Ouch, that must have hurt.
A north Berkeley home I have been following since it went on the market in May 2008, finally sold last month — a full 40.5% down on its original asking price of $1,849,000.
1730 Sonoma Avenue, a 3+/4 Cape Cod with a solar-heated swimming pool and master suite with city views, quietly sold for $1,100,000 after a succession of deep price cuts. Launched in a fanfare of excitement — and by an owner who, I am told, was a real-estate agent — its lush garden and pool was described as offering a chance to experience “Hawaii in Berkeley”.
So what might have been a $896/ sq ft home becomes a more sensible $533/ sq ft home.
A case of an overly optimistic outlook (a trait common among brokers I find) coupled with terrible timing.
Zillow has its previous transaction in May 1989 for $414K.
That was 19.5 years ago.
The recent transaction of $1.1 million results in an implied compound annual growth rate of ~5%.
A little rich for me, but far more sober than some CAGRs one can find in the hills.
Take 776 Arlington, for example.
http://www.redfin.com/CA/BERKELEY/776-Arlington-Ave-94707/home/1545680
The implied CAGR between current asking and prior transaction in 1993 is ~7.8%. Call it 7.5%… call it 8%. Either way, that’s a rich rate of return.
(Acknowledged: I am making assumptions about comparability, and ignoring add-ons and updates.)
One more – 125 Estates in Piedmont
http://www.redfin.com/CA/PIEDMONT/125-ESTATES-Dr-94611/home/648726
Seller – a licensed real estate agent – wants an annualized return of +8% for having lived in it a little more than five years. Before its recent price-cut, seller originally wanted +9%.
P-lease….
For the record, a google cache shows the afore-referenced 125 Estates was on Redfin for 66 days on January 24, before it suddenly became “new” again this morning at the same $1.349m asking price….
http://www.redfin.com/CA/PIEDMONT/125-ESTATES-Dr-94611/home/648726
This habit of brokers to relist their properties as new is becoming more widespread. I believe it’s done so that their listings head to the top of the search pile again.
Still, it’s very irritating to market observers such as myself, and I can only believe it’s annoying, and potentially misleading, for prospective homebuyers too.
I referenced the implied rich 7.8% CAGR for 776 Arlington in comment #1.
Well, maybe they read your blog… ’cause they knocked $100,000 off their asking today:
http://www.redfin.com/CA/BERKELEY/776-Arlington-Ave-94707/home/1545680
I might be interested in that property (uhh… at the right price): waiting just funded one of our son’s eventual college educations.
This is the dreadful logic of deflation: wait now, pay less tomorrow. The logic itself creates the diminished demand that makes the prophecy self-fulfilling… resulting in lower prices, and the apocalypse of debt.
By the way, the new implied CAGR is now “only”~5.9%. Let’s call it 6.0%.
Still rich.
The vast bulk of current listings between $1m and $1.5m have to drop askings down to 6-figures to have even half a chance of selling any time soon.
776 Arlington now a six-figure listing @ $985K. That’s 14% below December 2008 listing.
Cutting the path for other 7-figure properties….
412 Blair (quarter-acre in Piedmont… with publicity) is another one cutting price:
http://www.redfin.com/CA/Piedmont/412-Blair-Ave-94611/home/1079760
Drop from $1.7m in March 2009 to current $1.35m = 20% reduction. That was quick. I liked this place, except that the children’s rooms up the spiral staircase are distant from the master. This is the property to monitor for repricing +$1m Piedmont inventory.