Details: 3 bed/2.5 bath 1,470 sq ft house, 2,000 sq ft lot, 1997 construction
Description: WOW! Move-in-ready, 3-bedroom, 2.5-bathroom Mediterranean home, located in the highly desirable Ocean Park neighborhood of Santa Monica, with easy access to beach, nearby park, Main Street, Sunday Farmers' Market, Whole Foods, Rose Avenue restaurants and coffee houses. Live the Southern California lifestyle with an open floor plan, great light and high ceilings, two patios plus a roof deck, a large two-car garage plus one uncovered parking spot, and plenty of storage. Terra-cotta-tiled floors in entry, dining and kitchen. Master-bedroom suite has vaulted ceiling, balcony, walk-in closet and spa tub. Central heat and air and laundry complete this home.
Previous Purchase: 12/17/04 - $870,000
Listing History: 3/9/11 - $929,000
SOLD: 5/3/11 - $907,000
I haven't featured a lot of properties west of Lincoln on this blog so I thought it might be nice to take a quick look at this one. Not much land to speak of so this is sort of like a free standing townhouse. Hell of a lot better than having to worry about a HOA though in my opinion.
This property sold quickly as it was only active for 9 days before going into escrow. It doesn't appear much work (if any) was done between the 2004 sale and the current one. So I'm treating this as pretty much apples to apples. We see once again that prices are holding in the early/mid 2005 rollback area without much movement. I will be surprised if they don't weaken a little bit through the rest of this year but I still don't really see a scenario where they drop by a large amount from here.
Anybody, what does something equivalent to this rent for? Looks nice, but tight.
ReplyDelete$3000?
$3500?
I'm paying $2700 for a slightly run-down 2/2.5 townhouse near 11th and Michigan. So I think this would go for $4000 - $4500. Rents are still unreasonably high, especially if it's a nice place.
ReplyDeleteThis was a broker's "Pocket Listing" for a while. I saw it about 4(?) Months ago. Was asking over $1MM for it. Pretty, but absolutely zero yard. Very close to a park, however.
ReplyDeleteIf this place can truly rent at $4000/ month then that monthly payment is essentially equivalent to rent and the price is fair. If you argue that a glorified townhouse is not worth $1500 more per month than the condo equivalent and could not rent for that, then there is some room to fall, but certainly not dramatically.
ReplyDeleteAnyone who's waiting for SFRs or single units in SM to be cash flow positive from day 1 with 20% down payments should get used to renting.
ReplyDeleteIa that area okay? Seems a little sketchy. Still I think $3500-4000 IS the going rate. The economic return to rentals has caused the price of rentals to go up. We are looking for a SFR rental in SM, and they are pricey for a place in a decent location.
ReplyDeleteI think this is part of the normal cycle where we see rentals go up and then people run the numbers to buy. Still not even close to parity on the Westside, prob. never will be. But thats when things start to loosen up and you see the market heat up a bit.
Dwr,
ReplyDeleteIf you have to put 40-50% down to be marginally cash flow positive, then that is a poor investment. If it makes you happy, then you can assign some arbitrary dollar value to the amount of happinness to justify it. It just is not a good financial investment any longer.
I live 6 blocks from here, frequently walk by on the way to Whole Paycheck. Area is gentrifying, but slowly. The right person would pay $3,500 - $4,000, but most folks who can afford that rent wouldn't want to live there. Lincoln is close, and Lincoln is bad. It would rent quickly @ $3,000 or so, though.
ReplyDeleteelian,
ReplyDeleteYou're trying to argue that if the rent doesn't cover the mortgage then prices have to fall more. Show me a time where SFRs in SM were cash flow positive with a 20% down.
And who ever said SFRs are investments? They're places to live.
ReplyDeleteExcerpt from NYT article today about renting vs. buying...
ReplyDelete"Affluent people tend to want to own their houses, even when the dollars don’t make sense, and the Northeast and West Coast are home to much more wealth than a few decades ago. That could cause future rent ratios to be higher than those in the 1990s or even the 1980s, a better decade for real estate. Meanwhile, the coming rise in rents — maybe 4 or 5 percent a year, for the next few years — will reduce rent ratios even if prices don’t fall.
Yet the fact remains that a lot of New Yorkers and Californians, among others, are paying a hefty premium for the privilege of owning. Eventually, some of them may decide it’s not worth it, much as homebuyers in Las Vegas, Phoenix and Florida ultimately decided that prices were too high. If that happens, prices in New York and California will fall, too.
A crash strikes me as unlikely. But any potential homebuyers should know that real estate exuberance — irrational exuberance, it seems — has survived in at least a few places."
Dwr,
ReplyDeleteThat is not quite what I said.
I would not expect positive cash flow from a SFR, but I would from a condo which this unit basically is. For example, you cannot expand the house in any significant fashion.
A SFR carries these and other advantages and deserves a premium over pure rental cash flow. The question is, how much?
When the ratio of own to rent was 2:1, there was little doubt that owning was a bad move. Likewise, 1:1 is unreasonable and not expected. However, where is the cutoff?
Is 1.3:1 too high?
This sounds pedantic, but these decimal point fluctations are $100k a pop in Santa Monica, at least...
Well, IMO this property is better than a townhouse, which is better than a condo, but ok, show me a time where buying any single unit in SM (condo, townhouse, whatever) was cash flow positive with a 20% down.
ReplyDeleteMy wife and I have been looking in 90405 for over a year now and are discouraged that prices havent dropped more rapidly. Then we see a comp like 1248 Pearl St. 90405 that closed this week (1700sq ft and went for 1.33) Needless to say we are becoming discouraged. Can any longtime SMDM participants give some hope or is it Culver City here we come?
ReplyDeleteDWR is right. You're not going to buy a condo in SM with 20% down and be cash flow positive.
ReplyDelete