Santa Monica Distress Monitor

Clean This Up Already! Update 3

2012-01-23T17:59:00.000-08:00

I last featured 310 22nd back in November 2011.

This is a REO that has been sitting on JPM's balance sheet for well over a year. They re-listed it a while back (but I didn't do an update at the time) for the same price as they had it listed previously. That is an asinine course of action. Banks should not be in the business of carrying stuff like this for so long. Keep cutting until you find the market price and let it go.

JP Morgan foreclosed on 7/13/10 for $3mm. This was a case of the borrower refinancing themselves into a pickle once in 2005 and again in 2006. They bought this place in August 2003 for $2.65mm.

Old listing: 9/19/11 - $3,360,000
Reduced down to - $3,259,000

New listing: 12/4/11 - $3,259,000

Low Inventory = Stable Prices

2012-01-15T21:35:00.000-08:00

Address: 2707 6th - 90405

Details: 3 bed/2 bath 1,596 sq ft house on a 6,000 sq ft lot

Description: This timeless craftsman is located on one of the largest lots in Ocean Park! A classic beach inspired home seconds to the sand. Enjoy this 3 Bdrm/ 2 Bath home that encompasses beautiful details throughout; including original built-in bookshelves, a cozy wood burning fireplace bordered by wooden columns, breakfast nook with glass doors & crown moldings throughout. Absolutely stunning backyard with a lush garden & a Wisteria arbor. Separate bonus room & bathroom, that is unpermitted - perfect for your own studio or home office. Build your dreams and take advantage of the Ocean views from a second level! This is truly a one of a kind home.

Previous Purchase: 6/21/05 - $1,425,000

Listing History: 10/27/11 - $1,465,000

SOLD: 12/22/11 - $1,403,000

This house went into escrow after 8 days on market. It seems like prices for more attractive properties aren't dipping any more. There are some zombies out there on the MLS and almost all of them have location problems or other major defects (which aren't being properly taken into account via much needed lower asking prices). But for the most part, when attractive properties come on the market they tend to go into escrow quickly. Seems like demand is more than sufficient to handle the slow dribble of good properties, and thus prices have been fairly stable around here for some time. Of course, buying has gotten even cheaper even with flat prices since rates keep hitting new lows. Ignore all the scary headlines about national home prices hitting new post bubble lows...things have been stable here for some time and I don't see any change to that coming.

Palisades Bargain Buying

2012-01-01T17:40:00.000-08:00

Address: 891 Chattanooga - 90272

Details: 3 bed/2 bath 1,273 sq ft house, 5,200 sq ft lot, short sale

Description: *** Short Sale *** Approved by BofA with previous buyer. Light and bright 3 bedroom/2 bath California Cottage on quiet street in great Palisades neighborhood. Updated kitchen & baths with recessed lighting. Living room with fireplace. Two bedrooms with french doors that open to large and private grassy backyard. Additional features include: covered front porch, hardwood floors, updated copper plumbing, central heat & A/C, 2 car garage.

Previous Purchase: 7/22/05 - $1,350,000

Listing History: 4/20/11 - $949,000
Reduced down to - $899,000

SOLD: 12/29/11 - $917,000

I don't follow the Palisades closely but someone e-mailed me this listing. This short sale just closed for 32% off the July 2005 sale price. That is a pretty deep rollback for what looks to me like a decent property in a decent location. I don't think you can get rollbacks this deep normally, but seeing this bargain makes me think it is a good time to buy in the Palisades.

Another 90402 REO Update 1

2011-12-23T15:21:00.000-08:00

I last featured 434 17th back in late October when it was listed as a Wells Fargo REO.

REO Listing: 10/26/11 - $1,699,900

A helpful reader said there was a first and second mortgage on the property totaling nearly $1.8mm.

At the time of my last post I said that I did not think this would sell for any type of great discount and I welcomed the continual clean up of distressed inventory.

SOLD: 12/20/11 - $1,725,000

This was on the market for just 9 days before going into escrow and eventually selling over list price. Like I said, probably no great bargains here, and once again we see properly priced inventory able to clear the market quickly.

What Does Short Sale Fraud Look Like? Update 2

2011-12-21T21:52:00.000-08:00

I last featured ~~this festering sore~~ 933 25th back in October.

You can go back through the old posts but long story short, someone paid too much for this lot and then built a hugely expensive, ugly mcmansion. They could never sell it for what they needed and it has been on and off the market ever since. Suspicious short sale attempts have taken place, rental listings put up and then quickly pulled down, etc, etc. Property Shark shows a notice of default all the way back in November 2010.

The latest is that this house has yet again been listed for a very suspiciously low amount of money. This time, there is just one crappy photo (above), no description, very little other info. This short sale is once again being listed by someone with an 818 area code. It all stinks. Clean it up for real already.

Current Short Sale Listing History: 5/20/11 - $2,200,000

I don't recall seeing this listing back in May or any time other than very recently. Suspicious. Also note that it is "pending". Last time they tried to fool around with this, they listed it as a short sale right off the bat and it was "pending" from day 1. Maybe they are trying to make it look like this has been listed for a long time. Nobody here is fooled though. This house is worth a lot more than $2.2mm.

FLIPPERS!

2011-12-11T21:23:00.000-08:00

Address: 2509 Cloverfield - 90405

Details: 3 bed/2 bath 1,786 sq ft house on a 6,250 sq ft lot, flipped condition

Description: Can you say charming? Newly remodeled 3 bed, 2 bath home in prime Santa Monica neighborhood. Seller has replaced or remodeled the entire house including a new kitchen with custom wood cabinets, Cesarstone counters, stainless steel appliances, recessed lighting, and new windows. Large living area with fireplace and separate dining area with french doors to one of two patios. Both bathrooms are brand new, White Oak wood floors throughout. Master bedroom features huge walk-in closet “room”, and french doors that lead to a spacious patio and large backyard. New plumbing and electrical, new central AC & heat, new front yard sprinkler system, new 50 gallon water heater, and newly poured garage slab. Laundry area inside house off of kitchen. Agents please see private remarks.

Previous Purchase: 7/1/11 - $755,000

Listing History: 12/8/11 - $1,039,000

The previous listing for this property shows that the pre-flipped listing was on the the market for 89 days and had to cut its price down from $879k to $799k, before selling at $755k. I think what may have happened was just that someone thought they could buy the pre-flipped property cheap enough that a profit was likely if they could fix it up. If you look at photos from the link above, you can see the property was in pretty crappy condition. This probably discouraged a lot of buyers.

So our flipper buys this thing and is now back 5 months later ready to try and unload. The upgrades look decent but don't appear to be high end by any means. Granted, this thing was in bad shape before, but I'm wondering how likely it is that a buyer will ascribe over $250k of value to these upgrades. And the dark wood flooring? Why do flippers/builders/developers use this stuff? I don't want dark wood floors (or dark colors anywhere else for that matter).

Anyway, the biggest problem that this flipper is going to run into is the fact that the location of this property isn't that great. Cloverfield isn't as bad as 23rd but its pretty busy, has crappy trees and speed bumps. But this is a nice 3/2 with good square footage so we'll see how they do...

Higher End 90405 Rollback

2011-12-07T20:04:00.000-08:00

Address: 1127 Grant - 90405

Details: 4 bed/3.5 bath 3,339 sq ft house on a 5,500 sq ft lot, 2003 construction

Description: Craftsman-inspired Sunset Park home, with exceptional flow, stunning details and quality. Ground up, luxury construction, beginning with picturesque curb appeal from another era, replete with stone front porch and clad in wood shingle siding. Your buyers are drawn into the residence by a true center hall plan: downstairs features gracious living room with 2-story soaring ceilings and fireplace, formal dining room, powder room, large study (4th bed) with full attached bath. The entire rear of the home is a Great Room encompassing a gorgeous cook's kitchen, with all the bells and whistles, and a marvelous family room, all leading to a grassy back yard. Awaiting upstairs are 3 truly generous bedrooms, with vaulted ceilings and 2 full bathrooms, including lush master suite with terrace, and mountain, city and ocean views. A special blend of custom-crafted east coast appeal, in a quiet and charming Santa Monica neighborhood.

Previous Purchase: 3/15/05 - $1,980,000

Listing History: 9/28/11 - $1,899,000

SOLD: 12/6/11 - $1,885,000

This house went into escrow after just 8 days and sold for nearly full asking price. OMG, bull market! Well, not quite. See, this looks to be a pretty nice house in a good location and it was priced appropriately. These types of situations have been generating quick sales for some time now. The slow time of year didn't stop this one from going into escrow quickly either.

This sale represents a decline of about 4.8% from the early 2005 purchase price, making this a late 2004 rollback. Seems about right to me. Prices have been fairly flat for some time now and I see no change to that with this sale.

Nice Palisades Rollback

2011-11-26T15:26:00.000-08:00

Address: 1000 Galloway Street - 90272

Details: 3 bed/2 bath 1,652 sq ft house on a 6,179 sq ft lot

Description: Charming historical English cottage with lots of original details on a large lot in the desired Alphabet Street neighborhood. Enhancements include excellent layout, dramatic round top doors, large master with walk-in closet, hardwood floors throughout, updated plumbing, tankless water heater, new forced-air, updated kitchen with Viking appliances, Caesarstone counters & rustic brick tile. Completely redone detached spacious studio with vaulted ceilings and bath, excellent for use as office, guest room or play room.

Previous Purchase: 6/19/07 - $1,810,000

Listing History: 8/9/11 - $1,495,000

SOLD: 11/16/11 - $1,408,600

This house seems lovely, pretty well located, and very move in ready. This roughly $400,000 loss works out to a rollback of about 22.2%. This seems a little bit deeper than what you would expect to see at this time on a similarly attractive house in most areas of Santa Monica. Thanks to the reader that sent this in.

Rainy Day Market Update

2011-11-20T12:30:00.000-08:00

90402 (north of Montana) - If you are lucky enough to be shopping in this more expensive segment of the market, you have actually able to choose from some decent, limited inventory recently. This is a slower time of year and inventory levels appear pretty modest but it seems like a fair number of well located properties have been coming on market and quickly clearing. The under $2.5mm segment of this market seems especially hot with 11 of the 14 properties currently on the MLS in escrow.

90403 (north of Wilshire) - There has been a very limited amount of well located inventory in this segment of the market for some time. There have been some location discount type properties as well as just overpriced properties (ahem, 2619 Washington), but for the most part the few good properties that occasionally hit the market clear pretty quickly.

90405 - (south of the 10) - I recently featured a couple great looking Spanish houses in 90405 as part of my "Location Snob" posts. I think this sums up the market in 90405 well. There are a fair number of listings but many of them are in more challenged locations. A few gems have come on market and quickly gone into escrow, but it seems like right now almost all the properties on the MLS in 90405 have some type of major flaw, suffer from a location problem, or are pretty overpriced (or a combination of all three).

Pricing seems pretty stable in all three areas and if you are looking for a quality property you better be prepared to be met with a very competitive situation if you want to try and buy. Rates are low, the economy is still growing, and I'm building up the warchest to outbid you guys on one quality property this spring when activity picks up and we see more inventory. Right now, it sucks to try and be a buyer.

Another Spanish Location Snob Rollback

2011-11-13T20:02:00.000-08:00

Address: 2117 Pearl - 90405

Details: 3 bed/2 bath (+3/4 bath in garage) 1,525 sq ft house, 5,175 sq ft lot

Description: Much sought after traditional Spanish style home Santa Monica is known for. Delightful warm living room invites you in and features a fireplace, large bright windows, hardwood floors and arched ceiling. The formal dining room is in the center of the house and will accommodate the largest table. The den is adjacent with large windows and tile floor. The master bedroom boasts a large walk-in closet, French doors, and a private bath. Well designed convenient kitchen is complete with an eat-in breakfast area and stainless steel appliances. There is a separate laundry room and a beautifully landscaped yard with lemon trees. A 3/4 bath has been added to the garage making it ideal for a guest house or office. The location can't be beat! Walk to farmers market, Clover Park or the award winning Grant Elementary School. You can't imagine how nice this is. It has charm, location and convenience.

Previous Purchase: 9/1/05 - $1,250,000

Listing History: 11/10/11 - $1,095,000

Since I recently featured another Spanish location snob rollback, I thought it was worth looking at another. This house looks just fine but once again we must remember "location, location, location" is what its all about. In this case the house is located on Pearl which in my opinion should be a fairly large location discount street. Don't believe me? Go stand in front of this house at about 5pm on any weekday.

With this listing the sellers are hoping to escape with a loss of just 12.4% from their near peak purchase price. If this house were on a less traffic riddled street I would say maybe, but I think it may take a deeper rollback given the street it is on. We'll see.

There is very little quality inventory out there right now, rates remain low, and the economy is still growing. So who knows...maybe someone falls in love with this house and can live with the traffic. Spanish houses are lovely, but location trumps all in my view and I think a deeper rollback is needed to clear this property.

Clean This Up Already! Update 2

2011-11-10T14:34:00.000-08:00

I last featured 310 22nd back in October.

REO Listing: 9/19/11 - $3,360,000

Reduced down to - $3,259,000

Remember, JP Morgan foreclosed in July 2010 for $3mm.

Clean it up already. This thing has been on JPM's balance sheet for over a year!

Location Snob Rollback

2011-11-06T09:07:00.000-08:00

Address: 1047 Pacific - 90405

Details: redone/upgraded 3 bed/2 bath Spanish house on a 6,500 sq ft lot with a back house

Description: Sensational spanish home in a lush, private gated compound. This romantic spanish features great indoor/outdoor living with easy access from living & dining rooms to private yards. The main house has 3 bedrooms with 2 baths, large inviting living room with fireplace, formal dining room, huge gourmet kitchen, wood & concrete floors, wood beamed ceiling, arched doorways, 3 outdoor spaces & more! Very spacious & amazing permitted guest house! Wonderful home for entertaining & living!

Previous Purchase: 8/15/08 - $1,607,000

Listing History: 11/4/11 - $1,425,000

If you take a look at the listing from 2008 when these owners purchased the house, it seems all the upgrades were done prior to that sale, so we are looking at an apples to apples situation here.

I think this house is the kind of house that a lot of buyers would be interested in. The problem dear readers is of course the fact that any location snob* would instantly be turned off by the fact that the house is on the corner of 11th and Pacific. Pacific is a fine street. 11th isn't. So you can have a great house that you would enjoy living in but it all gets spoiled by living on a super busy street. This fact also leads me to believe that this house may need to be marked down a bit more than the current 11.3% that the current listing price equates to. The owners unfortunately purchased right before markets and the economy took a big leg down. Had they been readers of the blog and waited 6 months they would have fared far better.

*Location, location, location. Any person considering purchasing property in such an extremely expensive and simultaneously traffic choked market should be hyper vigilant about location. A street such as 11th may seem OK on a Sunday afternoon but come Monday rush hour it changes into a mini highway. A proper discount should always be demanded by those willing to put up with living near such busy streets.

Another 90402 REO

2011-10-29T13:37:00.000-07:00

Address: 434 17th - 90402

Details: 3 bed/2 bath 1,990 sq ft house on a 7,500 sq ft lot, Wells Fargo REO

Description: Location! New carpet and paint. Move-in now--remodel later. Features include: coved, detailed ceilings in living room and step-up, formal dining room; lovely living room fireplace; breakfast room with lots of light. Den has been added on, probably without permits.[Wells Fargo offer-submission policy: beginning 11/2, ONLY owner-occupied, NSP, municipality, and non-profit organization offers will be considered; beginning 11/7 all offers will be considered.]

Listing History: 10/26/11 - $1,699,900

This property changed hands in 2002, 2003, 2004, and twice in late 2006. Property Shark does not show values for these transactions but if anyone has access to the last purchase price that would be interesting to have. UPDATE -- All transactions appear to be between related parties and were not real sales/purchases. Also, from a helpful reader: "Wells Fargo bought the house back in August for $1,524,601. The previous owner had a $1,435,000 1st trust deed and a $350,000 2nd."

Anyway, I don't think this house will sell for any type of great discount but it is good to see the banks get more inventory off their books. We need to see more of this - get the gunk out of the system.

What Does Short Sale Fraud Look Like? Update 1

2011-10-23T18:33:00.000-07:00

I have been featuring 933 25th for a long time because it is a classic bubble reminder and it is a real mystery. The guy building it had a neighborhood party upon breaking ground and claimed he was building his dream home. But once the long process of building this giant monstrosity was complete, it was put on the market at a wildly high price. It has been listed a few times, prices have been cut but it never sold. It was apparently rented out...but then recently there were reports that the renters had moved out.

When I last featured this property, it was being listed as a short sale for $2.4mm. Like this thing or not, that is way too cheap and I suggested listing at a price like that and having it go into escrow right away smelled fishy.

Well, no short sale took place and now this thing is back on market asking $16k/month as a rental. According to Property Shark, the notice of default was filed on 11/30/10. When is the bank/lender(s) going to get real here? This house should be sold to the highest real bidder, losses should be taken and we should move on. Anyone have any additional info about this mysterious mcmansion?

**UPDATE** -- One day after being featured, the rental listing for $16k/month has now been "withdrawn" from the MLS.

Agent Owned Flip Finally Clears

2011-10-17T19:12:00.000-07:00

I last featured 942 26th back in February 2011

Previous Purchase: 10/31/05 - $1,549,000

This flipper listed the house for sale in early 2008 for $2.3mm, 2010 for $1.875mm and 2011 for $1.985mm before finally listing it for a fourth time on 7/20/11 for $1.595mm

SOLD: 10/10/11 - $1,600,000

So basically this person took the majority of their loss in the form of all the upgrades they did to the house. Sounds like they could have poured in a lot of money...

completely renovated & expanded in 2007. The major remodel was finished with attention to all the details!Gourmet kitchen with granite counter top, travertine floors. Master suite with his and her walk-in closets, spa tub, walk-in shower

Clean This Up Already! Update 1

2011-10-09T11:21:00.000-07:00

I last featured 310 22nd way back in May 2010 when it was listed as a short sale.

Previous Purchase: 8/19/03 - $2,650,000

The short sale listing started in October 2009 at a price that was way too high before being cut down to $3.15mm and then expiring.

The foreclosure auction kept getting pushed back but finally, on 7/13/10 JP Morgan foreclosed for $3mm.

REO Listing: 9/19/11 - $3,360,000

So here we've got another real foreclosure in the once "immune" 90402. Why does it take banks so long to foreclose and then once they've done so, why does it take so long to put the damn inventory on the market? Stupid.

So Awesome

2011-10-05T16:03:00.000-07:00

Try to watch that and not get a knot in your stomach. Amazing.

90403 East of 26th Street -- $/sq ft Comparison

2011-10-02T11:23:00.000-07:00

Address: 830 Harvard - 90403

Details: 4 bed/5.5 bath 3,846 sq ft house on a 7,900 sq ft lot.

Description: Drastic Price Reduction of $400,000!!! Contemporary, Cape Cod, custom designed single family built in 1989. This home features 4 bedrooms and 5.5 baths of very generous size. Great natural lighting throughout in a normal, family style layout. 3 bedrooms upstairs, 1 down. Den/Library can be converted to a 5th bedroom, if needed. It has an open kitchen with large family room and breakfast area facing the backyard. Large formal dining room. Tons of built-ins. Large walk in closets. 2 car garage in the back alley. Heated lap pool. Franklin School District. Motivated Seller!

Listing History: 11/26/10 - $2,749,000
Reduced down to - $2,350,000

SOLD: 9/29/11 - $2,128,000

This house took 266 days to get into escrow. Judging by the photos, the condition doesn't look bad at all but maybe you could make the argument that it could use some minor updating or a little face lift. Either way, I thought this was a lot of house on a nice big lot for the money. The sales price came in at $553/sq ft. You could spend $200k on some updating and you would still only be in the very low $600/sq ft range.

Next up is 850 Stanford - 90403

Details: 4 bed/3 bath 2,625 sq ft house on a 8,000 sq ft lot

Description: There is a charm that surrounds this lovely 4 bdrm, 3 bath home, in a prime Santa Monica location within the Franklin School District. Enter into a turret style foyer with leaded glass-paned windows and slate tile flooring. The living room and dining room have high volume ceilings, wood floors, slate tile fireplace in living room and plantation shutters. The eat-in kitchen has high vaulted wood beam ceilings with glazed Spanish tile flooring, Spanish tile counters, butcher-block center island. The mater suite is located on the 1st level with French doors, very large walk-in closet. Granite fireplace, beautiful private bathroom with vaulted ceilings and skylites, granite counters and glass and granite shower which leads to a large deck to the backyard. The second bedroom on the first level has beautiful built-in cabinet and deck and can be used as office/den. Two additional bedrooms and bath grace the upstairs. The beautifully landscaped grounds include a patio and deck leading out to a swimming pool and spa and two car attached garage.

Listing History: 6/5/11 - $1,875,000

SOLD: 9/29/11 - $1,700,000

This house took 116 days to get into escrow. Sure, it isn't as bad as the 266 days it took the Harvard house, but this is still a little long. Anyway, again judging from the photos, this house looks to be in pretty good shape and I agree with the listing description that there is some real charm here. The sales price came in at $647/sq ft. Given that the marginal square foot of house gets cheaper as houses get bigger and given that this house is over 1,000 sq ft smaller than the Harvard house, I would say these two valuations aren't terribly far apart, especially given that I would argue this house is a little more unique and probably gets some premium for that.

Finally, we come to 2619 Washington which I just featured recently.

It is a 3 bed/2.5 bath 2,037 sq ft house on a 7,040 sq ft lot.

You can read more about my thoughts on it in my previous posts but when comparing it to the two houses featured above (which actually sold), we can notice a few things. First off, the positives of this house are that it arguably has the most charm out of these three and it is in pretty good shape (new kitchen, etc). It isn't however completely redone as I remember looking at a pretty original looking bathroom. But hey, maybe that is part of the "original" charm here...The negatives of this house really stand out however. The lot is almost 1,000 sq smaller, it has one less bedroom and less bathrooms than both of the other two houses.

Most importantly, the picture becomes even more clear when we look at the fact that even after reducing the price, this seller is still asking a very lofty $897/sq ft. Again, we have to remember that this house should sell for a higher $/sq ft just based on the fact that it is the smallest of the three houses -- AND because I think it has the most charm, but even adjusting for these items, a price of nearly $900/sq ft seems way too high.

The Stanford house is only about 600 sq ft bigger and it sold for $647/sq ft. So maybe you pop it up to $700/sq ft to account for size difference, then add some premium for the new kitchen and overall good condition, and then add on a final premium for the character and unique Spanish style. I think some readers would be surprised to see how big these premiums might be. I don't think they justify the bump from a potential $700/sq ft up to $900/sq ft, but I think they could be worth $100/sq ft. So at $800/sq ft you are looking at $1.63mm.

The seller of this house has been stubborn about reducing the price down to a market level. The house has been listed several times with no luck at selling. At this point they are hoping to find someone who stumbles into an open house and loves the property (and thus would be willing to ascribe a far greater than $100/sq ft premium to it). I don't think it is likely that they find someone willing to pay near the current list price, but I could see someone paying something like $1.7mm.

Finally, this house previously rented for $6,000/month. The interesting thing is that I have a rough valuation tool that I use which is based on rental value...in this case, a rent of $6,000/month gives me a fair value of just about $1.63mm which is the same price as we came to above using $800/sq ft. Now, if the rent would be higher now (say $6,500 or so), then I can get a value north of $1.7mm. So ultimately, I see fair value on this house somewhere between $1.63mm and $1.75mm. Now you can of course make fun of me if it sells for more but I don't see that happening.

Deeper REO Rollback On Maple Update 1

2011-10-02T10:09:00.000-07:00

I last featured 1514 Maple back in August.

Previous Purchase: 6/10/05 - $900,000

Listing History: 8/9/11 - $739,000

SOLD: 9/23/11 - $675,000

As I said last time: this is deeper than most rollbacks we have been seeing -- but a big reason for that is that the location is a little challenged and the house is small and funky. And as dwr mentioned, there are renters in there right now.

And it looks like I wasn't too far off with what I said about valuation: Looking back to the purchase prior to the one in 2005, we see this property sold for $385k on 12/14/00. My 3% inflation + 1% premium compound growth rate brings fair value to around $600k + any improvements.

So Stubborn...Enjoying Those Holding Costs?

2011-09-25T12:42:00.000-07:00

I have featured 2619 Washington many times over the years. In its currently updated form, it is a fairly attractive property, but the owners have refused to price it near a realistic level. Thus, this updated 3 bed/2.5 bath 2,037 sq ft house has been listed many times since November 2008 when it was first asking nearly $2.3mm. It was listed in October 2009 for $2.0mm and then again in early 2011 for $2mm. The house has at times been rented out, but it seems like this routine is getting old. There seem to be fairly long stretches where the house sits empty and now the market is probably a little softer.

The last listing expired after 173 days on market but alas, the property has recently been relisted at a lower price.

Re-listed: 7/21/11 - $1,895,000
Reduced down to - $1,829,000

So the new listing started out $100k lower than the last price it was listed for. And since this was still too high, they cut the price down to $1.829mm. There is no question that there are buyers out there for this property...it isn't perfect but its a pretty nice Spanish house. The real problem is still price. Keep cutting, otherwise I suspect this will continue to rot on the MLS.

No Bid For The Junk

2011-09-24T17:10:00.000-07:00

Address: 1037 Hill - 90405

Details: 3 bed/1 bath 1,286 sq ft house on a 3,000 sq ft lot, "remodeled"

Description: Amazing home completely remodeled on corner lot! Hardwood floors throughout,maple kitchen cabinets, granite counter tops and stainless steel appliances are just some of the features in this one of a kind property.

Previous Purchase: 12/5/06 - $775,000

Listing History: 1/3/11 - $799,000
Reduced down to - $745,000
Canceled after 217 DOM

Re-Listed as short sale: 9/19/11 - $700,000

This house was purchased a little after the market peak. Then it was put on the market early this year for a stunningly high price of $799k...After wasting a bunch of time we are starting to get closer to reality as the house was recently relisted as a short sale. But this price is still probably too high, especially with the pretty challenging location, tiny lot, and single bathroom. These are all major problems. Buyers don't want junky stuff these days unless it is really priced at an attractive level. It is going to take a deeper rollback to clear this inventory.

Ignore The Asking Price (sometimes)

2011-09-13T18:34:00.000-07:00

Address: 1114 Maple - 90405

Details: 3 bed/2 bath 1,585 sq ft house on a 6,300 sq ft lot, pretty ratty condition

Description: Charming 1920s Sunset Park home with details like tile fireplace & casement windows. Large DR opens through french doors to spacious kitchen. 3br, family room & fun attic space with great light. Nice backyard area, just needs green thumb!

Listing History: 6/6/11 - $949,000
Reduced down to - $875,000

SOLD: 9/6/11 - $814,380

This was a good example of why it is necessary to do your homework. If you had gone to the first open house and seen the really beat up condition of this house and then looked at the asking price of $949k, you may have been confused, disheartened, mad, etc.

But if you had been doing your homework, you would have known that right across the street there was a similarly beat up old house which sold in March for just under $800k. If you had known that, you could have instantly looked at the asking price of this one and completely ignored it. Of course, when the agents holding the open house either don't know what the sales price of the house across the street was or try to lie and pretend they don't, then you really gotta wonder about proper representation here...

Anyway, the comp across the street was 1109 Maple which sold on 3/10/11 for $798,000 after also starting out too high (at $858k).

Active Mar Vista Rollback Update 1

2011-09-11T11:29:00.000-07:00

I last featured 3711 Wade back in July as an active rollback property in Mar Vista. When I first featured it I noted that the asking price seemed interesting, especially given that it seemed to be a standard sale and that the property didn't seem to have any huge flaws.

Previous Purchase: 6/8/06 - $1,249,000

Listing History: 7/13/11 - $879,000

SOLD: 9/1/11 - $925,000

This house went into escrow quickly (11 days) and the sellers were smart to price it at/below market price as it generated enough buzz to get people pretty interested. Thus, they were able to actually receive $46k more than their asking price.

This $324k loss amounts to a rollback of 26%. Mar Vista is an expensive westside market but it is not as desirable and expensive as Santa Monica. Thus, we would expect to see rollbacks a little bit deeper than what we are observing in Santa Monica, and that is exactly what you have here.

16.4% Off Peak Price In The Canyon

2011-09-11T11:19:00.000-07:00

Address: 427 Sycamore - 90402 (canyon)

Details: 3 bed/3 bath 2,859 sq ft house on a 5,270 sq ft lot, heavily remodeled

Description: Lovely and gracious shingle clad East Coast Traditional on beautiful and quiet Sycamore road, just a few blocks from the Pacific. Highly upgraded and remodeled with a wonderful floor plan with all the right rooms. Huge sunny eat-in kitchen with breakfast area and adjacent family room that opens to private yard. Features lovely hardwood floors, crown moldings and two beautiful fireplaces. There are 3 bedrooms upstairs including a gracious master suite.

Previous Purchase: 5/3/06 - $3,065,000

Listing History: 6/20/11 - $2,595,000

SOLD: 7/28/11 - $2,562,850

This $500k loss amounts to 16.4% off of what was likely near peak price for this house. I think the remodel looks pretty nice. Just another data point in another part of town. Sellers were smart and listed at a realistic price and sold it quickly.

More 90405 Rollback Action

2011-09-05T11:41:00.000-07:00

Address: 2015 Marine - 90405

Details: 3 bed/1.75 bath 1,598 sq ft house, 7,000 sq ft lot

Description: Enjoy year round fun in this cheerful 3 bedroom 2 bath Sunset Park charmer! Bring your sunscreen, sit back & relax in your private pool & spa! This home features bright living spaces, fireplace in LR, colorful dining room & eat in kitchen - 3rd bedroom has its own private entrance - flexible usage as an office. Embrace California indoor & outdoor lifestyle with a covered patio just perfect for pool side entertaining!

Previous Purchase: 10/26/04 - $1,100,000

Listing History: 7/8/11 - $1,195,000

SOLD: 8/22/11 - $1,025,000

This property was clearly listed too high to begin with. But to the seller's credit, they quickly accepted a bid which was more in line with fair value.

This is probably an early 2004 rollback. Certainly a little deeper because of location...remember, the worse a location is, the deeper the rollback should be as we have continued to observe poor locations lead to the downside. In this case, you have airplanes taking off right above your head. And someone still paid over $1mm for this. I think that is crazy...Think about the pollution and noise!

1044 Maple Rollback

2011-09-05T11:28:00.000-07:00

Address: 1044 Maple - 90405

Details: 3 bed/3 bath 1,958 sq ft house + guest house

Description: 2-story, 3BD + 2.5BA House and a 374 SQ FT guest house. Guest house anticipated to be vacant 6/01/11. Main house has a kitchen that opens to a rear yard, pool & spa, a large living room with a wood burning fireplace, hardwood floors and a separate master suite. New pool heater.

Previous Purchase: 5/21/03 - $850,000

Listing History: 3/8/11 - $1,195,000
Reduced down to - $899,000

SOLD: 8/25/11 - $873,600

This is a pretty deep rollback. I did not personally see this house but I'm guessing there was something funky about it that really turned off buyers. The location is not great but it isn't a disaster either so I don't think this is just a deeper than expected rollback due just to location. Anyone actually walk through this?

Owner Related To Agent Updated 2

2011-08-29T16:09:00.000-07:00

I last featured 1212 Hill back in April. At the time I warned about the fact that the listing agent was related to the owner and I suggested the price was too high.

Previous Purchase: 12/20/05 - $1,182,000

Listing History: 4/4/11 - $1,249,000
Slowly reduced down to - $1,049,000

SOLD: 8/25/11 - $985,000

This listing was a case of delusional sellers (and agent) who started by asking way too much. Then the listing got stale and sat and sat while holding ever increasingly desperate open houses every weekend. Slow price cuts ensued, all while the owners had already moved out and were shouldering big carrying costs. Finally, someone showed up and bought the place a fair amount below the still too high asking price.

This $197k loss is amounts to 16.7% off of the late 2005 purchase price. I would say this is a mid or late 2004 rollback. I also think (as I always do) that had they listed it at a realistic price from day 1, they would have gotten more for the house. This was a good example of how NOT to sell a house properly.

Deeper REO Rollback On Maple

2011-08-20T20:24:00.000-07:00

Address: 1514 Maple - 90405

Details: 2 bed/2 bath 935 sq ft house on a 6,299 sq ft lot, REO

Description: BANK OWNED REO! 2 beds 2 full baths. Hardwood floors. Dining room. Garage is semi converted with French doors but there is a second one car garage. Extra addition at rear of garage. This property is occupied & will be sold as occupied. PLEASE DO NOT CONTACT OCCUPANTS OR TRESSPASS ON PROPERTY WITHOUT EXPRESS AUTHORIZATION BY THE LISTING AGENT.

Previous Purchase: 6/10/05 - $900,000

Listing History: 8/9/11 - $739,000

This was a near peak bubble purchase made by a LLC and may have been a rental from day one (it is a rental now). The current asking price is 17.9% below the mid-2005 price so this is deeper than most rollbacks we have been seeing -- but a big reason for that is that the location is a little challenged and the house is small and funky. It looks like these jokers tried to list for nearly $1mm back in 2009 and cut their price down a bunch of times. Nothing worked so here we are now as a foreclosure.

Looking back to the purchase prior to the one in 2005, we see this property sold for $385k on 12/14/00. My 3% inflation + 1% premium compound growth rate brings fair value to around $600k + any improvements.

2004 Rollback -- Nice 90405 House

2011-08-18T16:12:00.000-07:00

Address: 2622 34th - 90405

Details: 3 bed/2 bath 1,422 sq ft house on a 6,400 sq ft lot

Description: A Very Special Property! Sweet & Charming – the open floor plan of living room & dining room flows perfectly to a large kitchen. Included are: 2 Bedrooms downstairs with a wonderful full bath. The Upstairs Master suite with beamed ceilings, loft/office and beautifully appointed bath overlook A truly amazing yard and magical gardens with sitting areas and secret spaces. The garage has been re-fashioned into a Separate Studio. A gated driveway completes this home.

Previous Purchase: 5/27/05 - $1,308,000

Listing History: 6/13/11 - $1,195,000

SOLD: 7/26/11 - $1,183,000

This 9.6% decline from the mid 2005 price means this is probably in late 2004 rollback territory. I think everyone fared well here.

Buyer: Got a 2004 rollback on a higher quality property. While prices can go lower, this is a "leading" downside transaction for this type of property.

Seller: Didn't take that huge of a loss considering they bought it not far off from peak bubble territory. They also got rid of this before the recent stock market volatility and crappy economic data. I think they wouldn't be able to get the same value if they had to sell it right now.

Also, kudos to the sellers for pricing it right and moving the thing. It went into escrow after just 8 days on market and sold near list price. This is the proper way to conduct business.

Soiled Million Dollar Views

2011-08-15T18:59:00.000-07:00

Address: 1766 Bryn Mawr

Details: 3 bed/1 bath 2,028 sq ft house on a 5,528 sq ft lot

Description: Wow! Million Dollar views of the City, Ocean & Mountains!! Views from all living spaces with beautiful, large deck off the living/dining room. Lovely yard.

Listing History: 4/19/11 - $1,249,000
Reduced down to - $1,095,000

SOLD: 8/10/11 - $980,000

This house is very livable (although pretty ugly from the outside). The views from this location appear to be pretty solid and that is where the real value is coming from. But I'm wondering if other readers are as skeptical as I am about possibly living this close to the airport and right under the freaking flight path. I just can't imagine shelling out the million bucks for this "million dollar view" only to have a bunch of dirty, loud jets taking off above my head. This house would obviously be worth a lot more without the airport there but still...I don't think I could enjoy my deck or even inside of my house with jets overhead. Am I nuts?

Why Is This Back On The Market? Update 1

2011-08-03T17:23:00.000-07:00

I last featured 839 25th back in June.

Previous Purchase: 8/31/10 - $2,640,000

Listing History: 6/21/11 - $2,850,000

SOLD: 7/23/11 - $2,825,000

They broke even (or even made a little money) after transaction fees.

Flip or Bail on California? Update 2

2011-07-29T16:57:00.000-07:00

I last featured 2215 California in June.

Previous Purchase: 8/26/10 - $1,395,000

Listing History: 5/31/11 - $1,695,000

Reduced down to - $1,595,000

SOLD: 7/29/11 - $1,560,000

Remember, they spent some money here on a little remodeling. This did not appear to be a flip.

Really Nice Hill House Sells for $100k Over Asking

2011-07-25T18:46:00.000-07:00

Address: 1417 Hill - 90405

Details: 3 bed/2.5 bath 2,648 sq ft house on a 7,050 sq ft lot, completely remodeled

Description: Entertainer's dream. 3 bedroom /2.5 bath designed and built with highest quality and attention to detail. Great room/kitchen/dining flooded with natural light flow through french doors to rear deck and garden. Kitchen with 6 burner Viking, wine fridge, custom cabinets and Caesarstone counters. Master with walk-in, vaulted ceilings, private balcony. Master bath with steam shower, spa tub. Wired indoor and out for sound. Double sided fireplace opens to living room and great room. Marvin double-paned windows. Contact listing agent for complete list of features.

Previous Purchase: 11/14/03 - $790,000

Listing History: 5/9/11 - $1,485,000

SOLD: 7/21/11 - $1,585,000

This house went into escrow quickly and sold for $100k more than list price. In this case the property was very nice but it doesn't even take a great property to sell quickly. It just takes knowing what market value is (not that hard) and the resolve to price near or even below market value rather than at some "wishing price" (harder but still not that hard).

Take a look at the photos, this is a really nice house and it is over 2,600 sq ft.

Active Mar Vista Rollback

2011-07-17T16:59:00.000-07:00

Address: 3711 Wade - 90066

Details: 3 bed/1.5 bath house + guesthouse, 5,950 sq ft lot, upgraded condition

Description: Who says you can't have it all? Ultra-charming storybook home plus fabulous 2-story guesthouse! Overflowing w/ curb appeal & charisma, the main house features 3 bedrooms & 1.5 bathrooms. Spacious living rm w/ bay window. Formal dining rm. Bright galley kitchen w/ eat-in breakfast nook & tons of cabinets. Improvements include central heat/AC, updated plumbing & electric, dual-pane windows, recessed lighting, tankless H2O heater, alarm system & more! Character touches include hrdwd flrs, plantation shutters, archways & sunny color palette. Secluded behind an electronic gate & privacy hedges lies a tranquil yard & finished 2-car garage. Newly-constructed 2-story guesthouse whose downstairs features wrap-around French doors, flagstone flooring & closet. Upstairs boasts vaulted ceiling, recessed lighting, hrdwd flrs, closet, bathroom & French doors to deck. Located in wonderful neighborhood, close to shopping, restaurants & the beach. Immaculate home plus fantastic guesthouse – a rare find!

Previous Purchase: 6/8/06 - $1,249,000

Listing History: 7/13/11 - $879,000

This asking price is 29.6% lower than the peak of the market purchase in 2006. The sale type is listed as standard which is surprising because there haven't been a lot of folks taking these types of losses...most leveraged themselves into a corner and are going the short sale/REO route. Anyway, this house looks nice and the location seems OK. I would be going to this open house if I were interested in this area. Thanks to the reader who sent this over.

Conduct Your Own Due Diligence

2011-07-12T21:05:00.000-07:00

From a reader a few posts ago:

I know this is outside your comfort area, but how would I do research on all the different neighborhoods of Burbank? I've combed through the CityData forums and Redfin comments. Where else can I look?

First of all, my approach should probably work almost anywhere. But before focusing in on a specific area, I would look at a larger area and break it down by city limit, school district (and specific elementary school boundaries), school API scores, zip code, etc. I did some of this for Culver City to familiarize myself. All of this info can be found via a quick Google search. In the case of Culver City, I was able to quickly figure out that there are two zip codes (90230 and 90232) which I wanted to look at. I actually used Zillow to take a wide angle view of the area and surrounding areas. If you zoom out enough you will see all the different towns/cities/areas shaded as separate areas. On Culver City's town website there is a zip code map and you can also then see where the different elementary school areas are. You can use the California API website to see which schools score better than others.

But after you take this wide view you really need to get down on the ground and walk around a bunch and on week days and weekends. Busy streets, airports, freeways, and downtown areas create traffic and noise. But they also offer benefits too. Gotta figure out what works for you.

I would then go to guests.themls.com and do some searching. Go to open houses. Talk to some real estate agents. Ultimately it is your responsibility to do your own homework because nobody is looking out for you. There is no "fiduciary duty" for anyone else to make sure you buy the right property at the right price. So if you are really a nut then you will start copying down MLS #s of properties that you like. An example would be "10-443485". Then you would copy down the MLS website URL and paste in the MLS #s to really track properties...

http://pro.themls.com/All_Searches_Preview_Files/pow_one_client_detail_preview.cfm?se=1&header_title=no_header&chosen=10-443485&property_type=0

Keep a spreadsheet.

Really it all comes down to spending time in an area and walking it a lot. Just looking at different properties should give you enough info to figure out what type of people live there, if an area is getting better, young people moving in, etc.

First Mar Vista Post Ever - Rollback Time

2011-07-08T18:56:00.000-07:00

Address: 3368 Cabrillo Blvd. - 90066

Details: 3 bed/3 bath 2,036 sq ft house, 7,200 sq ft lot

Description: Bank Approved Short Sale. First offer $840K gets this amazing deal! 3 bedroom, 2 bathroom English Country Homeincluding hardwood floors, spacious living and separate dining room, Master bedroom suite with large closets and more. Large 2 car separate garage. Agents please read private remarks!!!

Previous Purchase: 6/26/07 - $1,080,000

According to Zillow this house was listed for sale in mid-2009 for $1.175mm, listed again in 2010 and then finally listed this year as a short sale.

SOLD: 3/8/11 - $840,000

This $240,000 decline in value represents a loss of 22.2%.

Believe it or not, I just pulled up Zillow and looked for recently sold houses north of Palms (since one person commented about this area) and this was the first one I clicked on. This decline (in percentage terms) seems a little bigger than what we have seen in Santa Monica but not by much. This house seems pretty decent with good square footage, a good size lot and 3 beds and 3 baths. I don't know the area as well so I would be curious to hear what type of airport noise there is in this specific area. Seems like there should be some but maybe not a ton. I will look at some more 90066 properties but this was just the very first one I clicked on and it seemed like it deserved a blog post.

What Do You Want Now?

2011-07-06T19:44:00.000-07:00

The market is a little boring right now but I've tried to keep posting somewhat regularly (although certainly less frequently). Some time ago I decided to allow anonymous comments again so you don't have to sign in to comment now.

So I would like to know what people want to read about and talk about. Have you bought something already? In Santa Monica or elsewhere? Want to see more south side or north side properties?

I have read some commentary on Calculated Risk that the upcoming conforming jumbo loan limit reduction won't have much if any effect on the overall housing market. But I still think that may be a more important issue for pricey "entry level" westside areas such as 90405, Mar Vista, Culver City, etc. All those areas have a lot of houses in the $750-950k range. The loan limit decrease will force people to either put another $100k down or else take a true jumbo loan (with its higher rate and higher down payment requirements). I don't think this will have a huge impact but I think it may impact things on the margin.

Why Is This Back On The Market?

2011-06-27T19:59:00.000-07:00

I last featured 839 25th back in September 2010 after it had been completely refinished and finally sold.

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

Remember, this is AFTER all the fancy upgrades. So now, less than a year later it has come back on the market...

Listing History: 6/21/11 - $2,850,000

I believe the new owners may have painted the exterior but that's about it as far as I can tell. So this isn't a flip attempt most likely.

The owner needs to receive a bid north of $2,775,000 to be able to break even after paying a 5% commission. But why should a buyer have to essentially pay for their commission. It isn't your fault they have to or want to move less than a year after the initial purchase. The market is a little softer now too. I wouldn't really want to pay more than the 2010 purchase price.

Flip or Bail on California? Update 1

2011-06-26T09:41:00.000-07:00

I last featured 2215 California earlier this month.

Previous Purchase: 8/26/10 - $1,395,000

Listing History: 5/31/11 - $1,695,000

Reduced down to - $1,595,000

In my last post I discussed the upgrades that they did to the house post the 2010 purchase. I also said that I didn't think they had a chance of getting their asking price. What they are doing now is the right thing to do and other delusional sellers should take notice. When you don't get bids or if you only generate bids well under your asking price during the first few weeks on market, you need to cut the price ASAP before your listing gets stale. This price cut here may not be big enough on its own but it signals that the sellers are ready to deal. Finally, I don't think this is a flip.

I May Be A Week Late But This Is Pretty Funny

2011-06-21T17:18:00.000-07:00

Coming Full Circle

2011-06-18T17:20:00.000-07:00

Back in February 2008 I published a post about a condo on 15th street.

The first comment that was posted on the blog was from an anonymous reader and was as follows:

704 15th closed on 2/19 for 2.1 (it was listed for 1.99)

834 franklin also closed on 2/19 for 3.0 (it was listed for 2.395)

SO MUCH FOR THE BEARS!!!

So here we are, over 3 years later and I will draw your attention to 704 15th which is the first property that this person highlighted...

Address: 704 15th - 90402

Details: tear down on a 7,500 sq ft lot

Description: Lowest priced house in the Franklin School District North of Montana. This three bedroom home can be quickly torn down so that you can build your dream house in the coveted Franklin School district. The lot is a standard flat 7,500 square foot lot on the desirable west side of the street, which offers plenty of late evening sunshine. The elevation of the lot is such that the upper floors of a newly constructed house can enjoy a beautiful view of the sun setting in to the ocean each evening. The lot is located on a beautiful block. Also on the block is one of the most valuable houses in the entire Franklin School district, a house on the corner of 15th and Alta which Zillow values at 4.8 million dollars. Please call the listing agent directly in order to discuss this property.

Previous Purchase: 2/25/08 - $2,100,000

Listing History: 3/10/11 - $1,740,000

I kept reading the comments from the 2008 post and the anonymous person claimed they were being sarcastic, but nonetheless I think it is great to look at this situation as it shows we are still just getting around to clearing out some of the rot left in the market. I would imagine this is some builder or speculator who bought this place at too high of a price in a bidding war in early 2008 when it should have been clear that the music had stopped.

This seller is trying to escape with a 17% loss. As this listing has been on the market for 100 days with no action so far, they are clearly going to have to take a bigger haircut to get it to sell. Also, remember that they were eating holding costs for the last 3+ years. Ugh!

There were a lot of frustrated people on this blog back in early 2008 and before. It was obvious prices were going to come down but stupid people kept bidding things up until finally the market fell under its own weight. I think there is still a fair amount of rot to clear out, but we are a lot closer to a "normal" market than ever before now.

A Real 90402 Foreclosure Update 1

2011-06-14T17:15:00.000-07:00

I last featured 740 21st Place back in April.

It is a real 90402 foreclosure...ohhhhhhhhh so exciting

Snooze

Previous Purchase: 4/21/04 - $2,180,000

REO Listing: 4/22/11 - $2,299,900

SOLD: 6/10/11 - $2,325,000

No great bargain here but the lender did a good job of listing it at a real market price and selling it quickly.

OMG - They Finally Cut The Price! Update 1

2011-06-07T17:34:00.000-07:00

I last featured 907 22nd back in November 2010. This property was listed in May 2009 for $1,575,000 before cutting to $1,475,000.

It then re-listed in January 2010 for $1,475,000. The price was cut down to $1,425,000 in November 2010 when I last featured it. Finally it was cut all the way down to $1,369,000.

After 448 days on market...

SOLD: 6/3/11 - $1,340,000

This seems like a fair price and is about where I figured it would sell.

Flip or Bail on California?

2011-06-06T20:04:00.000-07:00

I last featured 2215 California back in August 2010 when it sold for a 2003 rollback price.

This house sold back in October 2003 for $1.4mm.

It then came to market in April 2010 for $1.5mm and ended up selling on 8/26/10 for $1.395mm. 2003 Rollback!

Then, fast forward to today.

Listing History: 5/31/11 - $1,695,000

They remodeled the kitchen, put in new lighting, new paint, and a new security system...and they are asking $300k more than the August 2010 price.

The kitchen remodel doesn't look like much more than surfaces and the other upgrades don't seem all that substantial. So in my opinion, this property should be worth more than $1.4mm but $1.7mm seems way too high. When this sold for a 2003 rollback price in August 2010 it had been on the market for 84 days before going into escrow so it isn't like this was some great steal of a purchase back then.

So was this purchased as a flip to begin with? I can't tell because it seems like it but it also seems like too slim a margin to gamble with. Selling fees and transaction costs are going to be roughly $100k. The upgrades don't seem that expensive but some money was spent. Finally there are holding costs. So maybe they figure if they can get paid $1.7mm then they can make $100k-$150k max? But I just don't think there is any way they are getting anything that close to the asking price here. Add to that the fact that the housing market looks a little weaker and the economy is looking more shaky now. So could it be that this seller was planning on holding longer and they are just trying to bail and make a little $$ or break even at worst?

Canyon Developer Distress? Update 1

2011-05-22T17:45:00.000-07:00

Way back in April 2008 I featured 415 Upper Mesa Road which at the time was an almost finished new, custom built house which supposedly needed about $200k to be finished. Private remarks on the listing talked about the owner trying to get the bank to lend some more money...

That didn't work out so well.

The lot was bought for $1.085mm back in April 2003 and in December of 2007 this almost completed house was listed for sale at the hefty price of $3mm before being cut to $2.7mm in March 2008.

Looking on Property Shark, I see that there are multiple mechanics liens with the first one back in 2006! As for the bank, Indymac foreclosed for $2.3mm in June 2009.

REO Listing History: 10/14/09 - $2,650,000
Reduced down to - $2,146,500

SOLD: 5/17/11 - $1,821,000

I am not familiar with the way that liens get paid so I'm wondering if the bank had to pay them or if the new buyer here has to pay (could be why the price came down so much if so). Either way, this property was a complete mess for years and years and its nice to see it get taken care of finally.

$729,750 Mortgages Going Away In October

2011-05-11T21:36:00.000-07:00

So I was meaning to do a post on the fact that the conforming jumbo mortgage limit is scheduled to go down from $729,750 to $625,500 when I ran across the following discussion on Piggington (a San Diego bubble blog).

The discussion on Piggington links to a NY Times article that you can view here.

There seemed to be a variety of opinions on the San Diego blog about how meaningful this change may be. I don't think it is that big of a deal but it is no doubt a negative on the margin. Conforming jumbo loans carry a decently lower interest rate than true jumbos...and a true jumbo lender may be marginally more stringent on income, down payment, and asset requirements.

Further, I think this change is just one of several potential headwinds for the housing market when it comes to potential policy changes. For a long time it seems that we have been artificially propping up the mortgage and housing markets in this country and it seems with all the budget battles that some sacred cows may be looked at a bit more closely. Reducing the government support via reducing the conforming jumbo limit makes sense in the long term. Along these lines, there has been a lot of talk about at least reducing (if not eliminating) the mortgage interest deduction. I think it would make sense to scale that back and put some restrictions on it, but I don't think it will go away completely any time soon. Finally, there is talk here in our state of proposition 13. Adjusting that would increase housing costs and make the prospect of long term ownership more expensive on the margin.

I guess the one thing I keep coming back to when I look at the entry level for Santa Monica (and other westside areas) is the fact that prices in the $750-$950k area seem so firm. It just seems so obvious that people are able to get government subsidized conforming jumbo mortgages of $729k and then throw down $100-$250k and boom, you get a big group of people trying to get in around that price range.

West of Lincoln 2005 Rollback

2011-05-08T15:14:00.000-07:00

Address: 716 Navy - 90405

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.

Back Out Of The Shadows Update 1

2011-05-03T17:48:00.000-07:00

I last featured 843 25th as part of a trio of houses in my "Back Out Of The Shadows" post in February.

Previous Purchase: 1/12/07 - $2,100,000

Listed: 7/26/10 - $2,199,000
Reduced down to - $1,999,000

Re-Listed: 1/31/11 - $1,999,999

SOLD: 4/29/11 - $1,832,000

This leaves 942 26th and 2619 Washington still on the market and overpriced.

4.25% Annual Appreciation - 90405 Entry Level Short Sale

2011-04-25T15:41:00.000-07:00

Address: 2315 27th - 90405

Details: 2 bed/1 bath 1,315 sq ft house, 7,791 sq ft lot

Description: CHARMING SPANISH STYLE HOME. 2 BEDROOMS, 1 BATH. DETAILED ARCHWAYS, COZY FIREPLACE. LARGE PRIVATE YARD FOR ENTERTAINING.

Previous Purchase: 5/17/00 - $525,000

Refinanced with two WaMu loans: 9/8/06 - $1.146mm

Listing History (short sale): 2/1/10 - $825,000

SOLD: 4/25/11 - $825,000

This is an entry level house which doesn't appear to have been improved so it provides a nice apples to apples comparison. Going back 11 years to the sale in 2000 we see that this just sold for a price which provided a compound annual growth rate of 4.25%. That isn't a crazy level of appreciation in my opinion. I think that should show that we are a lot closer to a bottom than a top (duh!).

The fact that the owners refinanced themselves to death is interesting but just goes to show how crazy things were back near the peak. Out with the irresponsible and in with a new class of buyers.

90402 Location Discount Rollback

2011-04-23T21:39:00.000-07:00

Address: 614 7th - 90402

Details: 3 bed/2 bath 1,254 sq ft house, 4,800 sq ft lot, "remodeled"

Description: Perfect Southern California Cottage. Fantastic Location ~. This remodeled house with guest house is set behind tall hedges offering complete privacy. The 3bed/2ba main house has dark hardwood floors, crown molding, skylights, vaulted ceilings, fireplace, recessed lighting, and a home security system. Very well lit and charming . Master bath features carrera marble sink and tub. The updated kitchen has a garden window, walk in pantry and custom tiled countertops. A brick patio/courtyard separates the main house from the guest house, and is perfect for al fresco dining. The 1 bed (w/cedar closets)/1 bath guest house has a family room and office and skylights. This is ideal for those who work from home or a great playroom for kids. This north of Montana home is walking distance to great shopping and restaurants, and moments away from the Santa Monica beaches and bike path.

Previous Purchase: 7/25/05 - $1,575,000

Listing History: 10/20/10 - $1,750,000
Reduced down to - $1,639,000

SOLD: 4/12/11 - $1,493,000

Location discount properties such as this showed weakness first and seemed to decline the most during the downturn. They certainly seem to be a little more weak in the current environment and this could be a leading indicator of overall weakness but there aren't a lot of data points and I'm not convinced there is a big overall decline ahead.

A Real 90402 Foreclosure

2011-04-22T23:04:00.000-07:00

Address: 740 21st Place - 90402

Details: 4 bed/4 bath 2,913 sq ft house, 8,940 sq ft lot, foreclosure

Description: Gorgeous Spanish style 4 bd/4 ba home. Windows throughout create light & bright feel.Gated property w/ detached 2 car garage.Lush landscaped front yrd w/fountain & vine laced porch.LR w/high ceilings & fireplace. Hrdwd flrs throughout.Kitchen w/breakfast nook, recessed lighting, dishwasher, stove, & custom cabinets.Laundry rm w/side exit & storage.A downstairs bdrm has private bathrm & separate entry, could be used as an office. Lrg family rm w/bar, mini refrigerator, speaker system, & french doors that lead out to a covered patio.Backyard has salt water pool & spa w/ automated pool cover.Upstairs bdrm is very lrg w/ pvt bath. Massive master bdrm w/ pvt bath & lrg walk-in closet. 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: 4/21/04 - $2,180,000

REO Listing History: 4/22/11 - $2,299,900

I last featured this house back in July 2009 when I had noticed that RealtyTrac showed it was going to auction.

I'm not sure what ever happened and Property Shark doesn't show that the bank took it back (maybe their records are slow to be updated). But this property is now listed on the market as a foreclosure so we have to assume the bank is in control now.

The photos don't appear to show any major problems and given the price they are asking, I think this will generate a good amount of attention and likely sell near or above list price. Still interesting to see an actual foreclosure in a proper 90402 location since there haven't been many.

Owner Related To Agent Updated

2011-04-11T19:45:00.000-07:00

Address: 1212 Hill - 90405

Details: 3 bed/2 bath 1,316 sq ft house, 6,950 sq ft lot

Description: Warm and charming, bright, Sunset Park home in move-in condition. Hardwood floors, new A.C. and heating system. Living room with wood burning fireplace and recessed lights. Vintage kitchen features O'Keefe + Merritt stove + overlooks huge lush backyard and one of two decks. Master suite with remodeled bath, separate spa tub and shower. French doors leading out to large, sunny and romantic deck. Gorgeous backyard ideal for entertaining. Tankless water heater, security system. Garage and storage space under house. Professionally landscaped yard, automated sprinklers. Inside laundry room. Great location close to parks, beach, shopping and Main street.

Previous Purchase: 12/20/05 - $1,182,000

Listing History: 4/4/11 - $1,249,000
Reduced a week later to - $1,199,000

This house looks like it could be nice enough and the location looks to be alright. However, after looking at the pictures I think it is a little odd that the master bath has been redone but the other bath appears to be more original and the kitchen looks really uninspiring (vintage = old). At this price point, you would think the upgrades would have been done throughout the house.

The question here is how much of the upgrading was done after the previous purchase. If it is little then this asking point looks pretty high. I also think the problem here is that the house is just 1,300 sq ft. 3 bedrooms? Must be small rooms. Agent related to owner, buyer beware.

How Rich Is Frank Gehry??!!

2011-04-04T18:25:00.000-07:00

Back in August 2009 I featured 2112 Washington which was a remodeled small house and guest house on a 4,150 sq ft lot. It went into escrow after just a few days on market and sold at a price that nobody could justify as anywhere near "market".

Go back and read the comments from the old post I did. Pretty funny. But buried down in the comments was the following nugget:

I know the owners of this house well. They knew that Frank Gehry really wanted the house and they thus priced it at a substantial premium to market. Gehry tried to talk them down, but they held firm. In the end Gehry capitulated and paid what he paid. Gehry really needed the land in order to expand.

So here we are a year and a half later...

If you walk by and peer through the screen in one area you can see the building permit and Frank Gehry's name is listed right in the open. So he is definitely the one that bought the "remodeled" house for well above market value and he has now demolished the whole thing. So he paid $1.375mm for 4,150 sq ft of dirt. Baller. Guy doesn't give a damn about what all the other jokers out there (including myself) thought this thing might have been worth. He just wrote a fat check so that he can have another 4k sq ft of land to play with.

Kudos to the seller for being smart enough to price it well above market knowing that they would get paid off. Makes you wonder if they could have priced it even higher!

Money is a great tool. Gehry obviously has lots of it. So kudos to him as well for knowing and getting what he wants with just a quick stroke of the pen. I think everyone here won...except for a nice family that might have wanted to live in that house; but hey, that's how markets work.

The 2011 Selling Season Has Arrived - Now Show Me Some Rollbacks Update 1

2011-03-27T12:10:00.000-07:00

I last featured 1025 25th back in January of this year.

Previous Purchase: 9/13/05 - $1,720,000

Old Listing History: 2/27/09 - $1,895,000

Current Listing History: 1/14/11 - $1,650,000

Withdrawn after 70 days on market

I'm guessing we will see this house back on the MLS at some point in the future.

BOMB on Montana Update 1

2011-03-24T17:07:00.000-07:00

I last featured 754 23rd all the way back in April 2008.

But 2008 wasn't even the first time it was listed. As we found out last time I did a post on this house, it was first listed in June 2006 for $2.7mm.

When I featured it in April 2008, it was asking $2.279mm.

Nothing ever happened and now it is Back On Market (Baby).

Current Listing: 3/24/11 - $1,949,000

There is a location discount in effect for sure as this house is located on Montana. I don't know if the current asking price is low enough to finally produce a sale but I will follow this and update the blog when/if it sells.

Delusion Isn't Dead Update 1

2011-03-18T18:07:00.000-07:00

I last featured 2323 California earlier this month when I said this house was wildly overpriced.

Listing History: 3/7/11 - $2,595,000

Reduced down to - $2,450,000

They reduced the price pretty quickly. However, this wasn't that big of a reduction and the starting price was way too high...so ultimately this looks to still be pretty overpriced.

2004 Rollback

2011-03-13T11:27:00.000-07:00

Address: 443 14th - 90402

Details: 4 bed/5.5 bath 4,071 sq ft house, 7,550 sq ft lot, 2002 construction

Description: Fabulous newer north of Montana two story Spanish remodeled with great taste, style & quality. Wonderful authenticity including elements from the 1920’s but with a fresh, whimsical, Contemporary feel. Cylindrical entry with sweeping stair leads to step down living room with tall wood beamed ceiling & fireplace, large formal dining room, generous office/den and sensational cook’s kitchen/family room that opens through French doors to patios, outdoor fireplace, built in bbq, synthetic lawn and gorgeous pool and spa with an electric cover. Ideal floor plan includes a total of 4 spacious bedrooms + office/guest/yoga room upstairs with one of the bedrooms downstairs. Terrific master w/ fireplace, window seat, private terrace, lavish bath and large walk-in. High ceilings, hardwood floors, custom hardware & fixtures and beautiful finishes throughout. Close to Montana shops & restaurants. Very special home featured in LA Times Home Section and Domino Magazine. Best Los Angeles lifestyle!

Previous Purchase: 4/5/05 - $3,333,000

Listing History: 9/2/10 - $3,795,000
Reduced down to - $3,295,000

SOLD: 3/11/11 - $3,100,000

Delusion Isn't Dead

2011-03-06T17:51:00.000-08:00

EDIT 2 -- The listing is back with a new MLS # and a new description (the first one was useless). Emotional Country Craftsman Bungalow. Enjoy ocean breezes in this remodeled home that is conveniently located near shops, schools, beach and wonderful Douglas Park. Open light filled rooms with high ceilings, large windows, warm country kitchen and family room that opens to a European garden for entertaining, additional separate library, sun room, large open loft/office, reclaimed hardwood floors and doors, finished garage. Custom finishes with great attention to detail.

EDIT -- The listing has now been "withdrawn". So this was listed for one day. I did a post that day and overnight it goes to "withdrawn". Interesting.

Address: 2323 California - 90403

Details: 4 bed/3 bath 3,400 sq ft house, 5,060 sq ft lot

Description: Open House Sun 2-5pm Nature living in the city. Beautifully country garden in front of this fully equipped home located in a peaceful residential area of Santa Monica. Close to shops, transportation, movie theaters, and upscale restaurants. Easy to bike ride to Venice beach, downtown Santa Monica, Third street promenade and Montana Ave. Best sunny whether and fresh ocean breezes. French doors and hardwood floors throughout. Great for entertaining. Two car garage. Just one block from the new whole foods store and Douglas Park, the most popular children's playground on the westside, and center for activities for families. One block away are two tennis courts open all day and lit at night for night time playing. Malibu beach just minuets away the playground of the Hollywood elite, attracts surfers, kayakers, and bathers as well. Of course world famous Santa Monica beach one the the most beautiful beach in the world along with Santa Monica pier the end of the road for Route 66.

Previous Purchase: 4/28/89 - $495,000

Listing History: 3/5/11 - $2,595,000

I think this house is wildly overpriced. Small lot, not the greatest location, house is old.

For comparison, readers will remember my last post about a property less than one block away that I did back in May 2009. 1024 23rd was a 4 bed/4.5 bath 3,500 sq ft house on a 6,118 sq ft lot. It was brand new construction and it sold in May 2009 for $2.425mm. Even if you argue that the buyer got a good deal due to timing, I don't think the market has moved up that much since that time. So what you have here is that this house on California is priced HIGHER despite the fact that it is slightly smaller, is on a smaller lot, has 1.5 fewer bathrooms, and it isn't even close to new construction!

Good luck delusional sellers.

Junk REO Update 1

2011-03-03T20:38:00.000-08:00

I last featured this disaster at 1308 26th back in November 2010.

Previous Purchase: 4/15/04 - $698,000

They tried to short sale it in 2009 but then stated that the seller declared bankruptcy at the last minute and that there were three different lenders. Messy.

REO Listing History: 11/11/10 - $669,900

SOLD: 2/15/11 - $570,000

90403 Boomerang Update 1

2011-03-01T17:22:00.000-08:00

I last featured the now upgraded 1030 Chelsea back in January when I said that I didn't think the house was a screaming bargain, but I also argued some younger couple might want to pay up a bit and avoid the headache of fixing something up.

Previous Purchase: 11/25/08 - $1,200,000

Listing History: 1/11/11 - $1,425,000

SOLD: 2/28/11 - $1,350,000

This house went into escrow after just 6 days on market so it certainly had a fair amount of appeal to someone right off the bat.

90405 Mediterranean Spec

2011-02-27T11:11:00.000-08:00

Address: 2924 16th - 90405

Details: 5 bed/4.5 bath 3,884 sq ft house, 7,039 sq ft lot, 2010 construction

Description: Spectacular NEW construction in prime Santa Monica features nearly 4000 sq ft, 5 bedrooms, 4.5 baths. Volume ceilings, bright open plan, gorgeous 8' mahogany doors, distressed 6" hickory espresso hardwood & marble floors. Custom cook's kitchen features granite counters, tumbled stone accents, huge center island, state-of-the-art stainless steel appliances including double oven, microwave, six-burner gas stove. Spacious fam room w/ cozy fireplace opens to huge outdoor patio area, heated pool and spa complete w/ Jandy control system. Exquisite master suite w/ volume ceilings, custom spa retreat-like bath with corner tub, double vanity, over-sized shower, dressing area, massive dual closets, private balcony and ocean views. Three additional upstairs bedroom suites. 1st floor bedroom suite ideal for Maid's or home office-den. Custom designer finishes throughout w/ great attention to detail. Wired for surround sound & state-of-the-art electronics. Many GREEN design features. A MUST SEE!

Lot Purchase: 4/20/07 - $957,000

Listing History: 12/27/10 - $2,295,000

SOLD: 2/25/11 - $2,235,000

Maybe there is something that I am missing here but I don't see how this developer didn't take a big loss on this. If you take out the cost of the land, the buyer just paid $329/sq ft for the construction on its own. Unless this was really crummy quality, I figure the all in build cost isn't too far away from that number. Then think about all the other costs. They held the land for for almost 4 years. There is a big real estate agent commission check to write, there is the construction loan interest, property taxes, etc, etc. The one thing I will say is that the developer did a good job of listing at a realistic price which allowed the sale to happen quickly. No point in listing way too high and letting the listing get stale and then having to rent it out.

As far as I have seen, there haven't been too many of these types of wretched, overbuilt monsters in 90405 so far. If I lived there I would be somewhat disappointed to see the spec palace type construction. However, longer term, it may be a testament to the 90405 value and a sign that the area is continuing to attract more wealth.

Stale in 90403 Update 2

2011-02-19T14:50:00.000-08:00

I last featured 2620 Washington back in November 2010 when it had made a second price cut.

Listing History: 6/3/10 - $1,387,000
Reduced down to - $1,299,000

Reduced again down to - $1,269,900

SOLD: 2/10/11 - $1,255,000

This house was on the market for 194 days before going into escrow. From the description, it was also available for rent at $4,600/month. Let's assume for the moment that they could get that rental price.

After putting 20% down, your mortgage payment on a $1mm loan would be about $5,700/month at 5.5%. Property taxes come out to another $1,200/month. You then need to factor in insurance, upkeep, etc but on the other side you have the mortgage interest deduction. No matter how you crunch those numbers, there is still a very big premium being paid to own. I think there has always been a premium to own in this area and there will continue to be in the future, but I could see the premium eroding a bit. Rents may marginally rise while property values come down a touch. But no matter what happens, if you wait for parity, you will wait forever.

Back Out Of The Shadows

2011-02-08T17:09:00.000-08:00

I last featured 942 26th back in February 2010. Before that, I featured it in January 2008. This is an agent owned and listed flip gone wrong. It looks like they couldn't find anyone to overpay for it, so they have chosen to delay the inevitable and rent it out. Stunner, here we are a year after the last listing (as the 12 month lease is likely running out) and the price is STILL too high.

Details: 3 bed/3 bath, 2,477 sq ft house on an 8,329 sq ft lot. Totally flipped.

Previous Purchase: 10/31/05 - $1,549,000

Listing History: 1/19/08 - $2,295,000
Expired after 61 days on market

Re-Listed: 1/28/10 - $1,875,000
Canceled after 42 days on market

Re-Listed: 1/27/11 - $1,985,000

This listing price is too high. The owner is either in total denial about the fact that they have lost a bunch of money or else he simply can't afford to sell it at a true market price. Good luck.

The next property coming back out of the shadows is 2619 Washington which I featured back in November 2009. This house has been listed twice already so now they are hoping the third time is a charm (at this price I don't really think it will be). Just like the house on 26th street, the last listing ended in the house being rented out.

Previous Purchase: 12/20/96 - $715,000

Listing History: 11/3/08 - $2,284,800

Re-Listed: 10/13/09 - $1,995,000

Re-Listed: 1/28/11 - $1,995,000

This seller is listing for the same price as their last try, however the current description cites a "newly renovated kitchen" and from the photos alone I can tell they painted the house. So at least they have spent some money and kept the price the same. A net price reduction. The joker on 26th can't say the same. So I give this house a much better chance of selling than the one on 26th, but I still think they will need to bring the price down by a decent amount.

The last of our trio of 90403 houses coming out of the shadows is none other than the slanted roofed, gaudy fountained, 843 25th. I last featured it in August 2010.

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

Re-Listed: 1/31/11 - $1,999,999

This house was the most recently listed out of these three as it was around in the summer of 2010. They came out asking a ridiculous price and quickly cut a few times, but it was obvious that they were still way out of the ballpark. They have raised the price by a nominal $999 this time around. If this seller takes quick action and cuts the price (by a bigger margin than last time) then I think they can sell it. Otherwise, I think nothing happens up around $2mm.

All three of these examples show that we are not out of the woods yet and that we still need to clear through some shadow inventory. At some point I would hope these sellers would realize that the strategy of listing at a price that is too high is not working. As I have shown on this blog many times, if you list a property at a low price, you will create excitement and buzz and likely get a bidding war. I think that in at least 2 of these cases, the owners may be unwilling to go that route because they are underwater and are in denial or can't afford to really sell...but who knows. I will keep an eye out and see what happens.

Another Stinky Short Sale On 25th?

2011-01-31T17:59:00.000-08:00

Address: 522 25th - 90402

Details: 5 bed/7 bath 6,397 sq ft house, 8,700 sq ft lot, 2006 construction, "landscaping and other areas still need to be completed"

Description: SHORT SALE SUBJECT TO LENDER APPROVAL. HOME FEATURES 5 BED/7 BATH. LANDSCAPING AND OTHER AREAS STILL NEED TO BE COMPLETED. HOME IS BEING SOLD AS IS. BUYER IS RESPONSIBLE FOR DOING ALL INSPECTIONS AND DUE DILLIGENCE. PLEASE SEE PRIVATE REMARKS.

Previous Purchase: 4/22/02 - $1,625,000

Listing History: 1/19/11 - $2,995,000

The last suspicious looking short sale on 25th that I featured was south of Montana. This one is north of Montana. Both are (in my opinion) pretty ugly spec palaces. The one south of Montana is still listed as "pending" as I write and it went into escrow at 0 days on market. This listing here was apparently on the market for 8 days before going into escrow and it is now listed as "looking for backup". But the odd thing is that if you go to the MLS and search for properties that are in escrow, you won't find this one. I was able to pull the listing page off of another link on the internet. But why, if you are trying to get top dollar and trying to get the widest audience, would you list a property in a way that limits the ability of people to see it?

From the description, we see that this property still isn't fully finished. They listed landscaping and "other areas" as incomplete. This thing is listed as being 2006 construction. So after 4 or 5 years they still couldn't get it together and finish the landscaping? Huh? Have people ever heard of the terms "holding cost", "time value of money", "cash burn"? How long have they not been paying the loans on this thing? Hard to know, but RealtyTrac shows that the property is in pre-foreclosure so I'm guessing at least one notice of default has been filed.

As to valuation, this is a very prime lot and the land itself is worth not too much less than $2mm. Probably $1.8mm -$1.95mm. Even with the fact that you need to spend some money on landscaping, I think the $3mm asking price for this short sale is low. Of course, I could be unaware of some major construction flaws or maybe it needs a ton of work inside (I don't get that impression though). I just get really suspicious when I see short sales like this where they aren't widely marketed for at least a few weeks. If anyone has any info on this situation, please feel free to share or anonymously e-mail me.

Examples like this show that despite my more optimistic outlook for Santa Monica real estate, there are still a bunch of buried bodies that need to get cleaned up. It should still take some time, but these types of situations are not common enough to pull down the entire market by a large degree in my opinion. I just don't like seeing suspicious activity in the market so I use this blog to highlight things like this. Thanks to the reader for the heads up on this property.

Sorry, No Free Lunches Here UPDATE 1

2011-01-19T17:12:00.000-08:00

I have continuously warned that if you are expecting to buy a high quality property (or piece of land in this case), you won't be doing it at some huge, 50% discount...even at the very bottom.

I featured 848 23rd back in late December. The seller and agent employed what I believe to be a brilliant listing strategy considering that this property was put on the market right around Christmas (and in the rain...the horror!). Instead of listing at some bloated price and have the property turn into a zombie, they listed at a very cheap price. A price that had several readers e-mailing me. I had a friend e-mail me because his co-worker saw it and wondered what was going on. Get it? High quality at a very cheap price elicited a giant amount of attention.

Next came the throngs of people willing to deal with a rainy open house during prime holiday gift shopping time. And of course, next came the bidding war.

My own sources and some astute observes guesstimated $1.35mm...

Listing History: 12/14/10 - $989,000

SOLD: 1/18/11 - $1,385,000

I'm a little surprised by this sale amount as it seems to indicate a very full price to me, but it is in line with the guesses of a few people. Some of you may want to compare this to 838 25th which sold in March 2010 for the exact same price but was actually rehabbed a bit so you could actually live in it. I would caution that it is not a complete apples to apples comparison in terms of location because the house on 25th backed up to the school whereas the house on 23rd is more of a super prime location (for south of Montana). So I don't think you can look at this and say that prices are rising much, but it sure shows they are pretty firm and not declining by a noticeable amount.

The 2011 Selling Season Has Arrived - Now Show Me Some Rollbacks

2011-01-18T16:40:00.000-08:00

Address: 1025 25th - 90403

Details: 3 bed/2.75 bath 1,900 sq ft house, 6,072 sq ft lot, 1930 construction with some upgrades

Description: Welcome to this charming one story Spanish home located on a tree-lined street. This location is close to the parks, shops and Franklin school. The house has hardwood floors throughout and coved ceilings in the living room with a fireplace. The inviting formal dining room, with high ceilings and big windows is adjacent to an outdoor eating area which creates a desirable entertainment flow. There are three bedrooms and 2 3/4 baths. The yard has a serene sitting area and a place for a swing set.

Previous Purchase: 9/13/05 - $1,720,000

Old Listing History: 2/27/09 - $1,895,000
expired after 182 days on market and no price cuts

Current Listing History: 1/14/11 - $1,650,000

The old listing history from back in early 2009 shows that this seller has been very delusional in the past. However, the current asking price appears to be much more in line with the market (although I think it still looks a little high).

The current asking price represents a 4% rollback from the September 2005 price...so call it a mid-2005 rollback asking price. I think they may need to reduce the price into early 2005 territory or a bit lower to get this to move. One of the problems with this house is that the smaller lot and interior improvements makes it so a buyer isn't going to buy this and tear it down to build, but at the same time, it isn't small enough and cheap enough to cater to the more entry level young family demographic. This thing is a touch above the entry level area but not really into the next tier...

I have noticed a nice little bunch of properties hit the market in the past week or so. Hopefully we can keep a close eye on new listings as well as listings coming back out from the shadow inventory pool (like this one).

90403 Boomerang

2011-01-13T17:51:00.000-08:00

I last featured 1030 Chelsea back in late 2008 when it sold. I went to the open house back then and this thing had not been improved in quite some time. Looked like a fairly old owner.

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?

Challenging Location Created Deeper Rollback

2011-01-10T18:21:00.000-08:00

Address: 716 11th - 90402

Details: 3 bed/3 bath 1,668 sq ft house, 7,500 sq ft lot, "pristinely remodeled"

Description: This pristinely remodeled 1-story home is located close to popular Montana Avenue, offering posh boutiques and restaurants, within the excellent Roosevelt School district, and a short distance to the beach and Boardwalk. The home offers 3 bedrooms + 3 baths and bonus room on a lovely and privately landscaped +/- 7,500 sq ft lot. The Kitchen is completely re-done with granite counters, breakfast area and top-of-the-line appliances. Hardwood floors, crown moldings and recessed lighting are found throughout. There is a large living room with views towards front landscaped yard. The nice sized dining room and French doors lead to the backyard with grassy area, bamboo landscaping, water fountain sculpture and outdoor deck for entertaining - all providing a Zen-like atmosphere.

Purchase History:
11/4/04 - $1,460,000
9/14/06 - $2,112,000
5/8/07 - $2,300,000

Listing History: 6/10/10 - $2,195,000
Reduced down to - $1,899,000

SOLD: 12/29/10 - $1,780,000

This is a loss of $520,000 which works out to 22.6% off of the mid 2007 price. This looks bigger than other rollbacks for single family houses in 90402 and I think much of this can be attributed to the fact that this property is on the first half of the first block north of Montana on 11th (which has a light). So, you've got the too close to Montana problem as well as the 11th street problem.

I think this is likely an apples to apples rollback as it looks like the upgrades to the house were likely done sometime after the 2004 purchase. Pretty crazy how many times this property changed hands though. Something of an Old Maid situation.

18.4% Decline To Start 2011 Off = Stable Values

2011-01-06T17:03:00.000-08:00

Address: 453 14th - 90402

Details: 5 bed/5.5 bath 4,665 sq ft house on a 7,810 sq ft lot, year 2000 construction

Description: Elegant Newer Mediterranean North of Montana. Soaring ceilings, gorgeous wood floors, custom moldings and quality built-ins. Large gourmet cook’s kitchen with stainless appliances, center island, butler’s pantry and granite counters. Four bedrooms and upstairs family room/library, guest bedroom downstairs. Palatial master with 16 foot ceilings, spa bath, fireplace and two balconies. Backyard features a dark bottomed swimmers pool, entertaining area, a built in BBQ and large covered patio. Bonus room above the two car detached garage. Enjoy all the benefits of Santa Monica’s schools, shopping and restaurants – all just around the corner.

Purchase History:
8/7/00 - $2,425,000
4/16/04 - $3,100,000
4/24/06 - $4,350,000

Listing History: 10/29/10 - $3,600,000

SOLD: 12/30/10 - $3,550,000

This $800,000 loss is large in dollar terms but it is a decline of just 18.4% which I would call roughly in line with other peak to current declines. Note also that this is 14th street which carries a bit of a discount and which is not as resilient as other streets which are less busy.

Happy new year and welcome to 2011. We are now in year 2 of my 3 year period in which I said buying a house would likely make sense (2010-2012). As shown by this example, I think prices are still remaining pretty stable. I don't see a compelling reason for values to go up and I still think they might creep down a bit (at least in real terms), but I don't see any major, looming gap-down upcoming. The economy is looking stable to better. Check it out, Calculated Risk even did another somewhat positive post titled "The Brighter Outlook".

Sorry, No Free Lunches Here

2010-12-24T22:01:00.000-08:00

Address: 848 23rd - 90403

Details: 2 bed/2 bath teardown on an 8,000 st ft lot

Description: BIG OPPORTUNITY! THIS SWEET COTTAGE SITS ON A FLAT 8000' LOT ON THE BEST BLOCK SOUTH OF MONTANA. AMAZING DEVELOPMENT OPPORTUNITY TO EXPAND ON OR REBUILD. GREAT WIDE STREET, FRANKLIN SCHOOLS. STEPS TO MONTANA SHOPS + RESTAURANTS. VERY QUIET AND PRIVATE.

Listing History: 12/14/10 - $989,000

OMG, a well located teardown in 90403 for less than a million!...Well, not so fast. Despite the fact that it is a pretty slow time of year for real estate, high quality lots get a lot of attention when listed for well below market value.

I actually think this listing strategy isn't crazy when trying to get a relatively quick sale done. Lots of excitement clearly got generated in this case with such a low list price and the ensuing bidding war is likely in its final stages as I post this right now. Somebody I talked to guessed this would sell for about $1.35mm when it is all said and done. I think that will turn out to be a pretty close guess. We'll see.

Finally, compare this listing strategy to that of 907 22nd which has been active on the market for almost a full year. Stale, no excitement, no buzz. I think the location of the house on 23rd is superior to that of the location of the house on 22nd so when this transaction closes, it will create a nice comp and reality check for the 22nd street house.

Mortgage Rates Are Rising, But Don't Freak Out

2010-12-14T18:08:00.000-08:00

I've been watching longer term Treasury rates rise. To the left is the 10 year rate graph I picked up off of a Calafia Beach Pundit post.

Mortgage rates basically track the 10 year rate (+ a spread). Calculated risk has a post right now about the real time movements in the mortgage market. It looks like conforming rates are getting near 5% after being in the low 4% area. This makes sense as the 10 year Treasury rate has also moved up about 1% during the past little spike.

Now rates rising on their own would be a significant negative for home prices. But in case you haven't been paying attention, the economy doesn't look too bad right now. A more stable and now growing economy should in fact elicit higher interest rates. So you have to ask yourself how much higher interest rates should be given the better economy and better outlook for growth next year.

Overall, I think rates are still really low and I don't view the current rise as significant enough to cause a significant disruption in the housing market, especially because a big reason for most of the interest rate rise is due to an improving economic picture in my opinion.

Other than this story, I don't really have much to say about the housing market right now. It is the seasonally slow time of year. Not much going on, prices don't seem to be moving much from the limited data points I see coming in for our local market.

What Does Short Sale Fraud Look Like?

2010-12-04T21:18:00.000-08:00

I can't ever come out and say something is fraud for sure. I almost never have all the details. I do the best I can in terms of putting the pieces together.

So I present the following hypothetical situation. Let's say that you built a large spec house and paid too much for the lot and then spent too much money on high end construction and materials. You then try to sell the monster but can't get a bid anywhere near what you need to break even. So then you rent it out for a while.

Now it gets interesting. You know some people who are happy to break the rules in order to make some money. You figure you are so underwater on the house that there is no hope of breaking even or making any type of profit. So you get your buddy who is a real estate agent to take your house and get it sold via a short sale. But rather than list it as a normal short sale at a reasonable price, you decide to find a buyer who would be happy to buy the house at well below fair market value and who will in exchange pay out some kickback money to both you and the agent.

So how would you go about doing this? Well, you line the whole transaction up and then put the house on the MLS but you immediately put it up as "pending" after 0 days on market. And the listing price is well below fair market value. You hope that you can somehow convince the lender/bank that it is a fair price and hope that they are not paying attention to all the red flags such as the fact that the listing went pending after 0 days on market and the fact that the agent isn't a local agent...his phone number isn't a westside area code. If the lender/bank is stupid and you can con them into approving the short sale, the buyer wins by getting a big, new house at well below market price despite the fact that they had to pay out some kickback money to the seller and agent. The seller and agent are happy with the kickback money. All parties extract benefits at the expense of the lender/bank...except all this would be illegal of course.

So could all of this happen right here in Santa Monica? Maybe. I will reiterate that all the text above is just a hypothetical situation. Now that we are done with hypothetical situations, let's look at a property that we have spent a good amount of time looking at in the past.

933 25th is a large spec house that was last featured on this blog in July 2010 when we learned that it was rented out for $16,000/month.

Listing History: 10/22/09 - $4,488,000
Reduced: 01/13/10 - to $4,250,000
Reduced: 03/06/10 - to $3,895,000
EXPIRED after 174 days on market

Rented: 7/9/10 - $16,000/month

So the last we had heard, this thing was rented.

I checked the MLS the other week and found an interesting surprise. The house has been re-listed as a short sale, but it went pending after 0 days on market at what I think is a price well below market level.

Re-Listed: 11/5/10 - $2,399,000

In my previous posts on this house I always said it was wildly overpriced. But $2.4mm? This house is worth well more than that. Hundreds and hundreds of thousands more. So why would a short sale listing come to market at such a low price? Well, maybe they are trying to attract multiple buyers to bid it up. But if that were the case, wouldn't they leave it active on the market for a few weeks at a minimum to make sure they get all potential bidders?

As I said before, I never have all the facts and appearances can be deceiving. I never can be certain of anything and I am not accusing anyone of anything. So readers, why don't you tell me what you think is going on here. I would love to know.

REO Gap-Down

2010-11-29T21:26:00.000-08:00

Address: 1320 Pearl - 90405

Details: 3 bed/1.75 bath 1,162 sq ft house, 5,080 sq ft lot, REO

Description: Bank-Owned Agents Please read the private remarks it will save you time a great starter home at a great value in desirable City of Santa Monica it is simply a gorgeous house with a huge separate guest room in the back Property is Tenant occupied and will be delivered occupied, due to the new ordinance Bank can not force the tenant out however the new purchaser can.. especially owner occupied.Information is not guaranteed buyer to investigate, verify& rely on their own findings including but not limited to permits if so choose. All offers must be presented w 3% copy deposit check, Proof of Funds, Pre Approval letter or there will be no response from the Seller.Please call my assistant Phone # in private remarks she will give you the info as to what the current rent is that is being collected as well as anything else you may need Please drive by with the buyer first no sign on the property the occupants are uncooperative please submit offers subject to viewing the inside at acceptance.

Previous Purchase: 4/28/06 - $1,270,000

Notice of Default: 4/9/08

Lender "Buyback": 11/2/09 - $1,250,786

REO Listing History: 6/23/10 - $889,900
Reduced down to - $739,900

SOLD: 11/29/10 - $735,000

This loss of $535,000 represents a rollback of 42%. This is abnormally high and is NOT representative of the market. With that said, we should ask ourselves why this huge rollback is taking place. The first place to look is the sale that just went through. I see absolutely no indication that there was any funny business considering the fact that this was listed on the MLS for quite some time (125 days before going into escrow). So this wasn't some insider kickback that went pending after zero days on market or anything. I think the price it sold for is a fair, market price.

So we are left to investigate the original purchase back in 2006 to try and decide what type of potential foul play there could be here. I did a quick search on the blog for the address and found the following comment left back in October 2007 from one of our esteemed readers, dwr:

1741 Maple and 1320 Pearl (both of which are currently being offered for sale by Klondike Investments' web "sight") were both purchased in 4/06 with zero down, financing by First Franklin. The owner of 1320 Pearl recently (on 10/10) had seven properties transferred to him from someone whose last name is the same as the owner of 1741 Maple, but with different first names. Probably just another extended family of wannabe Trumps who put none of their own money down and somehow "own" 15-20 properties, thanks to First Franklin et al.

So easy financing was abused and someone got a hold of a bunch of properties that they shouldn't have. Now is where you have to speculate because I don't have answers. Did they knowingly overpay and receive some type of kickbacks at the time of purchase? Or were they just stupid with no skin in the game and didn't care what price they paid because they had some type of neg-am loan where they would win by renting out the properties and making little to no mortgage payments?

I'm too lazy to do any more digging on the lowlife that owned this place and all the others, but I think the moral of the story is that examples like this show we are just now getting through all the (potential) fraud and market distortions brought on by the credit/housing bubble. The old sale looks way too high to be called "market", even by 2006 standards. The current sale looks fair. It is good news when we work through these situations. I think it will still take a few years to clear out all the rot.

OMG - They Finally Cut The Price!

2010-11-27T12:39:00.000-08:00

I previously mentioned 907 22nd back in January as part of my "Bermuda Triangle" post.

Previous Purchase: 3/21/00 - $740,000

Old Listing History: 5/11/09 - $1,575,000
Reduced down to - $1,475,000

Re-Listed: 1/14/10 - $1,475,000
Reduced - 11/11/10 - down to $1,425,000

This listing has been the definition of "stale" as it sat for about 300 days with the same bloated price tag. The location is not bad and there is certainly demand for this type of property in this location, but not at the unrealistic price they were asking. I had also heard that they were unwilling to negotiate with potential buyers.

I think this price cut is not enough and it barely even accounts for the seasonal softness in prices in the winter. The bigger issue is that the price was originally too high and now they are even that much higher due to what I think is a likely decline in the market that is going on right now. So the big question here if you are a buyer is the following: is this price cut yet another case of being too little too late as was the case with the 2009 listing? Or is it a signal from the seller that they are finally ready to think about becoming more realistic and negotiate?

My guess is that they are still delusional and will still be stubborn since the price cut was so small and they are still a good ways away from asking a market price. One comp for the area would be 835 25th which sold back in the hot spring market for $1,385,000. It had the location flaw of being next to the school but had a little work done on the interior whereas the house on 22nd has not had work done. But again, the bigger issue is that the market was stronger fundamentally and stronger due to seasonality back in the spring.

2008 "New" Construction Finally Sells

2010-11-22T17:22:00.000-08:00

Address: 714 14th - 90402

Details: 5 bed/6 bath 4,229 sq ft house, 7,500 sq ft lot, 2008 construction

Description: Completed in 2008 Spanish Colonial by Fernando Dizitti w/5bd, 5.5ba. North of Montana. Step down living room w/fireplace, elegant formal dining room & office. Kitchen w/Calcutta marble, waterworks fixtures, top-of-the-line appliances, butler's pantry w/wine closet & fridge. Bright family room w/fireplace opens to patio perfect for outdoor entertaining! Master suite w/ hi ceilings, balcony, bath w/limestone counters. Features walnut distressed hardwood, unique archways & wood-beamed ceilings, & exquisite detail thru-out. 2 systems for air/heat, wired for alarm & sound. Tenant occupied

Lot Purchase: 3/3/05 - $1,500,000

Listing History: 2/29/08 - $3,750,000
reduced and re-listed a few times until we get to the...

Current Listing History: 9/30/10 - $2,995,000

SOLD: 11/19/10 - $2,900,000

I recently featured another 90402 spec house on 24th which sold not too long ago. I estimated the cost net of the lot (i.e. the construction cost to the buyer) to be roughly $342/sq ft. I believe the quality of the construction for the 24th street house was pretty good.

But looking at this house on 14th, I think the buyer didn't get that great of a deal. If we use the early 2005 lot value purchase as a rough estimate of lot value today, then the buyer just paid $1,400,000 for the construction. What does that work out to? Well, about $331/sq ft. This is less than the $342/sq ft for the 24th street house, but I think it should be even lower given that I had heard multiple reports that the construction on the 14th street house was not nearly as high quality as many other high end specs in the area. Additionally, the house on 14th has been rented out and lived in by someone else! So while it was completed in early 2008, it isn't really "new" anymore and should deserve a bit of a discount relative to a real "new" house.

Stale in 90403 Update 1

2010-11-17T20:16:00.000-08:00

Just after my last post earlier this month on 2620 Washington, the price was cut.

Listing History: 6/3/10 - $1,387,000
Reduced down to - $1,299,000

Reduced again down to - $1,269,900

I think this is a poor listing strategy. The cuts are too small, too late. The best listing strategy is to list at a more attractive price and try to generate excitement over the listing. You might even get some silly buyers to bid it up then.

Junk REO

2010-11-13T19:05:00.000-08:00

I last featured 1308 26th back in March 2009.

Details: 2 bed/1 bath 855 sq ft house, 4,948 sq ft lot, "tastefully remodeled in 2006"

This property is in a very poor location and the rollback is thus deeper than average, but indicative of the direction of the market right now.

Previous Purchase: 4/15/04 - $698,000 (100% financing)

The last listing back in 2009 was a short sale and the price got down to $680,000 but it ended up expiring with the following description: 3 diferent lenders, seller BK last min. of close escrow. Property under investigation.

Finally it is back as a foreclosure

REO Listing History: 11/11/10 - $669,900

This is going to be a big rollback when it eventually sells as I don't think there is any way that it sells for close to the list price.

Thanks to Facts and Feelings for the heads up on this listing.

No Reason To "Hurry" Update 1

2010-11-11T17:08:00.000-08:00

I last featured 2507 California back in August. I then mentioned it in my "Stale in 90403" post just last week.

I have said all along that it is overpriced.

Looks like they are throwing in the towel for this year and adding it to the shadow/pent up inventory.

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

2010 Listing History: 8/9/10 - $1,499,000

Withdrawn after 86 days on market

This is almost comical. Overpriced in 2008 and let it expire. Reduced the price in 2009 and still didn't price it low enough and let it expire again. Now, in 2010 they list it at a higher price to take into account the fact that they put some money into the house, but they are still too high -- for the third time and the third year in a row.

This is called chasing the market down. The irony is that the market seems to be weakening a bit here. See you next year.

18.7% Prime Lot Value Rollback in GRS 90402

2010-11-08T20:27:00.000-08:00

Address: 365 24th - 90402

Details: Tear-down on a prime, 8,700 sq ft lot

Description: Teardown /Major Fixer on Prime 8700 Sq ft lot well positioned on the blk on one of the Most beautiful tree lined Street N of Montana. Restore this original Spanish or start anew either way you look at you will end up a great house in a fabulous location!!! Please see private remarks for further instruction for showings/presenting offers.

Previous Purchase: 5/3/06 - $2,337,500

Listing History: 5/4/10 - $2,500,000

SOLD: 11/4/10 - $1,900,000

This is a case where some old holder nearly top-ticked the market and sold a tear-down to either a spec builder or someone who wanted to build a house for themselves. We now see a decline of nearly 19% for what I think is unquestionably a very well located, zero location discount lot.

Good luck to the new buyer. I wonder if spec builders are out there in the market starting to buy lots again for projects to work on over the next few years. I would personally favor someone buying the lot for themselves and building something unique but whatever.

Stale in 90403

2010-11-03T19:05:00.000-07:00

Address: 2620 Washington - 90403

Details: 2 bed/2 bath 1,380 sq ft house, 6,807 sq ft lot, "recently updated"

Description: Located North of Wilshire in the Franklin School District, this Charming 2 bedroom, 2 bathroom home has been recently updated. Brand new kitchen features granite counter tops and stainless steel appliances. Step down living room with fireplace and formal dining. Newly remodeled bathrooms and all new double pane windows. Bonus room off garage with bath and laundry room. Spacious grassy backyard. Also for lease at $4,600/month.

Listing History: 6/3/10 - $1,387,000
Reduced down to - $1,299,000

As you can see from the description, this house is also available for rent at a price of $4,600/month. You can also see that they have put a bit of money into the house with some upgrading.

The problem here is that they are asking too much money for a non-pristine location and a somewhat smaller lot. This house is on Washington just 4 lots from the traffic circle on 26th and the lot size is just 6,800 sq ft.

Compare that with 838 25th which sold earlier this year for $1.385mm. 838 25th was a slightly larger house, but also 2 bedroom and somewhat upgraded. However, it was in a more prime location and the lot size was significantly larger at 8,000 sq ft. You can go ahead and build a real mansion on 8,000 sq ft and when you are in a more prime location. For the Washington house, the economics of future building don't work quite as well.

This Washington house is now looking stale as it sits at 152 days on market with just a minimal price cut. They need to get serious and bring a healthy sized cut.

Also, another stale listing in 90403 that I haven't mentioned in a while is 2507 California. You will remember that I titled the post "no reason to hurry" because I said it needed price cuts. As it stands, it is now at 85 days on market with no price cuts. It is materially overpriced and the sellers are doing themselves a serious disservice by letting the listing get stale like this.

Solid 2004 Rollback In 90402

2010-10-30T14:26:00.000-07:00

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

2010-10-28T20:39:00.000-07:00

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)

2010-10-24T10:54:00.000-07:00

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

2010-10-24T10:25:00.000-07:00

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

2010-10-23T14:43:00.000-07:00

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

2010-10-20T19:07:00.000-07:00

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"?

2010-10-15T17:59:00.000-07:00

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...

2010-10-14T18:29:00.000-07:00

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

2010-10-11T17:10:00.000-07:00

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

2010-10-05T18:46:00.000-07:00

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.

90402 Spec House

2010-09-30T19:51:00.000-07:00

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

2010-09-22T18:41:00.000-07:00

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

2010-09-21T18:36:00.000-07:00

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

2010-09-19T11:36:00.000-07:00

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

2010-09-14T17:43:00.000-07:00

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

2010-09-12T16:28:00.000-07:00

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

2010-09-12T16:21:00.000-07:00

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

2010-09-05T10:19:00.000-07:00

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

2010-09-01T18:21:00.000-07:00

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?

2010-09-01T17:59:00.000-07:00

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.