260 King Street #613, a one-bedroom at The Beacon, is now “bank owned.” It’s currently on the market for $552,900 or $680 per square foot. And although tax records show an assessed value of $567,018, it would appear that the bank “bought it back” for $609,117 this past November.
At the same time, there are another four one-bedrooms at 260 King Street which are currently listed on the MLS with prices ranging from $726 to $931 a square foot. And of the two one-bedrooms listed at 250 King (which is also a Beacon address), one (250 King #410) is “subject to short sale approval” with a “motivated” seller.
∙ Listing: 260 King Street #613 (1/1) – $552,900 [MLS]
∙ Listing: 250 King Street #410 (1/1) – $625,000 [MLS]
Geez, a 1/1 in a good building for under $700psf, a trophy view home in pac heights (above) for $711, and a view SFR in the Marina for around $800psf?
When prices were routinely hitting $1100 for non view homes, and a badly done home in pac heights on a busy street could easily fetch $900 psf, a lot of people never thought we’d see this kind of pricing.
And this, just as a recession is barely getting started. Wow!
Get used to this folks, we got another 2-3 years of price drops ahead of us. Just a matter of how big those drops are. All of you “San Francisco is different” people can get bent.
The only way we’ll have 2-3 years of price drops is if SF has a wipeout crash. If the pace of declines is moderate, which in most areas is likely, FWIW my prediction is that we are in for 7-10 years of price declines.
This is quite possible the largest credit-induced asset bubble in world history (at least in the modern era), both in terms of numbers of people affected and world GDP involved, and we are only in the very early innings.
http://comstockfunds.com/files/NLPP00000%5C292.pdf
after the last high water mark (1989?) it took 4 to 5 years to hit bottom, and 7 or 8 to return to ’89 prices. when the psychology goes negative its very hard to turn around.
the question is, will we see the rent v own ratio come all the way back to the mean? or will the pied a terre boomer/disneyland
effect preclude that (at least in district 9)?
“Geez, a 1/1 in a good building for under $700psf”
If there was one building that I would expect to be a leading indicator of price declines, it would be The Beacon. It’s just not a very attractive building, imo. Rental buildings that are turned into condos to make $$$ rarely are, and this one’s no exception.
IF there is a recession that impacts tech companies like Google & Yahoo and slows down the VC community, you will see continual and big price drops in SF and the bay area.
There are lots of 1BRs for rent at the Beacon — around $2500/mo, which includes parking and the $550/mo. HOA fees. It looks like we’ve already got price reductions of about 15-20% in this building, but you’re still far better off renting, and you wouldn’t shoulder the risk of further declines (I count 13 places on the MLS at the Beacon — clearly a buyer’s market).
“I count 13 places on the MLS at the Beacon — clearly a buyer’s market”
I wouldn’t say 13 units for sale in a 550 unit building (2.4%) indicates a buyers market. That sounds like a low inventory total to me.
“That sounds like a low inventory total to me”
Oh, come on. I don’t have access to complete stats, but Redfin indicates sales of about one unit a month (which includes foreclosures). So there is over a year of inventory — and that ignores any places that are being kept of the MLS.
SF has about 350,000 housing units — if 2.4% of those were on the market now there would be 8400 listings — not a buyer’s market?
This is the trend that I was seeing last year on my trips to Chicago. The first to drop were outer suburbs, then the inner ring suburbs, then buildings such as the Beacon, and now there are even foreclosures in some of the premier towers in the city. I think we are just a year or so behind what L.A. and Chicago are already going through. (And please don’t tell me that tiny S.F. has the same economic and demographic strength as Manhattan, which is really a real estate world unto itself.)
“SF has about 350,000 housing units — if 2.4% of those were on the market now there would be 8400 listings — not a buyer’s market?”
I don’t see how 13 listings in the Beacon = SF is a buyers market? Mission Bay has more availablility then any other neighborhood which is probably part of the reason the Beacon units are sitting there.
I can easily give an example of a listing in SF that went well over asking and had 10 offers on it. Does that 1 example make SF a sellers market? No, it doesn’t.
Avoid using 1 data point to support your generalizations about the entire SF market, it makes you sound ignorant.
jj, relax. I said it is clearly a buyer’s market at the Beacon — I said nothing at all about “the entire SF market.” You countered with a bogus argument that 2.4% of available units for sale at the Beacon “sounds like a low inventory total” and I called you on it using an illustration to show your faulty logic.
For the record, SF does appear to solidly be moving toward a buyer’s market, but I’m certainly not basing that on “1 data point.”
JJ he used one data point to support his argument which was better then zero data points which I believe you had. I am not sure calling his argument the ignorant one of the two was accurate. In fact, I’d say that the beacon is in fact looks like a lot of inventory compared to the # of units they have and I am not sure that reflects many of the units that were recently pulled from the MLS after they didn’t sell.
This building should be call “The Bleakon” or “The Bleak-hole.” I know, if you had a nickel for ever time you heard this, you’d have pocketful of change, but seriously – $553K for a foreclosure with formica, rental appliances and industrial carpet?!?!? Is everyone in this town INSANE?!?
Tweety, they were insane, but I think the ecstasy is wearing off. Look at a few sales here from the not-too-distant-past:
1/20/06, 750k, 832 sf
5/17/06, 739k, 814 sf
6/19/07, 760k, 832 sf
3/6/07, 779k, 823 sf
9/29/07, 769k, 822 sf
So 552k for 814 sf is positively judicious in comparison. It still makes no sense compared to renting the same place (and it does not appear that bidding wars are developing even at these new price levels), but the trend toward sanity is in the right direction.
It’s kind of staggering how much equity has evaporated in this single development in the last 6 months — perhaps $100 million.
“$553K for a foreclosure with formica, rental appliances and industrial carpet?!?!?”
Actually, kitchen counters are granite, but otherwise I agree, this unit doesn’t appear upgraded from when it was a rental.
The increase in value of real estate from 2003-2007 was due to a very real additional value that you got from owning real estate during that period: it was the entrance fee to a scam. You got to live in a home no one would have rented to you and you got to keep getting cash out refis that you would only be able to pay back with more cash out refis.
The increase in value that drove price increases of 2X or more was therefore, VERY real. You paid more but you got more: the opportunity to participate in a scam.
And the scam is still alive: people who had no business buying homes years ago are still living in them. As long as they can stay in them, they continue the scam (they get to live in a place no landlord would ever rent to them, and they don’t have to pay the entire loan back), so they’ll stay until the last minute, and for them, real estate continues to have the additional value, and so it would not make sense for them to sell for less than that value.
And that is why # of sales is declining. It is more economically efficient for existing owners NOT to sell because new buyers can’t provide them with the value that they themselves are enjoying by not selling.
70% of SF was purchased with alt-a mortgages. The clock runs out on alt-a mortgages much later than sub prime mortgages, so we’re seeing the end of the value stream for existing owners hit later here than in other areas. This is just an example of the initial tip of what is to come.
And because real estate no longer entitles new entrants to participate in a scam, something that has now been occurring for only a few months, the very real value that real estate had is now declining. Although existing owners are still retaining that value, and will for awhile, newcomers can’t access it, and so prices will continue to reflect the loss in value real estate is undergoing.
This unit is the perfect example: an obvious cash out refi allowed the owner to stick around. When that money ran out, that was the end and the value of the property dropped.
Doesn’t matter about formica, cheap appliances or anything. (Note the contrast in the thread above this one on Greenwich about people suggesting that someone should buy that property and rip the front off: replacing countertops and appliances is a snap by comparison). The issue here isn’t a remodel that everyone knows will be cheap. The issue here is that owning this place no longer entitles anyone to participate in a scam, so it’s value has dropped, and will continue to do so.
I’m going to use this thread to toot Adam’s horn a bit (and apologies for hogging the thread). From a CNNMoney article almost exactly a year ago discussing the different indicators of price trends, e.g. reports on SFRs vs. condos:
“Which gives a truer picture? Adam Koval, a former investment banker who now runs SocketSite.com, which covers San Francisco’s real estate market, insists condos are the way to go.
‘Look at the same building six or eight months after the first sales were made,’ he says. ‘The prices then will be a pretty good indicator of what’s going on.’
The reason: It’s an apples-to-apples comparison. With condos, there’s, ‘no adding floor space or big improvements,’ says Koval. If you see a price change, it’s usually pure appreciation – or depreciation.
Contrast that with single-family house stats. NAR prices, for example, do not account for the differences – especially the improvements – in homes.”
If Adam is right (always room for debate), we have some interesting data points here “of what’s going on” in SF.
The problem is, when you do apple-to-apple comparison of the same unit (condo or SFR), you don’t count the depreciation (sometimes deferred maintainance). Just like everything else, the building depreciates.
A building’s life is 30 to 50 years (sometimes longer). Without maintainance, it will be pretty much worthless by the end of 50 years. Then you will be left with the value of the lot.
Of course, most people don’t remodel every year. They may not do much to the building for ten years, then do some major remodeling – roof, walls, or whatever.
A well run HOA for condos will build up the reserve for major works…like roofs every 15 years, or other common remodeling every X years. In that case, there is an annual depreciation, which should equal to the change in the reserve fund, + the depreciation of the interior.
When you look at the whole market at a whole, the remodeling and deferred maintainance generally cancel out.
I am seeing furnished condos in this building renting for $3200. Do people think that is a fair price?