2211 California Street #202 is a 409 square foot studio condominium that has been on the market for 77 Days (at an asking price of $429,000).
Yesterday, unit #305 hit the market. It’s also a studio condominium (but listed at a slightly larger 425 square feet) and appears to be a bit more updated (although no in-unit laundry or wood floors in the living area). The list price for #305? $399,000. Those damn neighbors (and comps)…
∙ Listing: 2211 California #202 (0/1) – $429,000 [MLS]
∙ Listing: 2211 California #305 (0/1) – $399,000 [Prudential] [MLS]
∙ Those Damn Neighbors Redux? [SocketSite]
Ouch. Be interesting to see if 202 follows suit or holds their price steady.
Well, if $429 was a market-clearing price, it likely wouldn’t have sat for 77 days already.
More interesting question is whether 305 moves at $399 or if they both just sit. $938/sq. ft.is still a lot.
Isn’t the whole point of a studio is that it is some inexpensive entry level place you hold for a few years before leveraging the equity to buy a larger place and/or in a better neighborhood?
but at 400+k not only is that some serious cash but people are getting I/Os and Option ARMs and not building any equity to leverage later.
IMO neither are going to move anytime soon. “I paid 400k for a studio and still have to go to a laundrymat!” come on!
“Isn’t the whole point of a studio is that it is some inexpensive entry level place you hold for a few years before leveraging the equity to buy a larger place and/or in a better neighborhood?
but at 400+k not only is that some serious cash but people are getting I/Os and Option ARMs and not building any equity to leverage later.”
Exactly. For a fixed, 30-year loan you need something on the order of $100K a year to manage a 400K loan, plus of course some kind of money down. So where are the people with that kind of income who are going to plunk down the money for a 400 sq ft “starter” apartment? At that income level you can get a two-bedroom rental in a decent neighborhood. In 1999 a friend of mine bought a nice studio, washer, dryer, new appliances, nice complex, in Diamond Heights for 150K; those same studios now go for 400K. This is a sign that the market is seriously out of whack; when studios move down into the more realistic $150-250K range, then this market will finally be line with economic fundamental. Right now it’s all still just speculation.
I am seeing monthly fees a little over $300 and the property taxes on top of the mortgage.
There is no logical financial reason to buy one of these units to live actually in. Perhaps a wealthy east coast family will buy one to put there druggy, bi-polar child at arms length in.
Many older condominium buildings in SF and the Bay Area don’t have in-unit laundry. And believe me, you can pay a lot more than $400k for a unit and still not have it. It used to be a dream of mine to have in-unit laundry, as I had become accustomed to sending out for wash&fold/dry cleaning. One day, my dream came true and I bought a brand-new place with a big in-unit stackable washer/dryer. Frankly, it wasn’t all I thought it would be. I’ve bought two places since then without in-unit w/d and have never missed it. As long as reasonably priced laundry services are available in the city, for me, sending it out is preferable to always having a washer/drying running or laundry all over the place–especially in a small space like a studio. While I agree that prices are out of whack and due for an adjustment, I don’t see the return of $150k studios in SF’s future. And I think those who are staying out of the market because of neglible factors (in SF terms) like in-unit laundry are destined to be life-long renters.
[Editor’s Note: Just to be clear, #202 does have in-unit laundry (while #305 does not).]
I’m not staying out the market because of “neglible factors” – I’m staying out because there’s nothing I can afford! I probably will be a “life-long renter” simply because I can’t see the sense in trading down, space-wise, while trading up in terms of financial burden. I’m not an “investor,” I just want a decent place to live.
Don’t fret, everyone. Prices will come down, slowly. It’s already started – wait til inventory balloons in the spring. In the meantime save your money and be patient.
As evidence/comps, it seems the last studio sold here was #303, with 410 sq. ft., which sold for $455K in September of ’05. So #202 is priced almost $30K below the last comp and still sitting. Prior to that, an undisclosed unit sold for $399K in October of 2004. So it looks like #305 is at 2004 prices. This info is from bayareasoldhomes.com.
“Exactly. For a fixed, 30-year loan you need something on the order of $100K a year to manage a 400K loan”
More like 60k. heres the math.
400K-80k down = 320K.
320K trad. 30yr loan at 6% = 1920/mo
prop tax = 1.14% of 400K = 4560/yr or 380/mo
insur = 100/mo
Now with good credit Max loan to income = 50% of gross.
1920+380+100=2400/month x 2 = 4800/month gross required.
4800*12 = $57,600
NOW zero down will increase the income requirement to $75,600 (80% first at 6%, 20% second at 7.5%)
The last Anonymous poster omitted the monthly HOA dues!
Seems like it would be pretty tough to swing that 2400 payment on 60k, i see only 200 bucks a week left over after that. On 60k (from paycheckcity.com):
Bi-weekly Gross Pay $2,307.69
Federal Withholding $385.65
Social Security $143.08
Medicare $33.46
California $120.55
CA SDI $13.85
Net Pay $1,611.10
Monthly Net 3,222.20 – 2400 payment = $822 left over.
I think I’m probably leaving out some important elements of this calculation though, math and me aren’t really the best of friends.
Good point. 50% of monthly gross is nearly 75% of monthly net. So forget about having a car, or vacations, or even going out to enjoy life in San Francisco in the first place. But in exchange you get to live broke in a closet with windows and cupboards. Which is depreciating at 5% per year according to the comps.
What am I missing here?
Food, heat/gas, water, car, car insurance, health insurance……there is no way you can swing this type of mortgage with a $60k salary. I would be surprised if a lender would approve of this type of loan knowing that the borrower would default immediately.
“Food, heat/gas, water, car, car insurance, health insurance……there is no way you can swing this type of mortgage with a $60k salary. I would be surprised if a lender would approve of this type of loan knowing that the borrower would default immediately.”
I am the author of the above loan example. I bought a single family house in the East Bay in ’99 (age 28) for $390K. My interest rate was 6.375%. I had an additional 30K in the bank to smooth over any rough spots. NOTE: my employer paid for my health coverage and I paid off my car prior to purchasing. Down payment was a loan from the parents (which was paid back when I sold in sept 2005)
It can be done, you need good credit, stable job, backup money and understanding ‘rents.
Ah….My parents are understanding too. They ‘understand’ that there’s no way they have 100k laying around to loan me to get into this market 🙂
Before anyone jumps on this, IMHO there’s nothing wrong with getting this type of help from the ‘rents if they have the means, just not an option for a fair number of us.
You guys are making me sad…
Okay, let me re-state: unless you have parents who can loan you the down payment, and unless you have plenty stashed in the bank to cover your needs, you still need 100K income to qualify for a 30-year fixed for 400K, and that’s according to my bank’s affordability calculator. If you then look at the payments on that, it’s equivalent to a month’s rent for a nice two bedroom, so I fail to see how shelling out that kind of money to purchase a studio gains me any advantage in terms of quality of life. I’m glad to see that there are *some* people who can purchase in this market, but it seems to me it’s a very small percentage of the overall population who has the means to do so, and that inevitably will bring the market down.
A rising tide lifts all boats. Anyone who bought in ’99 (or even through ’02/’03) is going to look like a genius today and think real estate is the greatest investment ever. Which it coincidentally is not – if you bought $390K worth of Starbucks stock in ’99, you’d have well over $2 million today.
The point is that the market has clearly turned and the days of double digit appreciation are over for real estate. It no longer makes sense to stretch and buy anything just to profit from an up-cycle.
And for studios in this building, the days of appreciation seem to be over. At least according to comps.
It’s nice to see a sub 500k property (or two) getting some posting action.
The proliferation and general acceptance / stability of TIC’s in SF have driven up the price of a condo. I’m not sure the premium of a condo’s is 20-30% anymore, more likely 5-15%. You can get a pretty nice 1br/1bth TIC for 400k almost anywhere in the city, certainly nicer than these 2 condo’s.
I agree that neither of these properties are going anywhere fast when you look more broadly at what that type of investment will buy.
My mortgage is $2165. I am able to swing this plus HOA and property taxes on $65K salary. (Also have health insurance through the job and no car payment.) It is not too burdensome and I’m pretty comfortable. Although I agree “getting in” in the first place would be nearly impossible on my salary – lucky I got hit by that garbage truck and got a settlement.
That’s an interesting issue, specifically in regards to individual TIC financing (which, from what I understand, are still fairly new and have significant down payment requirements compared to traditional loan products).
I wonder if you could draw a correlation between easier TIC financing and a reduction in the condo vs. TIC premium in the city. That is, does individual TIC financing reduce the personal risk of the TIC situation significantly enough to eat into the premium.
Sorry, off topic, but this lower price range is close to this 99k earners heart (I ‘begged’ for another grand so I could tell my folks I made 6 figures. Begged :-))
“Ah….My parents are understanding too. They ‘understand’ that there’s no way they have 100k laying around to loan me to get into this market :-)”
Remember I also gave a zero down senario. 75K/yr is NOT 100K/yr (unless you round up) 😉
Also my whole point was to show that you can afford a 400K place on less than 100K.
I forgot to mention that my tax return was approx +5k/yr since the taxes paid is deductible.
In response to “Dude at January 11, 2007 2:40 PM” Im never bragged about making money from years of owning. my only point was that you pay for a 400K mortgage with less than 100k/yr. It might be a studio in SF, a condo in oakland/Fremont, or a single family home in Sacramento… True you might not want to live in these places but affordability is easier than you think. PS: I am not a loan agent, I think prices will be choppy for another year, and getting in now has some increased risk.
No Parking Space (good luck parking as this is one of the most competitive parking areas of the city), a noisy street view (Fire station right down the street), and a one room studio for the same cost of a 2bd. condo in almost any other North American city. THIS is the primary reason San Francisco STILL has not climbed back to the population it had in the 1950’s. All of the romance, history, and late night viewing of Hitchcock’s Vertigo will not continue to sell the San Francisco myth until the city starts seriously building affordable housing.
Parking is not that bad in this area. I live one block away at Pine and Buchanan, and do not have a parking spot. Most nights it takes only about 5 – 10 minutes to find a spot.
Yeah street parking is actually cake in this neighborhood (I live a few doors down from the condo building in question) and you can rent indoor parking spaces at CPMC or Japantown.
It’s a condo so you don’t need to spend $100.00 a month for insurance, it’s covered in HOA dues.
What a bargain! 400 square feet to live in, and you can rent a parking space at the CPMC garage. I think the fact that we have become used to these housing prices shows the insanity of the current situation. Were talking about a doctor’s income to live in a studio! Oh well, at least the medical professional can keep their car in the same hospital garage that they work at.
There is and always will be a price premium for living in the city. Prices may ease slightly, but they won’t change much. If you can’t afford this, how about living somewhere that is affordable and start building equity from there. Eventually you will be able to afford to “move up” – its a long process and which takes time.
Sorry. I cashed out my “premium” priced condo for a home in Lucas Valley (into Eichler before the books and magazines came out). The point is that San Francisco is worth a premium, but at 1,000 a square foot you are bumping up against some options that are much more desirable than living in a town that calls itself a “world class” city. San Francisco needs to allow more housing or you may find that more and more people will not be willing to pay a premium just to live in a city whose number one industry is tourism.
I would be curious how many homeowners in San Francisco actually work in the city. I know most of my friends who own don’t work in SF.
I’m so sick of people saying that you could be a millionaire today if you invested, say, $350,000 in the stock market 15 years ago, and compare that to the purchase of a condo for $350,000. Here’s the big hole in that argument (which should be obvious, but whatever):
YOU CANNOT BUY STOCK WITH MONTHLY PAYMENTS.
The real comparison point, for the average person, would be the down payment, not the total purchase price.
If you bought a condo 15 years ago for $350,000 and your DOWN PAYMENT was $35,000 — how much would you own in Starbucks stock today if you invested that $35,000 in stock? Keep in mind that the condo could now be worth anywhere from $700k to a million or so.
And you do not live in your Starbucks stock…
But if I knew now back then, would have loaded up the Starbucks stock.
“YOU CANNOT BUY STOCK WITH MONTHLY PAYMENTS.”
Yes you can. It is an investment strategy called “Dollar Cost Averaging”, but I degress …
The greater point with the loss of ‘free’ money and the loss of speculative buying and finally the loss of double digit apperciation current prices seem completely crazy.
The thing that kept so many buyers coming back for more in the housing market during the boom was the idea that no matter what happened I could sell or refi and get myself out of trouble. Those options, while not gone, are alot less likely now.
So with out the reassurance of a hot market that recent buyers can sell quickly in buyers are going to be alot more cautious and alot more conservative then they were in the recent past. Sellers need to wake up to this sooner rather then later if they want to move their home.
“There is and always will be a price premium for living in the city. Prices may ease slightly, but they won’t change much.”
Always is a very long time. The bottom line is it only makes sense to spend nearly $3000 a month on a studio that would rent for half that if you think you can unload it for $500k onto someone else. For a while that has worked. As those days have clearly come to an end (ie $429k is now $399k) and prices have climbed way beyond the ability of people to pay (zero down interest only ARM anyone?) the only direction is down (ever hear of reversion to the mean?) How long this may take is anyone’s guess but current rents give you good idea of how far.
Actually, you can buy stock with leverage in many different ways.
But forget about stocks and Starbucks. The point I was trying to make is that real estate, as an asset class, historically underperforms other asset classes (and by history I mean over 20 -30 years, not ’01 – ’05). Real estate is a great complement to a balanced portfolio – offsets inflation. Also puts a roof over your head.
Unfortunately the US has turned into a nation of wanna-be Trumps and Kiyosakis, who have pushed prices beyond the means of normal people who aren’t willing to leverage themselves to the brink of financial suicide just to have 4 walls they can paint. The result? Sales have fallen off a cliff. Real buyers are calling BS on the whole circus and are boycotting flipper-happy pricing. As someone else said, God bless you brave souls who are still out there trying to keep the party going.
For the time I have been in SF, renting is always cheaper than buying. As a landlord, I can tell you rents are going up in SF. I had one unit go empty after one year of occupancy, I was able to raise the rent by over 16%.
“It’s a condo so you don’t need to spend $100.00 a month for insurance, it’s covered in HOA dues.”
Incorrect. Condo association policies only cover public areas and problems that happen within the walls. It will not cover your personal possessions inside the unit. You still need to get a condo insurance policy to cover your own stuff.
“There is and always will be a price premium for living in the city. Prices may ease slightly, but they won’t change much.”
Yes! and that ‘premium’ was ALREADY built into the prices in 2000. it’s not like the RE industry just woke up one day and realized “hey! SF is a major city and ‘everyone’ want to live here and hey it’s surrounded by water on three sides so it can’t expand.”
The only thing that changed in the last few years was interest rates, which fueled looser lending standards, which fueled speculative buying.
Well, all speculation ends and all markets correct. Welcome to the correction.
How much stuff can you put into a studio? And a condo owners policy is not 1200.00 a year!
It is the dollar [Removed by Editor] people! House valuations are NOT skyrocketing
The dollar is decreasing in value relative to your house thus you think you have more purchasing power. Your house buys just as much bread and gold and health insurance as it did 10 years ago. You and your savings are worth less.
It is the dollar [Removed by Editor]
The thing that is SO wrong with Anonymous’s January 11, 2007 11:49AM cost breakdown is that s/he expects people to put 50% of their gross pay towards a mortgage. The federal recommendation is (and has always been) to not pay more than 30% of your monthly net for ALL your housing expenses – that means adding utilities to your totals as well. Therefore:
1920+380+100+200utilities+304HOA=2904/month x 3.33 = 9680/month NET required.
9680*12 = $116,160 NET
Now, I’m no CPA, but what does that make the gross salary? About $155,000? I guess this means that Willie Brown was correct when way back in the 90’s he was quoted saying that “anyone trying to live in SF making less than $150k/yr. should be shot and killed.” (true!) Maybe we should have him restate that for the year 2007 with “$1 million/yr.”
Listen people, you can see that something is wrong when the cost/s.f. price is over $1000! Something is wrong if it’s even over $400/s.f. You can build ground up for $150s.f. – I’m an architect, so I know.
Do you really think the utilities for a studio would be $200.00 a month?
to Anonymous at January 14, 2007 2:28 PM
IF you think every homeowner (who bought at 400K and over)living in San Francisco is making over 116K/year then you are crazy. I say every since there is very few properties under 400K. Standard buildable lot 25 x 100 is approx 450K. This isnt in the heart of the Marina, more like Hunter’s Point, Excelsior, etc… The building itself is 150/SF so that means for a typical 1200sf house+land will be 630,000 (cost). Remember when buying raw land it take 30% down and the monthly payments on the land which would be higher than a conventional home loan.
Also 50% is acceptable for people with high credit. (Fico 700+)
Anonymous at January 15, 2007 12:48 PM:
I don’t understand your point at all. You say that very few properties in SF are even under $400k. Very true. Which only increases the salaries that people must make to own an average home in SF. So why do you think I’m crazy to think that people should be making at least $116k salary? People should be making MUCH more! And people, don’t believe the hype! No one but those with crazy salaries and a trust fund should be spending 50% on housing. It doesn’t matter if your FICO score can QUALIFY you to spend this much, it doesn’t mean that it should be done. This is how we’ve fueled this escalation in SF housing prices in the past years – by people spending as much as 80% of their salary on buying a place. There was a great article in the Chronicle last year featuring young people, overextended by buying, who can’t afford to leave their home and who eat only PB&J sandwiches.
I am originally from Chicago and still do work there and I cannot believe the difference in lifestyles between people making similar salaries in both cities. At my level in my firm you make about 125k and nobody in that income range in Chicago would even think of spending more than 350k on a condo! After I moved to San Francisco, I noticed in talking to my coworkers how stretched out they were and how close to the edge of the cliff they lived with money. They talk as if 600K for a condo is a bargain! I for one will never spend more than 1/3 my income on housing and think we are beginning to witness a lot of people who will be in a lot of trouble for believing in the myth that real estate would continue to appreciate at more than 15% a year.
My best friend lives in Chicago. She is a lawyer with a 150k+ salary, 10%/yr guarenteed raise and hefty bonuses. Her husband is a chiropractor making good money as well, although I don’t know the specifics. They recently bought a beautiful two-bedroom condo, brand new construction, with a nice view, in an amazingly safe and fun neighborhood, garage parking plus driveway for two more, etc. They spent $350k and considered that the most they could spend. They are able to have a social life and take nice vacations every year.
From my visits, there is not that much different between SF and Chicago. Well, except that Chicago’s city government actually gets things done, they have much better architecture, plenty of job opportunities and no mentally unstable homeless people sleeping EVERYWHERE.
[Removed by Editor]
I fully agree that prices here are absurd and that Californians over-lever themselves in real estate. And I don’t know Chicago well enough to comment on it either way.
But let’s be fair: San Francisco is an incredible city with beautiful architecture – from Victorian to modern. Our weather is phenomenal compared to Chicago (don’t they have like 2 livable weeks in the midwest?). And every major city has homeless people…although I do admit we seem to have a disproportionate amount of schizos here. The city’s economy, while not as strong as in the go-go ’80s or the tech boom, seems to reinvent itself every few years and still offers lots of opportunities.
Let’s please not turn economic observations into San Francisco bashing.