Saturday, December 8, 2007

Flopper archives 2

Here's the second edition of Flopper Archives, updates on past acts of attempted flipping documented here.

Let's start with 724 Navy St. (above) from May 22, which has become a poster child here for flopping in Ocean Park.

It is a 2 bed/1.5 bath house on a 2,000 sq.ft. lot, second block west of Lincoln. Originally listed 5/6/07 for $949K, its latest LD is 9/29/07 and price $849K. Over 200 days on market, and managed to fail to sell in an active year.

Even 716 Marine one block over, new 2-story 4 bed/2.75 bath listed 4/20/07 for $1,759K, reduced to $1,589K, went Looking for Backup mid-November and off the market early December. Its neighbor at 718 Marine, 1 bed/1 bath, listed 5/25/07 for $869K, reduced to $799K, and was off the market late November. Did it sell too?

Another in Ocean Park that we featured July 2 is 2614 2nd St., corner of Ocean Park Blvd. It's a 3 bed/1.75 bath, listed August last year for $1,495K, off the market Dec-Feb, now with a listing date of 9/25/07 asking $1,339K. Unsold a year and a quarter.

Two recently covered long-time floppers left the market late November: 1101 Cedar St. (corner of 11th), listed 4/11/07 for $1,475K, last asking $1,399K, and 2320 Idaho Ave. listed 3/22/07 for $2,395K, last asking $2,195K. Did they finally sell (at what discount?) or will they be back in 2008?

And be sure to see SM Distress Monitor's Sunset Park - The Airport Flip **Update 1, NOW AVAILABLE FOR RENT**.

25 comments:

Anonymous said...

Can someone comment on the 2 price hikes in Santa Monica?

1427 25th, from $568 to $665

328 Pacific, from $898 to $1,098

Both represented by Melanie Sommers and Anthony Hitt at Sotheby's.

Price Stout said...

re 716 Marine. Do you mean 718 Marine? title co has no property at 716. 718 sold in '05 and not since.

Anonymous said...

Ok let's look at the price of land in different SM neighborhoods right now

7500 square foot lots now sell for 1.9 million in 90402

so in 90402 it is safe to day that vacant land is 250 bucks a square foot.

How much does vacant land cost in ocean park?

Help me understand relative land values

which neighborhood is most likely to fall

Anonymous said...

Interesting discussion on the SM Distress blog regarding the construction boom still going on in The90402. Does this mean that the big companies know that prices will keep going up in The90402?

allsouledout said...

Re: Anon at 12/9 12:16pm ...

I also saw those price hikes ... would be curious to see if the agents are just trying to "game" the listings before year-end.

I do believe that there are still some - although VERY few true increases happening (because the Santa Monica "drug" makes people do crazy things), but an increase of $200K on a place that's been on the market for a while?

Just weird ... any insight from the board?

pat said...

There seems to be such glee in the financial distress documented here. As a homeowner in 90404 I have to sell in two years time. I think some of you would like my house for free.

Anonymous said...

Dear Pat,

You are not a homeowner, or else you would not have to sell in 2 years time. All we want is to be able to buy and live in homes that we used to be able to afford before these newfangled option/negam/ARM types came along with less income, less cash down and offered more than we could fairly spend! You're getting kicked out in 2 years? Too bad! Maybe you should have moved someplace you could actually afford!

Brad said...

Pat(hetic),

We do not take glee in you losing your house. We are people who have been responsible and not spent above our means, while everyone else has. We have understood that wage levels must support housing prices and that they do not. All we want is for housing prices to go back to rational levels so they can be afforded by regular people with regular, 30 year fixed loans.

pat said...

I guess I wasn't clear. I've lived in my house for 20 years. I'm not losing it. I'll be retiring in 2 years and had hoped to move up to the mountains and use some of the equity to fund my retirement. My concern about falling home prices led me to this site. If the value of my home falls by 50% as some are predicting here, it will still be worth more than I paid for it, however after improvements to the property,(it was built in 1946)There won't be much left. I am very fortunate because I have a house, but a 50% decline in its value would be good for you and bad for me. There's 2 sides to this story.

Westside Bubble said...

You have a potential decision, Pat. You could sell in the spring of 2008, probably still get a peak-plateau price, and rent somewhere for two more years before moving to your retirement in the mountains.

Or you could wait the two years and see what has happened, whether prices held, rose, or fell, and by how much.

I wouldn't try to tell you which decision to make. Personally I'm expecting a fall, for the reasons I've described in different posts.

But I could be wrong (and it would be a big financial bite). I expected a fall here the last two years that so far hasn't occurred.

I'd also note that if you've owned for twenty years you may face big federal and state capital gains taxes, that you should consider your options for.

Would you like to tell us where in the mountains you're headed?

Richard Mason said...

Hi Pat,

I don't want to pry into your age but if you are planning to retire in two years, one could speculate you were born around 2008 + 2 - 65 = 1945.

Can anybody tell me if there were a lot of babies born in 1945, or only a few?

I am wondering if there is anybody else out there with the same plan as Pat.

Anonymous said...

Pat,

Please accept my anonymous apology. You are not the problem. But neither are we. I do not want your house for free, but sign unseen it's probably not worth $1.5 million either.

Nobody knows how this will play out. I can tell you that housing prices are declining and will continue to decline in 2008 and probably 2009 as well. By how much? Probably not 50% in an area like Santa Monica, though those kinds of declines are happening in less desirable, overbuilt places. As a guess, I would find your property's worth in 2002 (when appreciation rates were a healthy 7-8%, and not ARM-induced 20% lunacy), assume the same 7-8% annual appreciation from 2003 to 2007 and you will come out with what I think is a "fair" price. I've done this math on many properties in Santa Monica, and sellers are generally asking some 20-50% above that amount.

If worse comes to worst, I might consider holding onto your property and finding a renter when it's time to retire. You clearly missed the best time to sell (2005 until earlier this year) and I think 2009 will be a positively awful time to sell (though conversely, probably the best time to buy your retirement home). It may well be worth your while to hang on until the market fully recovers.

Good luck.

Anonymous said...

7-8% appreciation is not normal. Try inflation + a very small premium (in the range of 1%). If some areas are extremely special, then double that and you have inflation (3%) + 2% premium = 5%

joe contractor said...

One can't cherry pick crappy spec homes and houses in marginal areas (under the airport, substandard lots near Lincoln) to draw general conclusions for the entire westside. These homes are always a tough sell, even in a robust market. Now people have the jitters, and these overpriced duds are going to rot on the vine, regardless of any trend.
My take on the current sales statistics suggests that certain choice areas on the westside are not encountering significant price drops,and are still selling.

It certainly does looks like buyers are 'waiting it out' areas like in Mar Vista, Ocean and Sunset Park. But properties in 90402, prime Venice, Palisades and Malibu appear to be selling and closing escrow, albeit more slowly.

My theory is that people with substantial income who need a house aren't going to wait around for a price correction. Whether it is due to a job transfer, growing family, wealthy europeans, asians, or middle easterners, or merely the status of living in prime westside real estate, there are only so many homes available for sale in these areas. As long as inventory remains as low as it is, the demand continues; thus prices will remain high.

Anonymous said...

Joe

Thank you for having the balls to defy the concensus here.

The god's honest truth is that houses in the 90210 are today selling for more than they did on average in 2006

Anonymous said...

Hey Joe, if there's such a scarcity of homes in these exclusive areas why did it take until 2002 for the prices to go through the roof?

Answer: houses in 90402 etc went up just like the RE bubble in Modesto and Merced.

You are guaranteed that with every bubble there will be an accompanying POP!

The bubble popped in Japan and there's a very REAL scarcity of land and property there.

To believe that ANYWHERE in L.A. County is really that special is lunacy. Or you have to be RE "professional" or a builder.

aaaa-dah said...

Pat - sell now. Prices will continue to decline in both real and nominal dollars for the next several years, but if you list with an aggressive (realistic) price relative to other listings in your area, you'll still be able to get a knife catcher in the spring. If you wait for 2 years, you're going to lose even more of that paper equity you had been counting on. Plus if you sell now, rent and buy in two years, you'll have (slightly) arbed the rent vs. buy market.

rosebud said...

Pat,

This may not be the most objective place to solicit advice on when to sell... but it's a great topic of discussion.

You shouldn't feel pressured to sell (ever); when you feel like you absolutely must, you can get pretty bad results. This is a key reason SM sales are up in value this year, particularly in the Northern zips. There's simply not a pressure to sell, thus such low inventory, etc. If someone needs to be convinced on the inventory side of the equation, just look at this blog.

My guess is that you'll be fine in 2 years as the city is continuing to make moves to make it more and more attractive for businesses and residents alike, becoming a more affluent city all around. Plenty of stats that I and others have posted here back this up substantially.

Either way, good luck on the retirement. Also, good point from Mr. Mason on the boomers; I don't see it materially swaying inventory in SM though.

allsouledout said...

Just remember that market bottoms, like market tops, are only seen in retrospect. Profound, I know ... but what I mean is - do some math, get comfortable with what you're paying, and if you're buying a house for the long-term, don't think you'll call the absolute bottom - being close should be good enough to offer you equity upside.

I'm in the camp that agrees with looking at early 2000s pricing and grossing up at a more normalized real estate appreciation rate to get to a value today. And yes, most list prices are still 20-40% over those levels now. So I'm certainly sitting tight.

I also agree with Warchest about a false plateau (if I understood him correctly) in the near-term. If a place is currently listed at $1mm, even if the price at the "true bottom" - meaning some people will pick up comparable homes at that level by waiting a bit longer - is $700K, a price cut to $850K will entice some people to buy, thinking they are getting a "good deal". And to reference back to my first thought, although they wouldn't get as good a deal as someone who might buy the comparable place for $700K, over a 20-year period, who cares???

And if you must know, yeah, I'm a little bitter/jealous about my neighbor who bought the Porsche Cayenne and Mercedes S-Class using a home equity loan while I roll around in a late-model 'Merican car. Serves me right for being fiscally conservative!!!

allsouledout said...

Re: my previous post ... sorry, been flipping between this and the SM Distress blog. I meant Westside's comment about the peak-plateau. Sorry, 'Side ...

pat said...

Thanks for the advice. I've never particpated in any on line forum so I'm impressed with the power of the internet.

The fist house I bought was in SM in 1983. Jimmy Carter was president and interest rates peaked at 17%. I couldn't sleep at night worrying about how to make that payment.

So I worked 2 jobs and times changed

Lucky for me interest rates dropped to 12 percent just before I closed. I thought heaven had intervened.

Thank you all for the advice,
especially westside bubble for the forum, and rosebud who I think is right on.

pat said...

Oops my brain failed me. Reagan was president in 1983. They kind of blur over time.

Thanks also to anonymous who is real big on analysis. I'll be listening

Franklin said...

Is this a flip gone wrong - 1044 20th St #C in Santa Monica 90403? It sold recently for upwards of $800,000... now there's a For Lease sign on it for $3200/month - for a 2 bedroom condo! (The SM Rent Control Site has the max allowable rent at $1795, btw.)

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I would just like to take some time out thank the posters for doing what you do and making the community what it is im a long time reader and first time poster so i just wanted to say thanks.

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