While the first MLS recorded resale of a condominium at One Rincon Hill ( #2202) appears to have fared rather well, and #2602 appears to have repeated the feat with an MLS reported sale price of $1,325,000 on 7/30, the very first listing for a resale in the building (#2403) never sold (nor did #2103), and #1606 seems to be struggling a bit as well.
Listed for $1,232,000 forty-five days ago, the asking price for 425 1st Street #1606 was reduced to $1,120,000 after two weeks on the market and then to $1,050,000 a week after that. The non-upgraded sales office price two years ago on the very first day of sales: $980,000.
From the listing for #1606 last week: “Offers by 7/30 please.” From the listing today: “Don’t miss out on this one!”
∙ Listing: 425 1st Street #1606 (2/2) – $1,050,000 [MLS]
∙ The First “Official” Resale (And Open House) At One Rincon Hill? [SocketSite]
∙ The First “Official” Resale At One Rincon Hill Closes Escrow: #2202 [SocketSite]
∙ Trying To Establish The True Secondary Resale Market: One Rincon Hill [SocketSite]
So #1606 now wants a profit of $70,000 on an investment of $980,000 held two years? What a coincidence–isn’t two years the minimum holding period to enjoy no Federal capital gains tax on gains up to $250,000, on your principal residence?
What did the owner do to earn that money, if it sells? How much ooing and aahing did they do? How much grinning did they do, if any, at the prospect of no Federal tax on money obtained through no work, while the average person making $70,000 in w-2 income can pay a marginal tax rate of over 50% on earned income in California?
Just asking.
[Editor’s Note: We’re guessing the fact that the building hasn’t been open more than six months might make it a little difficult to pass that two year “principal residence” test.]
I don’t think they’ve actually owned the unit for 2 years– that is just when deposits were taken, not when escrow closed.
Anon – Your numbers don’t add up. The highest marginal tax rate someone making $70k could pay would be 41.95% (25% + 9.3% + 7.65%). And if they have major deductions (e.g., they own a condo/house) it could be a lot lower. How exactly is 41.95% “over 50%?”
Wrt #1606, even if s/he sells at $1.050m, s/he’ll probably still lose at least $10-20k overall simply from the transactions costs. There will be no capital gain, taxable or otherwise.
I think the classic argument (not one that I necessarily agree with in this case) was that the $70k was the risk premium “earned” by the owner.
BTW you 50% marginal tax rate is pretty off. In 2008 someone earning $70k will pay a federal tax rate of just under 20%, plus of course the CA tax rate (which I am too lazy to calculate at the moment, but will be less than 9.3%) and SS + Medicare of 7.65%. Will be well under 40%.
Also in order to get the exemption for capital gains you need to have lived in the unit for two years (living in the unit less then two years gets a proportional reduction in the exemption).
Also the transaction costs of selling are going to eat up any potential profit. So the sellar is unlikely to be paying any capital gains tax, not because of the exemption, but because there isn’t any gain…
Sorry, gmh is correct. The 41.95% tax rate number seems to be right, not over 50% as I indicated. I was off by 8.05%–less than the San Francisco sales tax rate.
Nevertheless, my main point was that people should question the Federal tax-free nature of this form of capital gain.
At $809 psf this looks like a bargain. I guess the market has really changed. Maybe the fact that the 16th floor is really the 8th floor, well that may just be too low a floor to command a premium price.
So #1606 now wants a profit of $70,000 on an investment of $980,000 held two years?
Um. No. The real estate agent wants $50K and the obligatory 3 years of HOA wants a little more than the other $20K.
The owner just wants his shirt. Please.
(And that assumes he bought on the first day)
(And I’m SHOCKED {sarcasm} that these are not flying off the market.)
I’ve seen a lot of people who were trying to flip ORH now just trying to get their contract price. With the 2nd building on hold–and sort of up int he air it’s a bit of a risk. Also, with jumbo mortgages pretty much drying up or having much higher cost and deposit amounts the price directin for this building is at best flat for the next 2-3 years and more than likely down.
I like the way the building and units turned out and there are some VERY nice units for sale tho. Just really tough to get them financed and its more a place you have to fall in love with which is hard to do cuz the neighborhood is 2-3 years away at least from being half decent. And as the 2nd tower slows the pace of that neighborhoods development into something ncie slows also. just my .02.
Recent ORH,
Can you please tell me what’s going on at One Rincon Hill? I’ve been searching the net and came upon so many attempted flips, assignments, and rentals over there. Granted I know there were many “investors” in the building, but why are so many dumping their units. I saw one ad stating they would be willing to lose 50% of their deposit if someone wanted to take over their contract.
I’m sure you know but there’s 3 penthouses at ORH being shopped around. On top of that, there’s at least another 25 units being shopped around ranging from low level 1 bedrooms to high level 2 bedrooms. Is ORH really that bad.
If so, who’s going to buy the 2nd tower?
As view lover pointed out, even at $809 psf this unit still has not moved. You think $600 psf will sell? Should that be the new comp for the building?
Can you tell me more about the gym and living at ORH. The place reminds me of the Beacom and the Palms but I could be wrong.
JK you are just being mean to poor Recent ORH.
Altho man he has been really mean to me in the past!
It’s not like I didn’t say 6 months ago he should sell while he could. People don’t listen and instead they get mad and make mean comments to me on socketsite!
@jk
maybe it’s those radioactive, radon gas releasing, granite countertops that are driving people to flip.
@badldrawnbear
L O L
“JK you are just being mean to poor Recent ORH.”
If I were a recent ORH buyer, I think I’d stop reading these boards and try to enjoy my new home with complete ignorance of the market conditions. Otherwise, you’re just going to hate yourself…
Why are we even having this discussion at this point?
If you bought a unit at ORH, even at the pre-sale prices, and you’re trying to sell now, then take your lumps and move on. The issue of whether the unit itself is marketable as a high yield investments wholly irrelevant because the sales environment sucks. Plus, who in their right mind would sell expecting a significant profit when the neighborhood, let alone the project itself, is still under construction?
Let’s have this discussion in 5-7 years. Speculators deserve what they get. Now, if it’s just a case of financial trouble for the owner that is prompting the sale, that is quite another thing, and I feel bad for those people.
lets talk about Penthouse 6004, that is now being quietly shopped for $3.3MM… That will be way more fun…
BTW you can rent a $1.2-$1.3M 2/2 unit in One Rincon/Infinity/etc. for about $4k/month. Let your landlord get angry for overpaying on a depreciating asset 🙂
Well, now I know what fluj feels like – total no win situation. When 2202 and 2602 sell at anywhere from a $250K to $300K markup, everyone here says it’s all a conspiracy by the developer. So even when some people make out, well, they apparently are part of some fraudulent scheme. Any when this person doesn’t [1606] well, everyone’s underwater in this building. Nice slanted logic, but typical.
jk – Your question has probably been asked an answered no less than half a dozen times, so here goes the brief version. If you assign your contact to someone before closing, one typically does so to gain a return of their deposit. The ‘new buyer’ is doing so to lock in a favorable price. If the party looking to assign doesn’t close, he loses his deposit. So, a party willing to settle for half of his deposit is better off than getting nothing, especially if he doesn’t have a chance in hell of obtaining financing and consumating the transaction. Many in this position were parties hoping they could purchase units with 5% down … good luck with that today.
I’m not a flipper, wouldn’t recommend playing that game, so the scenario for 1606 shouldn’t be a complete surprize. The surprize for me was that 2202 and 2602 managed to do so well in the current enviroment.
Wouldn’t be surprised if they pulled 1606 off the market soon. Another comp in the making that doesn’t get factored in…
eh, I predict someone will put in a low ball offer and it’ll sell for somewhere in the neighborhood of 975k. Minus commission, incentives, and carrying cost, the seller will probably lose well over 100k. Nice investment.
Walking away from a 3% deposit rather than closing sounds pretty sweet at this point…
I would say we are having this discussion is because 2 years ago when many of these “buyers” were putting down deposits many more “bearish” RE watchers predicted that there was a massive bubble in RE nationally that was not only due to pop but was showing clear signs of popping and that SF would not be immune from the impact.
That many of the one rincon “buyers” were actually first time or small time flippers who not only never intended to occupy their unit(s). Instead, they planned on immediately flipping them for market rate, which was sure to be much much more then the preconstruction price, and then telling all their friends about what RE geniuses they were.
Now if you bought and are occupying (or planning on holding for several years) kudos to you.
finally I would say we are discussing this because, for better or worse, one rincon is the poster child for new condo development in SF and this is an SF RE blog that discusses issues in the RE market in SF, such as the success or failure of RE investment in place like one rincon and the reasons why.
Can you imagine the enormous ramification of even a small drop in prices at ORH? If each of the 390 unit lose an average of $50,000 the total amount of equity lost could easily top 20 million!
Is ORH underwater? I know I’m getting my scuba diving gear ready 🙂
Well assuming rents stay put at around 4K for a 2bedroom unit. And these units rent for between 4k to 5k a month…
The fair value for SFO –say historically is something like 15 times annual rent right? So assume it rents for 5K which is 60k…
That says the nicer 2 bedrooms here should be worth 864K or 750 dollars pwe square foot.
Does anyone have a case for using a higher multiple? SFO usually has a nice premium I believe but is it much higher than 14 or 15?
cooper,
180 times monthly rent (or 15 times annual) is already a very high premium. I don’t know how anyone can pay more than that apart from pure irrational exhuberance. Another proof that many people still do not believe gravity applies to everyone.
“Is ORH underwater?”
I don’t know. But I do know that the first few floors are underground. That wacky floor numbering scheme (ground floor is numbered something higher than 1) is more confusing than the European and Japanese designation of “first floor” being what we would think of as the 2nd floor.
“If each of the 390 unit lose an average of $50,000”
If you didn’t buy on the first day, you blew past that number before you closed.
400 Beale street 1601, a 2/2 nearby with parking and a 180 degree view of the bridge is contingent at $823psf *asking*, after DOM=84 (though that included the contingency period).
http://www.redfin.com/CA/San-Francisco/400-Beale-St-94105/unit-1601/home/12399582
Assuming that one sold for 800psf and this one has no bay view, no parking and a further out location, something tells me the first day buyers are lucky to break even before transaction costs, and are already down more than 50K after transaction costs. When the option arms start resetting in earnest next year, it will be tougher still.
With a city view in that location, I think you’d be hard pressed to get anything over $4K on this unit, though it’s a great layout for a rental.
So Skipster, how does your “If you didn’t buy on the first day, you blew past that number before you closed.” apply to Units 2202 and 2602? Or are they still part of the elaborate conspiracy perpetrated by the ORH developer that goes all the way to the White House? I mean, if the each had around a $250K markups, that must be fraud … of course, just like the faked the Apollo lunar landing, right?
And so the mindless misinformation continues …
How many units at ORH have actually closed? It may be the developer, not individual condo owners, who is losing the vast bulk of the “equity” in this building. Since developers make their profits on the last units sold, I wonder if it is the developer who is really the one underwater.
Bottom line is that you ORH nay sayers are simply jealous that you didn’t get in when you should have. Fact is ORH is a new landmark building in a fantastic up and coming neighborhood. All this packaged in a superior buidling that was built with smart foresight and class unlike some other buildings that are misplaced (duh Infinity!).
This thread is amusing to me and reminds me of the election campaign. The McCain supporters can’t find much wrong with Obama so they are trying to find anything, anything at all to make their case even if it means they have to sink even lower with useless propaganda such as the recent Paris Hilton commercials.
the elaborate conspiracy perpetrated by the ORH developer that goes all the way to the White House
Um, no. All real estate is theater. Goosing the price for the early, highly visible, sales before all of your units have sold and before you’ve broken ground on the next tower is just good business.
At the end of the disco craze in the mid 70s, the disco owners paid people to stand in line outside to make it look like something you should pay exorbitant prices per night to attend, in order to keep sucking money from the people (mostly NYC tourists) who didn’t realize it was over.
At the end of the dot com boom, to get the IPO shares, you had to agree to buy more on the first day of sales, to goose the first day price when the media was watching.
I’m sorry if you think it’s a big conspiracy, but it’s just a normal part of doing business – it’s done across a lot of industries and it doesn’t appear to be a crime. It’s done in a lot of different areas to maintain the perceptions that a boom in popularity is continuing, as that boom is in fact ending, because people make good money from booms.
It’s done everywhere and sometimes to try to ignite a product. I was involved with a teen pop music group in the 70s. When they performed at events they held at record stores, I was given $$ to rush to the counter and buy several copies of their album, which basically sucked so that the record stores would order lots more.
Hockey announcers at coluseums in the 70s would double the paid attendance and announce that to kick start the hockey attendance.
Attractive alcoholic friends of mine in NYC in the lat 80s were paid to walk into bars and order vodka drinks by very loudly specifying the brand of Vodka who in fact was paying them (and gave them a limo and driver) to do so.
Look around you pal: it’s just marketing. It’s not a conspiracy that reaches to the white house, it’s just how business is done.
My assumption that the marketing department for a building in the process of closing by a lot of nervous buyers goosed the early resales is just an indication that I think this company is a very effective marketing organization and that’s what effective marketing organizations do.
I’d be disappointed if they did *not* do that. Do I know if they did? Nope. Did my BS meter go off the chart when I saw that first sale? Yup. Did I recall every one of those experiences I had up above and determine they likely did something similar? Yup.
Does all that surprise and offend you? Apparently. Sorry.
Not sure what to make of your disco flashbacks Skippy, and I see what you are trying to get at, but you are basically alleging fraud here. And, the bottom line is 2202 and 2602 were arms length transactions so none of the experiences of you and your alcoholic friends in the 80’s have any bearing here. Simple as that.
@ LadyORH (aka Recent ORH Buyer):
There are many ways you could describe SS posters’ feeling about ORH (loathing, disappointment, schadenfreude, anger, curiosity, puzzlement…) but envy is probably not up there in the top 100.
Anon,
Since I am new to this and your mind seems a bit foggy I will not fault you for confusing me with another blogger whose opinion and judgement on ORH matters I happened to agree with. But I hate to disappoint you, I happen to know Recent ORH Buyer since we both made the very smart decision to buy in the same building, and ORH fosters a strong neighborhood community but I can assure you, I am much prettier than Recent ORH Buyer.
We don’t know if the sales of units 2602 and 2202 were arms’ length transactions. They seem suspicious for reasons tipster has identified.
However, let’s apply some behavioral finance here and think about what we do know. 2202 and 2602 were the FIRST (re)sales. Potential buyers of these had NO information as to increases or decreases in true value from initial pre construction prices. Perhaps they estimated high. We’ll know in the fullness of time.
The next two DIDN’T close. This tells us that demand is not very deep, even if it is perhaps wide. Below a certain price (unacceptably low to the sellers obviosuly) demand evaporated. We don’t know the price below which demand evaporated, but we become suspicious that there is a lot of embedded gain from the pre-construction days (else, the sellers would have sold).
Now, we come to 1606. Clearly, this owner is going to eat a capital loss, and there appears to be ZERO “embedded” gain from the pre-construction days. We also note the very rapid dropping of the listing price (15% in only 45 days! – that’s an annualized rate of somewhere around 70-75%!). The rational buyer now starts to become more certain that demand is not deep AND that there is little reason to “reward” the pre-construction buyer with any appreciation.
The rational potential buyer is also now more willing to consider that tipster’s theory may be correct, in light of the new information (subsequent listings pulled; capital loss being suffered by the current seller).
That potential buyer might also now start to think that the buyers of 2206 and 2606 “overpaid”. As fluj likes to say, “It happens.” The rational potential buyer would like that it doesn’t happen to him!
At least that’s how I would look at it.
You know, based on the prices, I gotta believe that folks who can afford to buy in places like ORH and Infinity are intelligent, educated, mature individuals. But based on the juvenile name calling and snide remarks, I have my doubts. What is it about this site that brings out the absolute worst in you guys/gals?
Satchel,
That’s not an unfair analysis, and you are right, time will tell. My conversations with the listing agent for 2202 lead me to believe it was a clean transaction [I have no knowledge of 2602] to my mind hold more weight that elaborate conjecture on Skipster’s part … although it was lovely to hear about his heyday in the 70’s and 80’s.
The rapid price drop that you noted may suggest that the 1606 owner desperately needs to sell, and that’s never a position of strength. If so, he, like all parties that may need to liquidate fairly quickly [like Merrill taking $0.22 on the dollar for some of their debt] he/she is likely not to fare well. However the 70-75% annualized is rather meaningless, much like saying the S&P 500 was up 3% yesterday and that’s 1095% annualized.
LadyORH has linked investing in real estate at One Rincon Hill to support for Obama. All right. We’ll call it “The Economics of Hope.”
But Holycow!
The whole thing is that the building has done pretty well despite everyone not only predicting but vehemently arguing (a k a wishing it down) otherwise. It has been the signature argument of this site in fact. Of course these folks get ticked off. They bought, they could afford to buy, and yet they get slammed week in and week out.
And now at long last, we have Satchel basing arguments off Tipster’s gut instincts.
Context is needed. Trust me.
Are there really 390 units in ORH? Off topic, but what is the elevator wait time like? Are the elevators divided up into zones like at my office building (1-25, 26-50)? How many elevators are in the first tower?
Recent ORH Buyer—Like I’ve been saying to you for a year sell now while you can. it’s not too late. And Merrill actually sold that debt for 5 cents on the dollar since it financed 75% of the deal itself.
Anyway….
Does anyone have info on historical price data for SFO. 15 is good for many markets, but I’m looking for concrete info. this would put ORH and infinity at 800 a sq foot for high floors and nice premium views.
This seems like a bottom price to me.
There are an infinite number of reasons a person may want or need to sell. Everyone’s circumstances are unique. Not everyone is just looking for a quick flip. The 16th Floor at Rincon is about level with the top floor at the Watermark, by the way. The views from 16 are stunning and unsurpassed by most condos in the area. It would appear that this seller is just wanting to get a full cash refund, which I’m sure will be possible given the great price now being asked.
Glass towers containing the bourgeoisie, with a healthy sampling of beancounters, and with a median age of, oh, maybe 55, does not, in my humble opinion, constitute a “fantastic up and coming neighborhood” in a city. Rather, it’s Scarsdale. (If you don’t recognize that reference, ask one of your New York friends to explain it to you.)
And to LenderChic’s point, 501 Beale St UNIT 17D 1,259 sq ft, sold on 2/8/08 for $1,525,000. That’s well north of $1000 per sq. ft [$1211 actually] for a building a block away, and far closer to the prices for units 2202 and 2602, both of which are ‘higher up’ than the Watermark.
And, on the other hand, we have Skipster’s theories emenating from his on teen idol years … yah, that seems credibile.
2 of my 3 sets of friends have now moved in. The 2 who have moved in love it. one of them is on a lower floor and one on a much higher floor. If they are moving in based on floor number then ORH should be all moved in soon. my 3rd friend (actually an acquaintance) may not be able to swing the payments so they may not close.
The views from ORH are stunning and it is an interesting building, although obviously with some huge drawbacks that have been discussed ad nauseum.
although I agree with many that it is highly unlikely that ORH will see any sort of appreciation anytime soon, it is a million times better than what was there before.
so to me: if you buy there to live there, it’s a pretty nice building in which to live. If you’re buying it as some sort of financial move, you may not do so well. but it’s just money.
we’ve all “wasted” money on frivolous stuff before.
At the end of the day, we are all working towards the same goal. We want to see a proftiable return on our investments. All these sales (aka Watermark, higher ORH floors)help all the properties in the neighborhood. After much market research, it was clear to me that ORH happens to be a great choice and even a better choice if you got in early or can get in via a contract that can’t close. There is no denying that we are setting a standard for this neighborhood and should keep the big picture in mind.
“so to me: if you buy there to live there, it’s a pretty nice building in which to live. If you’re buying it as some sort of financial move, you may not do so well. but it’s just money.
we’ve all “wasted” money on frivolous stuff before.”
Funny, One Rincon is frivolous. That’s a new one…
Here’s 2 units on the 47th and 43rd floors going for 1.325M and 1.285M. One looks like an 02 stack, the other an 03. So far, no takers.
2602 and 2202 went for 1.3M and 1.325M. Is One Rincon underwater? Well 2602 and 2202 certainly are base on these pricing.
http://sfbay.craigslist.org/sfc/reb/785485427.html
http://sfbay.craigslist.org/sfc/reo/784847108.html
And if I was trying to dump a unit at One Rincon, I’d stop with the “2006 pricing”. That just doesn’t work anymore. Instead, I’d advertise “discounted 2008 pricing” and see if anyone takes the bait…
Cooper & San fronziScheme,
According to a Credit Suisse study referenced on SS recently, see https://socketsite.com/archives/2008/01/bay_area_rents_surge_but_housing_pe_ratios_remain_out_o.html , the historic price/(annual)rent ratio for San Francisco is about 24:1. That seems quite high based on what I’ve read about other markets, and I wonder if the study compared average prices to average rents, in which case the results would be distorted by rent control.
But if the 24:1 figure is correct, it suggests that there’s an idiosyncratically high owners premium in SF, and, further–if “unearthly” is right that a $1.2-$1.3M unit in ORH rents for about $4k/month–that prices don’t have too far to fall. At 24:1, a unit that rents for $4k/month should sell for about $1.15M.
“Funny, One Rincon is frivolous. That’s a new one…”
Of course it is. and so is most of the housing stock in the United States. ORH is just a little more frivolous than other residences. None of us “need” Subzero fridges or Bosch appliances. None of us need Granite Countertops or chopped pillows. or a concierge or a media room. none of us need 98% of the stuff in our houses.
do I think that many ORH owners will lose significant amounts of money? yes. and I’ve elucidated before why I think so.
is it the end of the world for most of them? no. there are things far more important than $100k.
so I agree with people who put up spreadsheets on why ORH owners may lose money going forward for the foreseeable future. And I also agree with people who say “this is my home” and love the view out their ORH units. ORH=bad investment, but possibly good home (in my opinion).
I’m just waxing poetic today I guess…
how deep or wide is the rental market for $4000 2BR apartments? i’m not sure, but i think the investors who bought here may be in for a surprise.
people/couples who can afford $4000/monthly rent typically buy a place, right? i have lots of friends who would rather rent a house/townhouse in South/East/North Bay for $2000-$2600 and save up for their own home.
unless you want a roomie…
i guess you could get a roomate…
“All this packaged in a superior buidling that was built with smart foresight and class unlike some other buildings that are misplaced (duh Infinity!).”
All this packaged in half of a building! What happened to tower 2 and why can’t they finish the building? Did the developer run out of money? Maybe he needs to sell tower 1 out before he can even put in the pool.
yeah i remember that post…
24 times for historical sf rent. and yep that would indicate soma condos are near that multiple.
mayeb there is some other explanation like—condos have much lower multiples? or the number is skewed by the 2000-2006 bubble and if you take that out it goes to some other number.
it doesnt feel to me like prices have stablized at all. I’ve seen prices in ORH drop 25% in a week in one case.
“All this packaged in half of a building! What happened to tower 2 and why can’t they finish the building? Did the developer run out of money? Maybe he needs to sell tower 1 out before he can even put in the pool.”
Yep, it’s no secret they are having financial difficulties. In fact, since there’s no tower 2, they are considering changing the name to 1/2 Rincon. And when and if they close the rest of tower 1’s units, the developer will have enough $$ left over to put in a 1/2 pool (a hot tub).
people laugh at this, but it is still possible that tower 2 won’t be built. I brought this up over a year ago and was lambasted with “CBRE is so huge they have tons of money so this cannot happen”.
but CBRE (parent company of CBRE investors) turned in a very weak 2Q2008 (profit fell 88%) and there are still problems with the construction loan market. I know the developer “secured” financing, but I’m sure it’s predicated on how many units in Tower 1 close and there may be contingincies with how many units go back on the market.
they may also redesign the second tower away from all the studios/1BRs and maybe make tower 2 more 2-4 BR (so a different type of product). There are other developments around the country that changed the mix to 1/2 condo and 1/2 apartments midway through construction as well, so maybe they’ll do that (if they are allowed to in their contract).
there is a reason why prices of condos are cheaper when they are in pre-construction: the buyer is assuming the risk of not knowing what the end-product will look or be like.
so far, Tower 1 is pretty much as-advertised (minus the spaces shared with Tower 2). now we wait and see what Tower 2 will be like, and then we wait a few years to see what Rincon Hill turns into. in the end, it’s sorta exciting, no? like raising a child… you never quite know exactly what’s coming!
anon & s beach,
the rumors that the developer is broke and this is the reason for not having started on the 2nd tower are as mentioned before useless and silly propaganda by uninformed and mentally fogged individuals like yourselves. I’d rather have a developer wait and start on the 2nd tower when it makes economic sense than begin building a 2nd tower and leaving it unfinished for months on end because the first tower is not selling which is the case with the Infinity.
Again, ORH developers have proven that they are smart in their decision making adjusting to market conditions. There is nothing wrong with waiting it out a bit. On the other hand, the Infinity seems a bit (excuse my French) f@%&ked in that department.
It’s bothersome to hear this kind of stupid commentary being spread on your end.
ex SF-er, I agree you can’t predict everything but the fact is that ORH is not just a great building and community to live in but it’s also a wise investment choice regardless on when you purchase, particularly compared to the sterile Infinity Towers.
I guess the positive if tower 2 is not built will be no obstructed views for the units facing north east.
Cooper – your mental vacuum continues to amaze me.
The latest – “Like I’ve been saying to you for a year sell now while you can.” Why would I want to move out of a building I love, a place where I can afford the payments and plan to remain for the mid to long term? Despite your advanced age, I never say anything about you needing to move out of your parent’s basement, but you seem obsessed with the inverse. Of course, you never present any factual data for your mindless statements, just meaningless innuendo.
So, while you continue to pull arbitrary price per square foot numbers out of your a$$, let’s examine some actual sales from similarly situated highrises in the neighborhood, which tend to match what we see from 2202 and 2602 –
219 Brannan St UNIT 15J 2 beds, 2.0 baths, 1,141 sq ft. Sold: $1,270,000 on 7/17/08
239 Brannan St UNIT 8G, 1,516 sq ft Sold: $1,508,000 on 6/25/08
219 Brannan St UNIT 6G, 2 beds, 2.0 baths, 1,309 sq ft. Sold: $1,400,000 on 5/30/08
However, I’m sure your made up numbers and other baseless conjecture are far more accurate.
Oh Recent ORH,
The reason I keep telling you to sell now while you can is becauase you are so nasty with the personal attacks on these boards.
Instead of taking your frustrations out on us–dump your condo and just move the hell on. Trolling the boards hoping your “investment” will pay off somehow by your trolling here isn’t going to do the trick.
Why don’t you tell us what’s going to happen if building two doesn’t go up? Notice they are trying to close the last of the building without clarifying whats gonna be done here?
If it doesn’t go up, I’d use that as some kind of breach to get out of any contract.
Also if you actually read what I wrote- I am more bullish on pricing in ORH than others. For example I’ve said that if you use 24x rent there isn’t that much further for prices to fall–maybe 10%–15% on the outside assuming rents dont start falling. Of course if that 2nd tower does not go up thats gonna be a whole world of hurt and a lot of lawsuits.
Our gentle reminders of the day: attack the argument not the individual; keep it civil; and name calling is more likely to undermine your own credibility rather than the other way around.
It’s funny how the only people that keep bringing up Infinity are the One Rincon supporters and owners. It’s like bashing Infinity somehow makes them feel better about themselves, even though deep inside they know they’re in deep sh*t. As said many times, One Rincon folks sure are a insecure bunch.
At least they’re entertaining 😉
Why would a renter spend $4000 on a 2BR when there is a good chance their landlor will either try to sell the place or at some point “let it go?”
Well said Socketsite, I will keep it civil.
Cooper,
Once again, your talk of lawsuits is [shockingly] ill informed. The documents we signed clearly state that each tower is a seperate entity and while a second tower is planned, it is by no means a requisite condition for closing. I’m fully confident that it will be constructed, but if I were a developer, I wouldn’t be in any hurry to get going. Compare that with the Infinity’s situation where you have a fully constructed Tower, with huge carrying costs, which you can’t start selling until you clear out the first tower … but you won’t release any numbers on Tower I because sales are going so well? Having that white elephant [TowerII] standing there, bleeding red ink by the day – that’s the situation to avoid.
What would happen if there’s no tower II? People thinking that the HOA will double are out of their minds. The only shared costs of the towers will be the common areas – the largest sunk costs [maintenance, insurance, building staff] will be Tower specific. Moreover, I’d push for deeded parking, as there is currently plenty of space in the garages. However, I don’t see this as a likely scenario, despite others joy in spreading such mis-information.
So, Cooper, please stop eating those lead paint chips from the folk’s basement.
but the fact is that ORH is not just a great building and community to live in but it’s also a wise investment choice regardless on when you purchase
this is not a fact. it is a hypothesis.
-I agree with you that ORH is a nice building.
-I disagree on the community, but that’s only a personal preference sort of thing. (I’m more of a Duboce triangle/inner sunset sort of guy)
-I disagree on this being a wise investment no matter when you buy
ORH takes more heat than it deserves, and the residents get slammed more than they deserve IMO. but that’s part of the package when a building dubs itself SF’s next landmark.
s beach,
Looking back at the history of this board, it was the Infinity crowd that started a shameless attack on ORH months and months ago. If you don’t like ORH just say so, but stop spreading lies when you don’t know what you are talking about it’s not helping your credibility or the Infinity likeability factor. As mentioned yesterday, let’s keep the big picture in mind. Investing here is a good business decision and we are all looking to make this a better neighborhood. Your useless propaganda is not helpful to any of the Rincon Hill neighbors including the poor souls that bought at the Infinity.
I thought the “cooper-despite your advanced age comment” was priceless.
If I was female I bet that would really tick me off.
Oh no you didn’t girlfriend.
“There is no denying that we are setting a standard for this neighborhood and should keep the big picture in mind.”
I thought one of the cardinal rules of real estate is that you never want to own the nicest house on the block?
I don’t think it’s just posters on SS who dislike ORH. Check out the any of the comment threads whenever the Chron has a ORH article. I’d say the general consensus in the city at large (for what it’s worth) is that people don’t like ORH. It’s a high profile building in a way that the Infinity, or the Millennium aren’t.
I think if you’re buying ORH as an investment, you’re toast. If you’re buying it as a place to live, that’s great, you might get your money back in 7-10 years. I actually like the building itself, if only it were somewhere else.
I hope it (and the Infinity) help the neighborhood. But I’ve lived in the area for 8 years and it’s been “up and coming” the whole time. I’d say only after the bridge retrofit is done (and the fugly Caltrans yards sold off) will the area start to take off.
I am new to this board and need some advice: which is better, One Rincon or The Infinity?
I like ORH and would buy there once prices stabilizes and we get some clarity of the second tower. i think if the 2nd tower does not build it really hurts the case for orh.
I ask my agent, factoring the market conditions, listing history, inventory, etc. what is a fair price for #1606 and she think 975k is a fair price. Noting that this is one agent that really has my interest in mind (i.e. by not overpaying). The listing’s been on the market for 47 days with no bites and has been lower multiple times. It may end up going higher than 975k, but she also says there will be many more attempted sales at One Rincon from desperate flippers losing their shirts so be patient and prices will continue to come down.
It’s no secret One Rincon has a high percentage of investors, many hoping to flip. Now that plan is out the window, potential buyers would be prudent to be patient and low ball any flipper trying to sell. Who knows how desperate they will become once the mortgages and HOA payments start to roll in and the units sit empty…
On a side note, it’s funny how Socketsite has to keep reminding to posters like Recent ORH buyer to tone it down and stop with the name calling and personal attacks, and yet it continues unabated.
I really get a kick bashing One Rincon, not because I hate the building (though I’m NOT a fan), but to get Recent ORH buyer and others really, really riled up. It’s great fun and they take the bait… every… single… time…. like clockwork.
anon@10:46 : somehow I get the feeling that you’re not new to this board but like to see a fight knowing that your question is inflammitory.
If I got that wrong then my apologies. If you want the answer to your question you might want to try using the search function : there are many opinions in the infinity vs. 1RH debate in there. Try searching on the term “smackdown”.
“I like ORH and would buy there once prices stabilizes and we get some clarity of the second tower.”
Wow, Cooper, so you actually like ORH, want to live & buy here, but like to ‘talk prices down’ to what you deem to be the appropriate level. Time will tell if your hopes do transpire, but it is certainly your perogative to try to do so. I have a feeling you’re not the only one on this thread with that motivation. Fair enough, as long as one does so without posting blatent untruths or false innuendo … and for a number of posters that ISN’T the case.
Bovis [the builder] has been [woefully] behind schedule on the common areas, but I expect them to be complete by end September. My understanding is that they will break ground on the new tower soon thereafter.
“”I like ORH and would buy there once prices stabilizes and we get some clarity of the second tower.””
That statement also blew me away.
“That statement also blew me away.”
Why?
“”That statement also blew me away.”
Why?”
Because Cooper has been steadfastly telling ORH he should have sold a while ago? I didn’t take him for somebody who liked the property.
There is a difference between liking the property and not thinking with my head and buying it even though it is over priced.
Here is my analysis of ORH.
The insides and views are very well done. Some of the floor plans are weak but some are great.
However, the pricing up until recently (like in the last week) has been bad.
Using hisotical measures tho 24x starts to make ORH look reasonable. However, I think you are still better off waiitng because you can rent for a year and its not like prices are going to go up.
I don’t know why its perplexing to like the actaul property but also believe its price incorrect.
If I had bought a year ago I would be down 20% right now. In some cases, I’ve seen prices drop 25% in just the last month on some units.
Me liking it has nothing to do with it.
hopefully that clarifies things.
To ORH–
don’t you find it a little suspect that you are being told that ground is now being broken in September which is after most of the other units are supposed to close?
Nice timing eh?
And to Fluj–why does my comment about it being smarter to wait for prices to stabilize and clarity on the 2nd tower blow you away.
Because you are so overtly skeptical of the whole shebang. Plus you’ve been telling the guy he should have sold. I guess I made an assumption there. I’m surprised you actually like the building, basically.
I actually like ORH and I don’t think it’s as ugly as everyone in SFO says. The views are great.
I also think if they build that 2nd tower, it will make it look less like a sore thumb stickign out of the sfo skyline.
I don’t like the neighborhood (it’s horrible) and I think if they don’t build that 2nd tower its going be a problem getting that area built out into something nice.
infinity –I like that one also. but wow that’s pricing but evidently selling much better from what I hear (or the info is better controlled). i like the way infinity shapes their living areas and it takes advantage of the better view. plus if you need a place to live now -infinity has by far the best neighborhood.
in 5 years -who knows maybe the neighborhood issue will change.
Recent ORH Buyer…
“Compare that with the Infinity’s situation where you have a fully constructed Tower, with huge carrying costs, which you can’t start selling until you clear out the first tower … but you won’t release any numbers on Tower I because sales are going so well? Having that white elephant [TowerII] standing there, bleeding red ink by the day – that’s the situation to avoid.”
I have been very surprised that more people have not mentioned this before. It appears that Infinity is in a very difficult position, given that they went forward with the 2nd building when the first building was not sold out. Either they were in a position where they did not have the discretion to hold off, or they gambled that it would get it done and sold before the market softened. They, along with everyone else, obviously did not anticipate the significant tightening of the credit markets, which is a key factor in the decine in sale volume in recent months. I feel really bad for the owners in Infinity Tower 1. Anyone wishing to sell their unit will be competing with the developers sales department who will be aggressively pushing unsold units in the same building or in building 2. Once they begin selling tower 2, it will be very interesting to see the pricing and what incentives they will be offering. This will have a significant impact on the condo market in the South Beach / Rincon area.
missionbayres,
re your comment: “I really get a kick bashing One Rincon, not because I hate the building (though I’m NOT a fan), but to get Recent ORH buyer and others really, really riled up. It’s great fun and they take the bait… every… single… time…. like clockwork.”
I pity you but thanks for admitting that your “bashing” is BS and not based on any true facts. The readers of this blog and potential buyers will appreciate the clarification.
I am not sure about the esthetics of ORH.
But I could suggest a functional use for the tower:
http://www1.shopping.com/xPF-Optimus-F-7325
Not that SF needs more ventilation…
“However, the pricing up until recently (like in the last week) has been bad.”
‘Bad’ because 2202 and 2602 sold in line with similarly situated highrises close by? Or ‘bad’ because it didn’t match what you hoped would happened to pricing. The latter seems most likely.
“If I had bought a year ago I would be down 20% right now. In some cases, I’ve seen prices drop 25% in just the last month on some units.”
While I will stop short of saying this is outright false, it’s simply not credible without specifics – which units and what prices are you basing these blanket statements on? Your numbers can be verified.
I agree with Fluj – it’s amazing that people will vilify a building, fully wanting to live there, but trying to drive prices to levels that will work for them. However, I do at least give Cooper credit for coming clean.
“the rumors that the developer is broke and this is the reason for not having started on the 2nd tower are as mentioned before useless and silly propaganda by uninformed and mentally fogged individuals like yourselves.”
I don’t think anyone is trying to spread rumors, there is a real issue here. The sales office keeps pushing back the date which is a fact. The common areas and townhouses are still not complete which is a fact.
Ann Dykstra and her sales team’s answers are always vague at best when it comes to questions about the completion of the project. They can’t even finish the common areas and facade let alone break ground on tower two.
Infinity is almost done with tower two and they have been long finished completing tower 1, the townhouses and common areas. This is night and day compared to ORH. Comparing the two, I think it is reasonable to think that ORH is having some difficulties.
And if tower two is never built, you have half a project. Who would want to pay full price to live in a development that te developer was unable to complete and may have been in financial trouble? Who knows what other corners they may have cut.
“the rumors that the developer is broke and this is the reason for not having started on the 2nd tower are as mentioned before useless and silly propaganda by uninformed and mentally fogged individuals like yourselves.”
I don’t think anyone is trying to spread rumors, there is a real issue here. The sales office keeps pushing back the date which is a fact. The common areas and townhouses are still not complete which is a fact.
Ann Dykstra and her sales team’s answers are always vague at best when it comes to questions about the completion of the project. They can’t even finish the common areas and facade let alone break ground on tower two.
Infinity is almost done with tower two and they have been long finished completing tower 1, the townhouses and common areas. This is night and day compared to ORH. Comparing the two, I think it is reasonable to think that ORH is having some difficulties.
And if tower two is never built, you have half a project. Who would want to pay full price to live in a development that te developer was unable to complete and may have been in financial trouble? Who knows what other corners they may have cut.
I think the Infinity tower 2 will have more, better view units than any of the other buildings, so I think they’ll push for higher prices (whether they get it or not they get them is a different question–but I think they will be, in many cases, better units).
I think it’s a good thing to have more units. I hope they build ORH 2 and on the post office parking lot too! The neighborhood needs more density if it’s ever going to improve (the so-called network effect http://en.wikipedia.org/wiki/Network_effect)
Living there, I’m glad they’re finishing it off. These kind of buildings take at least 2 years to finish. If/when ORH tower 2 starts going up, residents there will be looking at a long period of disruption.
“I feel really bad for the owners in Infinity Tower 1. Anyone wishing to sell their unit will be competing with the developers sales department who will be aggressively pushing unsold units in the same building or in building 2.”
At least they can sleep at night knowing their development is complete. Far better than ORH buyers wondering whether their development will be completed at all.
To ORH—
Of those in ORH who have closed and not found a way out of their contracts yet…
What % do you think have positive equity at closing?
I’d wager most were wiped out the minute the signed those papers.
Better to rent–worst financial crisis in the last 100 years. Not a good time to buy investment property in a speculative real estate market.
I may be old, but I’ve attained a lot of wisdom living in my parents basement all these centuries.
I don’t follow the logic one way or another. Both ways, ORH current buyers should feel OK by whatever outcome:
1 – Tower 2 gets built and it will further help the still dormant neighborhood.
2 – Tower 2 doesn’t get built and Tower 1 condos will be that more unique (and think what it will do to the resale value of the condos that were supposed to face tower 2).
Of course, if the builder bails out before the last condo in Tower 1 is sold (and stay the de-facto owners) there could be issues with who’s going to pay for the empty condo HOAs with an insolvent owner. But I’m just speculating. I have no idea where the reality is, nobody has, and that’s the main problem there…
I’m with missionbayres on this one. It’s so easy to push the buttons of orh defenders. It’s like grade-school recess and reading the posts is a pleasant distraction from my deadlines at work.
Personally, I like infinity better, but that’s obviously a subjective opinion. Given a choice, my preference would be to live in the penthouse of the millenium.
“At least they can sleep at night knowing their development is complete. Far better than ORH buyers wondering whether their development will be completed at all.”
Yes…I am sure all the owners in Infinity Tower 1 are going to enjoy the view of the Tower 2 100 feet away, especially at night when is it totally DARK!
um..how can you compare the Brannan to ORH?
The Brannan location is 100X better than ORH. Just ask any SOMA Realtor.
Cooper, SFS, cse – I think cse is correct that the Credit Suisse study must be comparing average prices to average rents (or some such similar thing). Their data indicate a 42x multiple in 2006, which would imply that you could rent a 2BR unit on an upper floor of ORH for a little over $2,000 in 2006. They’re clearly not comparing apples to apples – I doubt even Satchel could find that kind of rental deal. 😉
In terms of their numbers, I wouldn’t worry so much about rent control as I would about the fact that the average rental unit is much less nice than the average sale unit. The most that we can realistically conclude from the 42x (2006) multiplier vs. the 24x historical average is that SF housing may be overvalued by as much as 75% relative to historical norms…
“I feel really bad for the owners in Infinity Tower 1. Anyone wishing to sell their unit will be competing with the developers sales department who will be aggressively pushing unsold units in the same building or in building 2. Once they begin selling tower 2, it will be very interesting to see the pricing and what incentives they will be offering.”
itsknotme,
I’m surprized Socketsite hasn’t had a thread on this – an almost fully constructed condo highrise without a single unit sold. Moreover, a closer look at some of the pricing at Infinity I underscores your point.
#20B in tower I sold closed on 3/9/08 at $1.77m or $1345 per sq. ft. Nice water views here.
That would be over 300 per sq. ft MORE than either 2202 or 2602
#17H in Tower I sold for $1.39m on 3/2/08 or $1053 per sq. ft. This faces west and will soon be looking into Infinity Towers III & IV
That’s still more than either 2202 and 2602 where even cynics would admit the views are sensational.
So, there’s more inventory available in this building [they won’t reveal how much, but I’m sure that’s a good sign] and an almost fully constructed tower II next door without a single unit sold.
Cooper – you may have more luck with your bearish predictions in this scenario. The fact that you couldn’t produce individual units to back up your 20-25% ALLEGED price drops is VERY revealing. Definitely been in that basement too long.
the 24x historical average
This seems pretty high. I know a few places that used to sell in the upper 300s in the mid-90s that rented for 2000/month at the time. That would be 180x monthly rent or 15x annual rent which is around double the 100x monthly rent I think is a reasonable rent vs. buy ratio equivalence. 180x monthly rent is already a big premium to pay. Let’s no go overboard and call 280x annual “historical”.
To Fronzicheme,
I think 24x seems high too. I wonder what happens if you take out the years 2001-2007–basically the years where we had an inflated mortgage market.
I’d love to find a better analysis for the SFO market in particular. But have not run across one.
SFS – You missed the entire point of my post. You are doing an apples-to-apples comparison, and clearly Credit Suisse’s 42x/24x numbers are not based on apples-to-apples comparison. All we can reasonably conclude is that P/E ratios are 75% higher than historical average right now (or were in 2006) based on whatever methodology it is that they are using. But you can’t compare their 24x to your apples-to-apples comparison, because that’s clearly not the methodology they are using.
GMH-
I think you need to forgive him if he missed what you are trying to say. I reread your post 3 times and it is still not clear.
like put examples or soemthing…I honestly don’t know what you are trying to say.
Hi All,
I like reading SocketSite posts about ORH, Infinity or Millennium because of the heated discussions that go on in the comments. 🙂
I can understand the fact that ORH and Infinity residents like their homes. Both buildings have their pros and cons. Who wouldn’t defend their own homes from attacks by strangers on some blog?
That said, I do take issue with two things that the ORH residents have been saying:
Claim #1: ORH location is better than Infinity’s location.
While ORH may have some advantages vs. Infinity such as lower price per sq. foot and better views in many units, location is definitely not one of them.
Once I step out of my condo, I can walk to all the great restaurants on Steuart Street, the Embarcadero and Ferry Building in about 5 minutes. Additionally, Folsom Street is the heart of the Rincon Hill and Transbay Terminal Redevelopment plans. And so there will be many more nice retail stores and restaurants in the future.
What does ORH have for location? The entrance to Highway 80 right next door.
Claim #2: The fact that construction on ORH’s second tower hasn’t started is an advantage vs. the near completion of Infinity’s second tower.
Despite the Infinity sales office’s claims that prices in the second tower are going to be higher, it’s quite possible and perhaps likely that the prices of units in the second tower may be the same if not lower. So if you’re a flipper, you may be screwed.
If you’re a resident who can afford the mortgage and intends to live in the building for a while, the fact that Tishman Speyer is completing the construction for Tower 2 is a huge positive since we won’t be living in a construction zone for that much longer.
By the time my wife and I are ready to sell in 5-7 years, we’ll have enjoyed living in the Infinity for many years, and the market will have come back in the meantime.
“Infinity Resident”
No question about number 1 – got to concede that one. However, number 2 –
“the fact that Tishman Speyer is completing the construction for Tower 2 is a huge positive since we won’t be living in a construction zone for that much longer.”
Errr … I guess you forgot about Tishman III & IV coming up across Main Street in the Post Office parking lot. At 2 years per building [on average] that’s 4 years of construction yet to come right next to you.
Or, perhaps Tishamn has run out of money and III and IV will never be built? To paraphase Anon, I couldn’t “sleep at night” if I didn’t know the status of III and IV. That would change everything! 🙂
Let’s make that the new debate – will Tishman III and IV ever be built? Let the rampant and absurd speculation begin.
cooper – No problem. Consider the 42x P/E that Credit Suisse published for SF in 2006.
Suppose that #2202 ORH would have sold for $1.1 million in 2006. Then using Credit Suisse’s P/E multiplier, we see that the market rent should be roughly 1.1m/(42*12) = $2183/mo.
Then one of the following three things must be true:
(A) In 2006 it was possible to rent a high floor, 2 BR unit in ORH for around $2200/mo.
(B) ORH sales prices are massively undervalued relative to other SF properties, or ORH rents are massively overvalued relative to other SF properties.
(C) The Credit Suisse figures are not comparing apples-to-apples (i.e., the average rental unit that they are using to compute average rents is not as nice as the average sales unit they are using to compute average sales price).
I think we can safely eliminate (A). (B) also seems very unlikely to me – in fact, I doubt anyone here can find a property in SF that has sold for 500x monthly rent. So we are left with (C) as the only possible explanation.
If (C) is true, then you *cannot* use the 24x Credit Suisse figure when computing what a historically reasonable P/E ratio is for a ORH unit. Your comparison is apples-to-apples (ORH sales price to ORH rents), and the Credit Suisse figure is not. That’s why the Credit Suisse figure seems high to you…it’s not computed by comparing the sales price in a unit to market rents in the exact same unit.
Recent ORH buyer, you’re right. I misspoke (or should I say miswrote?).
What I really meant to write is that I’m really happy that Tishman is finishing the Infinity’s second tower because that will mean that our entire development project is done. I’ve read several horror stories about developers who half-finish a project and leave residents holding the bag.
We’ll be living in a construction zone for a while. The eventual transformation of Folsom Street into Folsom Boulevard will require lots of construction – Tishman III and IV, the temporary Transbay Terminal, the new Transbay Terminal, the replacement of the current Infinity sales office building with some new high rise, etc. I’d actually be happy if all this construction happened sooner rather than later since that just means that the neighborhood is improving faster.
No need to speculate about Tishman III and IV. They probably won’t be built for a while. At the first Infinity HOA meeting, a Tishman exec told us that they likely wouldn’t be building the high rises across the street until the markets recover and can support that much more inventory of high-priced condos. Until that happens, we’ll have the parking lot there and any friends who visit will have an easier time finding street parking. 🙂
My problem with the infiniti towers are that they are the ugliest and most out of place buildings in all of San Francisco. At least ORH is aesthetically pleasing from the outside. However, i do agree that infiniti has a slightly better location, although the difference is nominal./
Hey Recent ORH buyer, you forgot to mention ORH tower II and the Turnberry.
(oh wait…)
(quit making this so easy!)
Errr … I guess you forgot about Tishman III & IV coming up across Main Street in the Post Office parking lot. At 2 years per building [on average] that’s 4 years of construction yet to come right next to you.
Um, errr… you forgot about the Californian, Turnberry, the rebuilding of the offramp, etc across from ORH.
This entire area is going to be under construction for years. And, there’s a difference between a building going up across the street and one going up right next door. But I guess if you live on a windswept hill next to the busiest bridge in the US, you’ll have to get used to noise…
“My problem with the infiniti towers are that they are the ugliest and most out of place buildings in all of San Francisco. At least ORH is aesthetically pleasing from the outside. However, i do agree that infiniti has a slightly better location, although the difference is nominal./”
Infinity’s towers certainly look different from many of the surrounding buildings. Personally, I like the way they look a lot better than how ORH looks. But that’s just my opinion.
Only a slightly better location with a nominal difference? Lol. That’s pretty funny. You either don’t know much about real estate or aren’t too familiar with the area and the city’s plans. One of Infinity’s key advantages is it’s location. Infinity and ORH are only a couple blocks away from each other. But there’s a world of difference in those couple blocks.
“At the first Infinity HOA meeting, a Tishman exec told us that they likely wouldn’t be building the high rises across the street until the markets recover and can support that much more inventory of high-priced condos.”
Hmmmm … you think that might be the same logic that the ORH developer is using in not being in a desperate hurry to build Tower II? I think that’s almost certainly the case. And trust me, he’s very happy he doesn’t have a fully built tower where he has to carry the huge costs and obtains ZERO returns before he clears out Tower I and starts selling these units. That’s a recipe for lots of red-ink for Tishman and price pressure on existing Tower I owners – definitely not something to be reassured about, IMO.
Infinity Resident / Recent ORH buyer,
Infinity will have the 2 towers at the post office, and One Rincon Hill will have the Turnberry tower across the street, the towers on Fremont, and ORH II. The only question is timing. Rincon Hill will have potentially 3 large construction sites run by 3 separate developers/construction crews. If they all happen simultaneously, or overlap it will be a huge mess, I mean massive. If they build one after another, it could be 9-10 years of constant construction on the Hill.
Infinity will have a single developer and a single site so they may be able to manage the construction better and they ‘could’ be finished in 3+ years after groundbreaking (based on Infinity I/II’s timetable)
Likesemtall and Anon,
Calm down ladies – I was just making “Infinity resident” aware that just because Tower II is done, doesn’t mean all the construction is over for that area.
“the fact that Tishman Speyer is completing the construction for Tower 2 is a huge positive since we won’t be living in a construction zone for that much longer”
Californian and Turnberry may be a few years away … you guys should have the ‘temporary’ greyhound bus station next to you long before then.
That’s a recipe for lots of red-ink for Tishman and price pressure on existing Tower I owners – definitely not something to be reassured about, IMO.
You would think so, but the reality (based on CL postings and the desperate attempted flips at ORH) doesn’t support that view. I have only seen a single Infinity unit resale, compared to numerous ORH resales.
Also, I understood that tower 2 of the Infinity will start selling later this year. I’m not sure where you’re getting the info that EVERY single unit in tower needs to be sold before they begin tower 2 sales. That makes little sense.
gmh,
I didn’t comment on your post. I don’t have any questions about it. Just about the figures that reflect a perceived history. But the SF market has been so much out of whack with the rest of the country/state that it’s fairly easy to forget that until 10 years ago regular people could buy a place and raise a family here in this town without a fat inheritance of a business windfall.
It would be nice to remind some that a lot of the “clasic victorians” that are being bought up for 1.5M+ were houses bought by catalogue. Basic worker houses from the industrial age.
Some of these catalogues even allowed you to get your house shipped by freight train as a prefab. Others were just plans and instructions that you would use yourself or give to your local contractor.
Basically, this was mediocre quality housing.
“Hmmmm … you think that might be the same logic that the ORH developer is using in not being in a desperate hurry to build Tower II? I think that’s almost certainly the case. And trust me, he’s very happy he doesn’t have a fully built tower where he has to carry the huge costs and obtains ZERO returns before he clears out Tower I and starts selling these units. That’s a recipe for lots of red-ink for Tishman and price pressure on existing Tower I owners – definitely not something to be reassured about, IMO.”
Personally, I’m not too concerned about Tishman’s carrying costs on Infinity Tower II or the short term effect that it’ll have on prices because we’re planning on holding onto our property for a while. As a long-term resident, I care much more about whether the developers complete the project so that I can enjoy the property than about short-term price movements.
Anyone who is trying to sell a condo in the Rincon Hill/SoMa/South Beach area (including ORH residents) should be concerned about the potential pricing pressure caused by Infinity Tower II’s units. More inventory + fewer buyers = recipe for lower prices. Lower prices on Infinity units will affect all other luxury condo developments in the area.
One argument that could be made is that my wife and I should have waited to buy until the market hit bottom or somewhere near bottom. This argument could be made of any investment.
In our case, however, we found a unit that we really liked. And so we decided to take the plunge and took out a conservative loan (30-yr fixed, fully amortized). So far, we totally love our new home. Hopefully, when we’re ready to sell, the market will be booming again…
let’s see, temporary greyhound bus station or permanent 10-lane freeway, including off and on ramps…
(again, quit making this so easy)
“let’s see, temporary greyhound bus station or permanent 10-lane freeway, including off and on ramps…
(again, quit making this so easy)”
likesemtall, you’re funny 🙂
Checking Craigslist today I found 27 advertisements for One Rincon units for sale (some may be double ads). But I did NOT find a SINGLE Infinity unit for sale. That is a constant theme. Not many contract holders or owners looking to sell at Infinity, but dozens at One Rincon.
To missionbay Rez,
The reason that there are no for sale in CL for Infinity vs like many dozens for ORH is there is a no flip clause in the infinity contract.
It’s all controlled by their sales office. This way they control the information flow and the downside a little better than if its all in the contract holders hands.
In ORH I’ve gotten emails from realtors directly trying to sell. I don’t get that from Infinity. It all goes through there sales office. I don’t know the wording of the clause directly to know when that control will lapse.
Anon,
“Also, I understood that tower 2 of the Infinity will start selling later this year. I’m not sure where you’re getting the info that EVERY single unit in tower needs to be sold before they begin tower 2 sales. That makes little sense.”
Try calling your Sales office – the official party line is no Tower II sales begin until Tower I is fully sold. However, perhaps they have backtracked on this given current difficulties.
I’ll give the Infinity Sales office this, they have definitely managed the credit crisis fallout better than ORH. ORH agreed to allow assignments, and it has created a huge frenzy on Craigslist. What the Infinity has done differently is not to allow ANY assignments, certainly not publicly. So if you were some poor sap that can’t get financing [but thought you could when you placed a deposit] you are simply out of luck. No chance at redemption – none. Infinity keeps the deposit, buyer is out of luck and your home returns to their inventory. However, the untold story is the actual level of that Tower I inventory, a closely guarded secret. The real number could be huge – 30%, 40%, 50% … who knows.
While ORH suffered from an ‘image’ problem on CL, the assignment process did prevent a potentially greater number of people from failing on their contracts. To be fair, there are still several units have gone unclaimed and will be resold by ORH, but assignments may have limited that blow. Infinity took no such steps, so while they look better from a P.R. perspective, the inventory levels could be crippling. Let’s face it, buyers at ORH and the Infinity face both the same difficult credit environment. And now with the unsold white elephant of Tower II staring them in the face to add to the burden – I wouldn’t want to be the accountant ordering more red ink from the printers by the hour.
Anon – you have to at least admit that it certainly wasn’t Tishman’s dream to have Tower II completely unsold by the time it was built. After all, isn’t that why they have pre-construction selling?
Sure cooper, I don’t disagree with that (though I would like to see the clause). But I doubt the developer can prevent someone quit deeding off or on at closing or bringing in an investor. You don’t need the sales office’s permission to do that.
One Rincon also has a 1 year no flip clause, but like Infinity there’s a hardship clause you can use to sell at any time after closing (i.e. you relocate to another state).
There is wiggle room in the ORH escape clause. as i have seen people trying to flip their assignments for higher values selling the contracts as an option.
you can’t do that at infinity. its a much tighter contratct
Cooper – I think you mean a NON-ASSIGNMENT clause. You can’t flip a unit you don’t own. This is the common misperception about the ORH listings on CL – this are people who have placed a deposit that are unable to complete their purchase … most commonly due to an inability to finance.
There is none of this at the Infinity – ALL people in this position default and the unit returns to their inventory without even a shot at redemption. Accordingly the inventory levels build, unabated.
“But I doubt the developer can prevent someone quit deeding off or on at closing or bringing in an investor. You don’t need the sales office’s permission to do that.”
Avalon @ Mission Bay Rez,
Completely untrue. The drafter of a contact absolutely is entitled to have a non-assigment clause as a condition of a contact. As an example, if I contract with [great] plumber X, I can put in a non-assignment clause, such that he can’t assign the work to [lazy stepchild] plumber Y. It’s actually a common provision in many business contracts.
“There is none of this at the Infinity – ALL people in this position default and the unit returns to their inventory without even a shot at redemption. Accordingly the inventory levels build, unabated.”
Curious if you have some insider info we don’t? I know the sales office has done a good job keeping things under wrap. So where’s the hard evidence that “inventory levels build, unabated”. Where’s the evidence there is massive fallout? I’m curious to know as are many people here.
At One Rincon, there’s roughly a 10% drop out rate at any given time (based on Socketsite’s info and craigslist). It’s quite easy to dig up info on One Rincon, but to say inventory levels rise unabated at Infinity without verifiable numbers doesn’t have much credibility…
ORH buyer brings up a good point.
the perceived strength of Infinity vs ORH may be a PR issue more than a true strength issue.
it would be interesting to see the true data on all these sales/resales of both towers, etc.
This is the big problem with Real Estate as “invesement”. It is an extraordinarily inefficient market with severe information assymetry, moreso in SF than in most cities in the country. Buyer beware is all I have to say!
“Where’s the evidence there is massive fallout? I’m curious to know as are many people here.”
If things were hunky dory, and inventory was flowing along for Tower I, don’t you think they would have at least have pre-sold at least one unit in the Tower II? Officially, based on my call to the Infinity Sales Office last week, no Tower II sales before Tower I is done, and [shockingly] Tower I isn’t done. If they were close to selling Tower I out, perhaps they would at least allow some Tower II transactions? Don’t all condo buildings pre-sell their units prior to being built? All, except Infinity II apparently.
um, someone said it best last week. a good anology for the buildigs are
Millenniun – Neiman Marcus
Infinity – Bloomingdales
One Rincon Hill – JC Penny
Ask any realtor in SOMA which building they prefer between One Rincon and Infinity. Infinity wins hands down.
No need to bring up The Brannan in this topic. Brannan is located in the heart of S Beach and the location is 1000x better than ORH.
I do agree that all the listings on craigslist hurts the credibilty of One Rincon. I compare ORH to The Beacon. comparable?
“Where’s the evidence there is massive fallout? I’m curious to know as are many people here.”
If things were hunky dory, and inventory was flowing along for Tower I, don’t you think they would have at least have pre-sold at least one unit in the Tower II? Officially, based on my call to the Infinity Sales Office last week, no Tower II sales before Tower I is done, and [shockingly] Tower I isn’t done. If they were close to selling Tower I out, perhaps they would at least allow some Tower II transactions? Don’t all condo buildings pre-sell their units prior to being built? All, except Infinity II apparently.””
Ok, maybe you didn’t understand. Where is the hard, verifiable evidence?? You just provide hearsay. There’s inventory at both One Rincon and Infinity. No shock there. But you still didn’t provide any evidence that “inventory levels build, unabated” at Infinity.
“um, someone said it best last week. a good anology for the buildigs are
Millenniun – Neiman Marcus
Infinity – Bloomingdales
One Rincon Hill – JC Penny”
Actually, I believe they said One Rincon = K-Mart.
And based on what we see now, I can see One Rincon = Beacon 12 months down the line…
Ok, maybe you didn’t understand. Where is the hard, verifiable evidence?? You just provide hearsay. There’s inventory at both One Rincon and Infinity. No shock there. But you still didn’t provide any evidence that “inventory levels build, unabated” at Infinity.
I have to agree with missionbayres on this one. It’ll take a while for the Infinity to sell every single unit in Tower I because there are some units that aren’t nearly as attractive vs. the prices that they’re asking. For example, there’s a model unit in the 29th floor that has a great layout and lots of space. But the view is very ho-hum (the unit faces southeast and so you can only see the shipyards). I’d be surprised if anyone paid the asking price for that unit because I’d want a great view for that price.
The fact that some units remain in inventory is hardly evidence that there’s 30%, 40% or 50% inventory build up in Tower I.
On another note, I think that the uncertain status of ORH’s 2nd tower is just as big a PR problem for ORH as the number of listings on Craigslist.
Don’t all condo buildings pre-sell their units prior to being built?
In California, at least, pre-sales of condos is a relatively new development (2006):
” Kriozere said the investment in the sales center is a response to the passage of Assemblyman Mark Leno’s AB728. While state laws used to prohibit binding contracts with homebuyers until construction was complete, AB728 says that as soon as construction begins developers can collect non-refundable deposits big enough to cover any damages if the buyer defaults. Buyers are generally required to put down 3 percent of the sales price. ” (http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2006/05/01/story3.html)
I honestly don’t think we can guess what the deal is with the Infinity tower 2 sales (or lack thereof). My suspicion is that they’re going to try to ask for high prices so want as much done as possible, but who knows? I think they know what they’re doing. And waiting till tower 1 is “done” before selling tower 2 is not the same thing as waiting till all the tower 1 units are “sold.”
I thought ORH had a no-flip cause as well? In any case, it’s not a pure assignment. Don’t you have to do some crazy thing like keep the original contract holder on the deed as a 1% or something?
Real estate is perception as much as anything else. ORH is losing that game, at least.
um, someone said it best last week. a good anology for the buildigs are
Millenniun – Neiman Marcus
Infinity – Bloomingdales
One Rincon Hill – JC Penny
Said it best? This is just some obnoxious queen talking trash. Any one of these buildings could make beautiful homes with the right interiors, just as they can make crappy homes with whacked interiors. Regardless of money, what is the allure of a high-rise building. For those that are focused on status and status alone, yeah, the analysis above talkes to them. I would guess that for most other people, security, anonymity, and primarily views, are the main attractions. All of these places offer that. Finishes are debateable, kitchens are crappy in most but you can redo them if you simply can’t deal with them.
ORH has some great high floor floor-plans that face south-east. The curved glass floor to ceiling view of the water, mountains and sky with no other obstructions would be amazing. It has good size too, with the right scale the space would be wide and dreamlike. And there is an outdoor space. You cannot get that kind of enjoyment from anything you could find at JC Penney. That feeling comes from things you buy at Tiffany’s or Hermes or Christies. These are all luxury buildings with units at all levels top floors of ORH are more appealing to me than lower floors of Melinium, at least to me.
Yeah, these buildings are having a hard time, but are you people fighting about this myoptic enough to ignore that this country is in a recession? Do you really believe that things would or should be the same here as they were 3 years ago? There is a crisis, meaning that it will end as opposed to being the end.
It’ll be interesting to see how far the price points fall. They are almost becoming affordable. And I vote for no ORH 2.
I heard the delay with ORH tower II was to work out the significant design defects that have already appeared in tower I, which you may recall was built at record speed.
I don’t want to get specific about the problems, but let’s just say that American tourists will not need to visit the town of Pisa in Italy for very much longer.
A. I’m kidding.
B. I can’t believe I’m doing it too
C. I hate the building because of it’s location.
“Actually, I believe they said One Rincon = K-Mart”
Yep, and soon they will be having their blue-light special.
Sorry, this is too fun!
Stop saying such mean things. Besides, ORH buyers have one big advantage over Intinity buyers. They’ll get much bigger property tax cuts on their reassessments.
According to sfgate, both ORH and Infinity are selling well, with Infinity having the edge out of the gate. From the Mark Cos. overview,
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/08/BUB31272KN.DTL
Hard to understand how this could be real with all the negative publicity on the housing market.
Michiko,
Useful link – thanks. A couple of extracts are interesting –
“More than 225 condos have closed escrow in the 365-unit first phase, the cloverleaf-shaped glass tower at Folsom and Spear streets, said Carl Shannon, managing director for developer Tishman Speyer. More than half of the remaining condos are in contract.”
So, for the Infinity, of the remaining 140 units [365 less 225] about half are NOT under contract. Call it 70 condos not under contract. If the entire development, that’s about 19%. That also assumes that none of the existing contracts fall out, which is far from a given in the current credit environment. If they do, 30% remaining inventory is not inconceivable.
“Buyers at One Rincon Hill, the 64-story building that soars above the western approach to the Bay Bridge, have completed the sale of 192 units in its 376-unit first phase, said Garrett Chan, vice president of sales with Pacific Marketing Associates Inc., which markets that building.
Nearly all the rest are in contract, and they’ve been closing at a rate of around 40 units per month, project spokesman Spencer Moore said.”
Nearly all remaining units under contract is a HUGE positive. Let’s say there are about 25 or so assignments floating around Craigslist – even if ALL of those go unclaimed [a worst case scenario] that’s less than 7% of the building that would return to sales office inventory. Even at that level, that’s 1/3 of the inventory the Infinity has left … that before adding the 360 or so units from Tower II
MissionbayLes et al – the low end of my ‘random guess’ [30%] is not as far fetched as you would like to believe.
[Editor’s Note: You might want to head over here: Infinity Versus One Rincon Hill Sales: Strictly By The Numbers.]
Its unfortunate, but One Rincon’s reputation is SHOT and their perception is so vastly negative. Is it fair? Yes and no. They’ve made enough mistakes and controversial moves to question whether they really know what they are doing. As mentioned before perception is everything in real estate. I’m sure people have complained to Bovis over their lack of professionalism and their inability to finish the common grounds. Is it incompetence? Are they simply incapable of handing a large project? At the very least, Bovis is not inserting much confidence to prospective buyers with the mess they created on the site. 5 months after move in, the place still looks like a wasteland. And is it true they’re are incapable of putting in a simple pool??
Ask any agent that handles downtown, Soma, S beach etc, the majority will not recommend One Rincon at this point. Most will tell you to wait since the investors make up 50% of the buyers, and there will be a flood of resales in the coming months and years. Wait and you’ll get prices 15,20,25% lower than they are today.
Recent ORH Buyer…
“So, for the Infinity, of the remaining 140 units [365 less 225] about half are NOT under contract. Call it 70 condos not under contract. If the entire development, that’s about 19%. That also assumes that none of the existing contracts fall out, which is far from a given in the current credit environment. If they do, 30% remaining inventory is not inconceivable.”
I read the article this morning and I had exactly same reaction as you. I was very surprised that Infinity has a such a sizeable number (about 19%) of units not closed or in contract! This is considerably more than I thought there would be.
I am not sure what to make of the Editors note added to your post. The reference to 85% under contract is somewhat overstated…with the article indicating it is 81%. As you mention, the article states that there are about 140 units that have not closed with about half (+-70)under contract. I think this is the situation that was commented on yesterday…the prospects for the Infinity tower 2, with 20% of tower 1 still available for sale.
my take….
Millenniun – Neiman Marcus
Infinity – Miami mall
One Rincon Hill – Safeway
The Millenium is beautiful
I hear Infinity will be changing it’s name to Wal-Mart so that it can use their ad slogan “watch out for falling prices”.
Shouldn’t Milennium Tower be Neiman Marcus next to an ugly bus station?
I think that’s more accurate.
in regards to construction noise..most of the time you can’t escape it living in the city. always some loud pge project or construction going on. at least in the rincon hill tower you are high enough to escape most street level noise.