Solid 2004 Rollback In 90402

Address: 703 10th - 90402

Details: 3 bed/2 bath 1,736 sq ft house, 7,500 sq ft lot

Description: Beautiful and romantic home in Santa Monica on tree lined street. Beautiful style and elements of romance through out home. This home exudes peace and serenity after a long day. Slip away to the back yard with lush, mature trees and garden to relax and be in your own little paradise. Hardwood floor through out and lots of natural light.

Previous Purchase: 8/4/04 - $1,975,000

Listing History: 4/23/10 - $2,300,000

Reduced down to - $2,250,000

SOLD: 10/27/10 - $2,025,00

This house is certainly unique and I suggest you take a look at the photos which can be found via clicking on the "SOLD" link.

However, unique or not, the bubble is popping and here we've got a good apples to apples 2004 rollback. It is also interesting to note a high level of delusion previously existed with respect to this property when the owner listed it for lease for $11,500/month back in February 2009! Ha! I'm not sure if it was ever rented out because the rental listing shows it as being "canceled" after 130 days on market (they cut the asking rental price down to $10k which was still way too high).

A Look At Rollbacks All Over

Here is a great post on Calculated Risk showing rollbacks all over. Los Angeles and coastal CA seem to be in late 2003/early 2004 price territory.

Here on this blog we seem to be observing late 2004 prices and even some early 2005 prices in Santa Monica.

A Great Look At The Whole Cycle (and how my prediction from over 2.5 years ago is coming true)

I last featured 866 Stanford back in March 2008.

Details: 3 bed/2 bath 2,028 sq ft house, 8,000 sq ft lot, "2003 expansion/remodel"


 Purchase History: 
8/22/02 - $900,000
7/2/08 - $2,011,000


Current Listing History: 9/24/10 - $1,599,000


SOLD: 10/20/10 - $1,578,000


This sale price works out to a loss of 21.5% over just 2.25 years and this is totally on an apples to apples basis since the remodel work was done in 2003.


I had forgotten that I did a previous post on this property. At the time, it was on the market for $2.075mm and I said: At this point though, due to the small amount of inventory in this area, I could see some unfortunate soul buy this for not too much under $2M...remember, these things take years to correct.


It turns out someone paid more than what I thought the market would bear as it sold for $2.011mm instead of the under $2mm that I thought would happen.

But where I think I really nailed it was when I said the following:

If we are comfortable with late 2002 prices not being too bubbly, we can guesstimate what this house should be "worth" without the excess of the bubble. If we say they spent $300K on all upgrades, we come to a price of $1.2M. We will then be generous and give an inflation + 1% growth rate (say about 4%) and get to somewhere in the neighborhood of $1.5M.


So now that a lot of the bubble excess has worn off, we see that this very house did sell in the $1.5mm range! The fact that it is on the higher end of that range is due in my opinion to the need for prices to still correct a bit more.

There you have it. Had the 2008 buyer been reading this blog and looking at the cycle of market prices, they could have waited a few years and saved a boatload of money. Not only that, they would have been able to purchase NOW with historically low interest rates!

90402 - 16th Street Lot Value Sale

Address: 503 16th - 90402

Details: 7,250 sq ft lot with tear down on it

Description: *Sold Price was for one lot only - 503 16th Street. Lot size 7,250 sqft* Rare Santa Monica Corner Double Lot in Desirable North of Montana Neighborhood. Aprox. 14,750 sq. ft. for both lots. Live, Rent, Remodel or Rebuild - many options. Located on prime street, walking distance to restaurants and shops on Montana Avenue. Franklin elementary school district. 503 16th Street: Original Spanish on corner lot being offered for lot value. 505 16th Street: 3 bdrm, 3 bath aprox. 2,422 sq. ft. 2 story house with pool. Currently being rented. (agents see MLS # 08-334661 for pics)


Listing History: 8/9/10 - $3,895,000


SOLD: 10/15/10 - $1,650,000


This listing was for two lots next to each other. The one that sold was on the corner and has a tear down on it. The lot next door did not appear to sell and it has a 2 story house on it that is being rented. This should give a good update on lot value in this area though.

Trade-off *Update 1*

I recently featured 2307 Washington about a month ago. I said that it likely would need to come down in price if the upgrades were done before 2004. I still don't know when the upgrades were done, but it sold quickly for near list price.

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


Listing History: 9/10/10 - $1,795,000


SOLD: 10/8/10 - $1,780,000

Ghetto REO Gap-Down

Address: 1931 22nd - 90404

Details: 3 bed/2 bath 1,282 sq ft house, 6,974 sq ft lot, Zoned R2, foreclosure

Description:  Fantastic Opportunity to own in Santa Monica. Zoned SMR2YY. Single family home, 3+2 on appx. 7,000 sf lot. Well kept, ight and bright home less than a block away from Virginia Park.


Previous Purchase: 9/30/05 - $880,000


Zillow shows this thing being listed multiple times, with the first instance back in 2008 for $990,000.


Bank "buyback": 1/7/10 - $713,700

REO Listing History: 3/22/10 - $722,900
Reduced down to - $624,900


SOLD: 10/19/10 - $612,500


This sale price is a decrease of over 30% from the late 2005 price. That is a big drop. HOWEVER, don't get too excited. This location is...not where any reader of this blog wants to live I'm guessing.

Even though this location is not good, I think it is interesting to look at these types of situations. The original buyer paid way too much money and then tried to sell for almost a million dollars. They chased the market down, never being able to afford to actually sell it at a market price. The bank then foreclosed and actually had to reduce a good amount (reduced almost $100k before going into escrow).

Regular readers know I like to see foreclosures like this go through. We need to purge the system before we get back to normal. I still think it will take a while.

Remember That "Aloha Attitude"?

1328 Hill has been featured on this blog before a few times. It is a situation where a real estate agent bought a tear-down near the market peak and then got himself into a distressed situation. I believe what happened was that the seller couldn't afford to sell the lot at market prices so he decided to go ahead with the demo and start construction to try and create some value. That is why the listing price was bumped. However, it looks like that didn't do any good. So this is a unique situation for sure. But that also brings the opportunity for a buyer to seek out value.

Previous Purchase: 7/10/07 - $1,050,000

Listing History: 6/30/08 - $1,278,000


Re-Listed: 11/14/08 - $1,098,000


Re-Listed: 8/28/09 - $1,299,000


Re-Listed: 12/10/09 - $999,000


SOLD: 10/14/10 - $575,000


Again this is a unique situation. It was a short sale on a partially demolished lot property...But look at that decline! Probably not a bad buy but it would require someone with some real money to buy because I would imagine financing would be difficult to get on this.

It Has Been More Than 3 Years...

No, the blog isn't coming to an and end and no, I didn't buy a property!

However, there are a few things I wanted to note. First, I found it interesting to go back to some of the earlier posts. Late August 2007...the good times were still rolling for the most part. Finding signs of distress wasn't always easy and it seemed like poorly located one bedroom condos were all that were cracking. After doing this for three years it isn't hard to find signs of distress. They are all over. Bailing builders, losing flippers, short sales, and a few foreclosures (many fewer than I was expecting, but the final chapter on that story has not yet been written in my opinion).

Prices declined as we expected and for a while it seemed the market was gapping down as many of us expected. But then it stopped going down and found a floor in the late 2004 rollback area for the most part. Prices even seemed to rally slightly off the bottom.

Rates have been brought down to 60 year lows and you can get a 30 year fixed conforming loan for not much more than 4% now. Combined with many other government actions, this has served to significantly cushion the blow.

We are certainly into the slower fall/winter period right now but it seems like not much is happening out there in the market. It is pretty boring. This is sort of how I see things going for a while. It seems like there are still a good number of semi-distressed situations out there where people can't afford to sell at market prices. The banks have seemingly continued to lag (I will be looking more into some of our old featured delinquent properties in the near future).

The economy isn't great but has so far been good enough to stay away from another crisis and it seems less likely we will have a double dip recession (as Calculated Risk predicted). Basically, I think we muddle along for a while. I think our SM real estate market is likely to show some more declines but as long as rates stay low and the economy doesn't tank then I don't see huge declines in the future.

As I see us being in a somewhat boring period, I haven't been posting as much and you will likely have noticed that I haven't really been doing any posts on condos. I stopped actively following the condo segment of the market some time ago because it was just becoming a lot of work and I wanted to focus on SFRs. While I think condos may offer an early insight on future market moves, I'm not personally that interested in them and it is a lot less work to just focus on houses.

So there it is. If you think I'm wildly wrong about something, then make a comment. I would also love to hear directly from those of you who are active in the market right now. Realtors, buyers, sellers, anyone. Send me a confidential e-mail if you want. As I said before, 2010-2012 seems like the time period where it will make sense to buy something if you are smart and drive a good deal. I don't see a lot of screaming deals out there right now at this moment, but we are in just the first of a three year window.

90405 Entry Level - Late 2004 Rollback

Address: 1723 Robson Ave - 90405

Details: 3 bed/2 bath 1,668 sq ft house, 5,100 sq ft lot

Description: Adorable 3 bedroom 2 bath located in the Grant School District


Previous Purchase: 12/6/02 - $629,000


Listing History: 8/19/10 - $899,000


SOLD: 10/4/10 - $750,000




Looking at Zillow, I see a bunch of additional listing history for this house. It looks like it has been on and off the market since October 2009 and back then they were asking $300k more than what it finally sold for.

Also, Zillow shows a September 1997 sale price of $362k. That works out to annual appreciation of roughly 11% between 1997 and 2002. Using that type of annual appreciation, we see that the price that this just sold at is roughly in late 2004 territory.

90405 - 21st Street Rollback

Address: 2257 21st - 90405

Details: 3 bed/2 bath 1,548 sq ft house, 6,750 sq ft lot, "updated", "remodeled"

Description: Beautiful updated Traditional in Sunset Park. 3bd/2ba home in highly desired neighborhood & Grant school district. Light & bright, w/ wonderfully open floorplan. Remodeled kitchen with stainless steel appliances, solid wood cabinets and granite counters opens to DR & step-down Fam. rm leads to large backyard w/ brick patio & grass. Hrdwd flrs throughout & frplc in LR. New copper plumbing, new electrical, new roof & windows Fantastic detached bonus room. Long driveway will accomodate 3 cars


Previous Purchase: 6/21/05 - $1,225,000

Listing History: 1/10/10 - $1,279,000
Reduced down to - $1,149,000


SOLD: 9/30/10 - $1,100,000


The description mentions upgrades...I'm thinking they were done before the 2005 sale. If I am wrong about that then the rollback is larger.

Assuming I am correct, this is an apples to apples situation where we see a decline of a little more than 10% from the mid 2005 price. HEY, that gets us into mid-2004 or so! I admittedly have not been spending a ton of time blogging lately but I expect many more mid and early 2004 rollbacks to come and I will be watching to see if we finally get some more weakness.