Perhaps it’s simply a case of premature reduction. (And yes, we’re sure that’s never happened before.) Regardless, after three weeks on the market the list price for 1751 Beach Street was reduced from $1,595,000 to $1,445,000.
We’ll note that this 1,440 square foot condo in the Marina last changed hands two years ago (9/30/2005) at a contract price of $1,400,000. A sale at the original list price would have represented annual appreciation of 6.6% over the past two years. A sale at the reduced list price would represent annual appreciation of closer to 1.6%.
Yes, the master suite could benefit from a few more windows. Yes, you’re welcome (if not encouraged) to wager amongst yourselves. And yes, we’ll keep you posted.
∙ Listing: 1751 Beach Street (3/2) – $1,445,000 [MLS]
The open house was PACKED. I guess that is no longer an indication of anything.
While the Marina is full of wealthy people, I suspect few are so wealthy that they make $150k simply by waiting three weeks. Again, setting aside all the particulars (such as the ones Fluj broight up for the properties on the previous threads) there is a very simple message being communicated to buyers right now: waiting even a couple weeks can pay enourmous dividends. Even in the heretofore invulnerable Marina.
The question before us is whether there were the same number and size of reductions in 2005. I suspect the answer is no, and if that’s the case it isn’t going to matter if the properties were overpriced to begin with. Because the word on the street will be that waiting pays healthy and substantial dividends. And pretty shortly we enter a vicious cycle where it doesn’t matter how many people are sitting on the sidelines ready to pounce, because why would they buy into a decline? If waiting pays this well, why not wait some more? Its a lot cheaper to buy in the early stages of an up cycle then it is to buy in the early stages of a down cycle. And this is why realtors are so adamant that the housing market is still healthy: it’s not lower prices they are afraid of, so much as lower sales volume.
If a million dollar home sells for 20% less, then the sellers takes a $200k “loss”, but the realtor is only “losing” $10k on a $50k commission (based on 5%). But if the house sits on the market because buyers aren’t buying, then the seller still has a house, and is only short the difference between mortgage and rent, which is marginal as a percentage of the value of the house. The realtor however is experiencing a 100%+ total loss, because not only do not have a commission, they are out of pocket on labor and marketing/listing fees. An extended down market could force many, if not most realtors into a new line of work. So it is in the best interests of realtors to persuade us the market is healthy and stable, and that any price reductions you see are normal, appropiate, and the result of greedy sellers. In other words, realtors want to draw out the pain and have a long steady decline, because they know a correction is coming no matter what, but this way they still make money. But if the declines get too steep, and the buyers decide they dont want an asset that will depreciate for the next couple decades, and would rather collectively wait and force the hands of sellers, the realtors are SOL until the bottom is reached.
Those are some very blah bathrooms for 1.5 million.
Bear in mind this isn’t a SFR in a neighborhood where bullets don’t whiz by.
Remember the criteria for which market is healthy will change. First it was SF has too much demand and too little supply. Then it was prime neighborhoods in SF. Then it is SFRs in prime neighborhoods. Eventually it will be SFRs of a certain size in prime neighborhoods. Then SFRs of a certain size with an ocean view in a prime neighborhood. You see where I am going.
People will lie to themselves to believe what they have been indoctrinated to believe about real estate. This social conditioning of sellers, buyers and those in the industry will eventually work against them.
Like you pointed out missionite. Eventually the opposite of the frenzy will happen and real estate purchases would look like craziness to most people because they are so used to seeing losses.
Great commentary missionite. Will certainly be interesting to watch over the next year or so.
Makes one wonder what is the base number of sales that will happen in the market anyway…due to the usual deaths/divorces/relocations. SF volume is certainly down, but not nearly as much as some other areas of California. Question realtors must be asking themselves is “how low can it go for an extended period of time?”.
Certainly, some kind of balance will return when the sideliners who really want to/have to buy (births/marriages/promotions/relocations) finally step up to the plate. I know, everyone says “rent”, but that only appeals for so long for a lot of people.
Check out the sale of three-unit 1735 Beach about 100 ft. away…it sold for about $460/sf. Granted, it needed work, but it is a great property with a rear garden and a detached two-car garage, and huge flats. With 1751 you’re paying ‘full retail’ at +/- $1,000/sf. I have to believe in a slowing market this condo isn’t going to fare as well…
I’m gonna go ahead and call it…the SF RE bubble is over, and the next one’s starting. Get your cash into metals and mining stocks pronto, folks, and thank me later.
I hate the Marina. I hated it in 1983, in 1989, in 2004. If I was worth 3 billion dollars, I wouldn’t go anywhere near it. It’s so sterile, it’s like glass. Living in the Bay Area–but then choosing to hide out in the Marina?–strikes me as missing the point.
SurveyKid — I’m basically with you (except maybe not quite so vituperatively). My wife calls Marina housing prices the “live near almost all white people premium.”
Of 59 properties listed on the MLS above 800k in 94123 27 are currently under contract.
Of 20 listed SFHs 7 are in contract.
OF 39 listed Condos 20 are in contract..
I didn’t include TICs and buildings with multiple units..
“I hate the Marina. I hated it in 1983, in 1989, in 2004. If I was worth 3 billion dollars, I wouldn’t go anywhere near it. It’s so sterile, it’s like glass. Living in the Bay Area–but then choosing to hide out in the Marina?–strikes me as missing the point.”
Are you effing kidding me, like you figured out the secret to life and everyone else is ignorant. Not only are you judgemental, you’re [Removed by Editor]. People buy in a neighborhood where people don’t poop on the sidewalk and THEY’RE missing the point.”
I hate the mission it’s so poor
I hate the avenues it’s so asian
I hate bayview it’s so black
Would those comments fly if made in ernest? No. But castigate people for living in a nice neighborhood and it’s ok cause it’s mostly white. [Removed by Editor]
[Editor’s Note: A gentle reminder to attack the argument and not the person.]
Hot coffee, comin’ through!!
Gotta love the fact that there really is a neighborhood for everyone in this city….
But it never ceases to amaze me how many dog piles/”stains” are left on Chestnut Street (maybe not quite as bad as people poop, but still gross). Take our eye off the sidewalk at your peril…. I won’t even got there on a rainy day – nasty!!
Sold for $986 psft!! With a basement, window-challenged, master suite! Take that haters!
Of course, that was in 2007.
Fast forward to 2010, its top floor sibling just sold for $674 psft.
Down a “mere” 32%. Right in the heart of D7.
http://www.redfin.com/CA/San-Francisco/1753-Beach-St-94123/home/1348478
Why make us dig for the facts? 1753 sold for $1.151M in 2005 @ $761/psf, a year most people would attribute to the bubble years. It sold in 2010, 5 years later, for $1.019. A decrease in value of 132k or -11% on this apple to apple property. Thanks for pointing this listing out as I would have thought that we’d see more than just an 11% drop.
By your logic, this 2bd/1ba would have sold in 2007 for $1.489 in 2007, which is more than the 3bd/2ba actually sold for in the same time frame and it would represent +30% from the 2005 sale price. Certainly the price of condos in the marina rose from 05 to 07, but I don’t think they rose 30%.
Anyway, figured it was worth bearing out the actual facts here rather than obscure the reality with fuzzy logic. I’ll let informed readers make their own judgment rather than conclude it for them; but clearly the -32% statistic is a big stretch.