2608 Sacramento

Fifteen days ago 2608 Sacramento was listed on the MLS for $2,395,000. And yesterday it closed escrow with a reported contract price of $2,500,000. The sellers purchased the property in April of 2005 for $2,675,000.

While 6.5% under its 2005 sale doesn’t sound too bad, keep in mind that the median price per square foot for single-family homes sales in area code 94115 increased 11% from 2005 to 2008. If you buy into that metric, consider it a 17.5% drop from “peak” for this remodeled Pacific Heights home.

But hey, it did sell quickly and for over asking.

47 thoughts on “From Listing To Sale In Just Two Weeks For This Pacific Heights Apple”
  1. Don’t forget to add the costs of a kitchen and two baths remodel, about $100K for this place. So they were in for 2.775 in 2005 and out for 2.5 in 2009, so they did pretty well. They lost about 10%.
    To get a 2004 price in this market is pretty good! But that’s a great area, quiet street and close to everything.
    A two week close tells me there was likely a sale brewing well before it was listed. Why list it low? So you could tell everyone it went over?
    [Editor’s Note: We could be wrong but permits suggest the renovations were completed prior to the sale in 2005.]

  2. I remember going to the open house back in 2005. The work done to put it on the market in 05 did appear to be a flip job, with some decisions to optimize for speed IMHO (the sideways garage? is that even usable?).
    Also — it felt small… anyone know the sq ft? Did it even break 2600 sqft?

  3. Let’s see. Wrong on the post 2005 kitchen remodel timing. Guess on the kitchen expense. Guess on the pre-existing sale brewing. Great post, Tipster! Thanks. Brain activity has been slowed by the mere sight of it. Luckily I have a flight to catch, so zzzzs may come easily.

  4. This looks like a smart strategy on the seller’s part here. List it at a little below what the market will reasonably bear now, and generate the overbid. The pool of buyers in SF is not very sophisticated financially on average, and so the auction process that ensues from a lower than market list price increases the probability that the “winning” bidder “overpays”. Typical “winner’s curse” dynamics at play, which are amplified by the nature of the asset, which is inherently difficult to value.
    After standard commissions and transaction costs, it looks like the current sellers launched about $350K into heaven, which is not too bad in light of the sheer scale of the bubble. I’d say they got off pretty easy here.

  5. “If you buy into that metric, consider it a 17.5% drop from “peak” for this remodeled Pacific Heights home.”
    Brilliant! after dismissing medians for so long on this site, now they are being used to determine % falls from peak in the market. i thought apples were used precisely because medians were unreliable – so why interpolate and extrapolate between apple sale points using them?
    [Editor’s Note: As was written, “If you buy into that metric.” Insert the metric of your own choosing here, in this case it’s simply being used to make a point.]

  6. BTW, just checked and it looks like this seller is one of diemos’ heroes. Prop shark shows that $875K was put down in the first loss position, where it performed its selfless civic duty of absorbing the full loss. A respectable sacrifice, to be sure.

  7. The pool of buyers in SF is not very sophisticated financially on average
    As opposed to, say, New York or Kentucky or Canada or Fiji, where the pool of buyers are far more financially sophisticated… Here, Jed just rolls out of his turnip truck before he purchases his $2.5m shack.

  8. As opposed to, say, New York or Kentucky or Canada or Fiji, where the pool of buyers are far more financially sophisticated… Here, Jed just rolls out of his turnip truck before he purchases his $2.5m shack.
    Best post here in a while… K

  9. Yeah, for some reason LMRiM seems totally fixated even obsessed lately with the notion that people around here are particularly “dumb” or “naive”. He just seems to conveniently forget or ignore that people are just as “dumb”, “naive”, and “not very sophisticated financially” in places like New York City (from the Bronx to the Upper East Side), London, and South Florida, if not more ;). I mean, if he thinks California is a mess (and he’s right), wait ’til he gets to Florida.
    The New Yorker magazine a few months back had an interesting article called “The Ponzi State” about Florida. Here are a couple of observations from the article, the first by the author and the second a quote from a professor who concentrates on Florida history……..
    “The state’s economy depends almost entirely on growth – that is, on new arrivals and the wealth they generate in construction and real estate.”
    “Florida, in some ways, resembles a modern Ponzi scheme. Everything is fine for me if a thousand newcomers come tomorrow. The problem is, except for a few road bumps – ‘73, ’90, and they were really minor – no one knew what would happen if they stopped coming.”
    ………. I mean, we all know if there is one thing LMRiM is not, it’s a “sucker”. Right?

  10. LOL, guys. Where did I say that SF buyers were “more” financially unsophisticated than in New York, or Canada, or Florida, or Kentucky, or Fiji (?) or Canada? Touchy, touchy…..
    Now, if we’re going by MSA % losses and absolute size of dollar losses….. I think SF would take the cake. Perhaps NY comes close (not yet on % terms of course, but ultimately? and maybe in absolute $ terms?). I haven’t lived there in a while and haven’t followed it very closely except family properties in the NYC suburbs a bit. NYC is a much bigger place than SF so it’s hard to make comparisons anyway. It might be that suckers moving to NYC to take high paying jobs were collectively as big suckers as you’d find anywhere in their housing purchase decisions, but I can assure you that (unless something really crazy has happened there that I am not aware of), average people were not paying $600K+ for the equivalent of Bayview shacks in NYC environs.
    And Kentucky? Did they get suckered into 40%+ declines in large swaths of the urban areas?
    LOL.

  11. I’m not sure I’d use the word “unsophisticated” to describe SFers.
    I would use the word “naive” or perhaps “ignorant” or at the worst “foolish”… and that only describes SOME of the homebuyers.
    I don’t personally think SF homebuyers were more naive/foolish than any other bubble area. I do think that the bubble areas in general exhibited a lot more foolishness/naivete than the non-bubble areas though.
    the “we’re special” and “everybody wants to live here” and “RE only goes up” mantra really played well to the bubble areas. not as much to the non-bubble areas. it seems people really took those arguments to heart in the bubble areas whether or not they were true. the same did not happen as much in the non-bubbly areas.
    thus, places like Houston and Charlotte escaped more than places like Vegas and Phoenix. and people in Vegas and Phoenix were more naive/foolish financially in aggregate than those in Houston and Charlotte.
    People might scoff and say “ack, who wants to live in Phoenix?” but Phoenix was the bubbliest place one year and was one of the fastest growing metros. now in retrospect people are realizing that Phoenix really is, well… Phoenix!
    and “bubbly” didn’t always mean the coasts or urban centers. some of the bubbliest places were Midwest Farmland. Some arguments at the time were that ethanol would replace gasoline, and that there would be massive food shortages due to Ethanol useage, and that farmland was being developed into subdivisions and so on.
    it’s very hard to think and act rationally when everybody around you is in a mania.

  12. Good post, ex SF-er, and I’ll use the less loaded term “financially naive” going forward, as that’s really what I meant* – I’ve already got the SS market cornered on the use of the term “foolish”. I’m continually amazed that the property bubble took hold so quickly and effortlessly – or, more properly, continued and inflated even more – in the SF Bay Area, which was after all ground zero for the dotcom bubble and unravelling. I never would have expected that in 2002 when I surveyed the landscape, but I was new to the area.
    * “Unsophisticated” is really just a term of art on Wall Street and its use just comes naturally to me. It has as much to do with the SEC regulations regarding sophisticated investors versus retail investors than anything else.

  13. Bunk,
    Everything goes in cycles, and the real estate market will turn eventually, and Paulson wants to be positioned when it does. I think it’s premature to think of a real estate recovery for at least a few years, but Paulson may be correctly betting that this is a good time to raise money for the fund, now that some risk tolerance has returned (he doesn’t have to deploy it, and he’ll get a management fee regardless). As the recession grinds on, preferences could get very safety-oriented again (this feels so much like Japan in the earlier stages to me, but the gooberment is doing even more, which I think means it will turn out even worse).
    When I first started college, I met a fellow student who was from a real upper class family in India who told me that optimism is hard wired into humanity because without it no one could do anything in the face of the knowledge of his eventual but certain death. Is that a tenet of the culture or Hindu belief?
    About BAC – maybe Paulson knows something we don’t? I bought BAC for $4/share a month or two ago, and sold it out for only a 15% gain. (It’s up 200% since then.) So, I certainly didn’t have any special knowledge 😉
    OT – do you recognize this place, Bunk, from your rental search last year? Hard to find good renters who stay it seems.
    http://sfbay.craigslist.org/nby/apa/1178631407.html

  14. It is precisely this kind of desperate buying even in these desperate times, that is making SF still un-affordable…. 🙁

  15. Regarding “financially naive”, “unsophisticated”, and the turnip truck… I don’t mean to pick excessively on the buyers of annon Sr’s flip, but according to Zillow they are already down $50k. This is a doctor and a professor (who also used a “subsidy” from the university to make the purchase). It’s only a paper loss and these folks are “pine box” buyers, so nothing really lost, right? I’m sure the anonn clan is breathing a sigh of relief as it’s looking more and more like they are sellers who caught the crest of the peak. I’m guessing, conservatively, they cleared at least $200k. Much better than being a patriot in the first loss position…

  16. I took and have always taken LMRiM’s “unsophisticated” sort of characterizations as intended to show that despite the uniqueness of SF, it’s residents are not immune to general market psychology.
    In other words, when it comes to property San Franciscans are as greedy as anyone and that makes them rush in as fools no different than in London, NYC, Las Vegas or anywhere else. The only difference between SF, NYC, London is that these sorts of places will always have demand because they are actually nice places to live.
    LRMiM posts on an SF blog but he uses whatever the house is under discussion as a launchpad to make more general points that could be used almost anywhere in USA, UK, Ireland, even Spain, as well as other “2nd home” sorts of places (save for the prop 13 ones, but those work for all of California).
    Sorry if I am putting words into your mouth LMRiM, but your general market psychological analysis is a large part of why I read this blog most days.

  17. That’s fair, Piedmont. Generally, SF will behave just like all the other “special” places, of course with some local twsist. I am a bit surprised that SF and the Bay Area – being ground zero for the last (smaller) bubble – fell so effortlessly into the next, but I guess the housing bubble has been more of a continuum here (probably since the mid-1980s, but certainly since the late 1990s) so I guess I shouldn’t have been surprised.
    OT – On more important topics, have you noticed the almost implosion of the high end guitar market lately? I may be joining you soon in having some Martins to go with my Collings and Walker, as I’ve been talking to someone about acquiring his mint condition small collection at a distress price (D18A, 000-18A and D-28GE Brazilian – I’m always happy to help someone out ;)). It’s a good time to be shopping 🙂

  18. LMRiM
    Have I ever been into the guitar implosion. I actually got banned from the Martin guitar forum for weaving in an economic argument and referring to Obama!
    The next guitar I will purchase is the D-28 GE. That is everything I like. Classic old wood and bracing and new more modern thinner neck. The Authentics are just that…clubby neck and all. Some love them and that’s great, but not me.
    A potential caveat is to watch out for that guy who is selling the Collings Mandolin you talked about the other day. He apparantly is also known as “Flip it Fast” and there is a lot of discussion about him on the Martin form (UMGF.com). He is also selling that current D-28GE that is hovering in the $4K range on ebay now!!!
    I actually took advantage of the biggest drop in the markets since what–the Depression–last October 10 to buy an OM-45 Roy Rogers at Christies. I knew it was too early, but that was when the sale was and we’ll never see so many prototypes (like mine) for sale again. I got it right at the reserve so I am happy about that. I’ll put the link up to all the pix on the Martin forum if you are interested. It has “all the bling”.

  19. We sure do have a lot in common, piedmont. I almost bought an OM-45 (the reissue limited edition with the inlay on the pickguard that they did about 10 years ago or so) but for some reason I can’t remember I passed. I like the thick necks myself, but I much prefer the early 30s V to the 1937 C profiles. I used to have a 1932 0-17, one of the very rare ones that had a 1-pice top and both a decal on the headstock AND a stamp on the back. I wish I’d never sold that one.
    Christie’s – I can’t remember the names of all the London shops I used to haunt except I do remember a fun shop just about right on the Thames, but very hazily… I also remember driving my little Citroen (looked funny in the parking lo amid all muy hedge fund buddies’ Ferraris) somewhere about an hour north of london to buy a lowden 0-35 years ago.
    Right now, I’ve got a number of collings kicking around. A 2004 OM-1AV sunburst w/custom deep body, a 1996 000-2H, a 2006 custom DS-1G, a 2006 000-1G and my Walker OM. A mix of Norman Blake and Aerosmith (lol) playing in the background – life is good. I’d like to pick up one of the new Collings varnish dreads – there’s a D2HA varnish on collingsforum for $4750 kicking around but I don’t like the narrow bridge spacing….
    My best friend from college days is an absolute nut for acoustic guitars, and he’s worth well into 9 figures now, so you should see his collection (including a 1938 MINT all original D28, and I mean mint – that set him back almost $100K…)
    That’s funny they kicked you off UMGF.

  20. LRMiM – I very much remember that place, I think they started it out a $5500 a month about 8 months ago, and then dropped it and it sat there at $4500 which appears to be what they are asking now. I’ve seen quite a few of the rentals that I was looking at 6-12 months ago back on the market now. Who knows what happened there in that one, I wonder if they ever got someone in there or just stopped looking for renters. Reminds me of that place in St. Francis Wood you told me about that sat there asking $5000 a month, and it was empty for many, many months. When I called the rental agent and asked if they would be willing to lower the price, he said “no way”. I think you had called the same guy as well, it was a nice old house on a corner there, I don’t remember the address or streets.
    As for the Paulson fund, I am wary of RE prices for a long time. I am sure there are good investments to be had nationally, but if he raises too much and tries to put too much to work, he will have some poor investments threaded in with what could be some good ones. It is not a fund I would put my money in, at least not right now.

  21. Nine figures? I don’t even know where that ends up without thinking it through.
    But what the hey, life is good in Italy. You don’t need that coin here. I am now just a guy with a dolcetto vineyard, although I’ve started going back to London 2x a month as I have some cool clients now (yeah I still practice law).
    My little 15 minutes of banksterdom claim to fame is using my legal powers to hold the board of my old company in conflict (because of their shareholdings) and sell the company under them. The top shareholder got a Ferrari.
    The sale agreement was signed on 24 July 2007. Talk about the bell ringing moment on the Mount Olympus of bubble godz. Closing was in November and the main UK operating company was bankrupt 3 months later when our crack risk management staff (pun intended) had us in a trade for 2.5 million shares on a stock that sold 20K shares a day. Doh (Doh that is when the price went from 350p to 100p.)
    Your life is good as well. I haven’t been to marin in ages but my cousin lives in some place…Ross? I’ll have to drop in some time and pull out the geetars with ya.

  22. “according to zillow they are already down $50K,” -come on.
    Would you rather have me cite comps, like 835 Foerster? I will close my trap (seriously), if you think it’s the right time to buy one the 1500 sq.ft. homes in the area, add 1,000 sq.ft., and then resell it. I mean, the most recent neighborhood comp says this is a good way to make some scratch.
    [Editor’s Note: With respect to 835 Foerster: Catching Up On A Few Closings And Early April Apples About Town.]

  23. EBGuy,
    So according to that logic the new buyer of 3976 25th street has already lost over $575K and they haven’t even closed escrow yet. The zillow estimate is for $2.32M and it last sold for $2.9M and is in contract after 1 week at $2.85M asking and 2 offers.
    Plus, do you really have to pull out anonn and a home he sold out to make a point.

  24. Totally agree with REpornaddict, the lead-in to this posting from SocketSite itself was sort of mindless – “If you buy into that metric, consider it a 17.5% drop from “peak” for this remodeled Pacific Heights home.”
    Look, this is getting pretty old SS – everyone knows that the real estate market is down substantially from not only its peak but even from prices a few years old. When people (maybe 9-12 months ago) were debating whether the market was up or down, this whole idea of seeking out “apples” to prove the point one way or the other had some relevance and meaning.
    But at this point, we know the market is down. So every time that something sells that was last sold in the 2005-2008 period, it’s gonna be lower, and possibly a bunch lower. What new point is being made by you each time you post one of these “apple” articles? You might as well report each day’s closing in the DJIA or Nasdaq and breathlessly compare it to where it was one year, two years or three years ago – wow big news. Wow I wonder if tomorrow’s closing average will still be substantially lower than a year ago? It is? Wow thanks for that scintillating news, SocketSite.
    Long story short, how about be a little creative and try to post some items that are timely and/or thought provoking?

  25. So according to that logic the new buyer of 3976 25th street has already lost over $575K and they haven’t even closed escrow yet. The zillow estimate is for $2.32M and it last sold for $2.9M and is in contract after 1 week at $2.85M asking and 2 offers.
    No, we need to wait until the new data point has been fed into the Zillow algorithm to see what the post-sale Zillow loss (or, who knows, gain) is.
    I should probably let the buyers of the anonn flip rest in peace, but they are the only people that I know of who bought recently in SF. They are, gauging from their professions, very intelligent people who, most likely, made a poor financial decision.
    Robert, I don’t think everyone got the memo that the market is down. BTW, thanks for posting that Fed report yesterday. Did you write any of it; I noticed it touched on some of your favorite topics.

  26. Hey EBGuy,
    I didn’t write the Fed Letter 🙂 Just an hobbyist here. I am glad to see Minsky getting more attention, though. He is almost becoming mainstream!
    I also didn’t write the post above, it was another Robert. If you see a post complaining about the board or equivalent, then it’s most likely not from me, hopefully.

  27. @LMRim: Just face it, your lazy, haughty, uninformed schtick got exposed once again. Too bad; maybe you will actually try to say something meaningful the next time you post; though I doubt it.

  28. LOL, Noe Neighbor, I’ve been called lots of things but “lazy” is not usually one of them 🙂
    I will say that – in addition to posts from a few of the well known regulars on here – it’s posts like your that keep me coming back to SS. On Wall Street trading desks and other venues when you’re dealing with sophicsticated investors, the market adjustments happen fairly quickly, and response/emotion dynamics occur in rapid fashion. You almost can’t see it go by, especially if you’re part of the action. But in SF real estate – where the primary actors are “financially naive” (thanks, ex SF-er), this bubble is a thing of sublime beauty. To watch all the visceral reactions as it unwinds – the lashing out, the “hoping against hope”, the defiant rationalizing – well, it just doesn’t get any better if you’re a market junkie.

  29. No, EBGuy I don’t think that’s it (you don’t know of any other sales). Here are 2 recent ones from SS threads.
    313 Duncan; sold for $2.4M, zestimate $2.312; They have already lost $88K
    4356 25th street: sold for $2.4M, zestimate $2.162M; They have already lost $238K.
    Both of these houses have Port-o-pots out front and are doing work. So they must have lost a lot more.
    So in case you missed it my 2 points are:
    1)Zillow estimates are a stab in in the dark. They didn’t see the house and probably didn’t even look at the pictures.
    2)There is no need to bring up annon for your point, unless it is to just dig at him. He gets enough of that with his comments so leave it be.

  30. Howdy folks, just rolled up in the turnip truck. . . yup. Feel free to drop in– havin’ a little roadkill bbq at my place (‘possum, groundhog, raccoon (my place is towards the top of the lyon street stairs . . . )
    It will be interesting to see how “sophisticated” r/e investors are five years from now vs five years ago– yes partially because of the need to think more given the market, but largely due to greater data availability. This gets me into my whole NAR rant, but it amazes me that the single largest purchase/investment for most people has always been done on such little information. A couple of carefully selected comps from your realtor and comforting words that you can’t lose money in this market and a neg-am is a great deal because you’ll double in five years anyway. . . It amazes me that it is legal to “counsel” people with some of the things I’ve heard. . .
    LMRIM, you hang out in Schoenberg’s shop in Tiburon much?

  31. Robert’s post: “But at this point, we know the market is down. So every time that something sells that was last sold in the 2005-2008 period, it’s gonna be lower, and possibly a bunch lower. What new point is being made by you each time you post one of these ‘apple’ articles?”
    I wholeheartedly agree that your conclusion is as clear as day. However, you can read lots of posts here every day stating essentially “prices are only down 5% to 10%” and “we’re pretty close to the bottom.” So some people either are still either delusional or still need convincing.
    What I’ve always found to be the most interesting aspect of SS is the discussion of the present scope of the current decline (much debated) and also prognostications about the future direction (even more debated). It is pretty time-consuming to dig up market data and individual “apples,” and I think they are all helpful pieces of the big picture. Otherwise, what is SS supposed to post — nothing but pretty photos of mansions?

  32. Wow, so we have two Roberts here now. That’s almost as confusing as the multiple anons. “What ? You’re name’s not Bruce ? That’s going to cause a bit of confusion.”
    Anyways in response to “Cranky Robert” who complains “enough already, we all know the market is down”. Yes, that’s obvious to almost everyone now.
    The more interesting discussion now about how much further the market is going down. In fact, I think that was the point of the much maligned “inverted underwater” chart that SS posted here a few weeks ago : https://socketsite.com/archives/2009/04/socketsites_spcaseshiller_bonus_san_franciscos_thin_red.html#comments
    As the market goes down further, it trips over thresholds causing interesting effects like owners getting stuck with recasts, a drought of stupid money, and “linked buyer’s sales contingencies” collapsing.
    SF RE has already returned to my personal (and quite conservative) level of affordability. But I’m not buying because I think the above effects (and more) might possibly trigger a further avalanche.

  33. 4356 25th street: sold for $2.4M, zestimate $2.162M; They have already lost $238K.
    FWIW, I believe that number to be accurate; but we obviously need more time for that to be (dis)proven.
    Let me whet your appetite with 4250 23rd St. Bought for $2.4 million (5/2006); a NOD for $2.05 million has been filed. There also seems to be a number of NODs filed for HELOCs/seconds in Noe; wonder if this is a harbinger of things to come or if they will be cured…

  34. The moment you buy an SFR, your financial wealth immediately goes down by the cost associated with selling the place – roughly 6%. Generally, it goes down even more, because most houses are very distinctive, and the fact that you paid $x for the place generally means that you value the place higher than anyone else in the market at that time. In the case of a “winner’s curse” blind auction, that premium you paid over the next bidder can be quite substantial.
    Now, of course, that doesn’t mean you never buy a place, or that the immediate hit to net worth should be paralyzing. The moment you buy a car, for instance, your net worth takes a hit. Nevertheless, many people lose sight of this basic fact inherent in the illiquidity of residential real estate – by buying you are making an implicit forecast on the future evolution of the market (and of your personal circumstances) unless you are honest with yourself that you just took a hit to net worth equivalent to 6-10% of the price you just agreed to pay for the house.

  35. LMRIM, you hang out in Schoenberg’s shop in Tiburon much?
    Great, the thread is dead now, so we can get back to important things like guitars. I used to hang around there pretty often, Jed, ironically when we lived in SF. Not so much lately, but I see Eric is starting to “give in” and stock and deal in Collings.
    To bring it back to the subject of this thread (SFR in Pac Heights), and also for Renter in Piedmont’s benefit (he loves the bling guitars), I’ll go out on a limb and say that in 25-50 years, this 1930 000-45 guitar at Schoenberg’s will sell for more than 2608 Sacramento:
    http://om28.com/smartused/dlx.html

  36. For whatever reason, I haven’t dipped into vintage guitars yet. A bit afraid of getting started for various reasons. I have a collings baby and have been thinking about getting another smaller bodied collings now that they make the 00 and 0 sizes. Also, a Santa Cruz OM, a goodall cocobolo/cedar parlor size, and my current favorite– a froggy bottom in adirondack and koa. crazy sound from that thing.
    used to live in new york and go check out the old martin’s at umanov’s, but could just never get going with it. afraid of the slippery slope i guess . .

  37. Not to speak for LMRiM but because it would cost more to rent those guitars than to own them as it should!

  38. Yeah, I don’t think it’s possible to rent those guitars. Besides, the aggregate value of the guitars I’ve got right now is only about $50K, so it’s just a small discretionary outlay and not really something I’d even think about as regards capital committed.
    Funny thing is, the guitar “portfolio” is probably showing a slight gain due to a custom guitar that I waited four years for and has at least doubled in value since the price was agreed in 2002. The rising credit bubble tide lifted all boats!

  39. Meanwhile this place just sold for $1m over its 2009 asking price. I had considered buying this place at one point. Congrat’s to all. Never did figure out the square footage.

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