As we first reported this past August:
The Henry Gutterson designed home at 1495 Monterey Boulevard was purchased for $1,200,000 in 2001 at which point its original kitchen was demolished and rebuilt.
Soon thereafter, the English Tudor home sold for $1,528,000 in June of 2002. In 2006 a permit to expand up and out was approved but then cancelled in 2009.
And now after a nine year apples-to-apples hold, the St. Francis Wood three-bedroom home is back on the market and listed for $1,395,000 (9% below its 2002 purchase price).
The sale of 1495 Monterey Boulevard closed escrow this week with a reported contract price $1,350,000, 11.6 percent below 2002. The sellers had also listed the home for sale priced at $1,850,000 in 2007 (which we noted at the time).
All that being said, having reduced its most recent list price to $1,345,000 in October, it is another “over asking” sale for the property and agent according to industry stats.
∙ The Gutterson Designed Kitchen Was Gutted A Decade Ago [SocketSite]
∙ It’s On Monterey (But It’s Feeling A Bit More Like Carmel) [SocketSite]
Look at it this way: assuming 7% interest rate on jumbos in 2002, 20% down, 30 year fixed loan, you need an annual income of about $300,000 per year to own this home.
Today, at 4.5% for a jumbo, you need an annual income of only $200,000. That’s a significant drop. And it doesn’t include 10 years of inflation either.
The neighborhood is going downhill!!
Great to see taht 10 year holds are resulting in big losses, but the best part is that the very same realtors who back in ’02 “guaranteed” that the property would appreciate 6% a year will now just turn around and say that the buyers then overpaid. Busy street. Not The Real SF.
And of course they’ll say that the editor “cherry picked” this anomalous bad apple, quite an accomplishment way back in 2007:
https://socketsite.com/archives/2007/08/its_on_monterey_but_its_feeling_more_carmel.html
Those 2002 strawman realtors you made up would actually be correct about 10 year holds for the most part.
Well, not the 6% a year part. The strawman realtors you made up would have been wrong about that. But for the most part properties bought before late 2004 are trading for more money in 2012.
$631/ft² for this spot in Balboa Terrace is a great price, even with a black bathroom.
djt i don’t see lenders going for that debt to income ratio.i think you need a higher income with the stringen=nt requirements required for a loan
the property taxes alone have to be 15,000+
Today, at 4.5% for a jumbo, you need an annual income of only $200,000. That’s a significant drop. And it doesn’t include 10 years of inflation either.
I know I’m in the minority here, but spending over $1M on a house if you only make $200k a year still strikes me as absolutely insane. We make roughly 3x that and this place is at the outer limits of what I’d considerable a reasonable price point for our income. Maybe if you have no kids and associated expenses and aren’t interested in saving for retirement.
It’s a sweet house with a quirky arts & crafts design (I’ve been in it) that’s not for everyone, or kid friendly.
Although it needs no work, it has a potentially lovey back yard, almost uselessly small garage and a very tight driveway- probably an example of a lovely house seducing the previous buyers to overpay.
Our combined income is 200K and the max loan we qualified for was 800K, thus a $1 mil home. No way could’ve we gotten this place, or similar. Too bad, I like Gutterson. Even then, we felt uncomfortable with that max and got a home that was significantly less than what we qualified for. It’s just too many of your eggs in one basket.
shza, seriously? with annual income of $600K a year you feel uncomfortable about a $1.3M house?
hey I’m in the same boat, I make more than that and I wouldn’t pay more than $1.4 or $1.5. but I have two kids in fancy private schools and want to retire (very) early. looking to spend less than 2x annual income on a place.
I look around at my neighbors in the houses on this fancy block where I am renting and wonder how they’re affording it?? maybe they get all their income from stock options and dividends so don’t have to pay taxes like working stiffs like me.
No, I think they just view housing as something to spend more than 2x on, or 3x, or 4x, or 5x.
Also the foreigners, don’t forget the foreigners.
Affordability is not just looking at the asking price and income. You need to consider savings and expenses and job security which can vary widely. For example, a two-income couple like a pair of biglaw lawyers have a high tax load with both paying top rates and both paying maximum payroll taxes. Private school is expensive. How long have you had that income and how much have you saved? Do you have equity from a prior home or investments? Do you need to save a lot for retirement (or can you count on a big inheritance)?
For a young-ish dual-earner couple with a 600k combined income, $1.3mm for a home may very well be close to the top of the reasonable range if they have to stash away a lot for retirement and have not been working for decades to build up savings. For someone older with the same income with $500k in home equity, $1mm in other savings, and wealthy parents, $1.3mm may not even be close to the upper limit.
As to the question of “how they’re affording it?” There are varying circumstances. One common way people can “afford” it is to be house poor, save little to nothing for retirement, and be in a tremendous amount of debt. That does not describe everyone, of course, but it is very common in SF and just about everywhere else. Banks now take a closer look at what one can actually afford (without air-quotes), which is a big reason why home sales have dropped so much in recent years.