparity here, but it's hard to quantify. What's the premium to be west of Highland? The start prices on two comparable new homes suggest that premium could be $1 million.

The new home west of Highland is 200 19th (click for pics and details via Redfin). It's a cape style home (pictured above), very well done, offering 5br/4ba and 4200 sq. ft. on a full lot (2700 sq. ft.). You also get a 3-stop elevator (increasingly standard, isn't it?). From the patio and balconies, you get nice ocean views. It's a lot of house, high-quality – and it had better be, since they're asking $5.849m.

The new home east of Highland is 332 20th (pictured here). As MBC just wrote in the newest Market Update, it's a "spectacular and special new Spanish home near the top of the hill, offering big ocean views and a warm, custom feel." Size and features are similar: 5br/5ba (including partials), 4200 sq. ft. and a full-size lot, plus elevator. It's a top-tier achievement, yet they're asking $4.795m, fully $1.055m less than 200 19th.

So, if all aspects of these new homes were essentially equal, you could say it will cost a new-home buyer $1m to cross the street and buy west of Highland.

What do you think the premium ought to be? We've crafted a poll based on these two new listings to help get at that question.

We're asking what the spread ought to be between these two homes based on location, relative to Highland. No doubt there are other factors affecting the price spread, which you may, of course, consider in your response.

You may want to visit the homes we'll discuss. We'll hold this vote open till Sunday night to allow time for readers to drop in and comment. When you're ready, vote in the upper-left column of the front page, and support your rationale in the comments here.

Now It's a Buena Vista

It took 5 months, but now the best new home on Rosecrans is changing hands.

3617 Vista (4br/3ba, 2750 sq. ft.) came on the market Sept. 5, 2007, at $2.149m. MBC offered a detailed writeup shortly thereafter (see "As Good As It Gets on Rosecrans"). Highlights:

• a solid, voluptuous-feeling build with lots of nice custom touches;

• this is a loud part of Rosecrans... Throughout our visit, vehicle noise was noticeable – in part because cars are gunning their engines to climb the hill;

• If Vista doesn't go quickly, we'd guess a sale could come in nearer to $1.9m.

This listing was cut down to $1.899m in early January, so we imagine that the deal is close the that. Hey, that means we weren't far off in that edgy prediction way-back-when. (All predictions are edgy.)

MBC was blessed in the comments on that story to hear from a person who had bid on the project before it was built out. His numbers suggested a cost for the builder of about $1.765m. With 5% costs of sale at $1.899m, the net is $1.8m, meaning possibly a tiny sliver of a profit, assuming (big-A assuming) no extra costs along the way. With 5 months' worth of holding costs after the prop hit the market, we might assume a modest loss on this project.

But consider the buyers. They got at least a 12% discount, they're near the beach, the airport, yoga, sushi and, of course, El Tarasco. They're in the newly minted region of "North Manhattan Beach." What's not to love at this point?

Oh Yes, It Is Big

Apropos for Super Bowl Sunday, today we feature one of the largest and priciest new Tree Section homes. The copy for 2204 Palm calls it a "Colossal Corner Cape Cod," and here's a case where the home easily lives up to the hype. (Nice alliteration there, too. Who said realtors can't be writers?)

The home offers 6br/6ba (including partials) and 4925 sq. ft. Amazingly, this is on a lot that's only slightly bigger, at 4950 sq. ft. The secret: giant basement. (More on that shortly.)

The start price is big, too: $3.45m, meaning there are just 2 Tree Section listings now priced higher (3305 Laurel at $3.65m and 769 33rd at $4.5m).

2204 Palm (click the address for details – and, sadly, meager pics – via Redfin) has a lot going for it:

• Great build quality with fine details and finishes;
• Extra-large great room opening to a somewhat larger-than-standard patio/yard;
• Nicely flowing layout – we entered off 22nd and nearly forgot there was a garage (on Palm), a nice contrast to the standard garage-fronted setup; and
• Quiet, heart-of-the-trees location.

Less obviously, this house is surprisingly bright on the main levels. The corner lot faces north and there's a 2-story home to the south, which could have meant shady living spaces. Quite the opposite is true, though, because the design called for lots of windows – some oversized, some faux dormer skylights – to draw in extra light from the unobstructed north side.

The whole package is quite an achievement, and MBC's biggest question in seeing it was why this one wasn't pre-sold. The best homes in the best locations have a way of not making it to market. Maybe just a sign of the times.

Now, that basement. It, too, is big. A family of 4 could easily live there, with its multiple rooms and space that must exceed 1500 sq. ft. (The listing suggests you use it for a home theater, gym and so on and so on... we're guessing some interior designer some day will freak a bit in trying to make use of all this space.)

Interestingly, the price does not assume that all the home's square footage is equal. This one starts at $700/PSF. That's down from the range we've seen on some quality new construction over the past 6 months, although up a bit from the PPSF on the 3 most recently sold newbies.

Still, it's $3.45m, out of the range of a lot of regular folks. If you're wondering how to pay for it, a handout at the open helpfully explains (we translate a bit here):

• Start with $1m down (30%);
• Take an interest-only loan (5yr/7yr options are sketched);
• Pay $12k/mo. in interest (no principal); plus
• Pay $3,7000/mo. in tax/insurance.

So there's a partial answer to how you get in at this level – fork over $1m, pay $16k/mo. and gamble just a bit on future home values and rates (relevant to an implied re-fi down the road).

Another option: Partner with another family of 4, go halvsies on the d/p and monthly payment, and flip for who gets the basement.

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.

First Newbie Under $2m

We know the situation is tough for new construction in the Tree Section.

Until recently, however, new stuff in the Trees always started over $2m. Certainly, since Spring this year, that's been the case. No new home has been priced at, or sold for, less than $2m.

Breaking the pricing mold: 1144 Elm, a 2-week-old listing that otherwise fits the basic profile – 5br/5ba, 3300 sq. ft., and a standard 4480 sq. ft. lot. It started $5k below $2m, at $1.995m.

The home has character inside, with good living spaces downstairs, nice detail work in the kitchen and baths, even kids' bedrooms that don't seem too scrunched. It's bright, too, despite a northern orientation – apparently a good use of skylights.

So why is a very decent new build priced,