From a plugged-in Damion Matthews at LiveInSF:
I did just do some research last night on Short Sale and REO listings in districts 8 and 9 – there’s quite a bit. Not as much as in other parts of the state, of course, but more than we’ve seen in those neighborhoods before. I found 13 listings, and 8 of them are lofts. They’re all under $1 million.
Included in the mix is 950 Harrison Street #202 which is 1,120 square feet, has been on the market for two months, and is currently listed for $575,000 (“sold last year for $699,000”). And #S2303 at The Metropolitan (355 1st Street) which is now bank owned, 691 square feet, and listed at $519,000 $599,000 (see UPDATE below).
And no, neither of those two “anomalies” we noted last week (246 2nd Street #1302 and 41 Federal #42) are included in Damion’s thirteen. Nor are any of these in District 10.
UPDATE: Since publishing this story this morning the list price on 355 1st #S2303 has in fact been raised from $519,000 to $599,000. Sorry about that folks.
∙ Distress Deals [LiveInSF]
∙ Listing: 950 Harrison Street #202 (1/1.5) – $575,000 [MLS]
∙ Listing: 355 1st Street #S2303 (1/1) – $519,000 $599,000 [MLS]
∙ One Part Bank And One Part New Building, But Any Parts New Market? [SocketSite]
∙ Going Once, Going Twice…Going Five Times At Shore|Line: 41 Federal [SocketSite]
Hey, more power to ya, and you are offering a valuable service by sharing these items. But you know what I mean. And it’s this: When the bank-owned property becomes the market we are all in a world of hurt.
“When the bank-owned property becomes the market we are all in a world of hurt.”
Isn’t that something the “bears” have been predicting and saying? REOs are increasing and will do so for a while.
All the trouble in the mortgage markets isn’t media speculation and the figment of “the doom and gloom” crowd’s imagination.
I am glad you finally agree Fluj, even if it is only to a certain extent. Cheers.
Oh man. Stop. I never said no one was gonna get hit. yall are too much. But I do get NOD and NOT lists, weekly, and again, there aint no “Tidal Wave.” OK?
“But I do get NOD and NOT lists, weekly, and again, there aint no “Tidal Wave.” OK?”
Not yet.
What’s interesting is that for most of these units, the owners had been trying to sell for months, before the bank repo…….of course they were greedy and had listed there properties for much higher than market, hoping to get out with a gain.
For example:
etc
Now, all they are left with are the cardboard boxes to live in.
We have just detected the “subprime” earthquake and the first of the “tsunami”. The main crest of the wave from the 1.8 million strong subprime resets is still on its way. Not to mention the second larger “option and alt-a” quake.
But these “annecdotes” SS is allegedly producing are indicators that SF is not immune.
The “tidal wave” I’ve heard discussed here is not a wave of defaults, but rather a wave of adjustable mortgage resets. Those resets dramatically ratchet up the amount of cash needed to service the debt, leaving less cash for other things. The resets alone don’t have a direct effect on the market (in the sense that reset doesn’t necessarily cause NOD which does not cause default). Instead there may be an indirect effect in the form of :
– less cash available for “move up” purchases -> downward market pressure
– owners deciding to sell prematurely to improve their cash flow -> more properties on the market
– less spare cash for speculative investing including flipping -> less competition with real buyers
– less cash available for remodels -> lower future resale price
We’ll see. This has been talked to death. Man San Franciscans have access to capital, FHA increases are on the docket, relief teaser rate extensions are being offered, etc. Are you going out on a limb to proclaim tsunami!!! ? The problem with that view is that defaults, foreclosures and REOs benefit so few.
And, “I would have been right if Uncle Sam hadn’t stepped in to ruin my pity party” still counts as Bzzz NOPE UH-UH and WRONG-O in my book.
“Bzzz NOPE UH-UH and WRONG-O ”
We all know that French is spoken at open houses these days, so could you translate that for the less well educated into English please?
fluj: “What evidence do you have that people are unable to pay? I receive NOD and NOT emails from three different title companies, weekly. I have been for years. There has not been an appreciable spike for San Francisco.”
Damion: “I did just do some research last night on Short Sale and REO listings in districts 8 and 9 – there’s quite a bit. Not as much as in other parts of the state, of course, but more than we’ve seen in those neighborhoods before.”
Thirteen more examples. At what point does it become “appreciable” and evidence? The market doesn’t have to become predominantly bank owned nor do we need a “tsunami” in order to take a hit, every one of these distressed sales will become a comp for eveyone else in the market. It doesn’t matter if you have all the money in the world, or if you’ve been paying your mortgage all along, when the the place next door sells for less than last year it’s going to impact you.
What happened to “all is fine except in district 10”?
I’m with fluj on this one. I wouldn’t expect a tsunami. Real estate downturns don’t work that way. But I certainly agree this is yet another indication of things to come, which my bet would be a steady price decrease over the next few years driven by (1) slack demand as buyers realize prices are only going down (already seeing that) and (2) supply ratcheting up a bit with stories like these. If the now-expected recession really does hit, that could accelerate both trends.
The listing agent just raised the price of 2303 to $599K. Can someone calculate the rate of return for me on this one? That’s inflation. Relax, put the mouse down, it’s just a joke.
“Bzzz NOPE UH-UH and WRONG-O ” — that’s lightenupese. I don’t think you are particularly fluent.
@ Micheal
Typically there are about 10-15 NODs and 10-15 NOTs a week. Sometimes more, sometimes less. When I see double that for a month straight I promise to let you guys know about it on here. Let’s not forget that there are, and there always have been, infinite numbers of ways for people to get into financial difficulty.
“The listing agent just raised the price of 2303 to $599K.”
So pre-Socketsite it’s listed for $519K and post-Socketsite it’s listed for $599K? Damn Socketsite!
The only reason Tsunami was brought up is because fluj mentioned it.
It is anybody’s guess how horrible it will be but one thing is for sure the days worthless shacks commanding ridiculous prices because of the sentiment ” SF RE always goes up” are gone.
Once the economy is in recession even those sitting on piles of cash will think twice before spending more than they have to for housing. So good bye over-bidding. Places sit on the market longer because sellers are hoping for last years prices, losing cash every day the house is on the market. The more money the use to keep things status quo the less they spend. Further depressing the economy. With no upward pressure for prices they stagnate or go lower. Both of which are bad for the borderline owners that are dependent on refinancing to avoid higher monthly payments or are surviving on minimum option ARM payments.
So foreign cash will save the day…Right…not if the whole world is reeling in the after math of the US recession. The Canadian loonie and RE bubble are crashing. So are the UK, Australian bubbles. Norway is seeing price declines in RE.
fluj: “Let’s not forget that there are, and there always have been, infinite numbers of ways for people to get into financial difficulty.”
Yeah, but they could refinance and take out more for that vacation. Or sell for 10-20% higher. Not any more 🙂
“Yeah, but they could refinance and take out more for that vacation. Or sell for 10-20% higher. Not any more :)”
Neither of those options were necessarily givens at any time. But I take your meaning.
-less cash available for “move up” purchases
Higher end is doing fine as the median shows. Now about those houses left behind…
“Some of my clients have already moved up. Now they can’t sell their first home. These homeowners can’t afford to carry two mortgages,” she says. “So they are foreclosing on their first home.”
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2008/01/04/carollloyd.DTL
In reference to the above, so what happens to the second home when the first one is foreclosed? Does the lender go after the second home? Geez, I asked this before and it got removed.
[Editor’s Note: Sorry anon, your previous comment was flagged for moderation (it had to do with the link(s)).]
Finally we get some real trickle down economics!
The discussion about letting your property go back to the lender doesn’t really seem to work in California – especially with the recent change to the bankruptcy law. Correct me if I’m wrong, but my understanding is first mortgage loans made on an initial purchase of a property are non-recourse (i.e. they can only go after the house if you default) while every other financing of a home is considered a recourse loan (i.e., they can go after your other assets). So basically, if you refi once after a purchase, a lender can go after your other assets in the event of a default. And now with the new bankruptcy rules, that’s debt’s not wiped clean with a bankruptcy – you only reorganize the payment of it. Not sure if second/piggyback loans are non-recourse for the first loan and then become recourse after that, but it’s kind of a moot point as the vast majority of property owners in California have refi’d at some point and are now in a recourse situation.
I agree with everybody sortof.
there do seem to be more allegorical stories of houses that are losing money in SF.
that said, it is hardly a tidal wave.
however, it is early in the game.
nobody knows the future, we can only guess.
My guess is (and has been) that ORH and Infinity closings will be the bellweather, and that we will see NO appreciable signs either way until AFTER the closings.
If people close, and don’t immediately (first few months) put those units back on the market, it would speak volumes to support the idea that there is high demand IMO.
however, if we get a lot of last minute walkaways and cancelations, or if we get a lot of closings that are immediately put on the market, then it would indicate that these condos aren’t really in tons of demand.
The latter would pose a problem for SF RE, with all the other towers going up as we speak.
In the end, I watch the own vs rent ratios. It makes economic “sense” to own at a premium IF you expect rents to rise or IF you expect asset (house) appreciation. Right now owning carries a HUGE price increase compared to renting. I doubt it could maintain that if people didn’t foresee some significant home appreciation.
Infinity has a no-flip clause for the first year of occupancy. Year 2 the developer has a right of first refusal.
“Infinity has a no-flip clause for the first year of occupancy. Year 2 the developer has a right of first refusal.”
Has the legality of any of these “no-flip clauses” ever been challenged?
“Infinity has a no-flip clause for the first year of occupancy. Year 2 the developer has a right of first refusal.”
The only way you can sell the first year is a “life changing event”. i.e. job moved out of state, spouse death, complete loss of income, etc…” It’s in the contract, but still not very clear how it would work…