Green With Envy - Update 2 (The "Out of the Shadows" Edition)

We profiled the architecturally interesting (funky/cool/ugly, depending on your taste) 825 N. Kings Rd complex first in March when unit #4 went on the market, and updated the sale in July, which saw a relatively significant reduction from list.

We also contemplated whether, given the # of units shown sold in the building, there was additional "shadow inventory" here.

It appears we might have been on to something, as two additional units have come on to the market in the past few weeks. Neither have prior sales history, which would seem to suggest they were developers' units. In addition, the description for one indicates that it is "also for lease".

We disclose a lot of public info here, but I don't like putting individuals names, or even an insinuation of who they are, on the blog - just seems to go too far. Suffice it to say that it appears the original development group and/or "backers" still owns both of these.

Keep in mind that #4 was a 2BR/1.75BA, 1322 sq ft unit that ended up selling for $682,500 in July (prior sale 8/07 for $797k).

Both of these units look to be larger, more upgraded, and better-positioned in the building than #4. Will be interesting to see if they command a 50-100% premium.

825 N. Kings Rd #7
$959,000
2BR / 2 BA
(sq ft not listed)
Beautiful split-level dramatic unit in award-winning masterpiece by architect Lorcan O'Herlihy. Soaring ceilings & Amendium hardwood floors accentuate the sleek minimalist design. Sophisticated kitchen with Boffii cabinets, Miele appliances & large walk-in pantry opens to spacious living & dining area. Ceilings & walls converging at unique angles, the eco-conscious design is light & airy. Upstairs are 2nd bedroom & large master with private patio & well-appointed baths. Also for lease at $5,850.

825 N. Kings Rd #14
$1,249,000
2BR / 2.5 BA
1,490 sq ft
Unbelievable opportunity to own the BEST unit for sale in West Hollywood, in the award winning Habitat 825 by acclaimed architect, Lorcan O'Herlihy. Highly upgraded, this TOP floor split level floor plan (1 common wall) features walls of glass w/3 exposures, custom walnut flooring, a customized dual sided fireplace in liv rm that opens out to the enormous private patio. Boffi kitch w/Miele appliances, upgraded closets, upgraded master bath, custom window treatments & built-in sound. A must see!

Revisting Rent vs. Own

One of our not-rocket-science theses here at WeHoHo has been the need for pricing to reach a rent-equivalent level.

Now, we would agree that there's some intangible factors that come into play with owning vs. renting, and wouldn't expect a nice property in a nice area (particularly an SFR) to be purchased with a view to it being cash flow positive if rented out tomorrow.

That said, in the condo market, the rent vs. own analysis should still be alive and well, as potential buyers are likely weighing the "deals" in the current rental market with the pros and cons of buying, including: need for a significant % down payment, pride of ownership, have prices bottomed, no more "quick buck flipping" as in the past.

I thought this property was an interesting case study:

1222 N. Olive Dr #306 (90069)
1 BR / 1BA, 598 sq ft
For Rent: $2,295/mo

Bright and open unit with blond bamboo floors throughout along with updated kitchen and bath. Walk in all glass shower. Views of the Hollywood Hills and downtown Los Angeles. Safe and secured parking. Ideal WeHo location walking distance to Sunset Strip, Santa Monica Blvd and La Cienega's restaurant row. Located on one of the most beautiful streets in West Hollywood with tons of parking. The building is very quiet with an absolutely amazing pool that gets great sun. Utilities incl. PriceNeg

Sales History:
12/20/06 - $385,500

3/2/05 - $328,500

6/20/00 - $109,000

6/17/99 - $88,000

8/19/91 - $119,000

5/7/90 - $115,258


Lots going on here. Let's review:

1) Answer to the "how long can a cycle be" question with a sale around the prior top in the early 90s, and an 8 year span resulting in a sales price approx 25% lower

2) A bubbilicious 3x increase in less than 5 years from 2000 - 2005

3) A close-to-recent-peak last purchase

4) A current owner potentially waiting out the market/trying to recoup costs? I won't speculate, as there could be any number of things going on here

5) A seemingly way-above-market rent. Yours truly has been researching rentals in WeHo recently, and given the current market, you can get a nice 2BR in a nice area for around $2k. This is in a decent location, but almost $2,300/mo for a small 1BR?

However, it starts to get more clear if you make some reasonable assumptions on the monthly nut this owner is likely carrying:

$385k purchase
20% (being generous for the time) down
5% rate (again being generous, assuming a recent re-fi at low rates)
$300/mo HOA (probably at least that since bldg has a pool)
+ taxes
= $2,377/mo expenses

I think this has to get under $2K/mo to rent, meaning the owner is eating around $400+/mo, not including repairs or other related expenses. Not terrible, given the relatively small numbers, but some pain likely to be felt nonetheless.

Oh, yeah - and assuming $1900/mo rent (which I think is still too high), the purchase price equivalent would be around $285,000.

UPDATE:
After posting this earlier, I noticed another unit in the same building for sale, which makes the plot thicken:
1222 N. Olive Dr #314
$414,900 (REO)
2 BR / 2BA, 812 sq ft

Last Sale: 11/18/04 - $415,000 (100% financing and looks like at least 2 subsequent cash-outs)

The real evidence of "funny money" going back 5 or so years ago continues to drip out. Will be interesting to see where this sells. Any bets that they get less than the $385k last sales price of the 1BR above?

And So It Begins ...

I was driving down Highland (the stretch of primarily SFR between SMB and 3rd St) the other day during the late evening rush, and remarked to my carmate - "you couldn't pay me to live on Highland". Her reply: "yeah, or Crescent Heights".

I remember visiting a few SFR open houses a year or so ago on Crescent Heights, probably just after the market had peaked, and there were still relatively few data points of weakness. One open house in particular, the listing agent was going on and on about how $1.5mm was "very reasonable" for a 1500 sq ft house on Crescent Height. I know, I know, so what did I expect him to say?

In any case, one data point does not tell a story, but back to our not-rocket-science hypothesis of the downturn slowly rolling from lower-end 'hoods to nicer locales, I would put SFRs on this stretch of Crescent Heights in the "decent area but horrible street" category. In other words, not the first to fall, and not the last, but this is one of the first signs I've seen of cracking here.

The listing would suggest that this might be or an expected flip, or just a "project home" for someone who's hit rougher times. In any case, at a minimum, this will be an interesting "lot value" data point for this part of town

1015 N. Crescent Heights (90046)

$895,000 (SHORT SALE)

3BR / 1BA

1,558 sq ft

3BD/1BA Spanish charmer in need of TLC. Lot is zoned R3 with potential to build condos. Buyer to check with city of West Hollywood. Short Sale Subject to Lender Approval. Shown by appt only. Do Not Disturb Occupants

Last Sale: 2/9/07 - $1,070,000

Enjoy Your Mai Tai - It's On the Taxpayers!

901 Larrabee St (90069)
$489,000
1BR / 1BA
565 sq ft
2,350 sq ft lot

1 BEDROOM 1 BATH PER TAX ROLL- Has bonus room; Cozy, secluded cottage in a great part of West Hollywood, within walking distance of the heart of Sunset Blvd. Cute living room with fireplace and a separate dinning room with French doors opening to an enclosed patio deck. Large bedroom with a partially vaulted ceiling. Great starter home in the West Hollywood/Sunset Strip area! Don't miss this one! No garage; NEEDS SOME WORK - AGENTS: PLEASE SEE PRIVATE REMARKS FOR OFFER DETAIL-Thank you.

Sold: 11/18/99 - $319,000

Sold: 5/22/02 - $318,000

Sold: 8/24/05 - $825,000

Sold: 11/21/06 - $950,000

Sold (bank buyback) 1/22/08 - $795,960


Yeah, I'm feeling ornery tonight. Maybe it was the backhanded (although well-deserved - being backhanded, I mean) compliment in the comments about the blog not being "scintillating".

Maybe it's the fraud that's becoming more and more evident. Someone - oh, wait, the taxpayers - paid $950k for this palace at the end of 2006.

Maybe it's the ever-cheerful-even-when-the-sky-is-falling-and-your-2007-vintage-Porsche-payments-are-past-due attitude of the REAL-tors. I was going to pick apart the listing description, but honestly, why bother? Step right up and get your "starter home". What a joke.

*Deep breath*

OK, now I feel better. I'll put an end to the (blatant, at least) mean-spiritedness. Let's move on, shall we? ...

Seriously, What the Hell?

818 N. Doheny Dr. #806
$488,500
1 BR / 1BA
1,154 sq ft

REO Large south-facing unit with city views, designer recessed lighting and built-in sound, bamboo floors. Spacious bedroom with walk-in closet and city views. Full-service Building. HOD includes all utilities and basic cable.


Sold: 3/1/05 - $950,000

Sold: 6/28/05 - $600,000

Sold: 2/3/06 - $820,000

Have been reading several interesting stories recently about the rampant fraud that occured (not surprisingly, I suppose) during the bubble period. You know the drill ... buy a place, see the "appraised value" shoot up a few hundred grand, take out a HELOC/additional mortgage, cash in on the difference, and decide to get foreclosed on. Walk away with a nice chunk of change (and a temporary ding on your cedit rating, but who cares?)

I'm not suggesting (OK, maybe I am, subtely) that there was fraud occuring here. Maybe I just need an education on how to read the paper trail on this one. Propertyshark shows a bunch of "reconveyances" and trust deed exchanges. Not surprisingly, a number of the parties involved had defaults at one point and/or owned a number of other properties in the 2004-2006 timeframe.

So, did someone really pay $950k for this place? Or even $820k, for that matter? I guess anything was possible during the Great Era of Funny Money. The bank's price still seems too high (approx $3600/mo pre-tax) given current rent levels, but since this building is full service, a rent-equivalent in the high 2,000 range is probably in-line, which would put the price in the high $300k/low $400k range. Even if it sells at current levels, goes to show you that "prior sales", especially in the 2006 vintage, were so overinflated it's laughable.

Welcome to the Jungle ... Toilet Paper Provided

1033 Carol Dr. #T5 (90069)
$799,000
2BR / 3BA
1,579 sq ft

Garden 3 story town home in rarely available and desirable award winning west-side/Sunset Strip building with amenities. 2beds, 3 baths, galley dining, kitchen, den with wet bar and step down living room with access to private patio. New hardwood floors, new carpet and freshly painted.


Last Sale: 12/88 - $325,000

Nothing to really see here ... another large "SFR-substitute" townhouse in a decent (although backing up to Sunset commercial lots) area.

Our friends over at Santa Monica Distress Monitor have a good post up about high-end townhomes in their slice of the world, and how pricing seems to be holding up in the summer "selling season". Will be interesting to see, particularly if SFR sellers hold their asking prices at the $1mm level, if we see some larger condos and townhomes move in the $700-800k range.

For a lazy Sunday, honestly, I just thought the pic was interesting ...

My God, Man ... It's Only a Condo

935 Westbourne Dr. #103
$960,000
3BA / 2.5BA
1,800 sq ft
$697/mo HOA
"flip condition"

Highly sought after 3 bedroom 3 bath SINGLE story unit located on one of the most desirable street's in West Hollywood. Unit has been completly remodeled including granite countertops, stainless steel appliances, wood floors thorough out. Unit features 2 balconies one east facing one west facing offering views of both the street front and the buildings private pool and gym. 2 wood burning fireplaces Living room and Master suite. Contact me quickly and bring your most discriminating buyers . .. this one will not last long !!

I know there is a market for "high-end" (nice area, large living space, amenities) condos. In fact, I'd put yours truly in that category - no kids, "mobile" lifestyle, etc.

However, even in today's still low-rate environment, it's really dawned on me recently how absurd a nearly $1mm condo seems (and you can put smaller SFRs in that category as well). With 20% (yes, that's almost $200k) down, you're looking at approx $5k/month for this property, given the high HOAs.

I said "flip condition" due to our favorite twins of SS appliances and granite countertops, although in fairness, I couldn't find a prior sale. There does appear to be a past NOD which seems to have been recently resolved, and it looks like the building might have some kind of assessment being paid (Redfin shows an "Dues #1" of $697 and a "Dues #2" of $50).