A dose of reality

Remember that McMansion I wrote about earlier which was listed for $3.8M?  Well, it looks like Mulligan & Co. have reset its expectations on what something of questionable architectural quality can fetch in the current market.  The home, just off Paseo del Mar in Lunada Bay, has been re-listed with a much more reasonable asking price of $2.9M (listing can be found here) - a price chop of $800K or 20%!  If you recall from my prevous post, I had estimated that the profit margin on the house, given its size, land cost, and some fairly aggressive assumptions on construction costs, was between $200K-900K at the $3.8M price.    At the new price, its hard to envision a scenario where the developer would actually make a meaningful profit on this development.  Very interesting.  I can't help but wonder if they had spent more time (and money) working out the actual design and aesthetics of the home, if they would have been able to attract a higher value (and actual offers) for the property.  A lesson learned: design matters.

(Source: MLS)