90403 Active SFR Rollbacks *Update 1*

I last featured 2215 California back in April.

Details: 3 bed/3 bath 1,774 sq ft house, 5,060 sq ft lot, "updated"

Previous Purchase: 10/28/03 - $1,400,000
Reduced down to - $1,429,000

SOLD: 8/26/10 - $1,395,000

This is a late 2003 rollback and represents about the deepest rollback on a SFR in this area that I can recall seeing (at least recently). I would treat this sale as an outlier and I am guessing that there is something else going on here which would help explain why this rollback is so deep compared with other sales which have recently taken place in the area.

From the photos of the listing it appears that this house is a little more unique but I can't see any glaring flaws. The unique factor should not account for such a deep rollback. Maybe there was some issue uncovered during inspection. The other thing I can think of is that maybe the price they paid in 2003 was really high in comparison to other things so this is a bit of a mean reversion...

Or, there is still the argument to be made that this is the level that simply was market clearing for a seller who really wanted or needed to sell and that prices as a whole should be drifting down. I think prices should be coming down and could be in this territory on a wide scale basis, but I still have a hard time explaining why this late 2003 rollback is deeper by over a year compared with other stuff selling right now...I would like to hear from someone who knows this house well or has better details of the transaction. This type of sale is bad for other people with homes on the market because buyers might take a look at this and think twice about paying 2005 prices (as they should think twice!).

90403 SFR Entry Level *Update 1*

I last featured 2515 California in early July.

Details: 2 bed/1.5 bath 1,267 sq ft house, 5,060 sq ft lot, "extensively remodeled"

Previous Purchase: 1/17/03 - $742,000

Listing History: 6/8/10 - $1,329,000

SOLD: 8/20/10 - $1,260,000

When I featured it I said "I think if you were to cut 10% off of this and come to about $1.2mm you would generate a lot of interest".

No doubt some more interest would have been there as they didn't need to reduce the price down that far to find the bid. Also, for those who might just look at the prices here and think this is a huge jump from 2003, there is a remodel adjustment that you need to make. While I do not believe this purchase price to be very attractive and I think prices will go down in the future, I still don't see an imminent collapse on the horizon. Remember our exercises in affordability.

Maple Rollback

Address: 1719 Maple - 90405

Details: 4 bed/2 bath 1,860 sq ft house, 6,890 sq ft lot

Description: Beautifully designed 4 bedrooms, 2 bath 1,860 sq. ft. With its great floor plan, this home feels much larger than the actual size, and includes central heating & air conditioning throughout. Spacious kitchen includes upgraded cabinetry, tile counter-tops, built in Sub Zero Refrigerator and elegant garden window. Both the living room and family room are adorned with fireplaces. The formal dining area is attached to the front family room making this home light and bright. The master suite is separated from the other large bedrooms for privacy. The private backyard, with patio and grass, is great for entertaining or children at play! Plus, a separate two-car garage with an extended driveway with room for additional parking. This home is located within the prime Sunset Park location, one of the most desired school districts and only two miles to the beach as well as the shopping and dining on Main Street and 3rd St. Promenade.

Previous Purchase: 7/16/07 - $1,275,000

Listing History: 5/12/10 - $1,195,000

SOLD: 6/3/10 - $1,107,500

I don't quite understand why the MLS is showing the sale date as 6/3/10 because this only recently came across my screen as "sold". Maybe it really did sell on that date but there was some delay in reporting?

This rollback appears surprisingly small. On a dollar basis it is $167,500 but on a percentage basis that is only a touch more than 13%. I looked through both the photos and the description and the upgrades appear to be modest (cabinetry, a fancy fridge, and maybe some new recessed lighting?). I think there is a fair chance they were done after the 2007 purchase, but even still...it doesn't look like some big 6 figure some could have been invested into the house.

I think at very deepest, this could be a late 2005 rollback...but that isn't all that impressive. Unless there is some other angle that I am missing (speak up readers!), this seller looks to have been pretty fortunate to escape with this small 13% loss.

In Case You Thought Delusion Was Dead

Address: 843 25th - 90403

Details: 3 bed/2.5 bath 1,856 sq ft house, 8,350 sq ft lot, "completely renovated"

Description: MAJOR PRICE REDUCTION! Absolutely immaculate Spanish home w/ contemporary accents in one of Santa Monica's most sought-after neighborhoods. Completely renovated 3 bedrooms, 2.5 baths w/large backyard. Features include: extra-large master suite w/ adjacent home office or sitting room, wood floors, stainless appliances, recently installed dual-zone HVAC & electrical, 6-zone sound system throughout interior/exterior, travertine floors/granite tops in kitchen & baths, stone fireplace, 2 car detached garage w/ built-in storage & additional storage room. Fantastic turn-key property on a fantastic street in Santa Monica's coveted Franklin School District.

Purchase History:
1/12/07 - $2,100,000
6/21/05 - $1,600,000

Listing History: 7/26/10 - $2,199,000

Reduced: 08/11/10 - to $2,099,000
Reduced: 08/13/10 - to $1,999,000

This listing is a disaster. I have heard that the upgrades were completed at the end of 2006, which would make the early 2007 price something we can go off of as an apples to apples comparison. That also means that the current listing first started at $100k MORE than the early 2007 price...huh? What joker even tries to pretend that prices might be up from 2007?

Next, they employ the classic delusional pricing strategy of cutting the price by small amounts. A $100k reduction followed two days later by another one? Great strategy...better boast about your "MAJOR PRICE REDUCTION" in the opening of the description.

What should have happened here was the following: Realize and accept that prices are down from early 2007. I think starting the offer at $2mm would still have been too high. Maybe they could have started at $1.85mm which would be $250k (12%) lower than the early 2007 sale.

So I expect that this listing is receiving little interest at the current asking price. Looking at the current list price and pricing strategy, you have to wonder if the seller can even afford or stomach the loss of selling. An early 2005 rollback price would be something around $1.7mm. Maybe you can argue prices have firmed a touch and it should be more like $1.75-$1.8mm but I think odds are better in favor of seeing a resumption of softness in the market. This house isn't really anything to get excited about...lots of lipstick on an old body. I think another couple hundred thousand needs to get shaved off this to get close to a sale price.

No Reason To "Hurry"

A

Address: 2507 California - 90403

Details: 3 bed/2 bath 1,450 sq ft house, 5,060 sq ft lot, "completely remodeled baths"

Description: It's Time. The Last and Best Buy of the Summer for Franklin School, North of Wilshire! Vintage 1929 Beauty with completely remodeled baths! (No expense spared! Italian Carrara Marble Floors, Kohler Spa Tub, Restoration Hardware Fixtures). Newer Electrical Throughout, Newer Copper, Newer AC. Original Integrity and Detail Throughout. High Coved Ceilings, Hardwood Floors and Crown Moldings with Breakfast and Dining Areas. Rebuilt Chimney w/Fireplace wired for Plasma TV. Wonderful Private Yard with Mature Fruit Trees. 1/2 Block to Douglas Park. Close to Montana Shops and Restaurants. Do not Miss this Opportunity. Even a California Basement for Storage!! They don't build them like this anymore. Hurry.

Previous Purchase: 7/9/03 - $1,000,000

2008 Listing History: 11/12/08 - $1,599,000
Expired after 106 days on market

2009 Listing History: 10/30/09 - $1,375,000
 Expired after 26 days on market


Current Listing History: 8/9/10 - $1,499,000

I noticed that the big difference between the current listing and the previous listings is that the house now has "remodeled" baths. I looked at past photos and verified that indeed there appears to be redone baths, but the kitchen is still original. I guess the remodeled baths is why they think they can list the house for $125k more than the price a year ago...


There are several ways we can try to estimate value. The first method is to try and estimate a rollback price and then add in upgrades. So, we take the 2003 price and bump it up about 15% to get into 2005 territory. So call it about $1.15mm...or maybe even $1.2mm given that we have not been seeing as deep of rollbacks recently. Then add on whatever you want to give credit for in terms of bathroom remodel. I think something near $100k would be generous there. Using this method, I don't see how you can value this house at more than $1.3mm.


The second method would be to take a fresh comp from nearby. Well, a few houses down, 2515 California is actually "pending" right now. 2515 California was "extensively remodeled" and had a new kitchen, built ins, landscaping, etc...HOWEVER, it is closer to 26th, the interior is 180 sq ft smaller, has one less bedroom and .5 less baths. 2515 was listed for sale at $1.329mm but it was on the market for a month before hitting escrow and I've heard it will go for less than asking. Using a 5% discount from list, we get an estimate of about $1.26mm (but we will have to wait for escrow to close to see the real answer). So, we've got same lot size, similar location (slight discount for 2515 vs. 2507), but 2515 was more upgraded but 2507 is a bit bigger with an extra bedroom and half bath. Using old 2003 sale prices, it looks like 2507 commanded a 20% premium when looking at both properties when not upgraded. But now the heavier upgrades on 2515 likely shrink that down by at least half...so maybe 2507 still deserves a premium but it might be closer to 10%. That would give us an estimate of ($1.26 x 1.1) = $1.386mm which isn't all that far away from our first method of $1.3mm estimate.

So in conclusion, I don't think you need to "hurry" as the listing for 2507 has stated each of the last three years in which it has been listed. Wait for the price cuts or else do some more homework and come up with a value that you believe to be conservative but fair and go bid. Although I have been more optimistic about things (i.e. I don't believe another massive collapse in prices will come), I will caution that there appear to be some near term clouds on the horizon. I think the stability and even in some cases slight uptick in prices seen earlier this year is unlikely to continue through the fall and winter. I would expect some creep down in prices back to the early 2005 rollback at best with late 2004 rollbacks more common. This would represent a down tick as prices right now seem to be hitting mid 2005 levels in some cases. Much of my reason for concern can be found in the somewhat weaker economic data which has been hitting recently and I would recommend people check up on Calculated Risk to read more.

Featured In Sunset Magazine ROLLBACK

Address: 2335 33rd - 90405

Details: 2 bed/2 bath 1,255 sq ft house, 6,400 sq ft lot, "remodeled in 2002"

Description: Oasis in Sunset Park. Beautifully remodeled in 2002 with fabulous gardens, featured in Sunset Magazine and seen in Green Garden Tour. Architectural details allow for wonderful light and indoor/ outdoor flow. Contemporary and bright kitchen include cherrywood cabinets and Viking stove. Master bedroom w/soaring ceilings and exposed wood beams has french doors that open to back yard. Detached guest studio and bonus office further enhanse this very special and lushly private property. Easy stroll to hip neighborhood restaurants.

Previous Purchase: 10/31/06 - $1,154,000

Listing History: 6/2/10 - $1,095,000

SOLD: 8/11/10 - $1,065,000

The description states that the upgrades were done in 2002 so this is likely to be an apples to apples against the 2006 price. We see that this just sold for just 8% below the October 2006 price. I think that puts this in late 2005 rollback territory which I believe to be especially overvalued.

So we can talk about how prices should go down more but examples like this seem to keep showing how resilient the market is right now.

Roll It Back In 90402

A

Address: 408 17th - 90402

Details: 5 bed/4.5 bath 3,522 sq ft house, 7,500 sq ft lot, remodeled with bells and whistles

Description: Newly renovated 1929 Spanish features authentic detailing & state-of-the-art amenities. 5BD + 4.5BA, FR + det guest house with ½ bath. Hardwood floors & custom finishes throughout. Gourmet kitchen with Viking appliances, farmhouse sink, marble counters & center island. Perfect for entertaining, kitchen opens to bright & charming family room. Luxurious master suite with spacious walk-in closet, balcony, fireplace & bath, custom period tile & rain shower with his & her heads. Large backyard. Prestigious location in the SM flats.

Previous Purchase: 5/24/07 - $3,750,000

Listing History: 5/14/10 - $3,350,000
Reduced down to - $3,150,000

SOLD: 8/2/10 - $3,150,000

This is a loss of $600,000 which comes out to 16%. Tack on another $150k or so for selling fees and total loss is bigger. Transaction costs get ignored when big gains are being made but they really suck when you are taking a big loss.

To be fair, this loss is only 16% on a price basis which shows how well stuff in 90402 held up. On a rollback basis I would estimate this to be somewhere in mid 2005 range which doesn't seem all that attractive from a buyer standpoint here. Value should probably keep doing down by a bit.

Paying Up For Something Original And Unique

Address: 401 21st Place - 90402

Details: 3 bed/2 bath 1,488 sq ft house, 9,880 sq ft lot, 1936 construction

Description: Authentic 1930's single story Spanish on an oversized corner lot in Gillette Regent Square. Elevated above the street with original details, beamed ceilings, wood floors, dining room and living room with fireplace opens onto large yard. The exquisite landscaping with exotic plants, fruit trees and vegetable gardens transport you to another time and place.

Previous Purchase: 5/18/00 - $1,315,000


Listing History: 4/26/10 - $2,249,000

SOLD: 7/27/10 - $2,300,000

It looks like there isn't much which has changed about this house in quite some time. Maybe a little backyard landscaping but I don't know if we should ascribe much value to that when looking at appreciation rates. On an apples to apples basis, this is about a 5.8% annual appreciation rate since the mid-2000 purchase. That sort of appreciation rate is well above normal and I don't think anyone should count on that sort of appreciation in the future, especially given that rates have declines significantly since 2000.

All this being said, this house sold after 10 days on market and for $50k above list price. Large lot size likely helped in addition to the "unique/original" factor. 

The Bermuda Triangle of 90403 *Update 2*

I last featured 937 23rd in June.

Previous Purchase: 1/6/06 - $1,560,000

Listing History: 7/13/09 - $1,899,000
Reduced down to - $1,600,000

Re-Listed: 6/23/10 - $1,499,000

and after a whopping 4 days on market... 


SOLD: 7/30/10 - $1,500,000

 The other "Bermuda Triangle" properties are still where they were last time. 907 22nd is active with no price cuts and 2320 Idaho is pending as a short sale.

San Vicente Condo Short Sale

Address: 222 7th #312 - 90402

Details: 2 bed/1.5 bath 1,000 sq ft condo, 1974 building, $400/month HOA

Description: Two bedroom condo in a highly desirable complex North of Montana Avenue. Bright top floor home with excellent flow, large bedrooms, tasteful finishes, fireplace, and plenty of closet space. Two-car gated and secure parking space. Choice location, near "the Steps" on Adelaide, Montana Shops, Promenade and the Beach. Short Sale.

Previous Purchase: 1/31/06 - $656,500


Listing History: 12/4/09 - $619,000
Reduced to - $549,000

SOLD: 7/30/10 - $550,000

This is a 16% decline from the early 2006 price. I would say that roughly equates to a late 2004 rollback or so.

I haven't really been following condos and townhouses for a while now and I'm working off the backlog of those which I've been tracking since going "looking for backup" or "pending". I'm not sure that I will do very much tracking of condos and townhouses in the future as there seem to be enough SFRs to occupy my time.

More 90405 Entry Level

Address: 3030 Paula Drive - 90405

Details: 3 bed/2 bath 1,443 sq ft house, 6,277 sq ft lot.

Description: Wonderful Sunset Park home bathed in light and with great entertaining floor plan. Perched above the street, this pool home has French doors, three bedrooms, two baths dark hardwood floors and a converted garage as a bonus room (no permit). Close to the park and featuring a lovely pool, this home has the California lifestyle down.


Purchase History:
1/31/06 - $890,000
9/8/06 - $1,050,000

Listing History: 4/13/10 - $995,000
Reduced down to - $975,000

SOLD: 7/28/10 - $920,000

This house appears uninspiring from the outside, but the interior photos didn't look all that bad. I would imagine that the January 2006 buyer might have completed some minor interior upgrades (paint, track lighting, etc) since the increase between the January and September 2006 period looks fairly large (but maybe no improvements were done and the market was just that hot back then?).

Looking at the $920k price against the previous sales prices and adjusting for some potential improvements, this rollback appears about as uninspiring as the exterior photos of this house. Even if I am correct about the timing of the improvements, I don't see how this can be better than a mid-2005 rollback.