Saturday, April 4, 2009

Friday Night Fights - Vol. I

OK, so it's technically Saturday morning, but I thought I'd "spice" the blog up a little with the newly-instituted "Friday Night Fights", to be posted on (or around) every Friday.

The "Fights" will showcase similar properties for sale - sometimes condos in the same building, sometimes homes with the same specs in the same neighborhood, who are duking it out for buyers.

And, as always, we'll find out some interesting facts about these properties that continue to expose the madness of 2+ years ago and opine on if/how delusional the sellers really are.

We'll be following up on these later to see which property raised its hand in victory and which hit the canvas.

So, without further ado, Let's Get Ready To [remainder redacted for copyright reasons] ...


"THE CHAMPION"
522 Norwich Drive (90048)
$975,000 ($803/ft)

2BR/2BA
1,214 sq ft
4,851 sq ft lot


On Market: 190 Days

Sold: 8/90 - $325k

Sold: 10/96 - $285k

Listed: 9/08 - $1.25mm

Reduced: 1/09 - $1.099mm

Reduced: 3/09 - $975k

We last featured 522 Norwich here, where we wondered about the viability of the "million dollar listings" (sorry agents who had your own reality show) for tiny houses as we descend to some level of reality.

Well, the price has been reduced again, although we're still in our favorite "death by a thousand papercuts" (yes, I will come up with a new analogy soon) mode here. This property was already behind the curve on price reductions, and continues to be so. Granted, the most recent price reduction was more than $100k, but as we non-followers of the "nominal headlines" know, $100k on a $1mm property isn't fooling many people any longer. To qualify for a high-limit conventional loan here requires approx $270k down and the property remains "affordable" to those with a $200k+ annual income. For a 1200 sq ft house.

And, not to keep beating a dead horse (but it's fun), look at the selling prices between 1990 and 1996. Yes, Virginia, you can lose money in the real estate market.

Assuming this seller didn't use the property as an ATM and/or doesn't have any peronal issues happening that warrant this pricing technique, it would seem like they have room to move lower. The listing description describes our favorite "upgrades", which we all just know are worth several thousand dollars (granite, stainless appliances).

"THE CHALLENGER"

554 Westbourne Dr. (90048)
$995,000 ($721/ft)
2BR/2BA
1,380 sq ft
3,831 sq ft lot


On Market: 4 Days

Sold: 3/89 - $240k

Sold: 3/98 - $285.5k

Sold: 10/98 - $310k

Sold: 4/99 - $385k

Sold: 5/02 - $599k

Sold: 12/03 - $755k (90% financing)

Just a couple blocks down from 522 Norwich in the same "WeHo West" neighborhood is this newly-listed property. As we can see, at least from the numbers, the specs are relatively similar. Westbourne is a slightly bigger property on a smaller lot. (For any readers who have seen either or both properties, please chime in on the merits/detractions.)

This property's listing history tells an all-too-familiar-by-now tale: little to no appreciation following the late 80s/early 90s bubble for almost 10 years, and the start of the bubble activity in the late 90s, culminating with large price jumps in the mid-2000s. As expected, this property appears to have been updated along the way, although it's difficult to tell when.

As compared to 522 Norwich, these sellers have started at the sub-$1mm level, but have seemingly less room to come down, given the high-$700k previous purchase.

Interestingly, both of these properties transacted for the high-$200k level in the 1996-98 timeframe. Just for fun, let's assume $275k was a "fair" price in 1997. Now 12 years later, and assuming 5% appreciation brings you to a "current" value of approx $500k. To be clear, I'm not suggesting that these places will drop to $500k in order to be sold, but given the pricing cycles we saw after the early 90s, would it be stretch to see them sell now in the $800k range and remain at that nominal value for the next 10 years (which is the value you get with 5% appreciation from 1997 to 2019)?

8 comments:

John A. Lucy said...

I am not sure whether to be flattered or pissed off that you have adopted my registered website as your blog moniker. As you seem to be a considerate person, although totally anonymous, I would ask that you stop all "shortened" references to "WeHo Homes", and clarify that you are not affiliated or endorsed by me, my website, nor are you trying to infringe upon my business activites in real estate.
Thank you.

WeHo Homes said...

Thank you for the comment, and yes, no malice intended. I've updated the blog header to change the blog title that people see when entering the blog, as well as adding a disclaimer.

I'll also put up a separate post for added emphasis. While I'm sure there are a number of blog/commercial website duplications out there, I will make every effort to refrain from using the blog address "short name".

Anonymous said...

Yes, it would be a stretch to see these places stay flat at $800K. They will be going down further. They will only stay flat when they reach a value that corresponds to their segment of the market. These small houses on substandard lots were the same price as houses on bigger lots in Greenacre/Poinsettia in the 90s. Greenacre/Poinsettia is not going to stay flat at $800K. It's already dropped below that and these will do the same.

John A. Lucy said...

Thank you for making the disclaimer and those adjustments. They are appreciated.
I knew you sounded like a reasonable, considerate blogger, and I wish you success.

Full Disclosure said...

Looks like "The Challenger" 554 Westbourne is looking for backup offers as of 4/4. That was fast -- only 5 days on the market. Hmm. Will be interesting to see the ultimate sale price.

Anonymous said...

It has been told in sales meetings in the west hollywood real estate offices that the house was well priced and had several offers in the 1st few days. It will be interesting to see what the selling price is.

Anonymous said...

The WINNER... The house sold with 4 offers on in the 1st 5 days of being listed for sale. It closed Escrow on May 20, 2009 (yesterday) for....drumroll............$1,015,000 !!!!!!
the website is great:
wwww.554westbourne.com

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