90402 Spec House

Address: 515 24th - 90402

Details: 6 bed/6.5 bath 7,300 sq ft house, 8,700 sq ft lot, blah blah bells and whistles...new construction

Description: Custom tri-level New England beach house on one of the most desirable streets North of Montana. Four bedroom suites up and two bedrooms down. Constructed with great attention to detail, White French Oak floors, cook's kitchen with stainless steel apps, formal dining room, living room, family room and office. Spacious basement with a game room, media room and fireplace. The private backyard has an inviting loggia with fireplace. Excellent for entertaining and adaptable to fit one's needs.


Lot Purchase: 11/20/07 - $2,500,000

Listing History: 6/7/10 - $4,850,000

SOLD: 9/24/10 - $4,500,000


It seems that a lot of these huge spec houses were rented out the past few years when they were completed because they couldn't sell for the prices that the developers wanted. Here we have a huge spec house in a great location and it sold relatively quickly.

The developer paid peak price for the lot ($2.5mm) and the lot is probably worth $2mm or a touch higher now. If we assume it is worth $2mm, the buyer just paid $2.5mm for the construction. That comes out to $342/sq ft for the construction. The developer ought to be able to build for less than retail prices but given holding costs, transaction costs, the depreciation on the lot value, etc, they likely lost a fair amount. Looking at this from the buyer's point of view, I guess it isn't too bad because maybe they could build it a bit cheaper but that would take time and a lot of effort. So call this fair value?

Trade-off

Address: 2307 Washington - 90403

Details: 4 bed/2.5 bath 2,700 sq ft house, 4,750 sq ft lot, extensively remodeled

Description: Great curb appeal with this beautiful Traditional apx. two blocks away from Montana Ave. in the Franklin School District. 4 bedrooms & 2.5 baths. Spacious & extensively remodeled, feels like a new home! Light & bright with skylights, recessed lighting, wide-plank hardwood and travertine floors downstairs with new Sisal-style carpeting on the second floor, elegant crown moldings and plantation shutters. Fantastic layout with the dining room opening to the living room, kitchen and backyard. Large master suite features a balcony, walk-in closet, master bath with top-of-the-line fixtures & spa tub. Chef’s kitchen features custom cabinetry, granite counters, travertine floors and Subzero & Viking oven. Beautiful front and back landscaping with the lush private backyard surrounded by tall hedges . A must see! Definitely a well-priced property in one of the most sought after neighborhoods in Santa Monica.

Previous Purchase: 1/28/04 - $1,550,000

Listing History: 9/10/10 - $1,795,000

This house looks pretty nice inside and has been remodeled/upgraded. I will note up front that I don't know when the upgrades were done. I'm guessing prior to the 2004 purchase.

The trade-off on this property comes when you look at the very small square footage on the lot. The land is where the money is in this neighborhood so you can't compare this house to others just around the corner because the lot size on this is so much smaller. However, with the smaller lot size, you get to apply a discount and get a larger house in better condition for much less than you could otherwise obtain one for. So it comes down to what is important to you and what your budget is.

On valuation...if the upgrades were done prior to the 2004 sale then I think the asking price is about $100k too high. A late 2004/early 2005 rollback would be about $1.7mm. The asking price becomes more reasonable if some of the upgrades were done after 2004. It makes sense that the upgrades were done prior to 2004 as listing something for 5-6% above what it is likely worth is pretty common as a first list price. If nobody shows interest then look for it to be cut down to about $1.7mm in 30-45 days or look for a buyer to just bid them down right now and have them accept it.

Near The Beach ROLLBACK

Address: 133 Hollister - 90405

Details: 3 bed/3.5 bath 2,738 sq ft house, 3,890 sq ft lot, 2005 construction

Description: Gorgeous! Absolutely Picture Perfect Craftsman Beach Home in the Cherished, Historical Ocean Park Beach Tract…3 doors down from the sand & surf sits this Magnificently Lovely home built in 2005! A Spectacular Great Room, flooded with Sunshine & Ocean Breezes, opens on to a large Deck and beckons the intoxicating Sea Air! An Amazing Master Suite with Sitting Room, Luxurious Bath with Spa Tub and a balcony with Ocean Views completes the top floor. There are 2 additional en-suite Bedrooms and a Fantastic Family Room which opens out to the Backyard with Built-in BBQ. Limestone and Bamboo Flooring, Viking and Sub-Zero are but just a few of the beautiful finishes and quality enhancing this very special home! Moments to the Beach, Main Street, Abbott Kinney & the 3rd Street Promenade!

Previous Purchase: 11/9/05 - $3,600,000

Listing History: 7/26/10 - $3,100,000

SOLD: 9/21/10 - $3,100,000

This was on the market for just a few days before going into escrow. This $500k loss is about a 14% loss from the late 2005 price. I would say that puts this into mid-2004 territory.

4.5 Years Of Drama Finally Ends

This blog and Westside Bubble have featured the failed flip at 2320 Idaho for years...and years...and years.

Previous Purchase: 4/4/06 - $1,335,000

Listing History: March 2007 - $2,400,000

Re-listed: some time in later 2007 - $2,195,000

Re-listed: at least several more times over the next year+ at around $2mm

Re-listed a few more times...

Finally, it was listed at $1,495,000 with language in the listing that said "SHORT SALE, NO SHOWINGS UNTIL WE HAVE FURTHER INFORMATION FROM THE BANK. WAITING ON APPROVAL."

This thing sat forever as the lender(s) were slow to get this thing off the books. It was listed as "pending" for a really long time. Now, the drama is finally over.

SOLD: 9/15/10 - $1,499,000

This price represents a material decline as the house was significantly upgraded after the 2006 purchase. I wonder how long the failed flippers got to live in this thing without paying the mortgage or property taxes?

Seeing these types of zombie properties cleared off the books of the banks is good. We need more of this. Unfortunately, I think there are still a fair number of zombies out there that need to find real buyers at real(istic) prices. This should still take some time. That is one of the reasons why I gave such a wide time frame when I said that buying would likely make sense in 2010-2012. We aren't even through the first year of that 3 year time period.  

2.3 Years Produces Value On 26th Street

Address: 614 26th - 90402

Details: 5 bed/4.5 bath 2,873 sq ft house, 8,700 sq ft lot, newer central heating, roof, and pool

Description: Fabulous opportunity for a 4 bedroom {plus maids/office suite (w/bath) & separate entrance} home in the coveted Franklin School district. Great flow to this inside and out. Living room w/ soaring ceilings & fireplace and large loft w/ built-in bookcase. Good-sized dining room. Large master w/ large, west-facing deck. Huge master w/ fireplace. Master bath w/ shower, tub, double-sink & huge skylite. Sunny kitchen opens to breakfast nook & family room with fireplace and soaring ceilings. Family room, in turn opens to large, west-facing back yard with a salt-water pool (Pebble-Tec® bottom) and spa installed August 2006. New roof May 2007. The central-heating unit, which is air-conditioning-ready, was completed in March 2010. Detached, two-car garage. Alarm & fire system (ADT), motion detectors, panic buttons & medic button.

Previous Purchase: 4/15/93 - $782,000

Listing History: 4/29/10 - $1,875,000
Reduced down to $1,749,000

SOLD: 9/8/10 - $1,650,000

The meaning behind the title of this post comes from several posts that I did back in 2008 on another house on the west side of 26th street. 476 26th (last featured here) was close to a tear down/lot value property which sold on 5/29/08 for $1,575,000.

What caught my attention is the fact that after about 2.3 years, we have a good example of the value which has been created by the housing bust. Instead of paying about $1.6mm for just a crummy shack, you can now obtain a large house. The location here is very similar as both houses are north of Montana on the same side of 26th street.

Another thing I looked at was the previous purchase on this house from back in 1993. Using that price and the recent sale price, we observe a roughly 4.5% compound rate of growth over about 17 years AND this is ignoring all the upgrades (pool and spa, etc).

Overall, I don't know what type of rollback this would represent, and we all have to be very aware of the major 26th street discount in play on this house, however I think this wasn't a bad buy and I don't see how this house is going to go down by all that much from here.

Mid-2003 Short Sale Attempt *Update 1*

I last featured 938 Lincoln #4 back in April. It is a 2 bed/3 bath townhouse that was listed as a short sale.

Previous Purchase: 8/1/03 - $889,000

Listing History: 4/12/10 - $879,000

SOLD: 9/8/10 - $885,000

When I previously featured this I said that I expected it to generate a fair amount of interest. It looks like I was correct as it sold for over list price. I think buying something at 2003 prices represents a good deal in the current market as we aren't seeing many 2003 rollbacks right now.

Very Groovy House...But Overpriced *Update 2*

I last featured 334 15th back in July

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

Listing History: 10/23/09 - $2,250,000
Reduced: 06/30/10 - to $2,100,000

SOLD: 9/9/10 - $2,000,000


Last time I featured this house I said it was overpriced and that I thought it would sell for less than $2mm. I was wrong about that it turns out as it sold for exactly $2mm. It is still a neat house but I don't think this was a great bargain or anything for the buyer.

Duplex REO Rollback

Address: 1011 6th - 90403

Details: 2 houses (3 bed/1 bath and 2 bed/1 bath), 7,500 sq ft lot, R3 zoned, foreclosure

Description: Fantastic duplex 6 blocks from the beach. There are 2 houses situated on one lot. The front house is a 3 Bedroom / 1 Bath with hardwood floors, covered front porch and laundry. Rear unit is 2 Bedroom / 1 Bath plus dining room and laundry inside. Great location close to tons of shopping, dining and recreation.Info herein is not verified by agent. Buyer to verify all info & rely on their findings. Offers must be submitted on CAR form w/pre-approval (NOT pre-qual), copy of earnest money check, proof of funds & agency disclosure. For guarantee receipt of your offer check private remarks for submission instructions.

Previous Purchase: 5/22/06 - $1,780,000

Bank "buyback": 6/1/10 - $1,255,500

Listing History: 6/23/10 - $1,325,000

SOLD: 9/1/10 - $1,400,000

I only listed the REO listing history above, but I just went back through my records and this property was on the market for 149 days as an attempted short sale (asking $1.5mm then down to $1.4mm) before the bank foreclosed. So what happened was that the short sale didn't go through, the bank then foreclosed and listed it for $75k less than the last price and after just 14 days on market it went into escrow and ended up selling above list price.

The bank moved quickly as the foreclosure occurred on June 1st and they had it on the market less than a month later and they listed it at a realistic price. The sale price represents a 21% decline from mid 2006 which should be indicative of a 2004 rollback. Finally, from the short sale listing: Both Units Currently Rented - For $3000 and $2200.

Delusion Never Dies...(on 25th street) *Update 2*

I last featured 839 25th back in June.

Previous Purchase: 12/27/06 - $2,128,000

Listing History: 5/7/10 - $2,875,000
Reduced: 06/16/10 - to $2,725,000

SOLD: 8/31/10 - $2,640,000

According to a comment left on the last post, the agent said half a million was spent on the major upgrading of the property. While there is no doubt that a large chunk of change was spent, I think you always need to exercise some skepticism when you hear things.

For our purposes, I will look at the developer profit/loss in the following way:

$2.64 (sale price) - $2.128 (previous price) - $0.4 (upgrades at a discount estimate) - $0.13 (5% sales agent fee) - $0.1 (property tax + other) = a loss of about $120,000 without even taking into account the time value of money or interest charges on anything borrowed. I would guess that this is a conservative estimate but even still, the developer did well to "only" lose a relatively small sum given when they bought this place!

How About This One?

Address: 221 25th - 90402

Details: 5 bed/3.5 bath 3,355 sq ft house, 8,700 sq ft lot, "exquisitely restored"

Description: Exquisitely restored romantic St. Tropez villa set in an award winning garden on a 60ft wide, apx 8700 sq ft lot. This designer 5 bedroom + 3.5 bath home features hardwood floors, beamed ceilings, antiqued pavers, custom built-ins and is wired for sound and security. A beautiful Sienna carved marble fireplace centers the living room and flows into a formal dining room which opens into a private backyard. The dramatic kitchen has black granite counters, French glazed cabinetry, carved center island and premiere stainless appliances. A charming family room overlooks a lush landscaped garden with fountain. The luxurious master suite features a sitting room highlighted by a turn of the century French fireplace, picturesque terrace with arbor, master bath with French marble counters, double sinks, and large spa tub. Breathtaking and flawless, truly an extraordinary home.

Previous Purchase: 6/19/02 - $1,800,000

Listing History: 4/23/10 - $2,995,000
Reduced down to - $2,795,000

SOLD: 8/25/10 - $2,667,500

The photos of the interior show that this house has been nicely "restored". The location isn't perfect because this is the 4th house down from San Vicente and the house backs up to commercial buildings on 26th. So location discount for sure.

However, I don't think the buyer did all that poorly if I am correct in guessing that the upgrades were done after the 2002 purchase.

I think a late 2004 value would come out to about $2.2-2.3mm. Then you have to add on the value of the upgrades. I have no way of knowing what was spent but it looks like there may have been some real money put in.

If the upgrades were done prior to the 2002 purchase then you can ignore everything above and I would argue this buyer didn't do well at all.