555 Edinburgh Sells For 24% Over Asking (The Neighborhood Median)

One hundred two (102) foreclosures (NODs, NOTS, bank owned) in this neighborhood; that’s a lot of “pent-up supply”. Over 3 homes in distress for each one currently for sale. Should be some nice bargains in the fall.

The market is definitely hotter in 2009 than 2008. CBS’ case could be true if you don’t look at the numbers before 2007.
Case in point: foreclosure in Fremont (yes, that is not real Bay Area), had 50+ offers…a record number and closed over 100k over asking as well.

LMRiM, I don’t see in our RE databases the loan info (probably not updated yet in our services). I have to pay to search for this which is why I don’t generally care to dig it up, but I was also curious about this one.
It would be interesting for price discovery purposes to see “bid” prices on places that don’t sell — in other words what the market is offering. 41 out of 42 bidders apparently were only willing to pay less than the 2009 to-date median $/sf for this place. But they got one to offer the median. Probably a complicated pricing effort to get nothing more than the median $/sf price . . .

Loan amount $300,000 with United Commercial Bank.

We have no data about the other 41 offers. My guess is that there is a whole mix from low ball offers, investor offers, and probably a good number above $550,000 which is 95% of median value of the Excelsior. Serious buyers will look at comps and bid accordingly. The market is not supporting wild bids substantially higher than “market” values, but a reasonable house also will not usually be sold at a substantial discount in this market with lots of motivated buyers (lower price range SFR).
Underpricing will still bring in traffic, multiple offers, and ability to work with the most solid buyers with fewest contingencies and negotiation after contract. But sellers should not expect a bidding war to produce a price 10% above what the market statistics indicate a value should be.
As a side note, most of the bank REO properties in area 10 are receiving multiple offers within days of being listed. Yes the asking prices are well well well and make it another well off the peaks. Almost as bad as Oakland. But people are buying and that is a good sign for market stabilization – at least at the entry price point for a sfr in San Francisco.
As I tell clients, there are no more 2 bedroom, 1000 square foot single family homes being built in the city. It is truly a fixed supply.
Finally something to consider. Most lenders require 20% down to buy a condo in SF and most buyers can buy a SFR with 10% down. This is traditional lending, not FHA or VA.

A sucker is born every minute. Greed and fear will take over your common sense emotions if you allow it. And that’s what happened to this buyer. TIMING IS EVERYTHING!

Please tell me that that loan info is incomplete. UCB is a bank focused on Chinese-Americans, many recently arrived. I hate to think that after all this, some hard-working immigrant family put $270K of cold hard cash down in the first loss position on that property. I can see that I still have a lot of work ahead of me. Like that ancient Greek wrote, “The life is so short, the craft so long to master”.

“A sucker is born every minute. Greed and fear will take over your common sense emotions if you allow it. And that’s what happened to this buyer. TIMING IS EVERYTHING!”
Wow, you were able to make this assessment based on what? This home or neigborhood may not be your cup of tea but you really have no idea what motivated the buyer. Clueless…

“I can see that I still have a lot of work ahead of me. Like that ancient Greek wrote, “The life is so short, the craft so long to master”.”
Chaucer was English, and it was “learn,” not “master.”

You know, I always thought it was originally said by Hippocrates, and a google search will turn up hundreds of attributions of it to Hippocrates, with a few crediting Chaucer for following it.
I remembered the quote differently from my high school days, as “The life is so short, the task so hard to master”, but that was back in the days before the internet, so people were smarter 😉
I’m really not sure, although I did flub the “learn” v. “master” (although whether in Old English or Ancient, I’m pretty sure the original word is neither).
Any literature historians out there who know definitively whether the thought is original to Chaucer or Hippocrates?
In any event, it’s a good thought.

As I always suspected . . . Chaucer was just an unoriginal hack and a foule!

I don’t get it. A 1250 sq ft 2/1 in Excelsior that sells for $570k? I can understand it if the home was completely updated and EQ retrofitted – but that price seems awfully high for what the buying is getting.

i’m sorry, was Chaucer from 555 Edinburgh???
and since when does a home have to sell at Median for it to mean anything? maybe this is the worst friggin home in the set.
and where is exSFer telling us no one puts large cash down in SF. we’re not even talking “real sf” here.

Someone paid over HALF A MILLION DOLLARS for a small home on a small lot with bars on the windows in a neighborhood where there were half a dozen murders last year.
Yes, it is across the street from a park. But still.
And this is somehow proof that the housing market is San Francisco is in utter collapse?

and where is exSFer telling us no one puts large cash down in SF. we’re not even talking “real sf” here.
I guess if I have to be called out, I’ll reply. I have never ever said that “no one puts large cash down in SF”, nor anything even close to that.
I have simply argued against other people who claim that the majority of buyers in SF are ALL-cash buyers. there is a big difference.
listening to some people around here you’d think that most buyers are uber rich folk who slap down all cash offers for themselves or their children. The demographics of home ownership simply do not support those wild claims.
Data has consistently shown that downpayments as a percentage of purchase price have plummeted in recent years, especially with the increase in so-called “80/20” loans. it has also shown that the mortgage owed as a percentage of home value has increased over the same time period. Simply put, people have more debt on their homes today than they did in the past. Even in SF. thus, it argues strongly against the mythical Loch Ness “all cash” buyers out there.
I am personally not surprised that some cash was put down on this property, although I am surprised at the amount of the cash down. at the time it was purchased loans were tight, and thus the 80/20 was hard to come buy. thus, I would have predicted 20% down, 79-80% mortgage.
this seems to be a 50% cash purchase. surprising? yep. astonishing? nope. against anything I’ve ever said? nope.
hangemhi: shall I start posting the loan balances on every socketsite home that goes up for sale and then call you out for them if they’re not an all-cash purchase?
I’ll start with this one.
this was not an all cash purchase. it was a 50% mortgage situation.

hangehmi: sorry for my irritated tone. I just tire of people putting words in my mouth that don’t even approximate my positions.
As a data-oriented person, I would be happy for someone to post data that shows the percentage of SF abodes that are purchased for all cash. I pass the baton to you in fact.
I am not an uber bear. I am currently a bear due to fundamental analysis of markets. I had RE bullish data that I was going to post, but this post is way way too long already anyway.
===
in 2007, (national data, for OWNER occupied units):
8% paid all-cash
51% had downpayment 20% or LESS.
9.4% put down NO downpayment (included in above 51% figure)
so you can see that the % paying all cash is as significant as the % who put nothing down. (LMRiM’s recurrent “non-sucker” theme)
source of data: page 158, US census.
warning: large pdf.
http://www.census.gov/prod/2008pubs/h150-07.pdf
the source of downpayments of owner occupied units (NATIONAL data again): (not restricted to all-cash purchases)
-sale of previous home (32.6%)
-savings (44%)
-sale of other investment (1%)
-borrowing, other than mortgage on owned property (3.5%)
-inheritance/gift: (2%)
-land where building built used for financing (0.8%)
-other (4.4%)
-no downpayment (9.4%)
-not recorded (2.3%)
same source as above, page 160.
===
thus, you can see using my data why i’m reluctant to believe in all these all-cash SF buyers. I am very willing for you (or anybody) to show me DATA on why SF is “different”.
typically, I don’t get data from people arguing against me. instead I get “you just don’t know because you aren’t here, and I know this friend who paid all cash because their dad is an oil sheik etc etc etc”
Or they try to say “well SF is different” but show me no data that would indicate otherwise.
As example: did you know that the % of homes owned outright is NO DIFFERENT in SF compared to the nation (both are about 1/3rd of homes owned outright). I did.
The ball is in your court. SF specific data showing percentage of homes purchased outright without a mortgage. I’d be even happier with a breakdown of downpayment percentages. And happier yet with data going back a to 1995 to see if there were changes as a result of the worldwide credit bubble.
I don’t doubt at all that there are some all-cash buyers in SF. I wouldn’t be surprised if it were near the 8% national figure. I wouldn’t be surprised if it were a little higher due to the wealth of SFers and SF transplants. I wouldn’t be surprised if it were a bit lower due to the absolute cost of SF Real Estate. But I’d sure like data before I just throw out national trends.

Hangemhi, myself and others said the recent market was typified by large cash down payments. You seem to be saying “all cash.” I’m sure you realize how much, infinite variation there is between those two points?
In my case, my initial anecdote was that I personally saw scores of situations 2004-2008 where buyers put down more than 20%. The point was that many of such buyers will find it easy to re-fi, and avoid any sort of ARM reset.

Hangemhi, myself and others said the recent market was typified by large cash down payments. You seem to be saying “all cash.” I’m sure you realize how much, infinite variation there is between those two points?
yes, that is true. I recognized this point after I posted.
It may be just that we have a problem with verbal communication. Perhaps the problem is words like “Typified” and “large”.
When you say that the “recent market was typified by large cash down payments” I understand typified to mean either the majority, or the mean, or at least a significant minority of the sample.
I understand “large” to be… well… large. I don’t consider 20% down to be large, so that may be the area of greyness. I consider 20% to be A BARE MINIMUM downpayment, and 20% WAS the bare minimum downpayment until the mid 1990’s. I do not consider a $200,000 down payment on a $2,000,000 home “large” even though $200,000 is a big number. it’s only 10% of purchase price. we’ve seen what such a SMALL downpayment means to loan portfolios.
Since my sourced census data only has a category of “40% downpayment or higher”, I am fine saying that a 40% downpayment is a “large” downpayment. (for instance, the house in THIS THREAD had a large downpayment, around 50%).
====
looking at my NATIONAL (not SF specific) data,
-one sees that over half of the purchases used downpayments of 20% or less. (a SMALL downpayment)
-Only 13.4% of people paid ALL-cash OR put down 40% or more on their property.
If more than 50% of people had downpayments less than 20%, and only 13.4% had downpayments of 40% or more, then I would say the market is TYPIFIED of LOW downpayments.
Unless of course you feel that 20% is a large downpayment. then it’s 50/50. But then I go back to the fact that 20% was considered the bare minimum downpayment until the 1990s. hard to call that “large”. I’d call that “relaxed credit standards”
===
I will word my position very carefully and very specifically thusly: You may all quote everything below from here on:
I do not know SF specific data, but request said data if anybody has it. However, national data indicates that:
-just over half of owner occupied homes are bought using downpayments less than 20%
-9.4% of owner occupied homes put nothing down
-8% paid all in cash
-5.6% put between 40-99%
-a total of 13.4% of people put 40% or more down or bought outright. (8% plus 5.6% is 13.6%, which differs from the above 13.4% number based on rounding… go to the data itself and you’ll see that it all fits).
-I consider a 20% downpayment to be “small”
-I consider a 40% downpayment to be “large”
-since 50% of people put down a downpayment less than or equal to 20%, I would say that “the national RE market is typified by small downpayments”
I anticipate that SF will have some variances from the above data, but I do not think it will be striking, similar to the fact that about 30% of SF households own their home outright, and 30% of national households own their home outright.
I welcome data to the contrary. I use the census data because I believe they have a very good methodology with checks and cross checks. I also understand the limitations of this data, and that the data can have errors due to sampling. However, I still maintain that this data is superior to people making unsubstantiated claims.

so clearly our disagreement is mainly simply one of semantics, specifically the use of the word “large”.

Lots of predictions there. Lots of assumptions too, all made in a spring 2009 that’s seeing a surprising bounce. Among your assumptions is seemingly one that most of these houses were viewed as starter homes.

From the second Bloomberg link: “Prices dropped in 134 of 152 metropolitan areas, with the deepest declines in Cape Coral and Ft. Myers, Florida, followed by San Francisco and San Jose.”
But, you know, that doesn’t mean San Francisco. Snark aside, I would be shocked if May sales were not quite a bit higher than March and April, which were totally in the tank. One can debate whether that is a bounce. I suppose in some sense it is.

JimAtLaw,
There is a guy who shows neighborhood/ZIP code foreclosure stats on this website at least a couple times a week. We’ve got a very long way to go to get to the capitulation/critical mass you’re assuming is a given. So you’re one of those ARM reset tsunami-ists, huh? OK. Let’s wait and see.
As for the surprising bounce comment that cracked you up so badly, there have been a number of higher priced properties moving since late April. Many of them have been talked about on this website. So let’s wait and see what June’s look back shows us. I think I might chuckle. I think you might not remember to post here again. It’s all good.
If you don’t think there are plenty of people in the market right at this moment in time with hundreds of thousands to put down on SF r.e. in a falling market, that’s fine. I don’t need to argue against your opinion. I know that there are, and every day for the past month or so this website is shown evidence of that fact.

The full table referred to in those Bloomberg stories is here (at the bottom), and it’s sortable by heading:
http://money.cnn.com/2009/05/12/real_estate/first_quarter_home_prices/index.htm?postversion=2009051212
The Bay Area really tunrs in a command performance – if you sort by median % loss, only Cape Coral (FL), Saginaw (MI) and Akron (OH) are doing “better”. But I still have faith in the Bay Area that we will ultimately get to the numero uno spot one of these days 😉

How is a rise in sales during the spring and early summer at all surprising? This is completely normal, and hardly evidence of a housing recovery in light of plunging prices, record foreclosure and pending foreclosure levels, and sky high inventory.
Sparky-B, it’s almost fair to say I’m “ARM reset tsunami-ists,” but it’s less about ARMs than about interest only and option loans, methinks – right now, rates are so low that resets of a typical ARM aren’t hurting that badly for many. But for those who are paying zero principal in negative amortization, the resets will hurt. And of course, there are some people with more cash to put down right now than sense – but enough to turn the market around? We’ll see indeed.
Trip, if you don’t think there’s a lot of shadow inventory, do you really think that all the listings that have been pulled from the market over the past couple of years but not foreclosed yet, or in foreclosure or pending foreclosure but not for sale, or which are not in immediate foreclosure danger but for which the owners just gave up after a while, are gone for good? Seriously? Of course not – a huge number of these will be back on the market soon, either as foreclosures, or with each passing hope that sales are picking back up. The snails pace of sales and fall in prices over the last couple of years has certainly clogged the seller pipeline and it’s going to take more than a month or two of slighty greater sales (still at a fraction of boom pace) to unclog it.
Of course, I could be wrong – perhaps the entire city of San Francisco is filled with people who make $300k+ or are independently wealthy and who just can’t wait to get themselves a $1.3M two bedroom condo. I just don’t see it.

How is a rise in sales during the spring and early summer at all surprising? This is completely normal, and hardly evidence of a housing recovery in light of plunging prices, record foreclosure and pending foreclosure levels, and sky high inventory.
I didn’t say that it was evidence of a “housing recovery.” You did. I said it’s a somewhat “surprising bounce” and for some reason you took great exception to that statement. Well, I read the news and follow the markets just like everyone else does.
Let’s face it. Conventional wisdom these days was that a bounce would not take place spring 2009. Because, as you put it, plunging prices, record foreclosure, pending foreclosure levels, and sky high inventory will all work against properties continuing to sell every single day for near-peak levels (or a few points off) in mid spring of 2009. I think you might even be one of those people. In fact, you are one of those people. So how many of these factors you are absolutely certain about are not actually in effect at this moment in time?

It would be fun to debate with you if you were sincere in any way, Trip, but you’re not.

It is LMRiM and others who use the 100% financed jingle-mailer examples.
I just want to go on record that I have no problem with the idea that many people (perhaps most?) put down “substantial” downpayments. People can argue about what “substantial” down payments mean – could be anywhere from 10% to 70%+ — I don’t think it’s going to make a bit of difference to where prices will ultimately wind up anyway (just affect timing in particular areas a little, though). You’ll never find me arguing on SS about sizes of downpayments, or option ARM “recast” versus “reset” schedules, etc. It’s not going to matter in my opinion in the end.
I only point out that people who were smart put down 0% wherever possible during the most extreme bubble years (say, from about 2002 onwards in most of SF), and when I find an example like that in a house we are examining on SS I note it. If there is one thing this unwind should be showing people, it’s that very very few average homebuyers are particularly savvy when trading a leveraged asset that is typically much larger than the productive surplus their earnings are ever going to generate (at least after paying for all the other things necessary to live in modern society).
In hindsight, once the bulk of the losses are behind us (they’re still in front of us imo for most of SF), it will be easy to pick what the “trigger events” were. But it’s impossible to try to forecast them with exactitude right now, and always a poor trading strategy. People who have traded other forms of leveraged assets (and, unfortunately, that’s what housing has become) will immediately recognize that in the presence of an extreme overvaluation on a fundamentals basis, once the trend changes, “that’s the ballgame, folks”. The key has always been the decline in sales volume to the identification of the trend change. The market will fill in all the “trigger events” later – just sit back and watch it unfold (this would have been a beautiful market to trade from the short side with a trailing stop – textbook beautiful).