388 Fulton Street

Purchased for $953,883 in September of 2016, a price which was in-line with the pricing for the other 68 units in the new collection of city homes at 388 Fulton Street, “in our beloved Hayes Valley, SF’s most desirable, lovable, [and] walkable neighborhood,” the two-bedroom, 743-square-foot unit #213 features “the most efficient floor plan” in the building, with high-end appliances, shelving and wide-plank wood floors.

And having returned to the market priced at $888,000 three months ago, the re-sale of 388 Fulton Street #213 has now closed escrow with a contract price of $855,000, which was officially “within 4 percent of asking” according to all industry stats and aggregate reports but 10.4 percent below its 2016-era value on an apples-to-apples basis while the frequently misreported index for “San Francisco” condo values is up 17 percent over the same period of time but trending down.

Of course, this was “just one sale,” as was the resale of two-bedroom unit #605 (which re-sold for 10.2 percent below its 2016 price) and the two-bedroom unit #411 (which resold for 11.6 percent below its pre-closeout price).

25 thoughts on “Nothing to See Here, It’s Just Another Data Point”
  1. Meanwhile, the Nasdaq is up 3.5% today. It is relatively unusual in the recent past to have such divergence between asset markets. Either the stock market is wrong and the recession for which many here have rooted will come upon us and stocks will crash again(?), or we will bottom out in the real estate market and dwelling prices will start to climb again.

    What does the SF real estate market look like with 5% prevailing 30Y mortgage rates and a much lower expectations for office work downtown (and perhaps fewer overseas buyers of shiny new condos)?

  2. It may turn out that we were building affordable housing all along, but didn’t realize it. Enables and paid for by boom time, often first time, buyers.

    1. At the contract price this home is affordable (30% income burden) to households earning $240k or more. This does not meet any known definition of “affordable housing”.

      To return to affordability based on current incomes in SF would require a price drop of something like 60%.

      1. Well obviously someone bought it to live there. So it’s affordable to someone who would otherwise need to live somewhere else.

        Also, it’s still a rather new building. Wait another 20 years and it could very well trade at 50% of new apartment buildings.

      2. “To return to affordability based on current incomes in SF would require a price drop of something like 60%.”

        Which will never, ever happen, no matter what the YIMBYs tell you.

        1. Oh, I don’t know. It’s not unprecedented on medium time scales. Housing in Connecticut lost a third of its value in the 1990s, for example.

    2. Until everyone has the opportunity to buy a dwelling in a market rate (not BMR) building at or near minimum wages for 40 hours a week we have a lot more to build.

      It is possible to do so in a top 5 metropolitan area. In Chicago, a person making 50% of their area median income ($36,500/$17.55 an hour for 40 hours a week) who puts down $5K can afford to buy any one of 18 homes currently for sale in Chicago’s 7 most densely populated northernmost neighborhoods north of Lincoln Park, consisting of 11 studios/one bedroom units, and 7 two+ bedroom units with a maximum price of $120,000.

      Someone at the 100% AMI of $73,000, with $20K down can afford up to $300K in housing with the same 32% maximum housing debt to income ratio I assumed above. There are now 260 units for sale of all different sizes and types in this zone.

      For our leaders to say that San Francisco is a welcoming place for all, and then only offer enough market rate housing for the wealthiest people equates to the highest possible levels of hypocrisy. Until San Francisco can figure out how to make market rate homes for one person to buy even with just a 100% AMI (let alone 50% AMI) without having income restrictions, lotteries, government subsidies, or BMR mandates, there’s no likely scenario where we could ever consider “affordable housing” to exist. This city will continue to be a transient boom or bust rental city, never to realize the benefits of having a large stable population of homeowners for citizens.

      Of note, the communities in the example above- population density of 24,760 people per mi.² from a population of 425,000 people in a total of 17 mi.²

      1. Cute piece of political rhetoric, I have to admit it’s almost convincing. You must have spent a fair amount of time during the SPUR meetings workshopping that.

        It’s true that our (political) leaders say that San Francisco is and should be a welcoming place for all, but those leaders are not the ones “offer[ing] enough market rate housing for the wealthiest people”. The overwhelming majority of market rate housing is being “offered”, such as it is, by the private sector, and it’s those private sector actors who are the ones “only offer[ing] enough market rate housing for the wealthiest people”.

        In addition, you will very rarely find those private sector leaders, who are overwhelmingly focused on and motivated by profit, saying publicly that San Francisco is a welcoming place for all. Instead, they believe, even if they don’t say so out loud, or only do so among themselves while walking up the back nine, that San Francisco should be a place for those who can afford it, and everyone else should vacate the available buildable real estate in favor of those who can pay more (“market rate”) for it.

      2. I think you mean, rather than “offering” housing, you mean “ALLOWING only enough market-rate housing for the wealthiest…” Brahma is getting hung up on that distinction, below, the city is not “building” market-rate housing, but that doesn’t mean they don’t prevent a lot of housing. Which gets to your initial point: the city should be doing everything it can to allow any and all housing to be built.

        1. the messeaging around “luxury” market rate housing by the likes of folks like Dean Preston is utterly misleading. a 1000 sq ft 2bd condo with normal finishes in an average building is not considered “luxury” anywhere is. a 30 yr old unrenovated condo is not luxury either. Most of the market rate housing is not “luxury”. the prices are luxury because the demand far outstrips supply>. its considered luxury because it costs >$900K which most people cant afford.

        2. If you’ve got a verifiable statistic that supports the claim that The City “prevents a lot of” market rate housing from being built, please do go ahead and post it here.

          In case you’re a new reader of this blog, it’s been well documented that the pipeline of fully entitled and permitted projects that haven’t broken ground yet — representing over 9,000 units of housing — has been rising. If The City were offering some type of impediment to building, that number of projects would be trending downward because developers would be building them instead of sitting on them.

          Also, as I pointed out earlier this month, San Francisco exceeded its overall housing goals from 2015 to 2022 because the city produced far more market rate units than was required by the State Department of Housing and Community Development and ABAG, which sets the goals. Obviously, if The City wanted to “prevent a lot of” market rate housing during that time period, it failed miserably.

          Finally, they key to understanding that the responsibility for underbuilding, if that is an actual phenomenon, is the fact that The City’s Planning Department has seen fewer projects filed each of the past five years, dropping from 612 in 2017 to 420 in 2021.. If developers aren’t even getting off their behinds to submit projects, you can’t claim that The City is preventing projects from producing market rate housing. The City is allowing housing to be built, but developers aren’t building it.

          1. Oh cool, so you’re just going to ignore the fact that the City is adding a completely crazy $150,000-300,000 to the cost of each market rate unit with their endless fees, affordable housing inclusions, multi-year delays, etc. So those costs just don’t exist, right? The carrying costs for holding a project for years until the city finally gives you a building permit, they don’t exist, right? Five rounds of legal fights with various “non-profits” and “neighborhood groups” for each project don’t exist, right?

            This is just grade a nonsense, dude. The City deliberately and openly increases costs for these units to limit how many “luxury towers” are built. And now you shrug about why units that were permitted at insane added costs aren’t getting financing? Well, yeah, the City made those units incredibly expensive so now they have trouble getting a construction loans. That was the whole point of the City setting up this byzantine process in the first place!

          2. @Seriously_though is 100% correct.

            If we were serious about creating new housing in the city, people (developers, homeowners) who add units would get a substantial credit against future property taxes, instead of paying loads of impact fees.

  3. I guess the aggressive asking featuring repetition of the ‘number of prosperity and abundance’ didn’t produce the desired bidding war and over asking sales price here.

    The average rate for a 30-year mortgage jumped around a lot during the Fall of 2016, but assuming the seller took one out at the 3.42 average rate prevailing the final week of September to borrow $763,106 and assuming no additional payments, the Mortgage Calculator at Bankrate indicates that the amount of the loan still outstanding in Jan 2023 would be $659,985. Subtracting just the 5 percent commission (i.e., ignoring all other closing costs) the seller grossed over $150k so they’re probably wiping the sweat from their brow and saying “whew!”, or they will next year if closing prices keep on dropping.

    1. Ummm what happened to the $190,777 of down payment the seller had to plunk down? Off to RE heaven therefore not counting towards losses?

      1. That comment was just a thumbnail sketch to figure out if the seller was going to have to bring a check to the closing, so I ignored the down payment ’cause it was a sunk cost as of seven years ago.

        If I intended to figure out total losses, then sure, that’s a totally valid criticism, and the down payment should be taken into account. But:
        • that $190,777 was in 2016 dollars, so you can’t just subtract that same amount in 2023 dollars, can you? Given what happened with inflation over that time period and/or the time value of money?
        • the seller received the benefit of having somewhere to live, unless this was purely an investment property (I haven’t seen any indication of this), so you’d have to account for the cost of living somewhere else
        • it appears, at this price point, the seller had at least some of the mortgage interest tax deduction

        I still think the seller is going to be thanking their lucky stars over the next year when other units in this building go on sale and the results of those sales are known.

  4. I imagine street safety after dark would be a concern here. Civic Center is notoriously sketchy after workers leave. A large low-income housing project area is across the street. The streets are wide and loud. There are still plenty of surface parking lots where bad things tend to fester.

      1. Likely not. The point I’m making is that it was a bad deal back in 2016. No one should have paid $1,200 a foot in that “meh” location back then. Irrational exuberance.

  5. It’s sort of funny that idea that a physical asset might depreciate isn’t even considered in the framing of these articles. To be far, property values have mostly only gone up historically, but still.

    But think about it for a second. This used to be a brand new apartment with all new appliances, floors with no little scratches, perfect paint, etc. And now it’s not. It’s a 8 year old apartment with the associated wear and tear. Its styling is from 10 years ago. Which would you pay more for? a brand new apartment or a used one. We all now how this works for cars, but somehow it’s inconceivable when we’re talking about apartments.

    I’m not saying that apartments should depreciate >10% in 8 years, but it’s just sort of interesting how the idea that it would be worth less than a new apartment is newsworthy.

    There’s also a lesson here in how we think about new, “luxury”, market rate housing. Of course, it’s going to be at the top of the market when it’s brand new in the same way that new cars are more expensive than used cars. The thing that breaks the analogy with cars is when we stifle the creation of new housing and we get distortion in the market.

  6. People tend to pay a premium for new developments with all mod cons and no fingerprints. It’s not that surprising that prices dip when second hand.

  7. Not the best transaction for the seller but I actually think this is a relatively strong outcome considering the interest rate environment and the current (much deserved) negative sentiment when it comes to all things San Francisco. Housing will more than likely get significantly worse before we see any kind of comeback.

    It appears in this instance, the seller just wanted to move on and therefore made the difficult decision to rip the band aid off & take the substantial financial hit instead of hanging around for 3 plus years in the hope of being made whole. Every decision we make has risk…sometimes things don’t turn out as we expected. It happens!

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