Price cuts in Pacific Palisades

Catching up: Westside Bubble has an interesting price about significant price cuts in Pacific Palisades. The houses are in that tricky sub-$2 million price range.

The 3-bedroom, 2-bath pictured has been languishing on the market since January, when it was listed at $1.699 million. It's now listed for $1.199, a price cut of 29%.

The other two price cuts mentioned aren't as deep: !3% and 8%.

Our take: We've seen weakness for a while in this price range (too rich for first-time buyers, not rich enough for the suitcases-of-cash crowd), but we can't remember anything close to a 29% price cut on the Westside.

Thoughts? Comments? Email story tips to lalandblog@yahoo.com
Photo Credit: Westside Bubble

Comments

[archispot]

a lot of people said that wealthy westside neighborhoods would avoid big price reductions in this downturn. they said the same thing in the early 90s...

[tony almonte]

Check out 15461 Albright St.

Purchased is 9/05 for $2,575.0M and new owner put about $125.0 into it. Listed in 5/07 for $2895.0. Three price cuts later and the current price is $2425.0, a cut of more than 15%. Interesting to note that the current listing agent also represented the current owner when they bought this property. Have to wonder about that agent's ability, huh?

[Archer City, TX (winds from The Last Picture Show)]

Forget being over-priced or under-priced.
The important price is the accepted offer price.
Known as the real price.
Keep cutting the fat off the meat;
and get the thumb off the scales.
(It's the cowboy way).

[Carolina]

This kind of pricing on the pictured shack must indicate mental disfunction or high drug use of the current sellers. How much weed do you have to smoke before you think the hovel is worth $1.69 million?

[Charles Wilson]

What would the place in Pacific Palisades rent for? Most rent vs. buy calculators that I'm familiar with say that an investor who wants to buy residential property with an intention of renting it will pay 120 times monthly rent. To interest such an investor even at the reduced price, the Pacific Palisades place would need to fetch $10,000 a month.

Historically, people who buy a house with the intent of living there there themselves are willing to pay 150 to 170 times monthly rent. This would imply a monthly rental rate on that house or a comparable property of $7,000 to $8,000.

I live in Seattle, not Pacific Palisades. So, could someone say whether the place in question would rent for $7,000 to $10,000 a month? I'd be pretty surprised if it would, but I've been surprised before. In any case, history will tell you that the current gao between rents and home prices is very wide. I think it's going to close, and not because rents go up.

[Another]

And it will fall several more multiples of 29% before reality is reached. Westsaide, Eastside, North and South have a long, long way to go DOWN yet. See ya at $350k?

I bring the money, I say how much it's worth. Wishing prices mean nothing.

[Evil Landlord]

I honestly can't think of the last "family" rental house that I saw in Pacific Palisades. The curb appeal of the "shack" is minimal, but the house is in decent condition.

[seattlesnoop]

I agree with Carolina. And I don't care where the hovel is located. A shack by any other name(or price)is still a shack.

[Martin]

On the outside the house looks like a dated shack, making the original price seem outrageous. But, before I pass judgement, I would have to know comps for the area (naturally adjusted for this market), the size of the lot, interior square footage, and the general interior condition.

It clear why this house was posted. Most everybody who sees this sort of picture for a house in this price range will drop their jaw. I'd be more interested in seeing a universally attractive house facing a similar challenge. Now that's news.

[KenO]

This house sold on 10/06/2004 for $1.195M and after 247 DOM it's listed at $1.199M, so after a 5% sales commission of $59,950 to the agents the net would only be ~$1.139M. That would put them squarely in the loss column after almost 3 years, even more so when some of the apparent refurbishments are taken into account. Wiping out theoretical equity gains is one thing, but moving into a losing cash position is different. It will be interesting now to see how much lower the sellers will go, and that will serve as a much better example of the psychology of this market.

[Enlightenment]

The sky is falling!

[John T Watts]

You have got to be kidding. Pacific Palisades is nice but not that nice. Now get on realtor.com and see what you could get in Paris Texas for 1.199 mil. You get get a lot more for a lot less and have money left over for plane tickets to go just about anywhere.

[ed carson]

Let's set the record straight shall we? The price of the LAND is what is being purchased, not the house. The house can be built for probably under 100K, or there abouts. If someone were really interested in a bungalow for that price, there would be a bulldozer following to dismantle the house and start all over with a REAL house worth the asking price of this property. All over the west, east, north, south side the same thing is happening and will continue to happen for a long time to come. Fools that already have purchased in the upper ranges of the price game believing the Realtors that there was no ceiling are finding out the hard way. Too bad because they didn't deserve the lies. My brother bought a brand new house in the Woodlands of Texas, north of Houston for about 350K. It puts this cracker box to shame. Why in the world would somebody want to pay, and don't forget this one folks, $1,350 in taxes alone, every month for the shack on the "West Side?" I can hear it now,"Fred buddy, come on over and check out my shack I just got reamed into buying, only 1,6mil. Hey, I know for a fact a little of this and that, some more TLC and shazam, I can sell this baby for $2.2m in a matter of weeks. No doubt. I love this real estate game. After that, who knows, the sky is the limit."
The only people that are enjoying this game are the Realtors, and the people that sold this joint to the fool. They really won and made the moola! I say to everyone that believes they can sell their house now, cut your price in half, and then again in half, and then it might sell!!!!! Good luck Yalll.

[watching things]

I did a little drving around in my area (south bay) Sunday and popped in at a few open houses. My extremely unscietific observations -

1. Lots of open houses. The local newspaper (Beach Reporter) that usually has the most open house listings showed about 180-200 open homes in MB, HB and RB together. My guess is there were considerably more than that. Not to mention, EVERYWERE in the South Bay there are "For Sale" signs on nearly every street you drive down.

2. Every realtor I spoke to (except the one that was at a Laker's home in a gated community) had a long face and admitted things were VERY slow. I visited 2 homes in the 1.0-1.5 million range, 3 in the 1.5-2.0 range and 2 more in the over 2.0 range. Also, I only saw one other person walking through any of the homes.

3. I saw some homes still for sale in MB (where I live) that have been listed for many months and price reductions were small.

For the record, my wife and I sold a large home 2 years ago with the idea of downsizing (2 children in college) and decided to wait and see if the market might drop some before buying back in. For almost the entire time since then I've felt like an idot watching the market continue up. It looked like I might have left a lot of dough on the table. Now it looks like things may be heading the other direction, and possibly in a big way.

Just my 2 cents.

[Randall Adams]

The people from outside the area really have no useful contribution here. This house is being sold for lot value. The "shack" as you call it will be torn down and replaced by something bigger. Pacific Palisades is the nicest part of the City of Los Angeles, on bluffs abutting the Pacific Ocean between wealthy northern Santa Monica (to the south) and Malibu (to the north). Paris, TX? Please. Why not Alice Springs?

[Evil Landlord]

OK, I looked into renting and.... there wern't many comps at all. There's a 2 bed. 1 bath place on a shear cliff with no deck or yard asking $3,800, there are some apartments/condos/townhouses between 3-5000, theres a 4 bed house with a huge yard asking $12,000 and there's a 3 bed /2 bath right next to the elementary school that is asking 6,800/m 9 month lease ONLY

[David in Los Angeles]

People are continuing to paying over a million dollars for a 2 bedroom 1 bath "teardown" in this zip code, and building their dream house on the land. What neighborhood in Pacific Palisades is the home located in? How big is the lot? Does it have a view of the city? The mountains? The ocean? All of the above? This is much more important than the home you see in the picture. For those outside of the area, I suggest you view Pacific Palisades on maps.google.com. The land this home is sitting on is obviously not worth $1.6 million, but this one of the most desirable locations in Los Angeles.

[MyLessThanPrimeBeef]

You play with the Palisades, you and the prices are liable to fall off one of the cliffs.

[150 multiple choice questions]

I know the Palisades pretty well, those rents sighted earlier are high.

As for this property, this is certainly a flipper. Word is this genius sealed off the garage and made it a kitchen. Big no-no. Now there's no parking (1 is required I believe) and the hose is being sold basically with no permit. What's the lot worth? In this location and on that steep a hill... Hard to say. Be shocked if it was over 800k, wouldn't be shocked if it was 600k. So, let's do some math, buy it for 1.25ish, put in 125k ish. hold it for 2 yearsish = HA HA you're screwed!

And anyone who says how Pali is immune from price drops sure hasn't been paying attention the last month.

[neli]

According to Allan Greenspan, we're only seeing the beginning of the drop in housing values. This cycle will likely last awhile.