90403 Condo Gap Down *Update 1*

We previously featured 852 21st Street #F back in October 2008. It was a 2 bed/2 bath foreclosure in 90403...

Previous Purchase: 5/11/06 - $690,000

Bank "Buyback": 9/2/08 - $508,500

Listing History: 10/14/08 - $439,900

SOLD: 12/22/08 - $485,000

Thanks to the reader that sent this to me.


Finally, as I said last time:

"...this unit sold for $320,000 on 11/14/03. I don't really see why it couldn't roll back to near that level over the next few years."

Nickels in Front of Steamrollers *Update 2*

We last featured 733 20th earlier this month .

Thanks to a reader e-mail, we see that the re-list game is being played here.

Previous Purchase: 9/11/08 - $1,750,000

Listing History: 10/27/08 - $2,099,000
(also offered for rent at $6,450/month)

Re-List History: 1/28/09 - $1,995,000
(also offered for rent at $5,400/month)


I think that the asking price is still way too high, but the rental price is getting more realistic. However, they are still competing with 610 21st which is also asking $5,400/month in rent and hasn't been successful in finding a tenant for a while now...

More on Market Clearing Price Levels

Address: 2960 Neilson Way #105 - 90405

Details: 1 bed/1.5 bath 1,105 sq ft condo in the "Sea Colony II" building, $900/month HOA

Description: Wonderful bright corner 1 bedroom with den at prestigious Sea Colony ll. Building has pool, 3 spas, rec room, 24hr Security attendant, public tennis.

Previous Purchase: 3/16/05 - $675,000

SOLD: 1/23/09 - $675,000


From a recent post of mine:

"What I can say however is that I have been seeing sales take place at prices which would equate to late 2004/early 2005 rollback prices. This seems to be the range of current market clearing prices."

This statement was made with respect to the 90403 townhouse/condo market. However, here we are at a resort style complex which is nearly on the water and yet again, our late 2004/early 2005 rollback price range appears to be holding up.

This sale price should also tell us that the comparable 2940 Neilson Way #204 (photo above is from the listing) is likely overpriced. At 220 days on market and no price cuts from its $699,000 asking price, we know this is too high.

I continue to strongly believe that prices across the board will decline through 2009 so buying anytime soon will likely result in (potentially heavy) losses for quite some time. However, if you must buy, you should do your homework and make sure you are dealing with a seller who is both willing and able to sell within this rollback price range - and you would be wise to insist that your transaction include as much cushion as possible since the direction of prices is clearly down (i.e. you want to be a price leader and get a price firmly in the 2004 range).

Expensive House Rollback in 90403

Address: 854 23rd - 90403

Details: 5 bed/4.5 bath 4,272 sq ft house, 8,000 sq ft lot, 2006 construction

Description: Beautiful newer spanish built in 2006 by core development. Welcoming courtyard entry w/fp & fountain. Formal entry leads to step down lr w/large arched window. Both lr & dr open through french doors to courtyard. The heart of this home is the grand "great room" off a stunning gourmet kitchen w/breakfast area & large center island. A 5th br or office, & powder room round out the lower level. Upstairs is home to 4 including a wonderful master w/large closet & luxurious bath.This home is a stunner!

Previous Purchase: 4/25/06 - $3,500,000

Listing History: 1/19/09 - $3,349,000

Thanks to the reader from the last post who alerted us to this house.

This house looks like it was a spec that was completed in early 2006. The builders bought the lot on 9/28/04 for $1,350,000. I would argue that lot value right now isn't quite back to 2004 levels in this area, but it likely will be in a little while.

So maybe we estimate lot value at $100K more than this. That would mean that if we subtract out the lot value, the current asking price for just the construction is a whopping $445/sq ft.

But using the same methodology for 939 24th (which just sold and was featured in our last post) yielded us a construction value of $260/sq ft. Yes, the 24th street house construction is older by roughly 6 years and was a heavy remodel vs. completely new construction for 23rd street...but still, you have to ask yourself if this pricing differential is justified. Also, you need to realize that lot value is likely going to continue contracting for a while to the tune of at least a few hundred grand...

I would say that an asking price over $3M for this property is much too high. We'll check back after the first price cut.

Better Relative Value *Update 1*

We last featured 939 24th back in mid-December.

Listing History: 10/30/08 - $2,695,000

SOLD: 1/21/09 - $2,487,000

When I first featured this house, I argued that it was a much better relative value than 1024 23rd. I think that the selling price here is extremely ominous for the house on 23rd and proves just how much further it will need to cut its price to sell.

I would also like to take this opportunity to suggest that this sale price shows just how overpriced 2619 Washington is. That property hasn't even cut its price yet...

Congrats to the sellers of this house here. You priced your house a little high, but you rationally accepted an offer below the listing price and went into escrow in less than two months...meanwhile, all the other sellers continue to let their overpriced properties continue to rot and further depreciate on the MLS... maybe now people will be forced to wake up and realize that their properties are asking hundreds of thousands of dollars too much.

90403 Townhouse Under $1M Valuation Exercise

Address: 1015 17th Street #4 - 90403

Details: 2 bed/2.5 bath 1,674 sq ft townhouse, 1980 building, $251/month HOA

Description: Stunning, gated tri-level architectural town home absolutely turnkey! Spacious living room with a great fireplace and beautiful hardwood floors. Dining room with sliding glass doors to private patio. Kitchen has granite counter tops, pantry and eating area. Designer half bath on main level and walk-in wet bar w/wine refrigerator. Two master bedrooms/bathrooms with high ceilings & balconies. 3rd level loft perfect for an office. 2 car private garage w/direct access. Feels like a private home.

Previous Purchase: 3/8/05 - $860,000

Listing History: 11/6/08 - $839,000 ($501/sq ft)

Ok, let's get started. In the comment section of my last post, someone posted the following:

"What happened to all the townhouses in the 90403?...there is absolutely no inventory under a million bucks..."

So, what exactly has been happening? Well, first off, there have been some sales taking place. I know this because I try to track pretty much all properties that end up selling; however, I don't always do posts on every property (due to time constraints, other properties I want to feature instead, etc). What I can say however is that I have been seeing sales take place at prices which would equate to late 2004/early 2005 rollback prices. This seems to be the range of current market clearing prices.

Inventory has also seemingly been taken off the market via "withdrawn" or "expired" listings. Do some of these owners intend to rent out their places? Probably, but I don't track the rental market all that close. I would say there are probably a handful that will either give up trying to sell and/or go the rental route. I would also like to suggest that a good number of these will end up coming back onto the market at some point and try again as "new" 2009 listings. We refer to these types of properties as "shadow inventory".

Finally, there are still some townhouses currently on the market (including this one) and a few 90403 townhouses currently "looking for backup" or "pending". I may choose to do posts on some of these if/when they close. Stay tuned.

As for our current property here, we are now looking at 75 days on market without a price cut (and obviously no sale yet). This means that the current asking price is likely too high. But even at the current level, we are already looking at a price in our late 2004/early 2005 rollback price zone. For this thing to sell, we are likely going to need to see a mid 2004 price for two reasons. First, the market continues to deteriorate, so every day that a property sits it is losing value. Second, 17th street is a busier street, and properties located on busier streets have tended to have a harder time holding their value.

Finally, let's look to the future...The question you may be asking is, "Is a second-half 2004 rollback a good deal?". My answer would be that if you buy a property in that price range, you are getting a "fair market" price TODAY. However, I would continue to caution against buying because I think prices will continue to decline for some time (and by a fairly substantial amount). For example, in this case, let's look some of the older sales:

3/8/05 - $860,000
1/5/01 - $450,000
5/16/97 - $335,000

If you remember my post about OC Renter's purchase, it was suggested that nominal year 2000 pricing or inflation adjusted 1997 pricing should be a safe point to enter the market. We are obviously not there yet, and as I said on that post, I don't know if we will get there exactly. However, it is interesting to note that if you adjust the 1997 price for a 3% inflation rate, you get a value which is a little bit higher than the early 2001 price ($470K vs. $450K). Either way, it seems like nominal 2001 pricing should be pretty fair here for the value near the bottom (and it even allows for a "special SM premium").

Hell, even if you want to adjust it up further to $500K or even $550K, you are looking at a potential quarter of a million dollar decline in value before a bottom. Be careful out there...and in case you think these declines sound too big or "impossible", remember that this was one of (if not "the") largest real estate bubbles in history, and take a look at our imploding worldwide economy and our unbelievably shaky financial sector. Our nation's largest banks were all off between 20%-30% today. I don't enjoy the fact that this recession is really getting tough, and I don't particularly enjoy all the "doom and gloom" talk which is so commonplace now. What I am trying to do here (and what I have tried to do all along) is simply tell the truth and try to anticipate what will end up happening. Bottoms occur when all the excesses are washed out and when people all finally get real. Even though we are seeing rollbacks, I still think prices today are very much in bubble territory. Again, be careful.

Serious 90402 Mediterranean Delusion

723 10th is a 5 bed/5.5 bath 5,260 sq ft house.

Previous Purchase: 6/5/03 - $2,357,500

Listing History: 6/4/08 - $4,595,000
Reduced: 06/27/08 - to $4,395,000
Reduced: 07/11/08 - to $4,195,000
Reduced: 07/22/08 - to $4,095,000
Reduced: 08/20/08 - to $3,949,000
Reduced: 09/04/08 - to $3,895,000
Reduced: 09/20/08 - to $3,795,000
Reduced: 12/27/08 - to $3,695,000




557 12th is a 6 bed/5.5 bath 4,183 sq ft house.

Previous Listing: Mid 2007 - $4,195,000
Reduced: 07/03/07 - to $3,995,000
Reduced: 09/05/07 - to $3,537,888

Relisted: 1/12/09 - $2,786,000





So we've got the house on 10th which has cut its price by almost 20% and is now at $702/sq ft (but it is still likely too expensive). And then we've got the re-list on 12th which has cut its price by almost 34% and is now at $666/sq ft. Million dollar price cuts are all too common these days...aren't you glad you didn't buy a year ago when we were all screaming BUBBLE!!!

90405 House - Escrow Fails, Short Sale Status Ensues

Address: 1213 Oak - 90405

Details: 2 bed/1.5 bath 1,290 sq ft house ("needs tlc"), 6,490 sq ft lot

Description: ***$100k reduction*** short sale*** cozy 2-bedroom + den house in prime location in santa monica with a nice size flat lot. Needs tlc. Great investment!!! Won't last!!!

Previous Purchase: 11/19/02 - $585,000

Listing History: 9/17/08 - $895,000
Reduced: 01/14/09 - to $795,000

I believe that this house was "looking for backup" for a while, but it appears that the transaction did not close. Now, we have a price cut and the description has been adjusted to say "short sale".

My first reaction to the short sale claim was to look the property up on Property Shark to see if they had done a re-fi or something...because that purchase price alone ain't pulling this thing into short sale territory. I see that in 2006 there may have been a line of credit or a re-fi, but I can't quite tell what happened. But I think something had to have happened...

Checking another SMDM indicator, we see that while property taxes appear to be current for now, there are multiple signs of "turbulence" in getting previous payments in on time.

Finally, I would like to take exception with the description of the listing. In no way is this a "great investment" at this price, and I question the "won't last" remark as well. We know that short sales are notoriously hard to get done and tend to take a long time. Maybe someone out there really does think this is a good deal (as the house is somewhat of a price leader to the downside), and maybe the lender(s) is/are willing to go through with a short sale, but I still have my doubts.

I see no reason why a property like this shouldn't at least eventually go back to a late 2002 value, which in this case means you have over 25% more downside from the current asking price. I think $200K is a lot of money, and I think in this case (as with just about all others), it is going to pay (literally) to have some more patience.

South of Montana New Construction *Update 1*

We previously featured 1024 23rd back in mid-December. Since then, we have a few more pieces of info which can help us look at the situation.

First, the price was cut for a second time.

Previous Purchase: 8/8/07 - $1,445,000

Listing History: 10/8/07 - $2,975,000
Reduced: 11/11/08 - to $2,795,000
Reduced: 01/06/09 - to $2,695,000


Second, we found out that 823 Yale sold on 12/23/08 for $2,750,000.

Remember, the Yale house is 1,000 sq ft bigger, the lot is nearly 1,900 sq ft bigger, and it is on a street with no location discount. The only objective advantage that the 23rd street house has is that it is truly "new" whereas the Yale house appeared to have been leased for a little while between listings.

Sure, you might be able to argue that you like the style of one house more than the other, but I think the facts should rule in the end. I also think that the slightly used condition of the Yale house should count for only a very minor discount. Thus, I think the 23rd street house is still very much overpriced at its current $2.7M price due to the massive advantages of the Yale house (and the only $50K premium it sold at compared to the current listing price of 23rd)...also, see my discussion on the previous post for 1024 23rd about the comparison between the 23rd street house and 848 25th which sold earlier in 2008.

Oh and one more thing...I know I keep saying this, but...the economy has accelerated to the downside considerably in just the few weeks between the sale of the Yale house and right now. I think any way you look at it, this thing is still asking too much and will likely need to accept an offer below the current asking price if they want to make a sale.

SHARK SIGHTING!! *Update 1*

We last featured 1431 Stanford #2 back in September when our shark investor had just snagged it.

Previous Purchase: 3/31/06 - $638,000

"Unpaid Debt" at Trustee Sale: 7/7/08 - $537,332

Purchase by "Shark" at Trustee Sale: 7/7/08 - $373,100

Listing History: 7/17/08 - $579,000
Reduced: 08/13/08 - to $569,000
Reduced again at some point to $539,000

SOLD: 12/31/08 - $525,000

Behind The Curve

Address: 210 21st - 90402

Details: 3 bed/3 bath 2,175 sq ft house, 8,940 sq ft lot

Description: Trust sale-no court confirmation. Comfortable 3 bedroom or 2+den home located in gillette regent square. Open floor plan that lends itself to 2 or 3 bedrooms. Spacious living room, den or family room. All viewing a lush rear yard. A tranquil sun room enhances the home. Ideal for move-in now and remodel or develop later.


Listing History: 11/6/08 - $2,249,000
Reduced: 12/02/08 - to $2,095,000
Reduced: 01/07/09 - to $1,995,000

Here we have a situation where the seller appears to be realizing that the market is declining, but they continue to price "behind the curve" and thus, aren't getting a sale done.

When they first listed it, they were foolishly looking for close to peak pricing. Quickly realizing the errors of their ways and realizing no more suckers were out there, they cut the price by $150K after less than a month. Unfortunately, they didn't cut enough. We can easily see that they were at least $100K too high after their first cut because just a few weeks after they made the cut, 534 19th was able to sell for $2.0M.

So using that comp, we know that our house here was overpriced by at least $100K during December. However, we need to be careful about calling it a true comp. Both houses appear to be teardown/remodel candidates and both have equal size lots. However, the problem with our house here is that it is just the second house off of San Vicente. I think that means we have a bit of a location discount that we need to throw into the mix.

Ok, keeping the story going, we see that our sellers are finally starting to "get it" and they recently made their second price cut after roughly 60 days on market. However, once again I think it is clear that they are still "behind the curve". As I have stated many times, the keys to selling in this market are being realistic and getting ahead of the curve in terms of pricing.

These sellers are doing themselves a big disservice because if they had offered this thing at its current price when they first listed it, they probably could have gotten their price (or close to it). Now I think they will have to accept a materially lower price.

Nickels in Front of Steamrollers *Update 1*

We last featured this attempted flip at 733 20th back in October.

Previous Purchase: 9/11/08 - $1,750,000

Listing History: 10/27/08 - $2,099,000

Our update today comes because we noticed that the listing was "withdrawn" on 12/3/08 and that there is now a Westside Rentals sign out front.

I don't know what they are trying to rent it out for, but if you are interested in seeing a comp, check out 231 18th or 610 21st. If someone can let us know what they are asking, it would be most appreciated. *EDIT* Thanks to Frank for providing a link to the listing (see comments section). Current asking price is a completely delusional $6,450/month.

Finally, I just wanted to highlight this situation because it is a good example of why we are nowhere near a bottom on Santa Monica and why I think it could take so long to get there. This unit is now going into the ever increasing "shadow inventory" as this flipper joins so many others who are refusing to price their properties at market clearing prices.

The carrying costs here using 6.5% for the purchase price and 1.1% for the property tax come out to roughly $11,000/month. The best they can really hope for in terms of renting it will be about half that - Edit - Apparently they think they can get $1K more than I think. Then think about how long you would want to do that...not really a great "investing strategy". Secondly, if they think they are going to be able to sell this in a year for anywhere near their asking price then they are totally dreaming.

I still don't get it. There is plenty of demand out there RIGHT NOW even in this terrible economy and market, as long as sellers are willing to accept reality and price appropriately. So why not just sell and get it over with? Unless you are planning on holding many years and incurring negative cash flow the whole time, you aren't going to see higher values down the road anytime soon. In my opinion, value would be maximized by selling now but somehow, delusion still seems to be in style...

(not builders) Remodeling Owners Bailing Mid-Construction

Address: 825 Berkeley - 90403

Details: 9,000 sq ft lot, construction in progress

Description: Take advantage of a unique opportunity to complete this stunning home in a highly desirable area w/spectacular views of city lights that stretch to the sea!Finish & obtain instant equity!A spacious great rm offers a enormous entertainer’s deck for taking in the sights & sun.Walls of wndws on each lvl invite natural lighting to flow while framing the magnificent scenery.Spacious flat rear yd adds to the tremendous appeal.Nestled just south of Brentwd C.C.,moments to all the Westside has to offer

Previous Purchase: 7/12/06 - $2,000,000

Listing History: 1/8/09 - $2,400,000

I don't know enough about the details here to make any accurate judgment on the price. However, we can say that lot value should likely be below the $2M from back in 2006 when this was purchased. So then you have to ask yourself if you think it is worth paying a premium to that level for the construction underway. Keep in mind that you are fighting an uphill battle against time though...values will keep falling through the time that you finish this, so any "investor" here would obviously want to build in a large margin for error (and combine that with the fact that this is a unique situation which likely should command a decent discount as is). So I would imagine that the price being asked is much too high...anyone with a better feel for this, please chime in.

Thanks to the reader who alerted me to this.

"OCRenter" Buys House

I have followed OCRenter's "Bubble Markets Inventory Tracking" (or BMIT) for quite some time and it is one of the few websites that I have linked to on this blog.

Above is a graph from Calculated Risk (another great blog which I have linked to) which OCRenter modified.

The basic idea which OCRenter (and others) present is that real estate went through a major bubble after roughly year 2000. This is pretty much accepted by the majority of people by this time, so that basic idea isn't really controversial. The debate comes when asking, "how much of the bubble will deflate"? (i.e. how far will the rollbacks go?).

To get right to the point, OCRenter has presented the idea that starting in roughly 1997, the traditional real estate upswing part of the cycle started occuring. By roughly 2000 or so, the cycle should have been approaching its peak. But instead, in an attempt to help prevent pain from the tech-led recession, credit standards were loosened and interest rates slashed. Thus, according to OCRenter, it will be perfectly rational to expect real estate prices to "roll back" to 2000 levels because the gains beyond year 2000 were all false and illusory...part of a massive bubble destined to eventually give back most/all of the gain. Alternatively, we can take 1997 prices and adjust upwards for inflation (which just so happens to approximately equal year 2000 prices). Looking at previous bubbles (NASDAQ, Japan stock market, Japan real estate, etc) we have enough evidence to see that indeed, much if not all of the "illusory" gains from the bubble are eventually rolled back after many years.

So with this, OCRenter felt that year 2000 pricing (or inflation adjusted 1997 pricing) would be a fair level to buy at -- and he recently bought because he was able to snag a property which fit his standards (listed below).

--premier area with excellent schools

--proximity to work

--2000 pricing

--1997 inflation adjusted pricing

--50% off peak pricing

--must cash flow if rented

I highly recommend reading his post on the purchase (and the subsequent 100 comments).

I also recommend reading his follow up to the purchase post.

The big disclaimer that needs to be made here is that he purchased in San Diego. San Diego has been the canary in the coal mine for this whole cycle as it has been leading the cycle (whereas areas such as the Pacific Northwest have been lagging).

He had to really stretch and seemed to grab a definate "price leader". Thus as he argues, prices around him in San Diego will likely keep falling for a while but select deals will be atainable right now when finding the right kind of seller.

But if things are just barely getting to the level where buying makes sense in San Diego, we then know that places which lagged San Diego in the cycle (such as Los Angeles) are not anywhere near a bottom yet. OCRenter even weighed in and I think he is spot on.

...pricing wise, I don't believe LA and OC are there yet, I think price drops in OC are starting but LA will need even more time.

So there it is, a little talk about bubbles, "the cycle", 2000 rollbacks, and a bubble blogger buying a house. To be perfectly honest, I don't really have a strong opinion one way or the other about whether we will get to 2000 pricing in Santa Monica (on homes at least). I think it is VERY likely that we go back a lot further than the meager 2006 and occasional 2005 rollbacks that we are seeing right now on SFRs though...

90403 Bailing Rollback

Address: 2721 Washington - 90403

Details: 2 bed/1.5 bath 1,207 sq ft house, 7,050 sq ft lot, "plans and permits"...

Description: No shwgs til opn house jan 11th 1-4 pm. Opp to bld hm on 7050 sq ft lot in franklin schl dist! Plans & permits apprvd by city of sm nov 2008 & good for 6 mos. Plans designer greg flewin (this is essentially the same house mr flewin designed at 1024 23rd st - currently on the market) for 2-story, 4 br, 4 ¿ ba, 3500 sq ft hm w/hi ceil. Kit w/cntr island & brkfst area opns to fam rm w/ fplc, & drs lead to back yrd. Frml din. Gst quarters down. Mstr w/walk-in closets, balcony & generous mstr ba.

Previous Purchase: 4/6/06 - $1,548,000

Listing History: 1/5/09 - $1,499,000

Thanks to the reader who mentioned this property in the previous comments section.

So looking at this, you might think, "Wow, what a bargain!". I mean, its a clear rollback, you get plans and permits, and they are asking $1.5M which is exactly what 2722 Washington* sold for just 3 months ago (*note that 2722 Washington has a smaller lot size at 6,627 sq ft, thus making this house slightly cheaper since they are both essentially tear-downs).

However, I would argue that if you want to look at the comp at 2722 Washington, you should be building in a sizable discount considering that the entire global economy fell off a cliff right around the time that the sale went through and the market has deteriorated further, etc.

Then, you might think, "well it's still kind of hard to figure out how big a discount..."

So I present you with the previous previous sale for 2721 Washington:

11/2/04 - $1,249,000

I think it is highly likely that we see late 2004 rollbacks in this neighborhood in the future. Maybe it takes 12 months to get there, but is 12 months worth $250K to you? And then there is that nagging little detail about how the bubble was already massively inflated by late 2004. I don't think that a late 2004 level will end up being "the bottom". I think we will go lower.

But back to this listing right now -- gotta give credit to the seller for listing it at a "true rollback" price. This will get the attention of buyers right now and it is a symbolic move (and a smart one at that). I think that as long as they are willing to be flexible and stay realistic (and actually want to make a sale), this thing could be "looking for backup" pretty quickly.

**EDIT** from the comments section (which I think makes a good point):
Although 2722 Washington is a good comp due to its immediate proximity, it is not a perfect comp. 2722 Washington is a nice Cecil Gale and not necessarily a tear down. This house is obviously a tear down inasmuch as the sellers are marketing it that way. Perhaps a better comp than 2722 Washington is 1018 Yale, which closed for $1,337,500 in August before the major impact of the financial crash. Therefore, I disagree with those who suggest 2721 will go for $1.4M or close thereto. I think it sits until it dips well below 1018 Yale's price.

FORE!!-closure *Update 1*

We previously featured 1625 Dewey back in November when it was on the market as a foreclosure.

Listing History: 10/29/08 - $1,450,000

SOLD: 12/30/08 - $1,400,000

...Remember, the "bank buyback" was on 10/23/08 for $1,200,000

Even though I think a property like this has much further to fall, it is nice to see a market clearing transaction happen quickly (after only 16 DOM).

Marina Del Rey - A Whole Building Underwater *Update 1*

We previously featured 13700 Marina Pointe Drive #304 - 90292 back in September.

To refresh, this is a foreclosure in a building that was built in 2003. This means that pretty much every unit in the building is "underwater" and there is a lot of distress going on.

Details: Building built in 2003, 2 bed/2 bath 1,153 sq ft condo, $965/month HOA, foreclosure



Previous Purchase: 9/7/06 - $840,000

Bank "Buyback": 5/6/08 - $748,161

Listing History: 5/24/08 - $694,900
Reduced: 07/28/08 - to $689,900
Reduced: 08/29/08 - to $675,000
Reduced: 10/16/08 - to $640,000
Reduced: 11/29/08 - to $599,900
Reduced: 12/24/08 - to $549,900

With the current asking price, we are now looking at $477/sq ft and a dramatic 34.5% rollback from the 2006 purchase price.

There is a ton of distress in this area and in these types of buildings and I don't know where the bottom is...but if you were interested in one of these units and did your homework, I think things are starting to get interesting. Given how long this thing has sat on the market, the high HOA fees, the multiple other distressed situations, the fact that the building is a high rise 2003 construction condo tower, etc, I could see the bank accepting a strong lowball bid. If you could guarantee a fast close, I could see you getting a sub $500K bid accepted easily.

Is anyone out there looking at units in this area? What are your thoughts? A quick look on zip realty is showing a bunch of other units trying to do short sales and some other REOs...This is a complete disaster but if you wanted to live in this area, I would say conditions couldn't be better for a potential buyer.

90403 Condo Rollbacks Continue --> $481/sq ft

Address: 930 California #102

Details: 2 bed/2 bath 1,404 sq ft condo, 1974 building, $500/month HOA

Description: Prime N. of Wilshire location. Spacious and Bright 2bd + 2ba. New SS appliances in kitchen. Living room with fireplace opens to enclosed patio. Updated bathrooms w new vanities and Kohler fixtures. Central air and heat. SxS parking.

Previous Purchase: 9/6/05 - $715,000

Listing History: 10/15/08 - $699,000

SOLD: 12/30/08 - $675,000 (early 2005 rollback?)

Here we have what appears to be an early 2005 rollback. Note in the description that there are new appliances in the kitchen and "updated" bathrooms. I have no idea if the seller had put these in, but if so, you can roll it back a smidgen more in time to adjust for these items. So from all this, it looks like we certainly aren't all that far off from 2004 pricing (if we aren't already there in at least some situations).

From the comment section of the last post on this blog, someone said:

I count VERY few foreclosures in 90403 and i can't find ANYTHING asking under $500 a square foot

Well, here you go...this sale represents a sub $500/sq ft data point (at roughly $481/sq ft); and this wasn't even a foreclosure. Maybe a 2009 resolution of this blog will be to look at $/sq ft metrics a bit more (especially for condos).

Finally, in terms of the timing of the sale, note that the listing appears to have gone into escrow just 15 days after being listed. The actual sale closed on 12/30, which would represent a 60 day escrow period. This should tell us that the seller was pretty realistic with their pricing as they were willing to list at a realistic level (mid 2005 rollback) and then quickly accept an offer below asking. This is another nice example of a real, market clearing transaction.

I still see a bunch of completely delusional sellers out there with hopeless asking prices (both condos and houses)...I would suggest that if they actually want a transaction to happen, they should take notes from sellers like this one and price their units properly.