Wednesday, August 29, 2007

Cheap north of Montana

This new 2 bed / 2 bath listing at 420 7th St. for $1.4M is interesting for being north of Montana for well under $2M. Not a tiny lot, presumed a tear-down, but on very-busy 7th St., the main road into Santa Monica Canyon. I've outlined its lot above. A recent comp is 633 7th, 3 bed / 2 bath, sold 12/6/06 for $1.41M. You could drop by the brokers open today (wonder who the "committee" is?):

"Original 1950's charmer close to Montana Avenue & the beach. Single-story with 2BD, 2BA, living room, dining & 2 garages (one attached & one detached). Bring your architect to add-on or build your dream home. Tons of opportunity! Offers subject to review of committee. Open for the first time Tuesday Aug 28, 11-2 PM"

32 comments:

Anonymous said...

Warchest should jump on this opportunity.

Anonymous said...

Compare to : Not bad :-)
450 Lincoln Blvd Santa Monica CA 90402
3 beds, 2.0 baths, 1,260 sq ft;
Recently Sold: $1,605,000

1140 San Vicente Blvd Santa Monica CA 90402
2 beds, 2.0 baths, 1,652 sq ft;
Recently Sold: $1,800,000

Anonymous said...

I am so tired of warchest. he is really working a nerve for me and has been the primary reason I've stopped participating in the commentary on this site.

Evil Landlord said...

1811 Marine is doing it for me this week

WarChestSM said...

Sorry you feel that way anon. I think I have a tendency to hog the comment section. So I decided to take my long winded comments to another place (link posted in other thread).

That being said, this blog is great. I intend to keep adding what I can to try to give color where I can. I have tried to drive people to this blog and I have tried hard to spark up more debate/discussion because I couldn't believe that westside real estate would stay strong.

Again, sorry if I rubbed you the wrong way. Hopefully my participation is a net positive for most because after spending basically my whole life in SM, I feel like I have a lot of info that may be valuable to some.

Don said...

Bah, anon 3 is an idiot.

Anonymous said...

Don: it's comments like yours and some of Warchest's in the past that have turned me off to this blog. if anyone dares have an opinion that is contrary to yours, we are idiots.

I'm tired of it. It's supposed to be a forum for discussion, not judgment on others.

I actually appreciated Warchest's honest response. He at least didn't call me an idiot. He at least recognized that there may be a reason people feel a certain way.

WarChestSM said...

Anon,

I won't deny that I have been rough in some responses in the past. But I am really hoping that you stick around and give your opinions. Blogs where everyone is insanely bearish and saying that housing will fall 50%+ across the board are silly and provide little value. If someone is bullish or has a contrary opinion that has some interesting reasoning/perspective behind it, then I know I would love to hear it.

I have actually been hoping that a real estate agent or mortgage broker in the SM area would post comments here so we can get more of an "inside" view on things.

Bring on the contrary opinions, they should add value if people can be decent with their comments. Also always realize that everyone has a bias to their point of view. I am young and currently rent. I love Santa Monica and may likely own property here later in life...so naturally I tend to look for signs of weakness. At the same time, I am trying to really figure out what is going on and what will likely happen in the future.

Again, apologies to those who feel similar to anon. Please share your points of view.

And sorry for hogging the comment section again! Keeping blogs like this going with lively discussion is important.

Anonymous said...

Latest list of foreclosures from realtytrac in 90402 should cause sellers to price their homes to sell, even if it means lowering the price. With that many listings and many more to come prices will have to be lowered.


Los Angeles County Foreclosure Search Results
Location: Home > CA > Los Angeles County
Search Results: Foreclosures in 90402
706 listings match your search criteria.

Anonymous said...

I often disagree with War Chest but do appreciate his or her trying to spark some discussion in the comments.

Anonymous said...

That number of foreclosures from realtytrac isn't all 90402. Approximately 50 are 90402 and others are Pacific Palisades, Marina Del Rey, Playa Vista and other LA areas. Still a very high number is you are trying to sell a property in LA.

Westside Bubble said...

I think we do pretty well on civility here, and thank everyone commenting that way. I appreciate Warchest's participation and information. And all the others! (But please fill in some name besides anonymous.)

You can tell I have bearish expectations (hey, why start a bubble blog otherwise?!), but post the stats as they are. Inventory is lower than last year, and well-priced listings typically have sold within a month.

The over-priced and long-sitting are fun to write about, so I do. And they help illustrate the unfolding fall.

Don said...

Yo anon, you're an idiot because you've decided that YOU are the arbiter of who makes the forum worth participating in. I have no idea of your opinions about anything else because you post as "anonymous." I've got no idea which of a gajillion anonymous users you are.

Anonymous said...

Don: Haven't you figured out that calling anyone an idiot is simply rude? This forum is supposed to be a place to exchange ideas and opinions. Being called an idiot doesn't make me want to rush to post, anonymously or otherwise.

Warchestsm actually responded politely and civilly and I appreciated his perspective. It made me reconsider my position, but you, on the other hand, are not.

I would appreciate if Westside Bubble would weigh in on this and end it once and for all.

PS Warchestsm: checked out your new blog. It was very interesting. Thank you!

Anonymous said...

Hi

I am not a member of realty trac but i would like to see a list of the houses north of montana that are in foreclosure - would someone who is a member of realty trac be so kind as to post the list here?

I apologize if this is an inappropriate request or if i offend anyone with this request

Anonymous said...

It is common knowledge that standard 7500 square foot vacant lots north of Montana peaked at just over 900k in the late 1980's then they fell to just under 600k in the early 1990's and then they peaked again recently at around 2.4 million.

Assume that a buyer and a seller of the standard 7500 square foot vacant lot (or teardown) north of montana came together today, and they both arranged for a very very quick close, what price would the transaction take place at?

I know this is a matter of opinion, but i am interested in those opinions -

Thank you

Westside Bubble said...

Anon-the-last, I'm still seeking all the recent low-end (lot-value) sale prices north of Montana. In the meantime, a reasonable comp from this spring is 307 Euclid, 3/2.5, sold 6/13/07 for $2,050K.

Anon-the-next-to-the-last, it's very appropriate to ask about Realty Trac info here! We'd all be interested in detailed info.

Anon-third-to-the last, you said it well. Don, I've appreciated your comments (and that you have a NAME!), but please leave off the "you're an idiot". Your points will be stronger without it.

wastu said...

Try Zillow 10 yrs Market Value Change, compare with LA County Assessor data, House prices never drop significantly for LA west of 405 & north of I-10
See also assessor's data on Land v.s improvement and 'recording date', the housing bubble in the past was not that bad.
The present bubble? Time will tell........

Anonymous said...

"Try Zillow 10 yrs Market Value Change, compare with LA County Assessor data, House prices never drop significantly for LA west of 405 & north of I-10"

You should run out and buy something today.

Anonymous said...

If anyone on this board is aware of teardown property north of montana that is not listed on multiple listing service, please post it here.

for example, if there is a teardown in foreclosure, where the owner or the bank is interested in selling it

or alternatively, a teardown where they have chosen to not list it with multiple listing service for some reason

I am asking for the above information for the following reason - In driving around north of montana i have seen a large number of teardowns with for rent by owner signs on the front lawn. i believe that many owners that plan to sell have decided to rent instead since they don't want to accept the prices in the market today.

Only by looking at the teardowns north of montana in which the owner fees compelled to sell right now will we get to see what the true honest market clearing price is right now.

one issue that hasn't gotten a lot of mention here is the recent violence north of montana - i am sure that most readers are aware that some teenagers shot other teenagers north of montana recently - please don't flame me, but do any readers here think that this violence will persuade the marginal north of montana buyer to move to an area that they think is safer - like the canyon or malibu? I do not advocate such a move and do not see it as logical, but i ask whether you see this happening

thanks

War ChestSM said...

Anon,

Regarding the violence...

High school kids can end up doing crazy things no matter what neighborhood you are in. I went to Samo. I had good friends who went to crossroads and to harvard westlake. I heard really crazy stories from them. North of montanta is a great neighborhood and I feel very safe when I walk around there. I don't think this very isolated incident will have too much of an impact.

Westside Bubble said...

House prices never drop significantly for LA west of 405 & north of I-10

Wastu, They did fall over 30% from 1989-1994. "Lot value" north of Montana, in the area between Lincoln and 14th, rose from around $300K in 1985 to over $900K in 1989, then fell to around $600K in 1993, and even less after the earthquake in 1994.

Anonymous said...

Hello

i was aware that vacant lots north of montana sold for 900k + in 1989
but i had no idea that they sold for only $300k in 1985.

Can anyone else confirm the $300k 1985 figure?

if this 1985 figure is correct, then the lots tripled in price in around four years.

until today, i did not realize the bubble in the late 1980's was so extreme

On another note, does anyone have more info on 450 lincoln? I would expect teardowns north of montana to sell for 1.6 million or less today, but back in late 1996 when that sold for 1.6 the market for land was much much hotter than it is right now at the start of September 2007.

if anyone can shed light on why that piece of land (with teardown house on it) sold for such a price please share it.

thank you

Anonymous said...

sorry - typo in that last post -

On another note, does anyone have more info on 450 lincoln? I would expect teardowns north of montana to sell for 1.6 million or less today, but back in late * 2006 * when that sold for 1.6 the market for land was much much hotter than it is right now at the start of September 2007.

if anyone can shed light on why that piece of land (with teardown house on it) sold for such a price please share it.

wastu said...

Relate housing bubble in context (History never repeated, even Vietnam war v.s Iraq war :-)
In 80-90's not so much diversified job & high mortgage interest rate. Earthquake in 90's related to liquifaction - Northridge to SM. (now engineers have a better understanding of EQ issues).

This blog seems more localized, rise & fall of home price will be related to local traffic & neighbourhood issue. (See patrick.net for trend in national housing bubble)
Local, land value bubble in the Westside is unique.
See 'Home for family ownership' as 10 yrs investment. Flip-flopper will learn their own lesson.

Anonymous said...

I know someone selling south of Montana. Nice house. It has fallen out of escrow -- twice. Regardless of how special Santa Monica may be, or how many people want to live there to raise a family for 10 years (or more), the current prices are not sustainable. They were sustained only by ridiculous lending practices -- even at the higher end. Incomes in the Los Angeles area are not high enough to support SM house prices. Tightening lending is starting to have a significant impact.

Westside Bubble said...

Anon, 450 Lincoln was listed in July '06 for $2,195K. It languished in a slow market and dropped its price three times, finally to $1,749K in October. It then quickly sold for $1,600K, closing 11/9/07.

The north-of-Montana market bumped up in volume and price this spring, though.

A big difference in 1985 was that fixed-rate jumbo loans were around 12%! They dropped a couple points in 1986, which I credit with launching that run-up.

WarChestSM said...

Wastu, anon, Westside,

I just posted the conclusion to the 26th street (just north of Wilshire) foreclosure situation which was discussed here months ago. 2/1 condo originally bought a year ago for $681K was finally sold earlier this month by the bank for $560K. That is a big drop in a short time period.

There are numerous foreclosure situations going on right now on both condos and single family homes (most single family homes are in the pre-foreclosure stage).

Weakness is starting to show in even the nicest areas for the nicest properties. I have a few items to highlight next week.

Westside, great info on 450 Lincoln. It helps so much that you have been keeping tabs on these properties. Thank you for your work, keep it up.

WestsideChariot said...

Great blog. Great comments. Great info.

However, the 450 Lincoln must be dated 2006. But even then that was a big drop.

Read down for one good example of high prices, rampant speculation, or both. And some very basic mathematics.

I am seeing a lot of building on North of Montana lots bought in 2006-7, but few new teardowns coming on market.

A trend I see is expensive: to dig construction underground so that the built-out McMansion is priced above $5m and up. Look at 435 (or so) 20th. The builder is putting a whole floor underground. It looks like a commercial building underground parking.

By the way, I am told the builder lives nearby and has built several others. He should know his market.

With that kind of construction cost, he must be angling for a $6+m spec sale with enormous square footage of what is basically 3 full floors.

The point is that if the ground is worth so much you dig 40 feet underground to live there, then either (1) the teardown lots must have some basic constant land value that is not greatly decreasing or (2) North of Montana is the most speculative real estate market around.

In other words, it would be unusual anywhere to see $2 million houses on identical lots as $6 million houses. Even with construction costs of $500 sq/ft on a 4000 sq ft house you get $2 mil. 2 +2 equals 4. If you believe in price arbitration: one of those prices is probably wrong.

My guess is that the $6+ million is priced at least 50% too high, and will likely fall to sell at about $3 million. For a final sale at about $650,000 more than paid for the lot.

That prices the bare lots at $l- $1.5 million.

Just my uninformed opinion...

Mr.Mortgage said...

FHA Plan:Bring a water gun to fight a fire.
http://thegreatloanblog.blogspot.com

Anonymous said...

There is house North of Montana that is in foreclosure right now

House is on Alta Avenue - it is a teardown with two bedrooms and two bathrooms.

The balance of the mortgage is $1.4 million dollars.

I humbly request that others on this board post the teardowns North of Montana that they know about.

The reason why teardowns North of Montana are a good thing to watch carefully is that for all other types of westside property, people will argue as to what is really comparable - i mean some will argue a condo is worse or better than some other condo - even a completed house is very hard to compare to another completed house.

The standard 7500 square foot lot north of montana is as close as it gets to a pure commodity - any of us that have followed SM closely for years can recognize the price trends today by looking at the vacant lots and teardowns.

One other point - if we see a house sell for $5 million in September, it won't really tell us anything about the market - it just means there is another billionaire that wants to be in SM and doesn't care about he local market.

Remember that Manhattan apartments in the $20 million range are selling rapidly even right now - someone who has a second home in Manhattan at that price will regard a third home in Santa Monica as an incredible bargain at only $5 million

However, no one buys a vacant lot or teardown on impulse - it requires very careful thought and careful predictions of where the market will be in two years when a house is completed. so the pricing for teardowns and vacant lots may represent more of a careful analysis of the future while a $5 million house sold just shows a need for immediate gratification.

Please don't flame me - i don't think any home is "worth" $5 million and i don't predict that we will see more sales at $5 million, All i am saying is that a group of sales at $5 million won't astound me. Whereas a group of sales of teardowns at top dollar would astound me.

Comments?

Westside Bubble said...

Good discussion, Westsidechariot. Here are some useful numbers:

402 20th sold 2/14/07 as an 8,940 sq.ft. tear-down for $2,350K.

333 20th sold for $5.1M this May, a new high for a regular 60-foot lot.

Santa Monica R1 zoning for north-of-Montana limits the ground floor to 35% of lot area and the second floor to 26%. Thus the basements for media room, maid's room, etc.

(Oops: 450 Lincoln closed 11/9/06.)

Good points, Anon-the-last.