From a plugged-in reader with respect to the listing for 1304 De Haro:

My wife and I were bidding on this exact condo a year ago and did not counter to the multiple bid. It is interesting to see it back on the market with no improvements or changes. Beautiful flat but I will say that it is concerning to see it on the market after exactly 1 year.

And if PropertyShark is correct: last changed hands on 6/11/2007 for $775,000.
∙ Listing: 1304 De Haro (3/2) – $749,000 [MLS]

35 thoughts on “A Reader Reports: Apples To Apples On Potrero Hill (1304 De Haro)”
  1. given that there is not a huge amount of inventory, it never ceases to amaze me how many of these units for sale are owned for less than 3 years.
    the unit itself is cute and 3 BR, that’s a plus. could use a kitchen remodel but it looks very serviceable and doesn’t need a remodel
    location isn’t for me, but I’m sure others like that area.
    would be great if you are a resident at SFGH though.

  2. Loss: 25K
    Commission: 39K
    Loan Points: 7K
    Property taxes: 10K, 40% bracket = 6K
    Interest @5%, 40%bracket: 39K*.6=23K
    HOA/Ins: 6K
    Total cash out of pocket: 106K. Nothing beats the pride of ownership like paying 9K per month for a 3/2 Potrero condo. 🙂

  3. and if you were a resident you would also be driving to UCSF at least half the year
    now a junior attending at SFGH… that might be another story, of course, that location is pretty undesirable all around

  4. Get real the kitchen neeeds a total over haul. The price isn’t bad at all. I’m sure they will get close to asking. The area is ok but not for everyone.

  5. Still overpriced. There are north slope TIC’s for $739 and other 3/2’s on the south slope of potrero for $650. (within a few blocks)

  6. “and if you were a resident you would also be driving to UCSF at least half the year”
    they have a shuttle.
    I remember getting severe nausea on the shuttle every day for years. It must have a carbon monoxide problem or something.
    ahhh… fond memories. (yeah right)
    in all seriousness, yes you would still need to drive a lot… but that’s no different no matter where you live in SF, as most of the residency programs are multi-center-although some are primarily at Parnassus.
    and no, public transport isn’t a great idea if you are an MD that sees anybody sick in San Francisco.
    Imagine this
    “Doctor, we have a patient crashing on the ward”
    “ok, I’ll be right there as soon as the bus picks me up”

  7. “Loss: 25K
    Commission: 39K
    Loan Points: 7K
    Property taxes: 10K, 40% bracket = 6K
    Interest @5%, 40%bracket: 39K*.6=23K
    HOA/Ins: 6K
    Total cash out of pocket: 106K. Nothing beats the pride of ownership like paying 9K per month for a 3/2 Potrero condo. :-)”
    At this point you are very like Dustin Hoffman in “Rain Man” type automatic with that.
    And so am I. This is where I say owning a condo for less than a year and not doing any improvements is asking for trouble.

  8. Well, look at the bright side, fluj, maybe this will go like some of the others and they actually WON’T sell it (however unlikeley we all think that is), but will hand the keys back to the bank. In THAT case:
    Loss: 0 (probably paid nothing down)
    Commission: 0 (it won’t be THEM paying it!)
    Loan points: 7K
    Property taxes 6K
    Interest 23K
    Hoa/Ins 6K
    Total: $42K. About $3500 per month, probably close to what it would have rented for, old kitchen and all. You start to see the dilemma. It costs them $74K to sell it over the cost of walking away….

  9. I think lending standards were just starting to tighten up a bit by June of 2007 so they would have been lucky to get it with zero down. I’d suspect at least 5% down.

  10. owning a condo for less than a year and not doing any improvements is asking for trouble
    I couldn’t agree more. There could be many reasons for selling a condo after a year. Some good and others not so good. No-sweat flippers are no more welcome in this market. Sweat equity is still there, but don’t expect to have a free ride anymore.

  11. Obviously they are offering it at a ridiculously low price in order to start a bidding war. Prices cannot go down in SF. It is the law.

  12. Question for the poster who started this thread…are you considering another offer, or did you find another place?
    I’m curious (and don’t tell us before offers are due, for heaven’s sake!) because I too am seeing places that I “lost out” on back on the market, below their last sale price and am struggling with the same precise issue.
    On the one hand, I should be willing to pay now what I paid then, but I’m also not interested in catching a falling knife. As much as I *tried* to be systematic and unemotional about it back then, I probably did offer to pay more than I probably should have, all things being equal.
    Are others dealing with this issue?

  13. List price last year was $749k, the same as this go around. Last year, the original bid was just above the asking price. Still renting and saving $$ each month… No, we are not considering another offer on this place.

  14. @ Plugged In:
    Thanks. Yeah, that’s kind of where I’m at too. It’s funny how these places look less good this time around, isn’t it? Sort of like turning on the lights at the bar after last call. 😉

  15. Darn, I meant to do a strikethrough of “out” in the previous post. I guess the comment editor doesn’t take all the html tags.

  16. I don’t get how/why someone would buy a condo and sell it a year later and take a huge $100k+ loss on the transaction. I can understand that you might have to move suddenly, or whatever, but wouldn’t you be better off renting the place out until the market had risen by at least the 6% or 8% that’s required to break even? With a longterm IO loan you might come close to breaking even on the rent-vs-buy equation.
    Its not like RE in a rapidly-gentrifying neighborhood like Potrero Hill is going to go down for the next 15 years straight. Since you’re already in the market … better to just ride it out than panic and take a huge loss. Weird seller behavior if you ask me.

  17. Jimmy – You’re assuming that they can afford to make payments. Interest + principal payments + taxes + maintenance + insurance could easily exceed $5500/mo for that place, particularly if they didn’t put down much. I don’t know exactly what the rents are in Potrero, but I doubt they’re anywhere near that.

  18. Whether you can afford a place or not is mostly about cash flow and savings. Your cash flow should pay for your mortgage and the savings are there to cushion any hicups.
    5 or 6K a month is not for everyone in this town (may I remind that the average income is 70K and a majority of all loans done lately in SF are “stated income loans”?)
    If you don’t have the paycheck, you have to dig into your savings each and every month. Now, imagine that: you see the market seriously softening while your savings are being depleted just to make a housing payment.
    In addition, the projects are very close and the “rapid gentrification” might not be what the buyer thought it would be.

  19. Well, “rapid” is like 10 years or something. As opposed to de-gentrification (which also occurs in places).
    But, let’s say the owners put down 20%, got a 15-year fixed IO loan at ~5.5%, tax and maint and insurance is $15k/year, so your outlay is $48k.
    and it rents for $3500/mo…. you bring in $42k.
    plus you get to write off depreciation of the asset on a 27-year schedule (that’s ~28k/yr in tax writeoffs)…. in the 35% tax bracket that’s worth about $9800.
    So you actually “make” $2k/year under that scenario. Not great but you’re not exactly hemorraging money.
    You can just about break even on it. If you didn’t put down 20% then you’re taking a loss but its … maybe $1k/mo or less. Not very nice but it would still take you 8 years to lose the $100k that you are losing right away by selling now. That’s what I don’t get– 8 years is a long time and a lot can happen! Including inflation!

  20. 15-year fixed IO loan at ~5.5%
    IO? 15-years? LOL! IO means not paying any principal in my world.
    Depreciation
    That’s assuming it’s a rental investment, right?
    HOAs, all the unforeseen events and all the other little things a landlord does have to pay (and a renter does not) this easily goes north of 1000/month. That’s not including earthquake insurance…
    Plus, the lost opportunity costs of the 160K locked in the house. At 5%, that’s 600+/month.
    5K/month is very conservative. A 30-year non-conforming on 80% will cost you 4K. Tax is 800+. With HOA and all the rest, you’re easily over 6K.
    Believe me, I’ve owned quite a few rental places and the only reason I could break even was because I had bought in the late 90s at 30% of today’s prices!!!

  21. Yeah, IO means not paying any principal … ever (why bother?). Then you get the benefit of the depreciation tax writeoff. Plus I think I forgot the tax/maint. writeoffs you get on a rental. But anyway…
    Rent control is a killer here b/c there’s no inflation in rent to cover your costs. Hopefully you rent to students or people who are likely to move often, otherwise you will never ever break even on cashflow (even theoretically).
    As far as earthquake insurance– why bother? If there’s a quake and the structure is destroyed, just walk — like thousands of others will do. Save your cashflow. Since its an IO loan you will have no equity anyway. Or maybe you put down 20%, in which case is it worth $xx/mo to insure your $160k against an event that may or may not occur in your lifetime?
    Don’t get me wrong, this isn’t an “investment” (and I use the term very loosely in this case) I would ever make, but these owners are into it now and its too late for them. Either they ride it out and take the slow monthly grind and hope for the best or they take a giant, guaranteed loss now. If it was me, I would roll the dice and take the long-term approach.

  22. Jimmy: “plus you get to write off depreciation of the asset on a 27-year schedule (that’s ~28k/yr in tax writeoffs)…. in the 35% tax bracket that’s worth about $9800.”
    Yes depreciation can count toward your rental loses subject to income limit.
    I’m not an accoutant, but I believe
    the deductions starts phasing out at $125k/yr income and completely eliminated at $150k/yr unless you’re a real estate professional.
    If you and your spouse earn more than $150k/yr, which is not hard to do, you can forget about rental lost deduction unless you’re a real estate professional.
    Owning a residence have a bad downside once you’re not in a position to reside in it (eg -job relocation, etc.)

  23. Jimmy,
    Let me disagree with you on one point: Earthquake insurance is a big deal in CA. we’re talking about a quasi-certain event that is very likely to affect us in our lifetime.
    It’s just like prices that could never go down. It was true, until it wasn’t. Had people been less careless, we’d be in a lot less pain today.
    The reason earthquake insurance is so pricey is precisely because of the very high risk. The reason people don’t buy it is mostly because every new homeowner stretched his finances to buy a place but do not provision for it.
    In short, irrational exhuberance is again at play (on the premise that doomsayers are always wrong) and leaves everyone open to big losses. I hope this never happens, though, otherwise the effects could be devastating on so many levels.
    You should always buy earthquake insurance.

  24. Well, just one last point about “owning a rental house having a downside.”
    Don’t neglect the potential longterm upside. Here’s one anecdote that has been repeated thousands of times over in every major West Coast city in the past few decades. My parents bought a nice little house in West Vancouver (akin to…Sausalito), on a big lot with great city views, in 1976. They have rented it out for over 30 years and not only do they now pocket about $40k/year in rental income, the house has also appreciated by about $2M since they bought it.
    The ownership of the house was transferred into a holding company (for various reasons) when they left Vancouver in 1978. Conversely, if they had simply sold, at a loss, when the market was turning down then they would have left millions on the table.
    So there is some serious potential upside to long-term ownership of rental property in a desireable city.*
    (*Individual results may vary. Past performance is no guarantee of future returns.)

  25. “You should always buy earthquake insurance.”
    I disagree. If your home is located in a place vulnerable to shaking (landfill locations) or a place likely in the path of a quake triggered firestorm, then consider buying earthquake insurance.
    Lots of homes are located in fairly safe locations and have a good chance of surviving a quake and are not in particularly flammable neighborhoods. Sure the big one will cause widespread damage, but that might be limited to a collapsed brick chimney and broken glass for many homes.

  26. Potrero Hill “rapidly-gentrifying”? Not sure that gentrifying is even the right word for Potrero Hill. If that’s what you want to call, I’d say that it happened in the 90’s. I live here, and haven’t noticed many changes in the past 8 years.
    Home prices haven’t been low since before about 2001; over the past 5 years, prices have become expensive.
    If anything, the neighborhood has become a bit more dangerous over the past year.

  27. “You should always buy earthquake insurance.”
    what a joke…
    the premiums are outrageous. the deductibles start at 10%. there are numerous sneaky exclusions. and if the quake is sooo huge that everything falls down it will fall to the feds to bail out all the insolvent earthquake insuring subsidiaries of big insurers. good luck with your insurance…

  28. Word is that the condo was purchased by a couple.
    They’re no longer a couple, hence the sale. I.e. “personal reasons”.

  29. I know the area well and have seen the condo. The views are spectacular and parking is very easy. Show me a 3 bedroom/2 bath fully detached top floor unit with those views, easy parking incl garage, easy access to 101/280 for that price. I think it’s a steal for $749,000. Should sell for $800,000+. There is a lot of development in Mission Bay with the new UCSF hospital, etc. and there will be many rich docs looking for a convenient place to live.

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