It was listed for $1.4mm and ended up selling in November 2008 for $1.2mm.
Now it appears to have been upgraded and is back for sale. Too long of a hold to be called a flip, but not the longest holding period here...
Details: 3 bed/2 bath 1,319 sq ft house, 6,118 sq ft lot, "recent upgrades"
Description: A charming Santa Monica home on a quiet tree-lined street just south of Montana. Move-in condition with lots of recent upgrades including new windows throughout the house, tank-less water heater, and newly refinished hardwood floors in every room. Remodeled kitchen features granite countertops, new sink and appliances, refinished cabinets, and very hip cork floor. Third bedroom has it’s own fireplace and direct access to a tranquil backyard. Spacious backyard is great for entertaining and features a new fence and room for a pool. Detached garage with alley access and lots of parking for your toys. A great location that is walking distance to Franklin Elementary, Douglas Park, and shops on Montana. Agents please read and follow instructions in the private remarks for showing instructions.
Listing History: 1/11/11 - $1,425,000
I think prices are not very different now than they were in late 2008. So I would have to try and figure out how much value I wanted to ascribe to the upgrades. Are they worth $225,000? I don't think this listing looks like a screaming bargain but I also think that with rates still pretty low and the economy doing OK, some young couple might want to avoid the headache of redoing an old, entry level house and just pay up a touch and buy something like this for a price like this. What do you think?
"Young Couple?" That young couple would need 285k down, and would be paying about $7k/mo all in.
ReplyDeleteSo what? This is a single family house, north of Wilshire in Santa Monica. So by definition, we are looking at top earning young couples (or those who are top inheritors).
ReplyDeleteLos Angeles has a lot of high paying jobs. Do you know what someone in their late 20s or early 30s can be making at a top law firm? How about finance? If they are doing well enough they could buy this place on one solid income or else there is also the concept of two strong incomes. Then there is the fact that a lot of young folks get help with down payments from family (although I don't think it is impossible to save up this type of down payment as a young person).
I already discussed the concept of a YB (young buyer) a little while ago when looking at some 90405 properties. This is north of Wilshire and a step up, so call it a YB+ if you like. I'm saying young couple here because you aren't buying this house if you are a young single high earner and you probably aren't buying it if you already have a decent size family since the house is somewhat small.
I think the other thing to remember is that if you are part of a young couple that wants to buy a house in north Santa Monica, you have to be willing to make some sacrifices, plan ahead, and show a lot of discipline and patience. The YB+ could start earning good money in their mid 20s and by the time they are 30 be ready to think about buying.
Warchest seems to have hit the market dead on. I am in 90405 and the last 5 transactions I have been aware of have been funded at least in part by mom and dad putting their 30 year old married kids in small but liveable homes. The wife stays home (at least while the kids are really small) and the monthly not is being subsidized by the Family trust....
ReplyDeleteProbably same thing happening all over the pricey, but highly desirable westside...right?
These families are looking at real estate as an asset class that is worth having (long long term) in the overall portfolio.
I think the family help issue is a big one, but I want to emphasize that I think it is very possible that a young family could make and save enough to stretch into something like this house without help from parents.
ReplyDeleteOh, come on Warchest - I normally really like your thinking, but you seem to have had too much happy juice here...
ReplyDelete'Young Buyers'? Really? How many 'young' people do you know that can afford the kind of moolah to put down a $250k deposit on this place?
I'm not saying they don't exist - just I don't see them wanting to buy the kind of modest bungalow I used to rent in Lake Balboa..... for 1.4 million dollars.
And I question that there's as many 'YBs' as you seem to think there are. Seriously, how many people, young or old, do you honestly think there are in Los Angeles that can afford that kind of money?
Would they honestly all want to live there, and not somewhere else a bit more opulent and less congested for that kind of cash?
And....where are they? Many of these properties have been on the MLS for months - if not years - where are the buyers for these places?
Yes, I realise that prices have come down significantly since late 07-early 08, but they're still way beyond the price of most people.
Yes, I know its 'special here' and there's a hoard of young buyers/foreign investors/space aliens just around the corner stampeding to snap up these places at a bargain basement price......?
I'm closer to mid 20s than late 20s and my friends are not ready or interested in buying property right now. That being said, I know some who could flat out afford this type of place (now as well as in a few years) and I also know some who have parents in the area with excess funds who will almost certainly help out with down payments.
ReplyDeleteReaders of this blog should remember that Los Angeles has a lot of high paying jobs. I think Santa Monica is also a highly desirable place to live. Where the bulls went wrong was in thinking these factors could prevent the local market from falling. I think the bears are now making the mistake of failing to remember how many high paying jobs are here in LA (and the westside especially) as well as how much wealth is here. I think the bears also fail to recognize the fact that the economy is really getting better.
I'm not saying there are a ton of YBs who can afford something like this. There aren't, but again, we aren't talking about somewhere in the valley or somewhere out east. This is a property north of Wilshire so you just need a very small fraction of top earners/inheritors to want to live here to support prices...and they are doing just that whether you like it or not.
There is nothing fancy about this house, but the location is a few blocks to Franklin and half a block to Douglas park. I don't think people really want to live in some "opulent" palace out on the periphery of Los Angeles. They would rather raise a young family in a great location in a smaller house and then trade up if everything works out.
I don't know what you are talking about with stale MLS listings. The stuff rotting on the MLS is almost always junk in bad locations or else way overpriced. Decent properties with market asking prices have been selling without that much trouble. I don't have a strong opinion about the price of this house. It doesn't look like a bargain to me but it doesn't look wildly overpriced. So maybe it goes into escrow quickly if the sellers are motivated or maybe it sits for a while and cuts price and then sells.
Santa Monica (especially single family houses in good locations north of Wilshire) is ALWAYS going to be extremely expensive and beyond the reach of the vast majority of people. SO just because you can't fathom spending the kind of money it takes to buy something here doesn't mean there aren't a bunch of high earners who can afford to and want to live here.
With the economy doing better and rates low, prices are somewhat stable. If they were to fall dramatically, there would be too many people who could afford these properties and they would be bid back up.
I should also add that I'm just telling it how I see it. I don't own property and I am not currently in the market to buy...so I don't really have a dog in this fight. I just think my observations are closer to reality that those of the people who think prices are doomed to fall by a large margin or those who can't understand how people are able to buy expensive properties.
ReplyDeleteI would like prices to fall by a large margin so that I could benefit when I am ready to get involved in the market as a buyer. But I just don't see it happening. Hopefully I'm wrong, but I'm not going to let my personal angle color my observations of what I see right now and for the future.
I agree with Warchest....I think its weird too, that these smallish 50-60 year old houses are still in demand. plus or minus 25% since the top of the market. But they are....
ReplyDeleteHad a 'YB' pay all cash for the home up the street...1.7m....one income and the wife stays at home...its no secret where the $$$ came from....
"Where the bulls went wrong was in thinking these factors could prevent the local market from falling. I think the bears are now making the mistake of failing to remember how many high paying jobs are here in LA (and the westside especially) as well as how much wealth is here. I think the bears also fail to recognize the fact that the economy is really getting better."
ReplyDeleteI think that sums things up quite nicely.
"...would be paying about $7k/mo all in"
What would the monthly nut have been 10 years ago when rates were 8 or 9%? 15% less? 20%?