Twenty-five homes sold in the Sunset-Strip Hollywood Hills West area in September 2009 with a median sale price of $1,095,000. One house sold for over $3 million, three houses sold for $2 - 3 million, and nine houses sold for $1 - 2 million.
But consider this -- there are currently 68 homes priced over $3 million in this area, and at the current sales rate there is almost six years of inventory.
This begs the question -- what is a $10 million Hollywood Hills house worth these days? Or an $8 million house? Or even a $5 million or $4 million house? It's hard to know since few properties are trading in this range.
The lack of comparable sales means even appraisers cannot value these properties, so if they do go into contract, deals are thwarted by appraised values that do not jibe with contract prices.
Short sales and foreclosures are just beginning to assert their impact on the high-end as over-leveraged homeowners fail to pay their notes due to job loss, income reduction, or the sentiment that the albatross of an "underwater" home is not worth hanging on to.
Prices are crashing in this multi-million dollar range and in this broker's opinion it will be years before values hit bottom.
Listings that start over-priced run this risk of "chasing the market down" as eventual price reductions fail to keep up with the continuing price declines.
The whittling down of prices is evidenced by the highest priced sale, 8444 Harold Way in the Sunset Strip neighborhood. This house, with 2 bedrooms, 3 baths, 3,653 ft of living area on a 6,650 sq ft lot was originally listed in March 2008 at $6,995,000. It eventually sold eighteen months later for $3,500,000 -- a 50% reduction from its original asking price.
2807 Nichols Canyon Road had a similar fate. This home with 3 bedrooms, 3.5 baths, 4,642 sq ft of living area on a 20,400 sq ft lot, was originally listed for $4,999,999 in March 2008. It sold eighteen months later for $2,825,000 -- 44% off its original listing price.
The sale of 2073 Outpost Drive illustrates the kind of short sale scenario which is becoming increasingly common with properties bought at the market's peak. This 4 bedroom, 3.5 bath home with 3,550 sq ft of living area on a 51,401 sq ft lot sold for $1,902,000 in May 2007. It was relisted in February 2009 for $1,999,000 and eventually sold as a short sale for $1,492,700, 22% off its sale price of 28 months ago.
The lowest end of the market is being made by distressed properties ($585,000 for a short sale, and $529,000 for this foreclosure above.) 2251 Stanley Hills Drive was originally listed in December 2008 for $899,000. This home with 2 bedrooms and 1.5 baths in the Laurel Canyon neighborhood sold last month as a bank-owned property for $529,000, a drop of 41% from its original listing price.