Million Dollar Meltdown in The Palisades
(Click on Photos to Enlarge)
It appears we have a significant meltdown in Pacific Palisades that shaved over $1,000,000 in 17 months. This is in a gated community called "The Enclave" located in the Palisades Highlands.
Here is the information about the house:
16850 Calle de Sarah, 90272
5Br+4.5Ba, 5697 sqft, YB 1995
Sold for $2,200,000 on 12/11/08
$386/sqft
14,266 sqft Lot
What is interesting is, the past sales history:
2/25/99 $1,375,000
7/10/07 $3,320,000
12/11/08 $2,200,000 (-33.8%)
This takes us back to 2003 - 2004 pricing.
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20 comments:
Now that's one meltdown!
Another home in the same area now listed at $ 2,295,000; 5368 Sq ft or $ 427 Per sq. ft. Also, now over 30 new listings in the PP just this month. Looks like prices must come down to sell all of these homes.
Yes, quite a few listings now in the Palisades. Serious sellers are now taking drastic price cuts in order to move property. This property was originally listed for $3,599,000 in August of 2008.
We can imagine what a sale like this, does to the neighborhood comparables.
I know the area well. These are big houses that crash when the finishes are no longer up to the minute. Also, there are a ton of houses on that one street, Calle de Sarah, that have been on the market or are now for sale in the last year (maybe 30% of the street). I think this means people stretched a little too far to get into those homes.
Yes, I did see a number of active listings on that street. Perhaps, the entire Palisades Highlands Developnent, could be in danger of steep price declines. Obviously, sellers on that street, are aware of the situation.
This means that the house has been appreciating at an annual rate of 5.5% from 1999 to 2008. If the appreciation were a more reasonable long-term average 3%, the house should be at 1.8 million.
The point is this house is not cheap and could easily drop another 20%. I do not envy those who bought it.
Expect prices to bottom out about near 1996 prices. Was that about $200-250/ft back then? Trust me because I have profited from 3 complete Real Estate Cycles since 1974 (high school days). Every bottom reaches the past bottom for a short time. Every top beats the past top by about 50-100% for a short time. Buy when the bodies are "mummified" and sell when the "buyers IQ=50s".
IS this a desirable area of the palisades?
Look out below! Too many people still believe the "good time to buy" hype. Unless there's a seismic upward shift in income in the near future, these houses still have a way to go before the bottom.
It looks like the recent sales and realistic listing prices are around the low $400 per sq ft prices. Still, there many listings where HO's are trying to get 2006 -2007 prices. I blame the real estate agents for listing them at inflated prices, primarily to just get the listing.
The fact remains, that jobs are hemorrhaging, and prices are dropping at increased velocity. More and more of the market is becoming foreclosures, and this will affect the high end as well. Nobody really knows, how all of this plays out in the end. However, there are simply not enough people that can afford this decades prices. My guess is, we overshoot below 2000, towards the beginning of the bubble (1997).
I don't understand what's going on with the lenders in these areas. I see NOD's but no foreclosures. Two of the houses for sale in the Enclave are empty and one has been on the market over a year. Are lenders not foreclosing. Are any of these sales/listings short sales? Many of the HO's in this and other high end areas must be underwater on their loans. Other then short sales and foreclosures I can't see how this plays out as far as significant future price reductions.
Lenders are probably holding back on foreclosing, as they have to many on the books. Also, it is of benefit to them, if they don't take possession in some cases. In addition, they were "hoping" the market would turn around in 2009. I doubt it.
I suppose it's a meltdown.
Maybe it just time for us to re-calibrate expected value? I'd take the 3.3 million any day of the week :)
Jeff
Orange County Rentals
Come on guys !!! This is CALIFORNIA we're talking about. This is the land where we can all quit our day jobs and become real-estate moguls - you know like TRUMP himself. Buy it up, get cash back at closing (remember carlton sheets - my hero), then sit on it for 2 weeks and sell it for a nice 100K profit.
Sincerely
Joe Rogan
I think a fair price for that house would have been anywhere between 1.5mill-1.7mill. 2.2 is still quite inflated to me,but a price reduction of a million is a good start.
Late.. I'd suggest you delete these smart ass realtor/kool aid intoxicated posts. They're dumbing up my intellect =P.
1.5 to 1.7 million seems like a good price currently, with the given market conditions. However, if we roll back past 2000, or further, we should bust through that number. Possibly, closer to $1,000,000.
Meltdown or not, it's fair trade in my opinion. How long did people think they could buy a house at an inflated value, fix it up & then sell it for the original value plus the cost of new home? Given the market conditions & the foreseen decline in the economy (has anyone actually taken out a calculator & done the math... try multiplying 9mil by a very lenient 20k & check out the end result... scary & ridiculous beyond all measures) the profits will drop & rightly so. These homes were never worth the price tag. Sadly, everyone else pays for the greed.
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