La Mesa Rollback

Address: 2158 La Mesa - 90402

Details: 6 bed/6.5 bath 6,340 sq ft house, 18,680 sq ft lot, 1928 construction

Description: Exceptional 1928 spanish home on coveted la mesa drive! Impressive features include 2-story tiled entry, grand step-down living room with musicians gallery, inviting library/den, spacious formal dining room, cheery breakfast room, attractive guest suite/office plus 2 bedrooms down, 3 excellent bedroom suites up, lovely garden with terrace and pool, 3-car garage. Splendid architectural details abound in this romantic & unique home! Property is on santa monica historic resources inventory list.

Previous Purchase: 11/14/07 - $6,332,000

Listing History: 11/1/09 - $5,795,000

This house looks pretty neat and it is located in a very premier area (although the north side of the street commands a much larger premium than the south where this property is located). Notice the large square footage but then look at how big the lot size is. Compare this with the new spec houses being built in 90402 and 90403 where the square footage isn't much smaller than the lot size. You can't have a real, classy compound when your interior square footage rivals your lot size.

Even though this house looks really neat, I would have to highlight the fact that the current asking price looks much too high. They are asking less than 10% off of the late 2007 price. I think price cuts are in order.

Very Groovy House...But Overpriced

Address: 334 15th - 90402

Details: 2 bed/1.5 bath house, guesthouse (w/bathroom), 7,500 sq ft lot

Description: Romantic Spanish in sunny tranquil location of Santa Monica (15th being one of the few streets that does not connect to San Vicente). With a romantic courtyard this restored authentic 1920’s home has exquisite craftsmanship. A cathedral ceiling in the living room, chef’s kitchen, cozy banquet breakfast nook, bonus office or nursery, charming dining room opening to wood beamed patio & spacious backyard. 2 beds/1 bath in main house & guest house w/ fireplace, bath & 2-car garage. Spanish Jewel.

Previous Purchase: 2/8/08 - $2,400,000

Listing History: 10/23/09 - $2,250,000

For those of you tired of seeing all these ugly mcmansions...go check out this house. Real character, and just an overall interesting property. I won't argue that this house doesn't have serious flaws, but the location is great and there is just an overall feeling which this house produces which I haven't seen in many other properties anytime recently. For the right type of person in the right situation, I think this house rocks.

Ok, now that your heart says yes, let's check in with our heads. The current asking price is only 6.25% less than the early 2008 price. I think there should be a much bigger discount.

Second, it appears that this house sold on 3/6/03 for just $1,265,000. That might seem a bit low and I'm not sure if/when some restoration may have been done since that purchase, but I think any way you slice it, there remains a lot of downside here (see Westside Bubble's low-end 90402 graph for more on 2003 pricing predictions). I think asking over $2mm is laughable...but whatever; as cool as this house is, I think it rots on the MLS until the seller gets real.

1027 Chelsea

Address: 1027 Chelsea - 90403

Details: 3 bed/2 bath house + 1/1 guesthouse, 6,118 sq ft lot

Description: Amazing location for this 3 bed 2 bath main house w/ full 1+1 guest house & stunning creative space that could be art studio, home office- playroom. Grassy enclosed front yard & parking for 4 cars off street. Nice master bath w/ jet tub, huge walk-in, & doors to large rear deck. Alley access for garage/creative space w/vaulted open ceiling & beams. A block to the park w/ Tennis, Paddle, fountains & grass you don’t have to mow. 2 blocks to Whole Foods, 2 blocks to Franklin school. BTV sqft

Listing History: 9/21/09 - $1,449,000

SOLD: 11/12/09 - $1,600,000

I had been following this house since it went into escrow and was reminded again about it a little while ago when reader Frank commented: 1027 Chelsea (which was apparently once owned by comedian Paula Poundstone) closed yesterday. It was listed for 1.449 but sold for 1.6 in only 13 days. Does anyone know what happened here?

I also would like to know what happened because the sale price seems pretty high. For $1.6mm, I believe 1015 24th (which I featured recently and which is currently "pending") is a much better value.

So what are we missing about the Chelsea house?

Cecil Gale Delusion *Update 2*

I last featured 2619 Washington back in October when it was for rent and for sale.

Previous Purchase: 12/20/96 - $715,000

Listing History: 11/3/08 - $2,284,800

Re-Listed: 10/13/09 - $1,995,000

When I last featured this property, I said the following: First they were asking $7,500/month and they are now asking $6,000/month. Both of those rental asking prices are wildly delusional and they have no shot at getting those prices.

Well, according to the MLS, this property has been rented out and it appears that the "sale price" for the rental is $6,000/month on 11/13/09 which I previously called delusional. I don't know if there are some other aspects to the deal (extra incentives, etc), but I still think $6k/month is too much...I'll argue that I am right much more often than I am wrong on this blog, but here it looks like I was wrong since this got rented out at a "delusional" price.

Another Late 2003 Price -- Near Rental Parity?

Address: 1225 Washington #2 - 90403

Details: 1 bed/1 bath 595 sq ft condo, 1959 building, "updated kitchen", $174/month HOA

Description: SHORT PAY.Wonderful location, just a few blocks south of Montana. Quaint 1 bedroom with laminate floors, updated kitchen countertops, added cabinets inside the unit for further storage. Front facing living room, with separate dining room. Washing and Dryer inside the unit. Car port parking on the side of the building. This is a front south facing unit, so it will be light and bright most of the day. No showings currently available.

Previous Purchase: 1/27/05 - $419,000

Listing History: 6/15/09 - $299,000

SOLD: 11/13/09 - $355,000

This short sale came on the market and was only active for 21 days before going into escrow and it subsequently closed for almost 20% MORE than list price. Clearly the idea was to list this as a short sale and also list at a very low price to gain more interest. Looks like it worked as they got into escrow quickly and sold it for well above list.

I have been skeptical of the rally in this segment of the market because of the massive FHA activity, the ultra-low rates, and the new buyer tax credit. I still have questions about the sustainability of these incentives and questions about what will happen longer term, but for now let's just try and look at valuation based on two measures.

First, let's look at it on a rollback basis. I'm estimating this to be about a late 2003 rollback. So that is pretty decent, considering that we have seen stuff selling at 2005 levels recently (I believe 2005 levels are way too high). Luckily, we also have a record of this unit selling on 3/15/02 for $239,000. While you may be able to argue that an early 2002 price isn't exactly free of any bubble influence, I'm going to use it as a somewhat fair baseline for illustration purposes. As I did in my last post, let's use 3% inflation and let's use 8 years of compound growth for an early 2010 purchase date. That gets us to about $303,000. But the buyer just paid $355,000...so on this basis it looks like you can argue they jumped the gun and overpaid. But maybe we should adjust a bit for some minor kitchen upgrades and also adjust for a potential $8,000 tax credit.

A second way to try and look at valuation would be to think about this on a rental equivalent basis. Here, to be consistent, we assume no down payment and no principal payments (i.e. interest only). $355,000 @ 5% comes to $1,480/month. Add in another $320/month of taxes and you are at $1,800/month. Call it $2,000/month with HOA. But then you've presumably got some tax benefits which drop you down by a decent chunk. Depending on your assumptions, I think you can argue that this purchase price and these low rates get you back to roughly rental parity seeing as how a unit like this could probably command somewhere in the $1,400/month range.

So on a pure rollback basis, this doesn't look like a steal; although it does look like a good rollback relative to some of the irrational buying out there right now. But on a rental parity basis, I think this doesn't look like a terrible buy. You can blame low rates all you want -- and you can worry about what an eventual rise in the rates will do to values in the intermediate/longer term, but there is no denying the strong power that they have in getting numbers to line up. Yes, rental rates still seem to be under some pressure, but I don't see rental rates crashing in the future.

Finally, we can also use this sale to show that prices in this building have come down since I featured #3 in this building back in May 2008 when it was an REO asking $415,000. I did an update when it sold in June 2008 for $399,000. So the buyer of unit #2 here saved $45,000 and potentially picked up a tax credit and got a lower rate all by waiting almost a year and a half to buy...patience pays off.

So in conclusion, I think examples like this show that there some decent deals to be had out there. I don't see any reason to get overly excited though and I don't think there is much of a sense of urgency to buy...I think in rationally priced examples like this, the bulk of the decline is over and we are now in for a long, boring stretch of slowly declining or flat at best pricing. "buy in 2010-2012"

If I am totally nuts and am missing something, I want to hear it.

Late 2003 Rollback

Address: 428 21st Place - 90402

Details: 5 bed/4.5 bath 4,878 sq ft house, 9,000 sq ft lot, 1988 construction

Description: Sensational Traditional with lovely private gardens and pool. Gorgeous wood and stone floors, ideal center hall floor plan. All rooms in the right places. Large living and dining rooms. Great open kitchen / family room with lovely breakfast area. Separate office / library. Sumptuously romantic master with large sitting area. 3 guest rooms + maids with private entrance. Fabulous back yard for entertaining with BBQ, pool & spa. This is a great offering for Santa Monica.

Previous Purchase: 7/30/04 - $3,550,000

Listing History: 8/11/09 - $3,449,000

SOLD: 11/11/09 - $3,250,000

This location is solid. The lot is large. The house looks pretty nice. I don't see many (any?) flaws here and yet, just like the real estate agents and the bulls said could not possibly happen, we've got a healthy rollback into 2003 territory.

I have consistently said that I think 2010-2012 will likely be a good time to make a purchase -- with the big caveat being that you don't lose your mind and overpay for something. With sales like this one, I think it should be clear that there are a few motivated and realistic sellers out there with quality merchandise to sell. As the froth continues to get squeezed out of the system, it becomes safer to buy.

Finally, the sale before the one in 2004 shows how much more downside may exist if you are really bearish. This house sold on 3/2/01 for $2,350,000. When the most bearish were posting on this site that we would go into a depression I argued against them. I will take this opportunity to once again argue against the biggest of the bears and say that I don't think we will see a nominal early 2001 price on this type of house. However, things get kind of interesting if you assume the 2001 price was close to fair value and then you do an inflation adjusted valuation.

Take 3% inflation and assume a March 2010 purchase date for an even 9 years of time from the 2001 sale. That brings you to a fair value of $3,066,000. So maybe this buyer jumped the gun a bit and could have bought this place a bit cheaper down the line...but I don't think you can call this purchase all that bad.

What Is This Thing? *Update 4*

I last featured 2009 Montana on Halloween when I found out that it had finally sold.

(lot) Purchase: 10/6/06 - $969,500

Listing History: 3/4/09 - $2,798,000
Reduced: 04/01/09 - to $2,598,000
Reduced: 05/02/09 - to $2,498,000
Reduced: 07/30/09 - to $2,198,000
Reduced: 08/11/09 - to $2,098,000
Reduced: ???????? - to $1,988,000

SOLD: 10/28/09 - $2,010,000


It looks like this thing will not die. It is yet again back on the MLS, but this time it is being advertised as a rental ---- for $9,995/month.

I think they are asking way too much money for this as a rental seeing as how it sold for $2mm. You can rent a real house on a quiet street north or just south of Montana for much less than $10k/month.

Also, why did someone buy this and immediately put it up for rent? Did they really think this was a great bargain at $2mm?

Buying In Bulk? *Update 1*

Since nobody wanted to give details in the comments section in the last post...


I'm hearing from multiple readers that all three units were sold to three brothers in a package deal. Live/work thing...

Thanks to those of you who e-mailed.

Buying In Bulk?

Address: 1037 21st #1, #2, #3 - 90403

Details: Unit #1 is a 3 bed/2.5 bath 1,927 sq ft townhouse. Units #2 and #3 are 2 bed/2.5 bath 1,528 sq ft and 1,597 sq ft respectively. $360 - $400/month HOA dues.

Description (#1): Beautiful,brand new construction streaming w/light & all the bells & whistles.This sophisticated front west facing towmhome features 3 beds,2 1/2 bath,roof top deck w/ocean view,living room w/fireplace,gourmet kitchen w/stainless appliances & custom cabinetry,dining w/outdoor access to patio,hardwood floors,high ceilings,master suite w/fireplace,master bath w/steam shower,spa tub, 2 car private garage w/additional 3rd secured parking space,remarkable details & quality custom finishes throughout!

Listing and Sale History:

#1: listed 4/28/09 for $1,695,000
SOLD: 11/4/09 - $1,500,000

#2: listed 4/29/09 for $1,295,000
SOLD: 11/4/09 - $800,000

#3: listed 4/29/09 - $1,495,000
SOLD: 11/4/09 - $1,200,000

So all three of these new units sold on exactly the same day...Makes you think someone bought all three of them or something. Anyone have any info?

2004 Rollbacks Attract Buyers

Address: 1037 16th #8 - 90403

Details: 3 bed/2.5 bath 1,540 sq ft townhouse, 1980 building, $560/month HOA

Description:Lvly N Wilsh TH! Wrm liv rm w cstm WBFP looks on greenery. Updtd.country Kit w stnlss stl appl, incl 2 ovns & brkfst nook looks on priv patio. Frml din rm w beaut built-in china & wine cab & French drs opn to lrg tranquil patio set up for use (furn, plnts & drip-sys incl in sale!) Mstr bed en-suite w wbfp. Mstr ba w dble sinks, lrg tub & sep shwr. Quality built-ins in evry bedrm. Wd flrs thru-out w in-laid crpt in liv rm. Direct entry from 2 car priv gar.

Previous Purchase: 6/28/05 - $1,050,010

Listing History: 9/4/09 - $899,000

SOLD: 11/3/09 - $890,000

This property was only active on the market for 13 days before going into escrow. If a property is not junk and it is priced near 2004 pricing, buyers are swarming it.

Good location...but kinda high HOA given that this is an older building with no additional amenities?

25th Street Auction Date Rapidly Approaching *Update 4*

I last talked about 805 25th back in September.

This is a 2 bed (+ office)/2.5 bath townhouse on Montana and 25th which was foreclosed upon and has now finally sold after being listed as a REO on the MLS.

Previous Purchase: 6/25/04 - $639,000

Listing History: 8/7/08 - $899,000
Reduced at some point - to $889,000
EXPIRED: after 185 days on market

Auction Date: 6/22/09
Auction Amount: $762,000

SOLD (at auction to bank): 7/1/09 - $578,378 (Onewest Bk FSB now the owner)

REO - Listing History: 9/1/09 - $721,000

SOLD: 10/30/09 - $731,800

So somebody paid $100K more than the mid 2004 purchase price when this REO hit the market. They even paid OVER listing price...all to say they bought a foreclosure...

In my opinion, this type of buying is not all that rational and is a good example of the irrational buying which has been going on in this mini-rally. I think this buyer overpaid by a large margin.

Prices were already bubbly in mid 2004 and this townhouse is also on the busy street Montana. Call it low rates or the tax credit or whatever...but I still struggle to understand why that would make it worthwhile to pay $100k or more over where this value will likely settle over the next few years.

Relative Value Gets Swooped Quickly

Address: 1015 24th - 90403

Details: 4 bed/3 bath 1,860 sq ft house, 6,207 sq ft lot

Description: Unique 2 story Victorian ideally located close to Franklin school, Whole Foods on Wilshire, Montana Avenue, transportation corridors. Truly a one of a kind property in the North of Wilshire area.

Listing History: 10/22/09 - $1,599,000


This is the real deal, no lemon here. This is a very cool house in a pretty good location and its got enough beds and baths for a good sized family. Kudos to these sellers for listing at a very realistic price.

I tried to go to the open house last weekend but it was canceled.

Then I was going to do a post on it this week but it already is too late since it has just gone "pending" after just 11 days on market.

Did somebody swoop in and make a strong bid before they even had the first open house?

So while I like to make fun of a lot of the sellers and their overpriced, often underwater properties, there are still a few long time residents with equity who want to actually sell; as demonstrated by this listing. Very refreshing to see this.

19th Street Townhouses

Address: 851 19th #1, 2,3,4 - 90403

Details: 4 new townhouses, 3 of them are 3 bed/2.5 bath and one is 2 bed/2.5 bath, no square footage given

Description: Grand Opening Sunday! This brand new Spanish townhouse epitomizes the blend between traditional style and contemporary comforts. The front unit features hand-hewn maple floors, granite counter tops and plenty of built-ins. The home is prepared for the most modern of occupants, fitted with Cat5 cable and built-in speakers in the living room. Take full advantage of the Santa Monica climate on either the master balcony, enclosed patio, or the private rooftop sun deck.

Listing History: All 4 units have been on market since 8/5/09 as "excellent presale opportunity". Prices range from $1.549mm for the 3 bedroom front unit to $1.295mm for the 3 bedroom middle units to $1.095mm for the 2 bedroom rear unit.

It looks like these were put on the MLS a little before they were actually finished -- thus the original wording of "excellent presale opportunity". They have now been on the MLS for 89 days with no price cuts.

Before I highlight all the reasons why these are so overpriced and why I didn't like these that much, there were a few positive characteristics...I thought the private garage area underground offered a good amount of space, I liked the little rooftop areas (which have "peek-a-boo" views of the water to use realtor speak), I liked the front yard patio that you get with the front unit, 19th isn't a bad street at all and the location is pretty decent.

Now, the main negatives in my opinion were that these units didn't have very big bedrooms, the interiors didn't seem to get a ton of light, too many stairs, you live next to a bunch of sloppy rent-controlled units...and the number one reason I didn't like these was that they are way overpriced.

The flaws on these are nothing that price can't fix (as is almost always the case), so they need to chop a few hundred grand off these bloated prices and see if they can start moving some product.