Last week “Craig” (a rather cantankerous but regular SocketSite reader) left the following comment on the site:
BTW, 636 Broderick is freakin’ nice, but it is not the type of property one would see featured on this site as it is likely to sell for over asking. I would be willing to bet my last cent on that prediction too. (Says the man to the anon world of the internet…)
Here’s the bad news for Craig: 636 Broderick closed escrow yesterday for $1,029,000. That’s 1.9% under asking. And we have his email address.
Here’s the bad news for us: Craig’s a lawyer. We don’t have any consideration (much less a contract). And we’re pretty sure we’re not going to see a dime (much less a cent).
∙ Could “Priced Right” In Ashbury Heights Be Less Than What Was Paid? [SocketSite]
C’mon socketsite… (or readers), more data!
what was the previous purchase price?!!!
We may find that this place just sold a few months/years ago for hundreds of thousands of dollars less!!! In that case, despite missing the list price the seller would still do well.
It will be hard to do a true apples to apples assessment, because clearly this place has recently been renovated… but it would still be of interest. (as you know, by the SF 20x rule, if a person puts in $40,000 of renovation they raise the price $800,000)
Luckily for Craig, even as a non-lawyer he can easily get away from this bet with just a loss of a penny.
He never bet his entire worth, only his last cent.
so he keeps his first couple of million bucks, and Socketsite gets his last penny (presumably just as he dies?)
Regardless, not sure he made a good bet… I haven’t seen a lot of stuff go for over asking… but that’s partly because initial asking prices are SO HIGH to begin with. (more like wishing prices).
Ahh, the last of the rate lock loan crowd is now gone. The rate lockers locked not only rates, but terms as mortgages were melting down. They had 90 days from mid August to close or lose that no downpayment loan for the rest of their lifetimes.
So anything that the rate lock crowd could stay in for the next 10 years got bid way up. But places like the 1 bedroom in the Marina from yesterday had already started their descent.
Now the better places will start to fall when the few remaining buyers wake up and realize they are practically the only ones in the market, and that the frenzy of the summer’s rate lock crowd trying to buy anything at any price before their loan disappeared is long, long gone.
Initially, it will be things selling under asking (like this place), with losses from purchase prices from 2-3 years ago here and there.
As the buyers realize that the market has died, except for their remaining few, they’ll be more bold about lowering their offers, realizing that if one gets away, the next one will be better and cheaper.
This place went for $649k in January 2002. Not a bad return, but not as strong as the S&P 500 over the same period (I know, leverage, but we have no idea how much this owner put down, spent on renovations, closing costs, etc.).
I’m not saying this owner did not make a nice return — the point is that even with timing the market very well he did not make a killing. One big factor that drove housing prices to bubble levels was the sentiment that it is a can’t-miss investment. I think the tide is now solidly turning toward the realization that not only is real estate not necessarily a great investment, but it can be a terrible one, especially if you buy at bubble prices. Buy a house to live in it, not to make money. That has been the thought process for the last 100 years with short, speculative exceptions, and prices will return to levels supported by fundamentals (incomes, rents, etc.) with the speculative period fueled by easy, cheap money now at an end.
Looking at the pictures, my guess is that the owner who bought for $649K 5 years ago couldn’t resist the siren song of granite and stainless steel. What do you think he spent on remodels – 1$100K, $150K? Judging by how much people I know have overspent on what looked to me relatively light remodels, I bet those numbers are not that far off!
“Ahh, the last of the rate lock loan crowd is now gone. The rate lockers locked not only rates, but terms as mortgages were melting down. They had 90 days from mid August to close or lose that no downpayment loan for the rest of their lifetimes.
So anything that the rate lock crowd could stay in for the next 10 years got bid way up. But places like the 1 bedroom in the Marina from yesterday had already started their descent”
Ninety day rate lockers from August? No.
The industry went through upheaval. Programs DISAPPEARED. Lenders had no qualms about reneging on promises. And what’s more, the loans that are out there, the standard 20% down 30 year loans, ARE CHEAPER.
Dude. Please stop. This is your theme song and it is embarassing.
Also, Satchel, 150K for a condo kitchen and a single bath? No chance!
Last, this is over one million dollars for one block off Divis in Panhandle North. It is among the highest $p/sq ft ever paid in that area, which is still gentrifying somewhat.
How on earth you guys are seizing on this one as an indicator of market bust is beyond me, and probably beyond most people who read this site. This truly takes the cake.
As I said yesterday, in the four months I’ve been reading this site, you UBER BEARS have gone from, “A change is gonna come” to “Just wait till spring of ’08” to “Spring of ’09” to “change is imminent” to “CHANGE ALREADY HAPPENED AND EVERYONE IS GETTING CREAMED.”
Please.
By the way, this was on the market for about two and a half weeks. They set a very high pricepoint, a nearly unprecedented pricepoint. They just about got it.
It was purchased for 649. It sold for over a million.
Somehow, you manage to find fault with that? Fellas, 50K is more than enough to remodel a single bath and a kitchen.
Wake up and smell a reality that is not floating in a mythical bear cloud forest of the future.
fluj- I believe you said it before in your other posts. There may be a correction in San Francisco. Perhaps, this is the beginning of one.
No one can predict how small or large it’s going to be. At the top of the market, just about anything would have sold over asking.
Sometimes I wonder why Fluj would even bother with the subtly acerbic posts if the market is so hot? Who cares what all of the armchair economists/perpetual bears think from the sidelines compared to a true real estate insider? But actually I think his posts are good. Dissension is good and it takes two sides to make a market. . . .
I’m with Craig.
Solely because Socketsite refused to feature the property until it closed for slightly under asking.
Where does Adam rent?
I wouldn’t (and, um, didn’t?) say the market is “hot.” If you’re going armchair psychoanalyst mode on me, please don’t put words in my mouth.
I just think it’s funny that the Berensteins, Yogi, and Boo Boo seized on this one. This one?
But look at the headline. Frankly, it’s down to the way it’s framed. Check out the lede. It’s kind of like a Carol Lloyd article these days. The content, the meat of the story, has little within it to indicate market change. At most this indicates a %1.7 market slide. And that is only if the selling agent and buyer nailed the pricepoint with %100 accuracy. I doubt it, tho. Again, North Panhandle? 1600 feet? $1.029M? One and a quarter baths?
Well, if you continue north a bit, 1705 Broderick recently closed escrow for 2.8… 350k over asking and over 1000k a foot.
Yeah, and 2655 Broderick closed for $4.25M and 1217 Broderick for 890K. Broderick is a long ass street.
isnt the first $250K/$500K for a married couple of gain from a primary residence excluded from taxes? that increases the gain substantially if this is a primary residence right?
fluj, you’re the greatest!
At the risk of overstaying my welcome on these boards and engaging in too much pontification and bloviating, let me just offer once again to everyone buying today: please, please, please remember Satchel’s First Law of Bubble: Only Buy With 100% Other People’s Money!
Satchel, glad to keep you entertained. You guys are certainly entertaining me as well.
Trip, thanks for the 2002 price.
As a RE bear (but I feel, pretty reasonable one), I’d agree with Fluj that these people seem to have come out just fine on this deal.
they also bought and sold at almost exactly the right time periods… (after the dot bomb bust, and before most of the “correction” has started)
I would disagree with fluj about the remodeling costs… Remodeling in SF is very expensive IMO and a bath/kitched redo could very well be north of 100k…
especially with some of what they seem to have used (euromodern cabinets, subzero, viking etc, above counter sink, shower with wood floor/half glass wall, etc)
50k would be reasonable if they did all the work themselves IMO.
either way, 50k, 150k, these owners likely did just fine
Well son-of-a-gun. I was wrong, I admit. 20K under asking. Still, what, $640/sq ft though? How quickly?
My will has been modified to leave SS my last penny. Perhaps I will even make it an indian head or buffalo one.
My career as a psychic is in shambles…
BTW, I’m not a lawyer. But, I did stay in a Holiday Inn Express last night. Or perhaps I just play one on TV.
Wow.. 1 million dollars for 1 bed, 1 1/2 bath.
Now is a good time to buy in sonoma county. You will get your own backyard, huge home, more place for your friends to party…for less than half of what you pay in SF but 4 times more space.
Now is the time to get a good bargain and right price. We already reached bottom, the only direction from here is UP. Prices in the city will never go down, so its more affordable to stay outside.
Hey this Broderick place looks nice. Is there a link anywhere to get data /photos? I don’t see it on MLS. Thx
I’m just throwing this out there.. but a 20k reduction is sort of random. Isn’t it possible that during the inspections, something turned up that lowered the value of the house by the cost of the potential repairs?
So… anyone want to run the numbers on this one? The seller made about $318k tax-free for a 5-year hold, assuming they’re married etc. etc. (Minus whatever they put in for renovations).
Of course, that’s not including your interest and prop. tax costs which would eat into it a bit.
Not too shabby!
No doubt — this owner did very, very well. He bought at a good time and is getting out now when we have not yet fallen too far from the peak. My earlier point was that even by timing the market near perfectly, he did not exactly strike gold. As for more recent buyers near the peak, well, we’ll see . . .
Well, if he buys another similarly inflated property, he actually isn’t any further ahead than he was in 2002 … he only gets a net benefit if he moves out of the area or turns to renting …. or if this was an investment property.
does anyone know if Helocs show up on Propertyshark?
Looks like we have a winner (but not as much of a winner as some are thinking):
Owner cleared about $71k in cold hard cash, or $1,200 a month (assuming $160k spent on repairs and renovations over the five years, which seems conservative to me, as my friend just did her kitchen alone for $90k, but $160k is what I’m going with).
As compared to renting a similar property (assuming a 3 bedroom 1 bath could be had in this neighborhood in 2002 for $2500/month, which again seems conservative to me) the owner still came out ahead at $63k or $1073/month.
Nice job owner, congratulations!
Oh, and as always, here are the calculations for your inspection (and modification if you prefer to plug in your own assumptions – just follow the instructions on the sheet):
http://spreadsheets.google.com/pub?key=pM4Gw0s2zSeCXIvKktNGLbg
Missionite, thanks for having the smarts and patience to run the numbers. I especially like that they prop up my knee-jerk comments! Even if one argues that your rent or improvement cost assumptions are a bit high, the point is that even by timing the market on both ends near perfectly, this owner did not make out like a bandit but only did modestly well.
If the new buyer sells 5 years from now, I suspect his returns will be quite different.