From the listing for One Rincon Hill (425 1st Street) #1606 almost three months ago: asking $1,232,000. From the listing when reduced to $1,120,000: “Offers by 7/30 please.” From the listing when reduced to $1,050,000: “Don’t miss out on this one!”
From the listing today: withdrawn. And once again, the non-upgraded asking price two years ago on the very first day of sales: $980,000.
∙ Mixed Messages For The Secondary Market At One Rincon Hill [SocketSite]
Yawn. Tell us something new……..
Is there any news on the second tower?
So, this relatively high floor unit failed to sell at $800 psf, and clearly the owner is now nursing a capital loss. I hope this was 100% financed, so the holder can get out without imploding some or all of a downpayment.
Every dollar that is now put into this unit in excess of its rental equivalent value (maybe $4-4.5K/mo?) is a dollar that is being “held hostage” by the market. Let’s face it – the owner would like to sell the apartment. He or she doesn’t want the asset, but is unwilling to “take” the capital loss necessary to move it. It MAY work out in the end, but this should be little consolation to someone who EVERY MONTH is seeing a little more of his or her wealth siphoned off.
In any event, whether it will work out or not is wholly outside of the control of the holder. This owner is now firmly in the “hold and hope” category.
This “trapping of capital” is why I disagree strongly with the ideas often tossed around here that: (1) monthly payments of principal are simply transferring an asset (cash) “from one pocket to the other”, and (2) the “equity” tied up in a volatile and overpriced asset like a ORH condo should be discounted at a “risk free” rate when doing any valuation exercises.
The sales office tries to scam you buy trying to sell all the units that have come back for 10-20% above what the original contract holders couldn’t sell it for. With the financing on the 2nd tower withdrawn and the whole project in doubt these guys are criminal.
Dont pay above 800 psf for anything in soma period.
425Harrison, not 1st.
agreed satchel, except for the relatively high floor. Isn’t this really 8 floors above the freeway thanks to the 8 floors underground considered part of the 60 stories?
I agree with view lover…not a high floor here…16 is very low in ORH standards…8 floor is the bottom floor I believe.
Also, sf, it IS 425 1st st., not Harrison.
C
The construction crew had a computer printed sign a while back when they had the chain link fence up that said 425 Harrison. There really isn’t even a 1st st. on the south corner anyway since it’s just the freeway onramp, and not a street. I wonder how they get 1st st. out of that.
How is this possible? The sales team ASSURED Recent ORH buyer that condos returned to the market ALWAYS sell at a 20% premium. I had tears in my eyes then and I have tears in my eyes now (from laughing so hard).
the address IS 425 1st street. there more than just a freeway on-ramp there. the on-ramp is next to 1st street, which runs uphill from Harrison and dead-ends at the top of the hill. It is a public street.
@Karen
“financing on the 2nd tower withdrawn and the whole project in doubt”
Did I miss something? What have you heard?
The financing pulled out–they still have not nailed any back down yet. the 2nd tower was originally supposed to start construction like a year ago. Ask the sales office about the 2nd building and they’ll tell you “we are hoping to solidify things some time in the next 6 months).
“How is this possible? The sales team ASSURED Recent ORH buyer that condos returned to the market ALWAYS sell at a 20% premium. I had tears in my eyes then and I have tears in my eyes now (from laughing so hard).”
Is it me, or is the sales team/developer setting themselves up for an avalanche of lawsuits. I mean, if they constantly talk up the building saying all units returned back to them sell at a 20% premium when in fact they don’t, doesn’t that make it a crime or at the very least, highly unethical behavior??
This is what I call the D-9 effect.
Too many short term buyers,(that is what I call anyone who purchases with an ARM) are putting the homes on the market at teh same time as several major developers are still selling new product.
The successful D-9 sale will be those who have some equity and are willing to leave it on the table to close the deal as they trade up to a larger home in the down market.
Those with no equity will be left upside down in the interim and take a bath.
I asked one of the senior sales office people whether units with prepaid deposits that failed to close are put back on the market at a markup. Her unambiguous response – “Every time”.
Posted by: Recent ORH buyer at June 17, 2008 11:23 AM
I don’t see any mention of a 20% increase, just that units were marked up. Did I miss something?
Oh this is all to good. I don’t think anyone could make this stuff up. I feel so bad for the buyers of this building as I too was one, and managed to have someone take over my deposit very early on.
Second tower from everyone I hear in the market says its a no-go, or that the developer lost financing and is quickly looking for a second company to finance it. You’ll get the “very soon pitch” from the sales office when you ask. Second tower? They can’t even finish the first. I went to visit a friend and the place looks like a bomb hit it. I almost bottomed out my car going up the driveway. Its a zoo. I would take heads off if I lived there. All that money and nothings even done. I wouldn’t stand for it for a minute.
Its really sad that all these people can’t close. I am sure some still want to but don’t have the 20-50% down that most banks are requiring in this market. 980k for this unit in 06 was a joke, and 1.050 today is a joke. It is a relatively low floor in the building, and being a stack 6 it does have the nice views, but alas.. YAWN. Its time to break some bigger news in this building. Like why are over 50% of the PH’s back on the market? And when is the developer going to flee the country?
Yeah, I feel bad for all those that did go ahead and close and are now probably out their entire downpayment or more. But at least there’s some cold comfort in knowing that, with so few places closed, it is the developer that is really taking it on the chin.
Still have a long way further down on this one. Nice views though, and there are lots of units on Craigs List for about 60% of the purchase cost per month.
“Dont pay above 800 psf for anything in soma period.”
Sound advice, but even that may be a stretch, IMO. There’s a 2-bedroom for sale at the Beacon for $500 per square foot (#535). The warehouse conversion at 310 Townsend is selling the last new unit for $578/sq. ft. (#105). Even BLEW has one of their brand new units (#3E) on MLS for $740/sq. ft. And these are all 2-bedroom condos ranging from 1,000 to 1,200 square feet.
What are the chances the developer already skedaddled out of town with ORH unfinished? I wouldn’t be surprise since the place haven’t changed much in months (i.e. the place is a complete mess).
I think we all know tower 2 won’t be built for a long long time. The question now is; will they even finish tower 1?
last report suggested that many units were closed and more were on schedule. has something happened? what are the updated closing numbers? anyone?
The square foot price has to relate to other, more desirable SF neighborhoods. In a weakening market, why pay 800 psf in Soma, if you can have something at the same price in the northern part of the city? Aside from nightlife for 20 somethings, and some views, what is the attraction of Soma? Is it the fact that the buildings are new? If it is 6th street access to 280 for work in Silicon Valley, then Noe Valley is better.
“In a weakening market, why pay 800 psf in Soma, if you can have something at the same price in the northern part of the city”
You can? I’m not being a smart alec, but I don’t think so. North as in north of California?
Viewlover – as of last night the number of closed units at ORH was 215. Not much else in the way of veracity on this thread.
Be interesting to know which unit “ryan” gave up and what was his cost basis.
With the financing on the 2nd tower withdrawn
I’m sure I as well as others would like some verification of this.
I’ve long suspected that tower 2 might not get built (nigh on 1.5 years now) but to date I haven’t heard any confirmation of them losing financing.
obviously we all knew something was up when they replaced their builder and stalled on building Tower 2 but it’s been mainly conjecture.
Equally important to the financing is the devleoper and builder.
I’m sure there is a very nervous developer who is afraid of losing $$$ if they build Tower 2. Also the builder may be skittish as they may not get paid until project complete…
As for investors:
CB Richard Ellis (parent company of CBRE Investors) has had some very bad results (profit down 88%) of late and their stock is plummeting. I’m sure that plus lack of investor confidence in RE is hurting CBRE investors, a huge financer of ORH.
but I haven’t heard any definitive news on CBRE investors or other banks pulling financing, so I’d love to get a source.
This unit closed. One of 215 and counting at last report. Developer got their money. Who gives a damn if the owner tried to flip rightaway? That is so 2005 and is all about them and their financial situation.
Has nothing to do with any unit the sales center gets before close (after developer keeps deposit) and then sells to new buyer.
“Who gives a damn if the owner tried to flip rightaway?”
LOL – umm… probably the other owners in the building, and the developer, and any future potential buyers, oh, and let’s not forget about all the other owners in SOMA that would ever use this building as a comp, and the government that’s in risk of receiving less taxes if the value declines anymore and current tenants have their properties reassessed at a lower value… Come to think of it… who doesn’t care may be easier to answer? Maybe John Renter that never plans on owning – but even he’d probably care because a price decline could mean less rent for him.
That’s just my guess, since this failed flip shows that the units have lost value, and the demand for them is at an all time low (signaling a further decline in value)….
That’s just my guess, since this failed flip shows that the units have lost value, and the demand for them is at an all time low
1) we don’t have the final sales price so cannot determine if it lost value or not. it’s final listing price was above it’s original non-upgraded price. who knows what it sold for, and who knows what upgrades/improvements were put into it (possibly none?).
sure, the original owner likely lost money on this deal but that doesn’t mean that the unit lost value.
2) I’m not sure we can say demand is at “an all time low”. I guess it depends on how you would define “demand”. I would agree that demand seems to be waning, at least compared to when it was unveiled a few years ago. but is demand lower today than it was the middle of winter last year as example?
South of Monterey is undesirable ? You mean places like this : https://socketsite.com/archives/2008/09/live_like_fat_mike_and_we_mean_that_with_all_due_respec.html
Granted its just barely south of Monterey, but I just couldn’t resist.
Are there any bulls left on here?
“Are there any bulls left on here?”
Better yet, has a single bear written an offer on anything and actually gotten it?
Why would a bear write an offer if they were convinced that the market was still declining ?
…wait : I know the answer : A bear would write an offer if a rare singular property that interested them came on the market like Sunny Jim’s place.
I’m guessing that it is rare that rare properties enter the market though.
“has a single bear written an offer on anything and actually gotten it?”
Has there ever been an honest real estate agent that would have the morals to advise his client to hold off on purchasing because the market is bear, and thus prices are most probably on the decline?
Too late, smarty. Looks like Fluj took his toys and went home. Although I suspect he’ll come back soon enough…
But seriously, my question is still out there: Are there any bulls still here? If so, I’d really be interested in hearing their thoughts on all of this (seemingly bad) data.
Over at sanfranciscoschtuff.com, Garrett (a good guy who really is a champion of transparency) has posted the August sales stats for SFRs and condos/TICs. Yes, this just indicates the YOY sales volume and medians for the month, but I really don’t see how anyone can look at these along with all the other indicators and dispute that we are in a city-wide market decline. I’ll miss fluj’s views, which I always respected, but maybe he get tired of fighting a losing battle with the facts.
Relevant to this thread, the D9 condo numbers look particularly nasty.
Has there ever been an honest real estate agent that would have the morals to advise his client to hold off on purchasing because the market is bear, and thus prices are most probably on the decline?
My Realtor did this (not in SF, sorry). And there are many standup realtors around the country. The problem as always is that bad apples ruin the entire jug of cider…
I too will miss fluj, despite the fact that he’d sometimes get confused at who the “attack bears” are and attack me. he added knowledge (even though I disagreed with his interpretation of the information, he had a wealth of information). This is the problem with the name slinging. It doesn’t help anybody, it’s not interesting to most of the people, and it suppresses INFORMATION. I couldn’t care less about “winning” a flame war or being popular. I want to know about the market so that I can make the best most informed decision possible. It doesn’t help me to have rah rah bulls or rah rah bears… it helps me to have well thought out posts about the market, both ways.
it helps even less to have the incessant bickering. Just get a room and have sex or something.
post data and well thought out arguments. no need for flames and constant reiteration of old spatters.
“Has there ever been an honest real estate agent that would have the morals to advise his client to hold off on purchasing because the market is bear, and thus prices are most probably on the decline?”
Ours did. He works primarily in the East Bay (we were looking in Rockridge and Piedmont), and was quite open about the risks of buying. We just shut down our active search last week and he was in agreement with the decision.
my last post got flagged. not sure why. maybe because I used the word s-x?
hopefully it’ll come up.
the second part (which may come up first):
“has a single bear written an offer on anything and actually gotten it?”
I will be possibly writing an offer to purchase RE in a small town in the midwest over the next 1-2 weeks (going to look at it this weekend). I have armed myself with local RE valuations and what has sold/not sold for some time.
I will of course lowball. Not sure if they’ll accept or not. If sellers play hardball, I may even go full offer depending on what the place looks like in person.
but even if I buy at current list price I will buy for about 15% less than what the previous owner paid last year.
more importantly, the PITI will be less than comparable rent.
but
1) I’m buying it for non-financial reasons
2) I’m only going to offer maybe $80k to $90k.
3) comparable rent is higher than PITI, and I need to have a domicile there.
4) the place is just what I am looking for, and there is a time crunch.
due to the low purchase price and the fact that it will be used to live in, even a steep drop in price will not affect me much.
obviously, if I had the luxury of time I would hold off on a purchase, but I do not have that luxury.
in response to Switzerland:
I had a stack 8 on a realitivly high floor that I reserved back in 2006. I was able to unload it to someone through my broker in 2007 at the same price I had it reserved at (no mark up) and I am very glad I did since if I still had it, I dont think I would get anywhere near the 890k range that was the 06 contracted price… maybe 800k if I was lucky in todays market.
Not trying to make anyone mad, as in my previous post, my empathy goes out to the people that have lost 10% or more in equity since closing. Its a tuff time, in a tuff building. I think this may be just the beginning of the problems 1RH owners may be seeing in the coming months.
“Do not buy in SOMA at >$800 per s.f.” – Does that apply to Infinity or Millennium? Or is ORH in a different market entirely? Thx.
my agent told me last october to not even think of buying a place until this september and recently told me to be patient and wait longer. he was truly excited about me getting a lower price in the future.
I actually prefer a second tower not be built. The 1 tower alone is very iconic, and twin towers right next to infinity will start to look so tract housing. The one tower is enough, as long as the area is filled in with other tall towers.
this fresh cl ad sure smells like this unit:
http://sfbay.craigslist.org/sfc/apa/824163380.html
dg, i don’t think they will get $4750 for that rental, unless it becomes a corporate rental. maybe the entire development will become corporate rentals, like 201 Harrison and the Beacon.
“I actually prefer a second tower not be built. The 1 tower alone is very iconic, and twin towers right next to infinity will start to look so tract housing. The one tower is enough, as long as the area is filled in with other tall towers.”
Not building the second tower would have some serious implications with respect to HOA dues. If anyone has taken a looking at the budget, you will see that HOA dues will go up 30% or so. This will likely be followed by a lawsuit against the builder and some payout, but the long run will still be higher HOA dues.
but will the available parking be the same? Will they be able to cancel the valet and go to assigned parking?
Spencer, I think I agree. It depends on what of the other 2/2’s are actually renting for. Most asking prices on cl are at least 5k for 2/2’s but are on higher floors.
Maybe 1RH is better suited for corp rentals. Makes sense.