Infinity And One Rincon Hill: Closings By The Numbers To Date (2/29)

15 have walked away from their deposits compared to 40 who have moved in. Boy, to those who haven’t yet had to make the call, why would you close at the old price? It is clear that plenty of units will be available and they will go for less. Even if you love the place, why not just walk away, then come back in six months and buy at a discount?

15 walkaways! Is that right? If so, I’d be very worried if I bought at ORH.

I have a unit under contract at ORH, and asked the sales team this morning regarding that figure. I was informed that 16 people have walked away from their deposits, with all but 3 of them being replaced (most likely with higher prices).
The interesting fact of ORH is because of the large initial sales push, prices have escalated, so in actuality any cancellation re-written will most likely be at a higher price.

Matt, I would hesitate to trust the sales team that easily there…. it doesn’t make any sense that such a large percentage of walkaways (compared to closed units) would be replaced so easily, and with higher prices. Especially when the building isn’t even completely sold yet. Perhaps by ‘replaced’ they meant ‘people have inquired about them’ and by ‘higher prices’ they made they now required higher deposits because they want to avoid so many walkaways…
But if you have a unit under contract, you just go ahead and continue to believe its value has risen. I’ll be along in a year and a half to buy the unit next to you at a 30% discount. See you then (bake me a welcome to the neighborhood cake when I move in please).

So, If someone walks away from the deposit and the unit is quickly ‘resold’ does the original buyer get the deposit back ?

The cancellation rate is worrisome. Additionally worrisome is the fact that several ORH contracts are up for assignment on craigslist. Additionally worrisome is the fact that several of the owners who are closing are just planning on renting their units out. Check out craigslist to see how many units at Infinity and ORH are already listed for rent – it’s a lot, and at ridiculous rents that nobody is going to pay.
At Infinity, I saw 2 bedrooms listed from $3,800/month to $8,500/month. At ORH they’re asking $4,200 to $4,600. Looks like failed flippers trying to cover their mortgage until they can sell. Good luck with those wishing rents when folks can rent for much less in more established areas. Although it will be fun to watch the upcoming limbo contest that asking rents in these buildings are about to play out.
Oh, and didn’t somebody once mention that both Infinity and ORH had 1-year no-flipping clauses? Because somebody already listed a studio at the Infinity for $575K:
http://sfbay.craigslist.org/sfc/rfs/583269986.html
Then reduced it to $540K, just 6 days later:
http://sfbay.craigslist.org/sfc/rfs/590257001.html

If the developer does easily resell the unit the old buyer who lost his deposit could likely recover a large amount of it. The law in this area tries to avoid unjust inrichment, but also acknowledges the costs associated with signing up the first buyer and marketing to/signing up the second buyer. If my memory serves me correctly, the old buyer can ask for an accounting and has the burden of proving the builder did not loose more than the deposit.

So if my calculation is correct, by the time this all shakes out, One Rincon will have somewhere around 100 walk-aways. Having experience in the Las Vegas and Phoenix (where they also have high number of walk-aways in new developments), this is early signs of a development in big trouble. Let’s hope this number goes down or the market improves, otherwise the owners there should be very, very concerned.

Whoo boy this brings back memories of one of my first jobs in the 1970s when I was the hockey announcer for the local team. One of the things I was supposed to do was to announce the attendance each night.
The fact was, attendance in the 70s was pretty dismal. And if we announced the real numbers, it would make it seem like people who were there were not doing what lots of other people were doing.
No problemo, I was told to just take the actual numbers and make them look more favorable so that look like we were more popular than we were. So around 10pm I got the real attendance figures from a runner and I doubled the actual numbers and that’s what I announced. 4000 people showed and I said 8000. One night, my announced numbers (16000) were HIGHER than the capacity of the venue (14000), in spite of the fact that almost half the seats were empty! But attendance numbers kept rising so I kept making those silly announcements.
It didn’t matter. What mattered was that I learned an important lesson: information provided by private entities is not a public service for any benefit of yours: it is a marketing tool used to sell more of the product or service the party releasing the “information” is trying to sell.
Whatever the real numbers are, I doubt the sales office is releasing them to the poster who asked. The sales office is not there to provide you with reasons to walk away, so they are much more likely to be announcing walkaway numbers that are lower than actual.
Get this through your head: it’s a SALES office, not a public service. They, and the realtors who will no doubt be piping up at how “happy” their clients are to close, want you to close so that they don’t lose their commissions. They don’t get dime one if the buyer walks away. They aren’t going to release any information that encourages anyone to walk away.
If the buyers knew how many people were really walking away, more of them would walk.

Tipster –
I like your insights and comments to this site, and I agree that any information coming from the sales offices should be questioned and scrutinized. However, would you agree that it is possible to obtain accurate information from the sales office? Do you out of hand discount everything?

Real indicator is easy to get.
Just call the sales office, say you are interested in buying and ask if they have any units available and how many.
Keep in touch with them and check in from time to time for the next few months.

@ tipster – I agree with Fluj – give this whole ‘realtor conspiracy’ theory of yours a rest. Not only is it aggravating but it’s just not true in most cases. I don’t see you as any expert in the field myself, so why don’t you just stick to giving your opinion instead of making so many people out to be suckers, villians and crooks?

No need for anologies.
I think what we all have learned from this bubble (and burst) is that we should always read into the lines, not just the headlines.

also, we have to be careful with this data:
my understanding is that the closings thus far are mainly the lower floors.
The demographics of the lower floors would likely be different than the higher floors.
The higher floors will cost much more money (so perhaps people will be more likely to walk away given the astronomical prices)
however the higher floors likely attracted more people with higher incomes, perhaps they are more able to close, so less likely to walk away
also the higher floors command a higher deposit, so perhaps again less likely to walk away.
we’ll just have to see what happens.

EDIT: previous post got messed up in the browser – obviously the last question in the second paragraph belongs in the third paragraph (that is not publicly available info)
recentinfinitybuyer – The sales office is exactly that: an office whose goal is to sell the product. It is no different than walking into a car dealership and asking questions to the car dealer. Can you get a straight answer? It will depend on the question.
If it’s a factual question that can be proved/disproved using public info, you can probably get a decent answer. E.g., How many horsepower does this car have? Does it include anti-lock brakes? Does the condo have real hardwood floors?
If it’s a question that can only be proved/disproved using private information that is not readily available to the buyer, then you should expect that you will get an answer that is inflated in the seller’s favor. E.g., Have you really “taken all the profit” out of the car and given me the best price? Is the car running low on stock or is there an ample supply if I want to think about it for a while and come back in a few weeks? How many people are walking away from their deposits, and how might this affect my resale price going forward?

as for tipster being overly cautious:
I will say that ORH sales staff lied directly to me about the numbers of units they had left.
when I went with friends who bought an upper level unit, they were told it was the last unit available and that there were only 8 units left in the entire first building (this was last summer, maybe around June/July if I recall correctly). They were given the ‘hard sell’ pressure tactic of “it’s the last one left”. My friends signed a contract for that unit that day (against my advice).
The next day, other friends of ours were offered a very similar unit for sale.
I have caught them being not quite accurate about sales other times as well.
So although tipster’s posts are quite angry in tone, the gist is correct: the sales office is not there to provide us with information, they are there to make sales.
nothing wrong with that as long as you have no illusions about it.
I mean c’mon, what do you expect them to say? “Yeah nobody closes on these… everybody is falling out of contract!”

Sales office versus realtor, though — they aren’t the same thing. They can often be at cross purposes.

mrbogue,
That’s funny stuff!
I’ll bid 199k for the penthouse!

I don’t see anything wrong with tipster’s argument. If truth hurts some people, it does ( you can’t do anything about it). If some one is selling something(either propery or words or headlines), they have vested interest in that.
I wonder what happens if someone calls the sales team, plays a recording “This call is monitored or recorded for a future truth seeking purpose”. And start asking questions. I doubt if they even respond….

Tipster made a point about sales offices and threw in a “realtor” zinger for fun. That was what was wrong. Hey, I’m a realtor. I don’t take that sort of guff lying down. Think what you want. But I’ll continue to stand up for myself.

I’m confused about the “318 Spear Street” ad on craigslist too. How can that person be selling a studio “there” without breeching the contract? Are they making special allowances for some buyers to be able to sell whenever they want??
Concerning ORH and craigslist — I’ve heard from one person that someone at ORH threatened legal action against a buyer for posting their condo for sale on craigslist, claiming that he/she didn’t havw the right to sell the uit since they don’t officially own it yet, and don’t represent ORH.
Seems like a nasty tactic to me, forcing some buyers to lose their deposit.

“ORH walk aways: 27%”
The walkaway percentage is not relevant at all because it doesn’t tell you a thing about why they walked away. What if those people had trouble securing financing or were flippers?
What is relevant is the replacement percentage of walkaways and the price paid by those replacement buyers.
For instance, if the replacement percentage is 95% and the prices received by the developer for the replacement units is higher in the aggregate, then that speaks louder than anything.
In fact, if an anonymous member of the sales staff or a “friend” of the sales staff had those numbers and they were favorable, they could shut up the naysayers in one felt swoop…

fluj, you may have misinterpreted. My point is that some people who have a motive to mislead will sometimes do that. That isn’t a conspiracy, that’s just common sense.
I went back and looked for the “Realtor zinger” to which you referred, and all I said was, in essence, that there are some realtors who will lose commissions if more units fail to close, so if any of them come on here and tell you anything like listing how happy their clients are to close (which was done on this site previously), that they too have at least a motive to mislead, and one has to make up their own mind about that.
Geez, even clergy have covered up the truth, it wasn’t a knock on realtors, it was a message to people not to necessarily believe everything they hear, but instead to evaluate the source and whether that source has a motive to mislead, even one you might not realize (like inflating the attendance at hockey games, or trying to hang on to a commission) and then make up your own mind.
Do I think every realtor is a crook? Nope. Do I think fluj is one of the good ones? Yup. There are lots of good ones. There are also lots of ones who try to mislead. But I still evaluate what I hear in the context of the motivations of the person who said it. I hope others will as well.

An intelligent person would not make any conclusions from this data so far. There just is not enough data. This is like reading the national enquirer. Socketsite posters are sad.

So it’s the end of February. Would some plugged in reader care to give us a report on how the groundbreaking for the second tower went?
[Editor’s Note: Let’s not further muddle this thread (and we’d strongly suggest you plug in on Monday).]

uh, socketstupid, it’s “prophet” not “profit”

Socketstupid (and I think your name may just apply), I think Missionbayres was doing what people call ‘forecasting’. Let me walk you through the math:
Of the 55 units in discussion, 15 have walked and 40 have closed. That’s 27.27% walking, and 72.72% closing. Now, since there are 370 units in the building, 27.27 times 370 = 100.9. Since it’s not realistic that .9 of a unit would be walked away from, Missionbayres generously rounded down.
Let me know if you’d like to learn more about forecasting – it’s a common tool used by most business; including the real estate industry. In fact, I’m sure ORH used a great deal of it to predict sales before construction began – and unfortunately I imagine the #’s back then aren’t going to come true because the #$%! is hitting the fan, and despite people such as yourself trying to grasp on to every last shred of optimism, reality will strike soon enough. (for you – I think it’s already hit for ORH; they just don’t want you to know)

Can we get this straight…..the salespeople are licensed real estate agents (not counting the ‘hosts’ or ‘hostesses’)and have a duty to clients (fiduciary) and the public (honest, truthful). Their license number and affiliation are easy to obtain on the DRE web site. If you are not getting the truth file a complaint right away…..if there is a pattern or multiple complaints filed things will start to clear up soon even without the prolonged efforts by DRE (which in many cases is ridiculously long…but a file full of complaints will get attention from lots of people). Stop talking and take action!

Wow…some tension out there.
Anyway, question for the agents or lawyers out there: dot these contracts feature some kind of loophole that would allow people to walk away and still keep their deposit? Now granted, if you think you overpaid and no longer want to buy, tough luck.
But if a buyer’s financing fell through, as missionbayres mentions, wouldn’t that be grounds for letting the buyer off the hook since they don’t have the means to close? Just curious.

smarty, you are forgetting that when you make a forecast you should look at all the data. You fail to realize that people are moving into the bottom floors first which are cheaper units.
As you go up in the building, the units get more expensive and the buyers will most likely have different levels of income and wealth. As Socketsite recently posted, most of the units in the Millennium that have sold average $2.5MM while the cheaper units are not selling. People with lower incomes will be more susceptible to not having their loans approved, will be more sensitive to the economy, etc. You are the one who should take the lesson in forecasting.

Recent ORH buyer;
Are you serious, your going to pull cash out of an underwater property. That’s going to hurt at some point. And, I think it is pretty clear that banks are not the best at valuing property. I would wait before you go spending that cash on anything as you may need it.

Recent ORH buyer,
If you take comfort in constantly commenting how ORH is cheaper than Infinity, then all the power to you.
Seems to me, according to various blogs on Socketsite and others, the ratio of critics toward ORH vs Infinity is like 10 to 1.
Also, if Infinity is so overpriced, why is no one walking away (except 1) vs 15 at ORH?
Also, I noticed at ORH there’s still exposed drywall in the lobby and the driveway doesn’t look functional. How are people getting getting to the lobby/elevator? Is there a valet for parking? The place looks like a construction zone so I’m curious how liveable the place is now?

This place was doomed the moment The Sharper Image filed for Chapter 11 — It’s a sign people!!!

Recent ORH buyer….I think you should also take anonysf’s comment into account when making your decision.
“Seems to me, according to various blogs on Socketsite and others, the ratio of critics toward ORH vs Infinity is like 10 to 1.
Also, if Infinity is so overpriced, why is no one walking away (except 1) vs 15 at ORH?”
Together with missionbayres’s/smarty’s great forecasting skills and anonysf’s use of socketsite as a market gauge, you would be stupid not to take their advice.

sounds like a case for the Attorney General…

I think the point that Tipster was making is that Realtors and Sales Offices will present information in the best possible light, which can sometimes either be misleading or altogether false. Sorry Fluj, but I’ve dealt with lots of realtors, and as a buyer or seller a healthy dose of skepticism towards the profession is highly recommended!

@ Willow. Good. You should be.
I’m skeptical towards nearly every profession, cab drivers to lawyers to physicians to presidents. Realtors fall in there somewhere too.
There is a bit of a back story context here that a lot of us are familiar with. I don’t wish to get into it. Tipster didn’t mean it as a dig, tho to me it was. I’m not sure what realtors had to do with the point he was making.
Saying that “Realtors” will present information in the best possible light, a la sales offices, isn’t something I would agree with. If by “Realtors” you mean the National Association of Realtors and its perpetually sunny press releases, then OK.
But sales offices are agenda driven regarding one particular product. They are working under a particular directive and sales initiative. Realtors, on the other hand, are by and large entrepreneurs who present their own business plans to offices. If the twain shall meet, then OK, the realtor and the broker will do business together.
It isn’t the same thing. Plain and simple.
And that’s forgetting the simple fact that realtors have no particular reason to sell any one place over any other. They want to get the deal done, sure. It hurts the bottom line when clients back out, sure. But there is always something else out there. Sales offices have one motive, tied to one property.

“People like you amaze me. You must think that you are brighter than the smartest people at Bank of America.” First, I’m not that bright, but I think I can top them. But as for your point, take any advice you want, that does not mean it is not shocking to me and most people to hear people think their condo has gone up so much a days after move in when the market has done nothing but fall for the last year and the building is not exactly keeping buyers intrigued.
On a separate note. I highly doubt that these buyers that are running away are being replaced with those who are paying more. If they were, they would all get their deposits back and I have not heard of anyone getting them back. For those who don’t think this is the case, take a glance at the law re liquidated damages in this case and you’ll see that there would be no way for them to keep the cash if they can turn and sell for more.

It seems that there is at least one poster that is on a waiting list at ORH. If 16 units were walkaways and all but 3 are arleady in contract(?) would tell me that things are not that alarming.
I was thinking of buying at ORH when they were frst being advertised, but it was still a dream in my head. One day I found out that there had been a two day party or something and all the units were sold. I was pretty dissappointed, specially since I started to hear more details about the building.
Since I was not aggressively on top of the happenings I felt I lost a great opportunity to investors who were salivating at these units as filps rather than amazing homes to live in. I moved on.
Maybe there are alot of people that missed the boat,like me, and are looking at all of this as a second chance to maybe get into ORH. I’m sure Tito is not the only one on a waiting list.
Wonder if they are really going for more? I remember a previous posting about one of the penthouses having had an initial offering price around 1.5 and it had about 1300 sq.ft, with a protected outdoor space facing west and south. If the value scale is constant, I’d have to say that people would pay more or at least what the initial offerings were.
With regard to all of the my dogs better than yours aruguments, both are incredible buildings and will make beautiful homes for their owners to enjoy. Even if you feel upside down, if it’s a comforting home and you can afford to stay in it, just ride it out. If this country really goes to hell, it’ll be hell for everyone, but maybe you can still get through hell in a nice swanky pad.

@ cooper – oh yes, I suppose you consider yourself the voice of credibility. Do you own a house now? Have you ever? Are you going to buy at the Infinity or ORH? Do you know anyone that has? Just curious.

@movingbak Yes I own a house and have owned several in my lifetime. So? I just dont make a habit of buying assets that have gone up 100% in 4 years. And I think people like Fluj that have made all these comments at those of us calling for this decline–and its more than 15% in some zips and 10% overall according to the latest stats so far ought to admit they were wrong. How dumb do you have to be to have not to have seen this coming? I mean come on, an asset inflates 100% in just a few years–more in some cases and you couldn’t see a 20-30% decline coming as reasonable. Even now poor fluj doesnt believe whats happening when the stats are staring people right in the face…and the humurous part is this in only the beginning its going to get MUCH worse. ORH with a 27% walkout rate for the cheap seats on the lower floor is a very bad sign. What happens when those people try and close those jumbo loans with those 5% down prequalifaction letters they used to get on their depoists. Think the 27% is gonna go up or down? What happens if it hits 40%…its gonna start lookign like miami especially as all this new inventory hits. All I gotta say is the govt better not come in and bail guys like fluj out…no tax payer dollars for people who made bad calls. Let the prices come down and let the crisis resolve. The more govt interference we get the longer this crisis is going to go on.

@ Tom – I think you need to do quite a bit more research and not post any more erroneous information about this before you get the facts. There is NOT a LAW that says developers have to give deposits back for people who default on a purchase contract – quite the contrary. I suggest you check with the sources.

The credit market is so FUBAR right now, I wouldn’t assume that the walkaways are folks who don’t want to move in – maybe just unable to get a loan. Student loans and municipal bonds aren’t getting sold because banks are so sensitive about keeping capital on hand right now…. throw out any “typical” measure you’re using right now. They’re meaningless.

@ Tom – my apologies. I did skim-read it too quickly and failed to catch your point. All of the double and triple posting, and post-sticking going on had my eyes crossed for a minute. I now see what you are saying and assume that in that case you might be correct.

Interesting so you can recover the funds if you hire a lawyer and probably pay him $5k for fees ? Is that what you are saying?
Also, whats a good way to find out whats still available in ORH due to non-sales or re-sales of walkaways? Anyone have any quotes on new prices of units?
I’m sure buyers are wondering if they really have equity or are actually underwater. Last batches of good units were selling for ~$1400/ft so I ponder if you could find a buyer like that in todays market.

“Tom’s point was simple, straigtforward, and truthful, but was skipped over by many on this thread. I’m surprised there hasn’t been more conversation on this topic on any of the local blog sites.”
Thank you tipster – this is the ONE topic about which I have been looking for answers here and elsewhere because I am in the throes of having signed up for something (and pre-approved by the way) in July only to find that by December I was no longer so desirable as a borrower.
Am I completely screwed out of my deposit because of these “liquidation damages?” I’m the same person I was in July when I was pre-approved and I plonked down my cash… If the bank no longer sees fit to lend to me because of market conditions when I was so desirable six months ago, is that really my fault?
I’m a smart person – I even know how to spell for those of you who notice that type of thing – but I feel used and abused by this system and I really did plan to live in my new condo, finally be a homeowner in the city I love, etc.
Am I just another stupid sucker?

Robert,
Would any real estate attorney representing a buyer recommend your example 1? The law is clear, but clearer still is the very legal definition of “deposit” and “damages” and also judges propensities to dislike liquidated damages. Moreover there is the troubling fact for the seller that you cannot have two escrows open at once on the same property. I think there is a clear coarse of action for any attorney that has been down this road before.
I’m not an attorney, but am “internationally recognized and locally accepted” (Stole that one from u craig!).

pitofdespair:
(I AM NOT A LAWYER)
read your contract. I brought up this exact possibility with friends of mine when they put down a contract for ORH. (they will be uber-housepoor the second they close, IF they get a loan, but they really wanted to stretch into their dream condo)
I’ve been involved in pre-construction deals around the country during the boom years (NOT ORH or Infinity) and typically during the last few years the contracts were HEAVILY skewed towards the builder, which included them keeping the deposit even if the buyer couldn’t get a mortgage. In the end, the philosophy was that the builder shouldn’t be economically harmed if the buyer couldn’t fulfill their end of the bargain (e.g. close)
your case would be one to run by a REAL lawyer. A RE contract lawyer would be best, right? Sure, you’re going to have legal fees, but I’m sure your deposit was quite large as well. Perhaps Robert knows a good RE contract lawyer? (is that against socketsite rules? I would hope not!)
If ORH is really re-selling these failed closings for much higher prices then they may work with you. why not? it would be more money for them! I have my doubts about that claim though.
keep us in touch, I’m very interested in the answer to your question, and I think a lot of other people would really benefit from your answer, either way!
Good luck. And remember in the end: it is JUST MONEY. Yes, that money represents blood sweat and tears, but it can be replaced… Please look at it as “lesson learned” and not as “despair”!!!!

The posts from “tipster” at 10:30 pm and 10:42pm are not from me, though the first one may have been just cleverly adapted to look like it was. It’s OK to leave them up, as they did contribute to the thread.
Whoever posted it, please pick a different name and let people know you’ve chosen it. We try to use one name per person so that people can keep us straight.

@deflujional
Straight off the price trends report from this week “In December, San Francisco slipped into negative double-digit territory with an annual return of -10.8%.”
Wow you made my Saturday morning. That’s why people are walking away at a 27% rate from ORH which was priced like three years ago…because prices are going up! They must feel greedy pocketing all those paper profits given the starving children in Africa! If you are going to asserts that prices in San Francisco are going up as opposed to 10% down you need to go on TV and say something like that. Oh and guess what, January is going to be worse than -10.

socketsite… any hints on ORH building two in advance of monday? 😉
and while you reprimanded someone above for bringing it up, i believe (and i suspect others do too) it is very germane to the topic of closings in ORH & Infitity’s first towers.

pitofdespair – No, you’re not a “stupid sucker”. You listened to the professionals involved in the deal and went along with their implicit advice that you could afford your 1RH unit.
Your situation points out that we should not let the RE and banking professionals put us too much at ease when signing big home purchase deals. They are only human and can’t be expected to predict the debt meltdown that is occurring.
When I was actively writing offers on homes during 2005-07 I analyzed my finances and calculated what I felt I could comfortably afford. While I have no formal business background I’ve started up a couple small businesses that did quite well using my conservative accounting standards. My spending limit turned out to be just barely enough to afford a home in the SF neighborhoods that interested me.
Of course what happened time and time again was that my offers were outbid and I never landed a contract even as I stretched to about 20% beyond my “comfortable upper limit”. As this happened both my agent and bank rep encouraged me to qualify for a larger loan so I could bid even higher. I have substantial assets and a good credit score that would allow me to qualify for a loan almost 2X higher than what my calculations showed I could afford !
Fortunately I didn’t bite on the larger loan. In retrospect it would have killed my finances and I probably would lose at least one of my large assets (perhaps the house just “purchased” !)
The moral is that it makes sense for every one of us to run our own numbers. Figure in the effects of events that could put pressure on your situation : loss of a job, interest rates adjusting upwards, emergency repairs, etc. If you can still survive those scenarios then you can rest well after you sign that 2 inch stack of docs.
In the past this conservative strategy made many of us “losers” in bidding wars. It looks like that is now changing.
Please heed Ex-SFer’s words. It is only money and in the grand scheme of things a small amount. You still have the skills and talent that was used to create that wealth. You’ll be over this soon enough.
And look on the bright side : if you were able to qualify and buy the 1RH unit, you might find yourself more than 3% under water. Much more.

cooper says All I gotta say is the govt better not come in and bail guys like fluj out…no tax payer dollars for people who made bad calls. Let the prices come down and let the crisis resolve. The more govt interference we get the longer this crisis is going to go on.

Your swipe at fluj seems way off. All we know is that he is an agent. If you want to use an agent as part of a home selling or buying process that is up to you, but no one is putting a gun to your head and deciding when to buy and how much to spend and how the market as a whole is doing has always been the responsibility of the buyer. With luck an agent might be able to find you a listing or a buyer that you might have missed. That is all. They are just sales people, so get over it already.

Regarding the government and the crisis, if the US housing stock recently valued at around $6 trillion takes a 30% dive that is $2 trillion dollars. The government is in no position to tax that and pay it out. Nouriel Roubini goes into much and better detail than I can, but the idea that the government is going to bail this mess out is as preposterous as your idea that agents caused this problem. There was a mania, and buyers were at the helm the whole way.

Regarding the speed of the correction, there is some reason to believe you are totally wrong about faster being better. The Center for Economic and Policy Research has a detailed report on how this downturn is likely to impact labor markets. The sharper the correction the larger the expected disruption of labor markets and the longer it will last. This isn’t the 1800’s anymore, and there are serious implications to the rampant specialization that has led to our extreme productivity growth.

Both the Chron and this site used the same Case-Shiller numbers everybody so loves to seize upon, man. Yourself included. I’ve illustrated my point more than once, I’ve pointed out what you said, etc. It’s “welcome to 15” it’s “10” “it was 10.8 in December and I bet it’s 15 by now.” whatever. Not SFRs, and that’s what I’ve said.
But this is now plainly boring. I’m going to enjoy my Saturday. But congrats for bringing “mean anon” into the mix as well. I always sort of liked the Coca Cola slurpees but I think I will stop short of applying for a job at 7-11.
[Editor’s Note: Referenced comment by “mean anon” was removed.]

Ah, nothing like a good ‘ol ORH post to get everyone in a tizzy. As far as the ratio of closings versus cancellations, I think the cancellations were front loaded so that anyone who was sure they could not or did not want to perform on their contract told them early on before they entered the closing process. I’d be very surprised if a ratio anywhere near the current number of cancellations to closings continues through the entire sellout. And ORH Buyer who is doing a cash out refi…take the money and run – lenders consider new projects without a multi-year resale history to be very risky – especially before half of the building has sold (and closed) – 3% deposits are not the same thing as a building full of closed sales and an active resale history. If they agreed to give you a cash out refi on a building that isn’t even half sold & closed – well, that’s being pretty aggressive from their part. And I have a pretty good knowledge of the big banks lending activities and “expertise” and I’m thoroughly unimpressed – in the past decade lending standards have gone out the window. These loans and their risk has been offloaded downstream which has caused big banks to act more like aggressive mortgage brokers rather than conservative financial institutions backed by the federal government.

Yeah…
the cash out refi story is fishy at best.
it doesn’t even make sense.

I had some friends that attempted to sue a developer on a new project (in another state, not California) to try and get their deposit back not too long ago. The amount was somewhere close to $80,000. They found themselves in a situation where they went to contract on the property long before ground had been broken – with the intentions of selling their current house for a certain amount. Market started to turn, and then slid down quickly. Developer finished new house. Purchaser could not sell current house – after months on the market and reducing the price over and over – ultimately decided to stay put. Developer re-sold new house at a slightly higher price – my friends had an attorney and tried to take on the developer to get their deposit back – spend thousands in legal fees – finally had to give up and accept the $80,000 loss.
I’m not so sure that the same thing would not happen here. I heard it before as well.

I found this list of rentals in ORH etc. by following Paul Hwang’s link. Given the prices that were paid by the buyers of these apartments, is there any way that thay are breaking even? Why are there so many for rent already? Paul?
http://rincondaddy.com/index.html

I think the achilles heel for One Rincon is that the building is built like an apartment building. There are way too many 1 bedroom units.
Out of 370 units, approx. 200 are 1 Bedrooms, and only 170 are 2-3 bedrooms. The Avalon apartments buildings in Mission Bay are built this way too.
At Infinity, There are around 240 total units in the tower.
Only 38 are 1 bedrooms, 200+ are 2-3 bedrooms.
Given these numbers, it’s not hard to see how One Rincon will attract a lot more investors and renters, while Infinity may attract more primary residence and second home buyers.
On a side note, a 2 bedroom corner stack on the 20-something floor at Infinity just rented for $5000.00. I inquired about this unit on Craigslist and the owner said he already rented it for asking price.

31 closed at Infinity as of Friday. 84% sold or in contract.

@anon: ok, fine. But that’s only one example. A 54th floor 2/2 at ORH is asking $12,000/mo. Its probably special in some way (like, say, being really high up).
When the average rental 2/2 in ORH or Infinity is renting for $5000/mo, for multiple years with low vacancy rates, then I’ll concede to “getting schooled.”
The current scenario might be equated to people paying $5000 extra for a Mini Cooper when they were first re-introduced back in ’03 or was it ’02? It was the hot new toy when it first arrived, but the excitement wore off pretty quick.

anon,
Why not put a listing for 2/2 on craigslist for $5000/mo and then tell us how many people called and asked to rent it?

Wow, a lot of sour grapes here.

Can anybody comment on pitofdespair’s situation about the bank no longer wanting to loan the money, due to a change in economic environment, not the lendee’s personal situation? Granted, the banks want to hold on to their money right now, but isn’t there a chance that these same banks may “lose” some of that money due to lawsuits? If pitofdespair can prove that they can still make the payments originally agreed to then, but the bank now says “sorry, but things have changed and you’re out of luck, even though its not your fault,” that sounds a little weird. There’s lots of comments on this thread about going after the builder to recoup the money. Can pitofdespair go after the lending bank?

One other point from the Biz Times article, note that language used Dykstra (the 15 buyers “walked away from their deposits”) and Shannon (the one buyer who “has given up his deposit”). Doesn’t sound like these walkers are getting any part of their deposits back – even though Shannon is bragging about reselling the unit at immediately at a higher price.

“I think your story is doubted by many because your essentially claiming your unit has gone up $150k. That is highly suspect in light of (a) this down market, (b) people are walking away from their deposit presumably based on a financial position that they are better off walking away than buying a depreciated asset or, in the alternative, that they cannot find someone to partner with them to buy the asset, and (c) the inefficient structure you chose for your financial maneuvering (especially in light of an attorney being involved).”
Tom, I think it’s time to admit that you are clueless. In order to believe your unsubstantiated, repeated rantings, we would all have to believe the entire loan/mortgage system at Bank of America, as well as their appraisors don’t know what they are talking about. In addition, John’s quote from the SF Business Times is on point –
“At One Rincon, the average price per sf has jumped from $900 when most of the units went into contract 18 months ago to an average of $1,004 per sf now, according to developer Mike Kriozere. In one case, a buyer who walked away from a $2.1 million penthouse was replaced by someone willing to spend $2.6 million for the unit.”
I suppose the SF Biz Times are in on the conspiracy as well … or perhaps the developer is lying, or perhaps you are just pissed off that you didn’t get in on this. By the way, where exactly do you own property?
The facts – People who are ‘defaulting’ on their units at ORH are most often doing so because now the banks may want 10-20% down. However, when these parties originally put down their deposits, a lesser sum might well have sufficed, and they can’t come up with the “extra” downpayment now required. Lending standards have changed, and if they can’t finance, opportunistic individuals that ‘take over’ for them may have a deal on their hands. It’s nothing to do with a depreciating asset – your premise is simply wrong!
You see Tom, if units were priced at perhaps below market levels at pre-construction time, they could go up, even if the the overall market has declined … which for condo prices in SF is debatable. There is no question that prices in the overall Bay Area are down. There is probably a fair argument that prices in SF overall have gone down, in large part due to single family homes. However, condo prices are one segment of the market that has certainly held up better than others. In SF they have declined from their lofty Summer 2007 peaks, but I believe they may have had a slight positive return [albeit minimal] for 2007 overall. The real estate market does have segments, and while most housing segments are down, not every one of them has tanked, as you simplisticly believe is the case, based on overall trends.
With the Infinity pricing many of their obscured view, white kitchen units at 1000 per sq ft, if one locked in prices at $725 per square foot at ORH [like we managed to] with views, hardwood floors and a kitchen of our choice, that property is undoubtedly worth more today than the purchase price paid.
Tom – you are yet another person that needs to get a clue before commencing your rants!!

Recent ORH buyer,
You sound very bitter and angry. But there’s no need for personal attacks (calling people clueless, foolish and dumb).
Attack the topics, not the person.
And talk about ranting, you need to re-read all your past postings, then you’ll realize the only one ranting is YOU.
These people are making constructive criticism (esp Tom) and you should take them with a grain of salt and not attack them.
Peace.

“Either way, 5 years from now I have no doubt that your unit will be worth much more than it is today”
Absolutely! Thing is that by then a gallon of gasoline will be at $7, 1 Euro will cost $2.5 and your salary will still be the same – in USD that is. But you’ll always have the views (which are priceless anyway).

OK, admit it, at $725 psf, this guy got a deal. Much better than Palms or Infinity Soma Grand, and all the other high-rises and new construction at $1,000. Congratulations. How high up are you and what directions are your views?

LOL ORH Home buyer looks super duper angry. Everyone is “clueless”. Hmm, I wonder where i could buy a clue? Is it at ORH? Or are all their clues in FORECLOSURE. hehehe..just kidding…I do thing that 725 if its for a +25 upper floor with an ocean view is a VERY good deal if thats what you got. Even with prices going down a bunch one would sure HOPE they do not go down that much.

Quoth anon: I honestly don’t know many people that would want to make their primary residence as a Jr 1 bedroom. Is there any other high rise condo towers in the city that has that many 1 bedroom units?
There are high rises and then there are high rises. I think it’s possible that, 4 or 5 years ago, back in the planning stages, the developer thought he would play it safe by having lots of 1BR units. We’ll see what happens in Tower Two, but I’ll bet you anything that there will be far fewer 1BRs, because in the intervening years, they learned that the market for 2BR and 3BR units in this place is very strong.
Also, not all the units will be their owners’ primary residence. Face it: this is San Francisco. There are people who have ample funds, with homes in several places, who want a fabulous pied a terre here. Infinity has its studio apartments; those are not all likely to be primary residences, either.
Of course, another reason someone might buy a 1BR Junior is that the buyer is junior (:-), has enough income from stock options or whatever, and wants to live in a seriously cool place. Or they’re literally “Jr.”, attending school here, and the wealthy parents thought this would be the best place for their kid to live. I’ve seen that in other cities.
Me, I only needed a 1BR, but I have a piano, so a 2BR it was!

Recent ORH buyer:
first, my apologies. your story sounded fishy to me, so I voiced it. Others also thought the same thing. Your cash out refi story is definitely atypical as well, don’t you agree? (quite the vitriolic response by the way… LOL!)
two last points of clarification:
1) have you closed on your ORH unit? (so the deed is now in your name, or at least the deed is in the 99%/1% TIC structure)
2) have you closed on your cash-out refinance?
I was under the mistaken impression that you were on one of the higher floors and that only lower floors had closed/moved in as of yet. again, my apologies.
===
as for your claims:
overall:
A better indication IMO that your unit has appreciated is that another unit ON YOUR FLOOR just sold for 90k more than yours, NOT your appraisal.
Your appraisal is worthless. there are too many appraisal games. Look at all the Craigslist RE listings with “INSTANT EQUITY!!!!”
One game I’m seeing recently is this: changing the appraisal so that the loan can be sold off to Fannie or Freddie.
as example:
Home loan: 800k.
owner equity: 0
needs to refinance:
not allowed… too high of LTV (100%)
so new appraisal values home at $1Million.
now borrower has 20% equity!!!!
This is called “hit the number”. now the loan can be sold to Fannie/Freddie.
(don’t think this is happening, then WHY DID FANNIE JUST SEND A LETTER TO ALL THE BIG LENDERS THAT IN-HOUSE APPRAISERS ARE NO LONGER ALLOWED??? I assure you it wasn’t for giggles)
this was discussed here on socketsite.
as for this line:
Tom, I think it’s time to admit that you are clueless. In order to believe your unsubstantiated, repeated rantings, we would all have to believe the entire loan/mortgage system at Bank of America, as well as their appraisors don’t know what they are talking about.”
How can you possibly believe that the appraisors/BofA are any good at valuing property in the midst of one of the largest real estate contractions in recent memory!!! Think about it, almost EVERY appraisal done on a sale in South Florida in 2006 was WAY overvalued. Those properties in SoFl are now down 10-20% from peak in just a few years!
Banks lent too much money to people who couldn’t afford it on an overvalued asset. and they cherry picked appraisors who would “hit the number”. It is a commonly accepted problem.
using your argument, there is no Floria or California or Arizona or Nevada problem, because the banks would have properly valued those units…
BofA just put $2Billion into COUNTRYWIDE for goodness sakes! Countrywide which until mid-2007 was writing the worst loans in the nation, and using appraisers to figure out “value”!!!
you can’t possibly believe that BofA properly valued RE when they sunk $2Billion into Countrywide, can you? nobody on Earth thinks that!

“I recently moved into the Infinity, still a work in progress but the unit and the gym and the service is great!”
Hey,
I’ll be moving into the Infinity this weekend. Do you mind sharing more about what is and is not complete. On my recent walkthrough I was dissapointed that the common areas were not further along. The gym did look great, but there were only 4 treadmills and I had expected 10. Also, the cealing was not complete and, to go to the gym, was like walking through the back halls of a mall. Any recent changes?

Do you mind sharing more about what is and is not complete.
The gym is complete, they are still working on the locker rooms (should be done today). The pool is ALMOST ready. There’s construction workers still around. My main concern was a few deficiencies in the unit itself, but I will say that they staff is VERY responsive.

recent ORH buyer: I hope we’re at peace now. Again, my apologies for doubting your story previously.
also: 725/sq ft is quite a deal. My friends (albeit in 1 BRs in higher floors) are paying $950-1150/sq ft (actually $1120/sq ft to be more precise). So that to me shows that you got a great deal.
This is what caused my confusion. I erroneously thought you were higher level and also not yet closed. As example, if my friend’s unit appreciates $150k, then it would be $1340/sq ft… so it was erroneous assumptions on my part. causing me to be WRONG. (smile)
I wish nobody harm at either ORH or Infinity, least of all you. if you read through my posts you will find that I have said very little negative about ORH or infinity except for thinking the striped side of ORH is ugly, and that the kitchen cabinets aren’t spaced correclty (causing a gash in the wood near the fridge).
I have also hypothesized that they will be a harbinger of the SF RE market, and that it is possible that they may not close well, or get first tower built. But never did I say “blood in the streets for ORH owners and it’s a shit building”. that’s other posters. I can see why that would get old.
as I said above, I personally hope they both do well, because this will encourage more high rise building in the Rincon Hill neighborhood. I have had 2 key agendas for SF for quite some time:
1. build more buildings (more supply)
and
2. more trees.
ORH/infinity failing don’t help with my agenda (#1)
also: as I’ve stated several times, some VERY close people to me are scheduled to close later this year. they would very possibly go BK if values there fall for any appreciable time period. I have no interest in that.
as for appraisals: I totally distrust all appraisals including your and including mine. I have no idea if your appraisal is good or not (it may be). however, as I also said, the IMPORTANT info you gave was that another similar unit in your building sold for $90k more than you paid.
THAT is great info that ORH appreciated since you/previous buyer signed contract.
i’ll give you my appraisal story.
When I bought my house (2003) the appraisal came in at 5% higher than my purchase price. So the Realtor said “wow, your house already went up 5% in just 1 week!” Hearing this my neighbor got an appraisal in order to do cash out for a kitchen(smaller house, less nice) and it came back at 5% above my value. This would mean that my house appreciated 10% in 1 week! (it did not, there is no way I could have sold that house for 10% more than I paid).
Appraisals almost always come in higher than purchase price/appraisal price, they have to or the deal won’t go through. this is what caused the rampant fraud. lenders pressure appraisers to inflate the value to make the deal go through. and many people (not just me) are concerned that the fraud continues. Including the AG of New York, Fannie Mae, and Freddie Mac…
one last time: my apologies. although I’m bearish on RE and I THINK (not know, think) we’ll see hard times ahead, it doesn’t mean that I wish anyone harm. and again, I too am a homeowner. so being bearish on RE hurts ME too.

Ex-Sfer –
We are indeed at peace and all is right with the world, at least for today 🙂 Apology accepted and I hope mine is too for being a bit aggressive with my responses.
A few tidbits – Although it looks like it will be a while, ORH does plan to have more trees, positioned to block the ‘lovely’ onramp view. They also plan some on the sidewalk along Harrison. I agree, all very welcome.
In terms of cabinet spacing, that outcome may vary by unit … we don’t have anything like that in our 2/2, but it may be an issue for certain 1 bedroom units.
One contrast with your appraisal story. The buyer that put down the original deposit [whom we ‘teamed up’ with] did so in mid-2006. So, when our appraisal was higher than the purchase price, it means that the unit has appreciated since mid 2006 – that’s 18+ months to rise in value as opposed to one week. The one week “instant equity” stories are definitely bogus and reflect the type of abuses that have led to the subprime crisis. However, given the extended time frame for appreciation, plus my own assessment of the comparables [albeit an amateur one] I don’t believe that the appraisal that we received is dramatically out of line.

The funny thing here is that ultimately the two sides agree:
ORH owner claims that s/he paid $725/sf and that BofA now appraises it at $840/sf, which s/he thinks must be accurate because BofA is a big bank hiring an experienced appraiser.
Most of the SS posters think that the ORH buyers (who are supposedly paying $1,000+/sf right now) are overpaying by a substantial degree relative to the current market value (i.e., if the whole bldg went back on sale now), let alone the future market value (all trends say down, no trends say up). And, sure enough, according to the BofA appraisal, they are overpaying by about 20%. Even assuming that the current units are on average higher up than Recent ORH’s units is unlikely to close the majority of that gap.

@ Robert re: refinance and 580b.
I’ve done a little research on this subject myself. There is no hard and fast rule that refinancing a loan will leave a person outside anti-deficiency protection in CA. The RE industry would like people to believe this and a quick Google search will confirm this. However, the case usually cited for that proposition is faulty on several grounds (see Union Bank v. Wendland).
In addition, the law on what constitutes “purchase money” for the purposes of section 580 is still unsettled. A refinanced loan still may fall within the definition of purchase money for the purposes of section 580 under certain circumstances. A refinanced loan with the same lender for not more than the original purchase price appears to be purchase money. A refinanced loan with a different lender probably is purchase money where the refinance is not more than the original purchase price (no case, but same policy). Finally, a refinanced loan for MORE than the original purchase price probably does NOT fall within the definition of purchase money for the purposes of section 580 (no case either way). However, there is an argument that only the money that is over the original purchase price falls outside of 580 protection.
A must read for anyone in this situation is a 1996 UCLA law review article entitled, “Will refinancing your home mortgage risk your life savings?” There are a few cases since this article that further define “purchase money,” but this gives a great start.

You can find the referenced San Francisco Business Times at the Mission Bay branch of the public library.
What’s this “library” thing you mention? 😉

Uh, Recent ORH buyer, there is still two problems with your story:
1. Unless the bank doing your appraisal had magical and secret access to subsequent sales information from the sales office at One Rincon with respect to units that hadn’t closed yet, there is no way the appraisal would come in significantly higher than purchase price. Where would the appraiser obtain the higher comps necessary to support the higher price? Certainly not from other SOMA buildings, none of which sell at higher prices than they did in 2006. Tell us (if you would), what were the comps used in your appraisal? This would be interesting/useful to all of the readers here.
2. More to the point – the appraisal you are referring to (by your own story) was obtained in connection with the acquisition you’ve closed upon. You seem to be assuming (perhaps hoping?) that when you now apply for a refinancing, you’ll get the same appraiser and the same valuation. You might, but that is entirely speculative on your part. Your postings are misleading since they state or imply that you’ve obtained a refi appraisal that will permit cash out.

Banks are getting aggressive and will offer refi’s to good risks. I just got a call yesterday from my banker offering a refi with much better terms, and at no cost! This is counterintuitive to what we are seeing in the RE market.
I don’t doubt the recent ORH story. It’s getting crazy out there. But as my banker put it, they are running out of clients and without making loans they go out of business.

Mike,
I work in asset management [so I’m familiar with most of this] and you are right about the way the loans are packaged and resold. ‘Good’ loans were often stuffed with ‘bad’ loans and investors that purchased these CDO pools didn’t really know what they were getting. A lot of CDO buyers are now realizing they are stuck with a bunch of “sub-slime” on their books, particularly Citi.
I appreciate your insights about B of A’s ‘incentives’. I was operating from the perspective that B.of A. would learn from the error of their ways. However, for certain divisions of B of A, you seem to be saying there was no error, given that their agenda is simply to consumate loans. That’s a fair point. However, while loans are most often packaged and resold, I think B of A may still have [or be forced to keep] some mortgages on their books. At some point, surely they have to clean up this lending mess as they can’t package and resell these loans unless they upgrade their lending standards and ensure investors that they are not being stuck with ‘deadbeat’ loans.
Accordingly, I’m inclined to believe all banks [not just B of A] must have upgraded their lending standards/appraisal process. If lending reform is not already here, surely it must come soon, else banks will have a hard time staying afloat.

Does anyone have any advice for someone looking to re-locate back to SF (from overseas) & buy 2/2 w/ view in either Infinity or ORH in the next 6 months? Do you think I need to make a move now? Or wait it out a bit longer? I would most likely be paying cash.

We’re scheduled to close on our unit at the Infinity in June, but haven’t locked in financing. Has anyone talked with the preferred lenders lately? We’re leaning toward a jumbo I/O product (we’ll put 20%++ down), and are thinking we’ll stay 5-10 years. Getting a little worried we’ve missed the boat in terms of getting a decent rate…can anyone confirm?