April 22, 2008
Every Listing Tells a Story… But This One is an Epic
Whether or not Ernest Hemingway actually wrote the six-word short story attributed to him in literary lore - “For sale: Baby shoes. Never used.” - the point is clear: you can fold a lot of backstory into very few words.
The lesson is delivered with a devastating kick in this listing for a Topanga Canyon bank-owned home.
Only this time the story is told in numbers.
3416 Dorothy Road
Topanga, CA 90290
Price: $723,500
Sales History
Date Price Appreciation
March 12, 1990 $425,000 -
November 30, 1995 $310,550 -5.3%/yr
June 3, 1996 $222,000 -48.3%/yr
August 26, 1999 $340,330 14.2%/yr
October 27, 2000 $325,000 -3.9%/yr
July 27, 2006 $1,100,000 23.6%/yr
October 25, 2007 $940,374 -11.8%/yr
The house was built in 1988, toward the end of a period of spiking price appreciation. In the last gasp of the ’80s boom, it sold nearly-new for $425K in 1990. Five years later, more than halfway through the slump that followed, it changed hands for only $325K. Six months later, confidence in housing shaken to the foundation, it sold again for only $222K. (click chart to expand)
By 1999, the housing market was making a tentative recovery at last. The house on Dorothy Road sold for $30K more than it had in 1995: $340,000. But a year later an unaccountable blip sees a $15,000 price drop when it’s sold once more.
Enter the dragon market of the 2000’s, breathing fire, scorching earth. Dorothy Road rides the rocket for six blazing years until, in July 2006, a new owner signs a note for a dizzying one point one million dollars! (Dr. Evil coyly sucks on his little finger here.) The warning signs were already in the air - or in its absence - but the intoxicating smell of money was an anesthetic. Already poised to plunge, the price fell to $940K when it was sold little more than a year later in 2007. Now bank-owned, it is listed for $723.5K after a price cut in March.
It’s interesting to see how closely the sales history of this house tracks the Case-Shiller Housing Index for the L.A. region (courtesy www.Patrick.net) over the same period of time. But it’s even more fascinating to me that despite its overall appreciation, of the home’s six resales up to now, four of them registered negative appreciation - as the next one certainly will too.
The message I take away is that just because a market has fallen dramatically, it doesn’t mean it won’t slide even further. When it sells again, five of this home’s eight owners - including at least one bank - will have learned that the hard way. It’s a lesson today’s would-be buyers should pay close attention to.
