Monday, May 5, 2008

Submedian Searches: Sunset in Spring

For my next little "feature" I'm going to narrow my focus on a particular neighborhood to tell me something about the market for submedian single family homes (i.e. anything under $750k) with at least 2 bedrooms and see how things are holding up.

This week's featured neighborhood is the Sunset.

As of 9pm on May 5th, I got 29 results on one of my favorite sites Redfin.com. After eliminating the handful of condos and TIC's (I'm all about the SFH's here...) I have 22 SFH's. Some interesting data points arise when I take a closer look:

First of all I'm interested in how many homes are selling for more then they were purchased for. I'm frankly not surprised that out of the 13 homes that list the previous sale price 6, or 46% are listed for less then what they were previously purchased for. But what does this tell us about prices in general? Well, when we dig in a little deeper they tell us some interesting things:

Of the 6 homes that are listed for more then their previous purchase price, five of them were last sold in the 90's. That's a rather stark statistic: if you want to sell your house for more then you paid for it, you better have bought your home a decade ago.

Among homes showing a prior sale price, anybody selling a Sunset home purchased within the past five years is showing negative appreciation. And in some cases, it is drastic: 1491 43rd Ave is now listed at $720,000. It's high water mark was it's purchase for $875,000 in April 2005. That's a whopping $155,000 depreciation over three years. That's $4189/month not including taxes, maintenance, insurance, closing costs, commissions, etc.
Just to give you a point of reference here, you can find on craigslist today 2 and 3 bedroom houses and flats in that part of sunset for $2,000 - $2,500, today in 2008.

Intriguingly, the people who bought in the 90's seem to be suffering from another problem: greed. They have across the board higher listing prices then the newer homeowners, and are paying the price for their desire to hang on to those higher prices by having much higher DOM's: 54 is the DOM average for the people who have owned their homes more then five years, compared with 26 for the folks who are newer homeowners.

5 comments:

Dodd said...

Hey Missionite,
Welcome back. I missed your input over at SS. Love the rent/own calculator. Best housing tool I've seen anywhere.

Anonymous said...

Hi Missionite,

Please do post some of the deals you are seeing that are decent houses that are trading 20% below 2005 levels. i'm definitely in the market to buy more investment property, and will be forever greatful! Thnx!

Missionite said...

Thanks Dodd, much appreciated!

Anon, you can start with the "deals" I discuss in this post. Load up as much as you want. In fact I think you should leverage all your other invesment properties to get all these killer deals while you still can. They aren't making any more land, and you are sure to win big in the long run! So with a sure thing like homes in the Sunset, you should be pouring all your resources into owning even more porperty. Good luck!

*smirk*.

anna said...

Haha, ever clever Missionite!
Really enjoyed this piece (I actually love the Outer Sunset; I'm a beach girl at heart and like to park my car when I get home without epic battle). Linking to it in today's Redfin post.

Best,
Anna

Anonymous said...

...please where can I buy a unicorn?