While the sellers of 3342 Divisadero are still seeking a buyer, 3324 Octavia St #4 has closed escrow a little to the east (on more stable ground in the Marina) with a contract price of $739,000. That’s just over $982 per square foot! And heck, had it been listed at $600,000 that would have been $139,000 over asking (and most likely with multiple offers)! It all sounds (or would sound) quite impressive.
Then again, a sale at $739,000 is $11,000 less than what the sellers paid for this District 7 condo almost four years ago (on 7/16/2004). Perhaps they simply “overpaid” at the time. Of course that would suggest anybody that relied on the sale as a comp four years ago probably overpaid as well. And so on. And so forth.
And in terms of the effective after-tax cost of owning this one-bedroom condo over the past four years, we’d estimate at least $3,300 a month. And that’s not including any transaction costs associated with buying or selling the property. Or the depreciation.
∙ An Apples To Apples Comp To Be Is Back On The Market In The Marina [SocketSite]
∙ An Update (And Reduction) For A Marina Apple To Be: 3342 Divisadero [SocketsSite]
we get it, we get it. the tone of most of these posts are similar to the tone hillary clinton uses–negative, negative, negative. any way some of this news is actually good? how about for buyers? they can now afford more house (if they can qualify for a loan). buyers don’t have to deal with multi-bid situations as much any more, etc. i don’t mind getting all the news of the depreciation, of the offer dates that come and go or the apple to apple stats, but deep inside these stories, there is still some positive news. if i remember correctly from the last time Socketsite stats were shared, many of the readers of this blog are/were renters/buyers. for those readers, times are better than ever. why is there such a negative tone in these stories, it’s wearing me out!
Let’s not even bring Hillary into this, people…Some of us Democrats are ready to “Just Say NoBama”.
It will take a lot of “negative” posts to deflate the hot-air balloon that is the SF real estate market.
hahahha. no editorial bias in those ledes, nosirree bob!
san fronzischeme—
i totally agree with you, a change in the market not only needs to happen, but should have happened a long time ago and will continue to happen as money becomes tighter, the economy becomes weaker and choice becomes greater. there was/is a pretty big “hot-air balloon” in sf.
all of the shared info/doomsday stuff is ok, i have no problem with it and frankly, i’d love to see more people able to afford homes in sF. i’m just super frustrated and tired with the extremely negative approach/tone. that said, that’s what this blog has been doing since day one and i don’t expect it to change. i’ve even left comments like this years ago, it’s just tiring to me, that’s all. from what i gather from this blog, it’s hardly ever a good time to sell and it’s never a good time to buy. i learn that prices are coming down in some cases (this blog has been teaching me that for years) and that there is some beautiful (and ugly) architecture in this city. i have also learned that the contributors of this blog prefer a negative approach versus a positive one, but that’s expected—happy go lucky doesn’t sell. sex and gloom do! mr. editor–maybe we need some more stories about sex??
And you’re just the person to get it done San Fronzi!
Attack the messenger, if you don’t like the message. Awright!
NAR, CAR, all the realtors I know do a pretty effective job of putting a positive spin on all the bloodletting. I, for one, am glad that someone is telling it like it is.
By the way, I am a homeowner watching thousands of dollars of equity leak out each week. But I have been here 10+ years and in for 20+ more.
There is another flat in the building for sale, #2. It’s a 752 foot one bedroom for 695K. The last time it sold was ’03, and it went for 450K. That’s why I again ask to please try to put a finer point on all of this. The upstairs neighbor took a 1.5 point hit after four years of normal wear and tear, sure. But I think clearly the bottom half of 3324 Octavia street has yet to feel the effects of the credit crunch. They still think it’s spring 2006!
There was once a Realtor climbing the Half Dome in Yosemite. He gets to the top, puts down his gear and starts enjoying the scenery. Taking his gear down, he loses his balance for a split second. His right foot slips, he falls flat on the wet rock, tries to cling to something. Nope. He starts slowly sliding down the dome accelerating until he gets to the edge of the cliff. The free fall.
Out loud he says to himself all the way down “It’s not that bad. I’m still alive am I not?”
http://www.realtor.org/pac.nsf/pages/television
“Attack the messenger, if you don’t like the message. Awright!”
Isn’t that what our good friend San Fronzi does all the time?
Case in point: the post from San Fronzi above at 10:01 AM.
Yeah. I brought up the other flat in the building because it is irrelevant realtor spin. (sarcasm)
Now, let me tell you a story.
There was once a guy who lived in a town for two years. He thought knew enough about it to pontificate on the Internet ad nauseum. Unfortunately, everyone saw right through it. Oh yeah. He also liked to tack on snide dismissals of someone else’s profession in every single post he made. The end.
sigh (rolling eyes). yeah you two (FronziFluj) we get it, you both hate each other and you both have big virile genitalia.
Fronzi: can you lay off of fluj. we get it. you can make your points in non-offensive ways. most’ve us have been burned by realtors in the past, but most’ve us have also had good experiences as well. Fluj tends to cheerlead at times, but is also a valuable asset and has put up with a lot of this from other posters, and it doens’t add much anymore.
Fluj: quit feeding him.
both your bickering will marginalize your valid arguments…
(example for Fronzi)
acceptable: “one should be careful of what a realtor says because there may be a conflict of interest due to the method of compensation. caveat emptor”
unacceptable: “a realtor climbs a mountain…”
Realtors cannot be independent messengers, as they have a vested interest in the business. They cannot say “things got out of hand. Stop buying, let it fall”.
That doesn’t say I don’t have an interest in seeing the market depressed. Actually, all the fence-sitters have an interest in things going south. But it does not prevent them to voice their opinions.
I guess the Internet is levelling the playing field somehow. It’s not the TOP-DOWN model that we had before.
The fast free-flow of information has actually benefitted Realtors for a while. It created a sense of urgency that accelerated the turns of the market. You could see the market going up, up, up. All of this compounded with daily warnings of being “priced out forever” helped fuel the frenzy.
Another very important factor in the acceleration of the RE frenzy is the way loans are negociated. In the old days, you walked into a bank and met with loan officers. LendingTree, Ditech, eLoan, eTrade and many more started this business right before or right at the onset of the bubble. Lenders had to compete, lowering their margins and making it up with volume. But volume means accepting more people than you used to, relaxing the standards a bit. Until the others did the same. It was a flight to non-quality helped by WS and the Fed policy.
Now, the free-flow of information is actually hurting the Realtors. New web sites pop up every day with more info, sales figures, price reductions. Information is not kept under the veil of secrecy (who outside of professionals used to go to local government offices to get local sales, repos, notices of defaults, permits, complaints. People have most of the information they need to make a more educated decision.
We’ll always need Realtors. They know better than anyone else how to sell (and how to buy). Their input is invaluable in terms of psychology as well as dealings in the legal,financial and administrative and their fees are overwhelmingly well deserved.
The best deals I got were through Realtors.
But they can’t try and “make the market” as easily as before.
No more free lunch for them. It’s time to go back to basics.
Ok, so getting back on topic…#2 that fluj brings up makes the story even more interesting. #4 previously sold on 12/4/2001 for $465K. 15 months later, #2 sold on 2/27/2003 for $450K. Both #2 and #4 are 752 sq ft. 17 months later, #4 sold again for $750K. Now #4 has sold for $739k. And they are trying to sell #2 for $695?
What’s going on? Who has the scoop? Come on cough it up!
http://www.propertyshark.com/mason/san_francisco/Reports2/showsection.html?propkey=45387543
Realtors (some) can and do advise clients correctly). I just advised a client to walk from a $2.5M+ “resale” above the 50th floor at ORH. Yes, I just gave up ~$50,000 for the sake of my client’s best interest.
Fluj is the best! Garrett is right on the money too!
Realtors cannot be independent messengers, as they have a vested interest in the business. They cannot say “things got out of hand. Stop buying, let it fall”.
I disagree. it is uncommon for realtors to say this, and I doubt I’ll ever hear the NAR say this. and the NAR has ruined any respect I might have had from it. The entire NAR from Lawrence Yun and Leslie Appleton Young have all proven themselves both incompetent and also liars. they have changed their data at a whim (like when they changed how they measured “affordability” in 2006 to make it look better than it actually was).
so I use little to nothing from the NAR
but some individual realtors will say “stop buying”. case in point: my realtor.
he’s a rare bird, this is true. but he knows that he’ll make the business up on the back end due to referrals etc. every house he’s sold this year he told the people “it’s not a good time, you will probably lose money for some time”. however, it was emotional for them so they bought.
and because of this he has a very successful business with tons of high net-worth buyers. they trust him and he’s in “the group” now due to his honesty.
there was also a realtor that used to post very bearish posts on the Housing Bubble blog back in 2004 (when I first became aware of the bubble). I think his name was Jim Carlsbad out of La Jolla or Del Mar or something. he convinced me to sell in 2005 in SD. if I ever buy in SoCal again, I would use him as well.
there is also mike Morgan in Florida (who posts on Mish’s blog).
and there are others too.
that said: the barriers of entry to real estate are low, and thus the average agent may not have a high skill level. but you can’t paint them all with one brush.
this is why I would prefer that we use the word “real estate salespeople” instead of “experts”, only because it would reorient the average Joe that Realtors are indeed salespeople.
(and as I’ve stated a lot: there is nothing wrong with being a salesperson… from Realtor to International Sales Executive for a Multinational company and so on) salespeople have intimate knowledge of their product.
they may or may not be knowledgeable about the entire macroeconomic trends in their field (i’ve found that most are not)
that’s why I would simply say “caveat emptor”. know your realtor, know that they have biases, and evaluate the info they give you using that knowledge.
going back to fluj: I have found him to be honest on this board. he occasionally gets irritated and lashes out, and I ignore those outbursts. I have found that he knows the SF market very well, much better than I do (and much better than you do too Fronzi). I have found that I understand macroeconomics better than fluj. no biggie, I know a lot about those. I have found that he is optimistic for SF RE, again no biggie we all don’t have to doom and gloom it to make a contribution.
So I take fluj’s info and combine it with my macroeconimic info and I’m all the better for it.
ex SF-er. I agree, fluj knows the market much better than most at one specific point in time even if his microspcope has rose lenses on it. There are 2 dimensions behind the shape of a market: the very close view and the broader view. Professionals can only offer that much broad insight. No one can, actually. We can only guess and be humbled by the market once in a while.
I agree also that it has been too easy for a few years to be part of the real estate profession. The market is now deciding who is voted off the island. It’s a buyer’s market, therefore I believe those who help the buyers have more chance at making it past the crisis.
Good realtors are invaluable. They have so much information to provide a buyer that asks questions. If someone does not know what they are really looking for, other than housing, they can keep you from making big mistakes. They can walk you through the economics of a remodel, advantages/disadvantages of TIC’s, new projects, neighborhoods, etc.. A good realtow will more than welcome all of the issues that are of concern. I looked at over 100 properties in SF before I bought my first condo. The realtor took me out every Sunday and some days during the week for over 3 months. My price point was also entry level at the time. I remember falling in love with the space on a new loft on Harrison. He said, you hear that humming noise…it’s not going to ever go away. There was an air conditioning unit above a warehouse nearby. I would have never noticed it given my awe. He saved me from a financial disaster. I can see where another realtor would have just joined me in the elation instead of bursting my bubble and encouraged an offer.
Also, we blame realtors for the sometimes crazy expectations of the clients. If a property is hot and every other buyer really wants it, what other advise but overbid can a realtor possibly give?
I’m not sure what sort of client fluj works with, but based on his knowledge, I’m sure he does the best for his clients.
I agree with every sentiment posted. It’s unfortunate that Realtors have to share that title with other Realtors. Some of them are quite knowledgeable, and worth every cent. Fluj is definitely one of them.
Those of us who hate the NAR really hate the news media who announces their every spin in headlines. If the media were as honest and skeptical of the NAR as the editor of Socketsite, the NAR would be a laughingstock, never to be quoted, but instead ridiculed as the trade organization they are, and only then would they change their tune. But Realtors buy a lot of newspaper advertising, and so no newspaper wants to offend them.
They are no different from any other trade organization with their weekly assertions of new market bottoms, etc. They are looking out for what their members believe are their best interests, without, of course, realizing what it does to their credibility.
Nevertheless, our problem with the NAR has to do with the fact that the media treats their every word as if it is the pronouncement of an independent panel, so the rest of us hold them to that standard, which is, if you think about it, ridiculous. It is really we who are wrong, not them. We should be attacking the media, but instead, we attack the NAR.
That lying trade organization, coupled with nonstop lies from the bad realtors then gives us, what we think, is a license to attack all Realtors. Probably something we should quantify when we do it: “SOME realtors”, “MANY realtors”, maybe even “MOST realtors” but not “realtors”.
It’s definitely something to which we should all be more sensitive.
By the same token, it would be refreshing if, every time a realtor paid for a newspaper ad, if they reminded the person at the paper that the NAR is not off limits, and they wish the newspaper would hold them to the same standards as everyone else. When the media skewered them, it would probably force the NAR to clean up their cheerleading act. And that would be better for everyone involved because we wouldn’t have a deep seated distrust of the whole group, which is what the cheerleading really brings.
“It’s a buyer’s market, therefore …” — says Fronzi.
No, it isn’t. It is trending toward a buyer’s market compared with the last few years. There are some decent deals to be had around town, mostly with condos. But a “buyer’s market” ? no.
Amen to that.
OK, OK, fluj, I’ll be more accurate: The current US market is a buyer’s market, with some local exceptions. All Real Estate is local. Until it is not.
Thanks. To refresh, this is a San Francisco real estate website. The posts in this thread fall under the topic of a singular Pacific Heights property, a condo sold for a mere point and a half under its 2004 purchase price. The topic was delivered to us in a shadenfreude-laden manner by the editor.
I posited another property for sale in the same building, a property that will most likely earn its seller quite a nice return, in contrast to the upstairs neighbor. In response to that point, were all treated to a delightful anecdote about a realtor who went on a rock climbing expedition.
So, um, how about that other flat at for 924 a foot? Good deal? Bad deal? Signs of a buyer’s market? Was there really such a difference between ’03 and ’04? Because 3324 Octavia #2 stands to profit handsomely. And 3324#4 obviously took a loss.
Ok, so getting back on topic…#2 that fluj brings up makes the story even more interesting. #4 previously sold on 12/4/2001 for $465K. 15 months later, #2 sold on 2/27/2003 for $450K. Both #2 and #4 are 752 sq ft. 17 months later, #4 sold again for $750K. Now #4 has sold for $739k. And they are trying to sell #2 for $695k?
What’s going on? Who has the scoop? Come on cough it up!
http://www.propertyshark.com/mason/san_francisco/Reports2/showsection.html?propkey=45387543
Posted by: chuckie at April 23
i can’t believe people have this much time to derive an argument from one marina property that lost 1.4% over the past 4 years.
Just saw a news item on AOL where San Jose is the most favorable market for sellers and San Francisco is second compared to other majore metropolitan areas. Not sure on all of the methodology, but inventory was taken into account and at a high it was 2.4% but has since been cut in half. For whatever it’s worth, might help put a perspective on how much of a buyers market it really is out here compared to the rest of the country.
Hi! I was just wondering if someone could tell me where Octavia Road is? Is this even in the city? I’m just trying to figure out if this is a good area or not. THX!
resp – perhaps this is because about a year ago many here were claiming that the Marina and PacH were immune to any flattening and downturn. So losses in those neighborhoods will likely receive attention.
Probably the next step would be evidence that losses are not isolated but rather widespread in these prime districts. Or conversely evidence that these cases are just flukes and prime RE is still booming in those neighborhoods.
The trend would point towards the former result : a year ago there were not even these apples-apples cases demonstrating loss. Now there are several.
Good point. In theory, owners of the upper crust market have the cash to wait a storm out. The pypical example is the person behind University Of Phoenix Online ( http://www.forbes.com/lists/2007/54/richlist07_Peter-Sperling_RQWL.html ) who has put his mansion up for sale for 65M for 2 years.
http://sfarmls.rapmls.com/scripts/mgrqispi.dll?APPNAME=Sanfrancisco&PRGNAME=MLSPropertyDetail&ARGUMENTS=-N375232204,-N186949,-N,-A,-N13258859
I am sure he has the time to find the right buyer.
But Donald trump lowered his asking price on his “Maison de l’amitie” in Palm Beach, FL from 125 to 100M. Proof that even in the rarefied air layers, gravity still exists.
That’s not relevant to this topic. What about how you countered my example of a condo for sale in the same building with a tale of a realtor falling off Half Dome? That’s what I want to hear. “Buyer’s market” or not?
“Hi! I was just wondering if someone could tell me where Octavia Road is? Is this even in the city? I’m just trying to figure out if this is a good area or not. THX!”
Oh yes. Very smack dab in the midle of one of the nicest parts of SF. Now kindly tell me, how many ounces are in a pentagram?
I’m not countering anything, fluj. The issue was that “evidence that these cases are just flukes and prime RE is still booming in those neighborhoods” from Milkshake.
Obviously some sellers are resilient and the PcH and Marina neighborhoods are very specific. The question is: who is selling and what are their specific situation? Do they adapt to the overall demand or can they wait to find the right buyer as it’s a different demographic from the rest?
Hey vox: There’s this thing called the Internet where they have maps…
http://maps.google.com/maps?f=q&hl=en&q=Octavia+St,+San+Francisco,+San+Francisco,+California+94102,+United+States&sll=37.77916,-122.42007&sspn=1.656296,2.889404&ie=UTF8&oi=georefine&ct=clnk&cd=2&geocode=0,37.774360,-122.424210
Anyone, anywhere worth any amount of money can sell or not sell. Two guys in one Kansas trailer park have their mobile homes for sale. One would like to move to another state. The other’s mother needs chemo, immediately. Whatever.
These are two units in the same building. And the funny thing is, 900+ a foot still.
And anyway, your Half Dome story preceded that point by Milkshake.
wow another crappy fluj vs the bubble thread.
Can we just delete all the comments and start over with the RE bears not bringing up fluj’s name in ANY comment and fluj doing the same and/or BOTH having the maturity to not get all bent out of shape by some ridiculous comment by an anonymous stranger on the internet
@ silly: My first comment was an attempt at sarcasm. A while ago, you’d see reductions and losses on places that weren’t selling in the Sunset or Excelsior. Certain posters here would laugh these off because they weren’t happening in ‘prime’ areas like the Marina or Pac Heights. So I wanted to note that “1,000 a foot” has urned into “900+ a foot still” and will likely turn into “800+ a foot still” sometime soon.
@ vox: 2.838349523125e-14. I’m assuming you meant “petagram” not pentagram.
@ ex-SFer at 10:58 a.m. who wrote: “…I would prefer that we use the word “real estate salespeople” instead of “experts”, only because it would reorient the average Joe that Realtors are indeed salespeople.”
Yes, but real estate agents (unlike, say, car salespeople or department store salespeople) have legal fiduciary responsibilities to their clients, and thus it’s not the same thing.
“wow another crappy fluj vs the bubble thread.
You didn’t read this thread then, badlydrawn. I brought up a very relevant point — another property in the same building that stands to profit — and someone saw fit to be a complete ass for no reason. Then, when questioned, said person dodged around and has yet to come clean. This is not fluj versus the bubble crowd by a longshot.
“You didn’t read this thread then, badlydrawn. I brought up a very relevant point — another property in the same building that stands to profit — and someone saw fit to be a complete ass for no reason.”
Fair enough.But your example doesn’t mean much. All you have illustrated is that market went completely irrational somewhere between 2/27/03 and 7/16/2004. The prices of two similar units in the same building almost doubled in 17 months.
While you may be content with the fact that the owner of #2 will make a profit. The bigger picture is atleast for this building in the heart of prime SF prices have reverted to 2004 levels. Not a booming market given the data. So the editor’s tone seems reasonable.
LOL
I, for one, am very entertained by fluj and his microscope. I am equally entertained by Fronzi and his half-dome analogy. I say keep it up.
fluj, don’t take it the wrong way. Let me re-iterate that I was not replying to your post, which was very valid and insightful by the way, but to another comment talking about the shape of the “creme de la creme” markets and whether they’re holding on as is often affirmed/denied.
To go back to the core of the thread, this specific building, it’s very tricky to size a market from a tiny sample. Things can go down on a microscopic level and up on a macroscopic one, and vice-versa. The Apples-to-Apples and unit-to-unit comparison gives a good idea of a specific situation, but has to be compounded with other stories to make sense of a local market.
Thanks again for your insight and input. I learn from you and other readers every day in these debates.
akrosdabay,
The editor can do whatever he wants. It’s his site. But it’s both telling and interesting that he took the time to break down the minutiae of the one unit’s loss with not even remotely disuised amusement. Yet meanwhle another unit stands to gain handsomely.
I’m not “content.” It’s just another anecdote. You say “big picture” and “just for this building” in the same sentence there. But I think I follow you. Yeah man, nobody is saying anything about appreciation these days.
If you want to talk big picture, then here’s what it really is, big picture, in my opinion undeniable. If you keep something for a relatively short time — in this case three and a half years — and don’t do any material improvements to it you might just stand to lose money. Big picture, if there was data on this I’m sure that would be backed up.
Just to put this discussion in perspective:
Fluj’s other unit has appreciated a little over 8% per year for 5 years, barely beating the interest rate on the loan. After the commission, the homeowner really gets nothing back. He still had to pay property tax and HOA (and insurance if not in the HOA), so he ended up getting to live in a place for about $500-700 per month less than it would have cost him to rent it. Over 60 months, that means he saved $36K in rent. Maybe it’s as much as 50-70K back when all is said and done, if he did nothing to improve the unit in 5 years. Not bad!
Had the owner put his 45K downpayment into unleveraged Amazon.com stock, he’d have about 300K after taking 65K back (his 45K plus inflation).
So the owner of fluj’s other unit really doesn’t make much money: he did a better job lining the pockets of realtors and the mortgage industry than his own, and he could have done better by renting and investing his money.
And that was during one of the greatest real estate booms of all time. In a normal time, he’s be much worse off.
But you’ll note during this very rational analysis how the real estate salespeople at least imply how well the homeowner did.
Has anyone seen Billy Madison???
“I am now dumber for reading this post”
In reality discuss a market based on national statistics is ridiculous but so is discussing a market based on one 2 unit flat.
Real estate markets are like the micro climates of the bay area. Its very specific to neighborhoods, city blocks and in some cases house to house.
I know a condo that went into contract today (I bid on it and didn’t get it). The listing agent said it had 5 offers 3 of which were over asking.
So what do I believe? The condo that just sold for over asking or the condo that took a hit of 1.5% over the last 2+ years?
There is no such thing as a “micro climate” in a rain storm.
It’s only a matter of time before Tipster shows up with his bearculator. Stick around. The perfunctory dig at r.e. salespeople. Spaceships, the Zapruder film, Hoffa, the CIA’s 9/11 complicity, and the faking of the lunar landing to follow.
Actually, Tipster, if you look at the history of the financials it appears as if the property was 100% financed. The buyer has already likely paid herself back for the down payment. She stands to make a much better return than you posit.
You forgot something re that Amazon stock Tipster: TAXES. Typical bear spin to leave such “minor” details out. (head shaking)
“Actually, Tipster, if you look at the history of the financials it appears as if the property was 100% financed. ”
Well, try getting 100% financing these days… This implies your example, like much of the money made during the past 5 years were likely a once-in-a-lifetime event.
Uh oh. You are right: I did forget about taxes. The renter would “only” be about 200K ahead @ 20 percent cap gains. My bad! I’d still take it!
And the bearculator was really a boomculator. I took real returns during a great real estate boom of a property a real estate salesperson held up as a counterpoint.
Almost every time I do a real analysis, I find the homeowner didn’t make as much as the industry did unless the hold period is much longer. It’s not a conspiracy theory as much as it is just bad math: at fist glance, it looks like the homeowner made out. When you look carefully, it doesn’t happen nearly as often.
And while that homeowner may have put 0 down,most people buying today will be using some down. And so anyone considering buying in a flat to down market should really look closely at what home ownership really costs, and also determine if they really missed out by.not buying in 2003.
If you had the opportunity to buy this place 5 years ago, there were much better options from a purely financial perspective.
And while that homeowner may have put 0 down,most people buying today will be using some down.
I would just add that based on no PMI (harder to get at least if not impossible due to AIG pullout) for condos in SF, most buyers will have to put down 20% to get financing.
Yeah well maybe she took that 170K she freed up through home financing and got in on the initial Google auction. Maybe she bought 170K worth of gold in 2005. Maybe she bought rice futures.
Let’s stick to housing, all right? Your Amazon point was not valid.
I’m not trumpeting this as any sort of great shakes. AGAIN, IT’S IN THE SAME FREAKING BUILDING. I refer you, once more, to the manner in which the other property in the building was presented. Shadenfreude City.
You b’errors are impossible. You’re entertaining, but impossible. Even if she had stuck with the 90K she initially put down, she would have done better than OK. For a property such as this one the loan was in the range of what would make good sense for tax writeoffs for a person of average SF means. 6% annually on initially 360K, then 460K, finally 530K.
Tipster,
What basis did you use for the rent of this place? 2003 market or 2008 market?
If 2003 market what would have been the rent? 1800? 2000? 2200? With rent control, this would have an impact on the numbers.
Whatever the results: RE investors had a great run, nobody can deny it.
I was going to try to run the actual numbers and see what the difference between rent and mortgage payments, invested in a more likely portfolio (such as coffeehouse versus amazon stock only) would have turned into, but it’s a bit of a spreadsheet pain because of the continuous investment. Anyway, that’s the real comparison here IMO.
In any event, my guess at 2003/2004 market rent for a 1BR is 1200 to 1500. I may post results later if I feel motivated enough.
Damn. Don’t any of you realize that real estate is best as a long term asset? Y’all appear to discuss it as if it were a stock. The real payoff is when the asset is owned free and clear at the end of the mortgage period.
Why stop at AMZN stock? Why not pick China Life or Apple? Heck, is this mythical investor of yours had bought the right combination of calls and puts and timed it perfectly, they could be multi-millionaires by now! And to think, they stupidly bought some real estate instead.
Got any hot stock tips?
That’s an excellent point, NoeValleyJim.
But why weren’t you making that same point when fluj brought up a person who fortuitously bought near the beginning of a real estate bubble and is selling near the top?
My mythical Amazon investor is no more lucky than the guy who bought fluj’s second unit. Bought something, it went up, sold it. Why did you have no objection to fluj’s example but you object to mine? They are really no different.
If the guy who owned fluj’s second unit put in a new kitchen and a bath, he probably didn’t do much better than he could have gotten with a mutual fund, had he rented.
Well it looks like you didn’t read my comment fluj.
But oh well, I guess I will keep up with my practice of ignoring 2/3rds of the comments
“If the guy who owned fluj’s second unit put in a new kitchen and a bath, he probably didn’t do much better than he could have gotten with a mutual fund, had he rented”
No, no, and no. She cleared 170K in refinancing. 90 to pay herself back for monies down, 80 to update the kitchen and remodel the bath. Easy.
Also you keep using stocks as some sort of opportunity lost. It’s nonsense. First off, why shouldn’t a person who buys a property also be able to have a stock portfolio? Especially with something such as this, a relatively inexpensive 450K initial purchase? There’s no reason for stock portfolio and home purchase to be mutually exclusive in ANY case, especially here.
Why don’t you write about the mythical people who were torn between purchasing a home and crafting a stock market strategy nine months ago? You know, those folks who opted for stocks instead of of a home purchase? Because those folks did not fare very well. Not at all.
“Why don’t you write about the mythical people who were torn between purchasing a home and crafting a stock market strategy nine months ago? You know, those folks who opted for stocks instead of of a home purchase? Because those folks did not fare very well. Not at all.”
That’s a good point, although probably should be a different topic.
Some people have been using Google as bay area RE indicator….meaning, they believe there is a link between stock market and RE market. If that’s the case (can someone do a chart?), it would be a lose-lose situation unless you always put the money in treasury (which pays less than the inflation).
So, where is everyone putting the money? I would love to hear from the two extremes – fluj vs tipster, for example. Where did you put your money over the last nine months, and how did it do?
Unless they shorted, fluj, at which point they made out like bandits.
And the commission was only about $20, giving them the flexibility to move in and out as they saw fit.
tipster, we know Satchel shorted (at least some).
How about you?
Yeah, and if gold was discovered on my great great great great grandfather’s property Sutter street would be called “Grandpa Fluj Street.” No. I think we have killed your stocks opportunity shpiel once and for all.
I think most of the “macroeconomic folks” around here were squawking against stocks for some time now.
Here are some of my posts:
We’ve all debated endlessly about whether or not the Fed dropping rates will “save” housing. Now we can sit back and watch what happens.
Anybody who is smart is fleeing the dollar. Ben Bernanke has officially earned his “helicopter” nickname. Now we know that he will drop and drop and drop again, just like his predecessor.
I held on and believed for a while. No more. I’m tired of seeing my life savings destroyed by inflation so that Angelo Mozillo can get $500 million in stock options and Goldman Sachs pass out hundreds of millions in bonuses. and then when they take the slightest hit they’re bailed out.
next on a channel near you: sky high gas and food prices, as well as sky high import prices.
Posted by: ex SF-er at September 18, 2007 3:35 PM
and here’s what I changed my investments to in September:
I am personally going to invest in many things:
American stocks
Foreign Stocks
gold/silver
Treasuries
Oil
Staples (it’s a commodity play without being in commodities)
Posted by: ex SF-er at September 18, 2007 4:48 PM
—
and then in end-January:
Ben fooled me once (way back last summer… when he first betrayed us with the 50bps cut). but I learned… This guy will drop as fast as he can as low as he can. And take our life savings with him if we let him.
I will only play a little… Gold like everybody else (for me since 2005). I cashed out all my longs today. Now I’ll ride back and forth shorting then going long. (actually I use index ETFs and ultrashort ETFs instead of really shorting).
ride the market up… sell and go short… ride the market down, sell and go long… ride the market up… sell and go short… ride the market down… rinse, lather, repeat.
Posted by: ex SF-er at January 30, 2008 5:16 PM
Let’s discuss your mythical stock investor.
9 months ago, he was sitting on $150,000. He thought the real estate market was scary, so he decided to keep his $2000/month rent and invest his cash. He invested in a diversifieed mutual fund portfolio covering both stocks and bonds instead of purchasing an $800,000 condo.
Condo buyer dude: let’s assume a 6.5% mortgage rate. His $150k is gone, and he’s paying about $5k per month, including property tax and insurance. We’ll give him the tax discount of 35%, so that’s a net cost of $3250, or $1250 more per month which he could have continued to add to his portfolio to take advantage of dollar cost averaging.
But let’s leave the DCA advantage out of it and we’ll pretend stock dude bought everything in one day. And let’s say that day was July 13th, the highest close in July and very near the high reached in October. The S&P 500 closed at 1552.50. It closed today at 1388.82. That’s a drop of 10.54%.
Keep in mind two things: He’s in a diversified portfolio. We’ll say he’s aggressive and put only 25% in bonds. And we’ll say those bonds returned absolutely zilch, which is of course not true. We’ll pretend he did nothing but 25% bonds and all S&P for simplicity’s sake (emerging and intl have done better, so I’m making his performance even worse), and the bonds earned nothing because he picked the worst bond funds ever. Zero percent interest on 25% of his money.
So he’s lost 7.9% over that time. BUT! He also got dividends. We’ll say he got a 2% dividend yield (current S&P 500 yield is 1.95%). So overall, he’s lost 6.9% over that time. So now he’s got $139650 in his account.
What’s happened to the other guy who bought his condo? Well, he’s down about 2%. No big deal, right? BUT! That’s 2% of $800,000. That’s a $16,000 loss on his $150,000 investment, or a loss of 10.6% for a remainder of $134,000.
Stock investor dude gets scared tomorrow and backs out of his investment. He’s still got $135,000 (we’ll assume he got killed on fees, and I mean REALLY KILLED!).
Real estate dude gets scared and sells. Sells for $790,000, which is only a loss of 1.25%. Oops, the 5% transaction fee to the realtors! [of course this could be 6% as well]. Considering he’s paid off pretty much zero principal, we’ll give him the benefit of the doubt and say he owes $645k on his mortgage instead of $650k. He gets himself a check for $750,500 after paying the 5% fee. Then he pays off his mortgage. He’s lost almost a third of his money in 9 months, plus he’s spent an additional $1250 per month for the privilege.
I believe I’ve moved most of the numbers to the benefit of the condo buyer. Let me know if I’m off on anything.
And then let me know which one you think has done better in the last 9 months.
ride the market up… sell and go short… ride the market down, sell and go long… ride the market up… sell and go short… ride the market down… rinse, lather, repeat
Please do share with us the next time you decide to buy or sell, so we can share in your “good fortune.”
Thanks in advance.
Noseeum if you know of anybody who matches that hypothetical please have he/she look me up. Somebody who buys and sells inside of nine months? Hot diggety!
But I gotta say that that person only exists in chat rooms and BBSs. Unless job relocation or some other unforeseen event necessitates it, nobody would do that. Never ever ever. Courting a 5% loss openly due to cold feet? I’ve never seen it. The cold feet happen during the initial purchase phase. After that it is where one lives, and the sentiment changes.
I guess that’s the main problem here. Stocks and housing are not the same thing.
It’s all about leverage.
stocks can only be levered 2:1
real estate can be leveraged 5:1 or even 10:1 if you can still get away with 10% down
Bear Stearns was leveraged 35:1.
you look really smart when you’re highly levered and things are going up. and really dumb when they go down.
Please do share with us the next time you decide to buy or sell, so we can share in your “good fortune.”
Thanks in advance
NoeValleyJim:
Yawn.
I have already done this many times
You veiled hostility gets you nowhere, and makes you look foolish IMO.
Here is from later in that thread (had you bothered to read it, you didn’t.)
I will give you highlights, but please
please read my entire post from January 30, before you stuff your foot even further in your mouth.
thank you
Posted by: ex SF-er at January 30, 2008 7:21 PM
The next time I’ll make a big position is right before the next Fed meeting in March. I’ll go long a few days before the meeting. Again, they’ll drop the FFR as always (what a surprise), and we’ll get a “pop”. I will SELL my longs on that “pop” and buy a short-ETF
It’s just nickel and diming the market… but with the right position you can make a fair amount.
now let us look at the market, here’s a sampling of closing prices:
March 17: S&P: 1276.6
March 20/21: fed meeting
March 25: S&P 1352.99
March 29: S&P 1315.22.
(let’s pretend I missed the drop from March 25-29… then the market rose again…until april 13 when it was 1328.)
I DID NOT BUY AT THESE LEVELS. I AM NOT AT HOME SO DON’T REMEMBER MY TRUE BUY/SELL POINTS
However, I made a lot of money that week. again, it was an obvious volatility play.
again: please read my post from the above bolded day before speaking… I am not timing the market. I am playing volatility. it is very different.
ex SF-er,
If you have to pick the best trade you did, of course you will win.
I was asking over a period – specifically, since 8/2007 when the subprime crisis hit. What’s your return from then?
To be honest, I am at least 10% down from the peak (11/2007?), and that’s after making about 60% in 2007 (tax is killing me), so I think I am pretty good at picking the stocks.
Fluj, your point’s well taken, but I only had the person sell in order to close the transaction and calculate what they’ve got. I think the point still stands that despite the doom and gloom about the stock market, housing’s been a much more expensive ride over the past 9 months.
I only made the comparison between stocks and real estate because you asked. “Why don’t you write about the mythical people who were torn between purchasing a home and crafting a stock market strategy nine months ago? You know, those folks who opted for stocks instead of of a home purchase? Because those folks did not fare very well. Not at all.”
I think the stock market wins out over the past 9 months by a wide shot.
Yeah noseeum, you argued your point well. I could bring up six examples of people who used RE to make great returns in the last nine months too. But it wouldn’t be the same thing. You guys would call them “flippers” and they are hardly the average consumer. You’re talking about the average guy who buys the average 850K condo or what have you. Point taken.
John:
I’m not picking my best trade. the above posts were just some of the posts I could find quickly by googling my name, to prove that I have indeed stated BEFOREHAND some of my strategies for investing
it gets tired hearing “oh yeah, you are a liar and you never invested the way you said you did”.
so I simply pulled some posts to show that I have indeed stated how I’m investing. one can go back and look how my investments have done.
I’m not a stock picker. In general, I study fundamentals and then invest using a combination of Treasuries, Savings Accounts, ETFs and short ETFs. I have very very few individual stocks.
I honestly haven’t bothered looking up my overall returns, because it’s a headache to do and with the volatility we have my positions can move 3-8% in a day.
I do know that I did VERY well in my investing until October (because I was long a lot of things, as I posted about in September).
Then I did poorly from the peak in October through Jan 30 (because I kept my longs) but I did very well with my gold and silver ofsetting some of that. I would GUESS (wild) I lost about 10% during that time period.
I sold them all on January 30th and went major short, and was LUCKY because the market peaked again on Feb 1 before falling precipitously
I was riding the ultrashort ETF SDS buying in around 60 then selling at 65.5 and going long with S&P ETF between those. I think I did 2 cycles of that (and neither time did I get the top or the bottom… that’s ok). then I made my big killing with the Fed announcement (as I said), and then sold and went short after that then closed most of those positions.
I also was shorting sectors and classes (like SKF for financials and EEV for emerging market)
thus, since January 30 I have done VERY VERY well. (again, I don’t have the full data) wild guess: I’m up over 40%, not including taxes on equities. but this is a guess. If I’m off, I think I’m off on the low side..
but remember, this is only part of my portfolio. My gold is up big for the year (I’ve had that since 2005), but down 10-11% since peak. My treasuries are locked at 4.7x% or so from last summer (2 year treasuries) and my CD’s are also locked at the 4-5% range.
My house is I’m sure losing value as we speak.
so my point is (and has been):I am diversified in multiple different investments that HOPEFULLY won’t be totally correlative given the bad economic outlook.
My goal isn’t to make this a stockpicker forum. there are other great blogs for that.
ex SF-er,
Actually, your experience is what I expected.
80% of the gains in any investment market are made by 20% of the people, who study and understand the market, and know when to get in, out, or just stay put.
Others would say something like “Stock investor dude gets scared tomorrow and backs out of his investment.” – well, 80% of the population are like that. They chase the market, often get in at the peak and get out at the bottom.
So, while the average return of the stock market may be 11% over the long term, 20% people do very well, maybe 20% return per year. Then, most of the population will be lucky to get 0% to 5%.
I am not trying to make this a stock picking discussion. I am just tired of people using the word “oppotunity cost”. For someone who is good at investing (you may be a good example), I am sure you get a good return on most of your investment, whether it is stocks or RE, and you know when to get in RE when/if the market is right.
A good investor knows where is no absolute. Markets go up and down. On the other hand, some of the people here give me the impression that they would NEVER buy no matter what. I really doubt with that kind of mentality, they would do well in stock market either.
John:
agreed.
if you go through some of the other “opportunity cost” posts, you will see that I have argued AGAINST using the 3% estimations and also AGAINST using the 8-10% estimations as well…
I argue for using a calculation that best approximates your own investing style (in other words, what YOU would personally use that money for if it weren’t tied into a downpayment)
you can read my arguments from the last ORH post from 4/21/08.
as for my prowess…
I’m making a killing right now.
however, I doubt i always will. I am not a daytrader. it’s a hobby mainly, and also because I feel that my life savings are being taken away from me. (so I’m being defensive).
I fully anticipate taking more big losses in the future, and more big gains. I HOPE that I’ll come out ok in the end after taxes and inflation.
there are rarely times when the future couldn’t be more obvious (or so I think). such was the march 20/21 Fed decision and the resultant volatility. so I bet big and won big. (I did not feel of it as a bet, as I was that sure of myself)
there are others that demand more caution, such as right this second. The markets are difficult to see right now, so I’m mainly on the sidelines and nibbling a few shorts right now…
However, markets can be irrational. So I could THINK that nothing is more obvious, make a big investment that way, and lose big. nobody is a genius, we all make mistakes. so I try to limit my downside and use analysis and judgement to not overreact. it’s very difficult. but I also think it’s fun.
but lastly, that’s why I’m diversified. I own my house, stocks, gold, metals, commodities (through ETFs), Treasuries, CD’s etc. some do well, some do poorly. overall it diversifies. hopefully they won’t all go down at once.
this is another reason why high cost housing sucks. too much of one’s net worth is in that house. luckily for me, I live in a “cheap” house with a low mortgage.
ex SF-er,
I pretty much agree with you on everything. To grow one’s net worth, a balanced approach is the best over long term.
And a cool headed person will recognize the risk in everything – whether it is stock or RE. However, he would not totally write off a vehicle (many people on SS do).
Your posts are generally very balanced, so I am not surprised that you are doing pretty well.
Some of the other people on SS are so negative that it seems their whole lives are in negativity. The negativity not only shows up in price discussions, but also in discussions about news developments and neighborhoods – to them, SF sucks, no new development is done right, no remodeling is done right, nobody can make any money on RE, no neighborhood in SF is good, there will be a depression, everyone will lose their jobs etc.
I am just curious how well they do with their investment.
I should clarify before I get myself in trouble:
I said: “but lastly, that’s why I’m diversified. I own my house, stocks, gold, metals, commodities (through ETFs), Treasuries, CD’s etc”
at this second I am not in all of these. I have been adjusting my positions of late.
at this second I own:
my house
Treasuries
CDs
Savings Acct
Gold/Silver
a few short ETFs
I am completely out of oil and commodity stocks
I have reduced my diversification because there is so much leverage and speculation right now that a lot of things are moving in tandem that usually do not, so I don’t trust the diversification
I’m in “safe” mode for now with a leaning towards going short again soon.
I will likely soon go more short, but pull it all out before the next fed decision unless the Fed and resultant market reaction becomes more obvious to me.
You see, guys? Fluj is a reasonable fellow. You treat him with respect, he treats you with respect.
Yes, that was a very civilized exchange indeed.
“My goal isn’t to make this a stockpicker forum. there are other great blogs for that.”
For those of us who are interested in more discussions like these (i.e., markets and macroeconomics), would anyone care to name some of the blogs they read on the subject?
I definitely enjoy these discussions at SS, but I can also appreciate that we want to stick mainly to SF RE…
Thanks.
ex-SFer: what is the name of your realtor? I will call him when I am ready to buy.