The sale of 1604 Castro Street closed escrow yesterday (11/5/08) with a reported contract price of $1,000,000 (was listed for $1,050,000). Purchased for $920,000 in December of 2004, the sale of 1604 Castro represents average annual appreciation of roughly 2.2% over the past four years for this renovated single-family Noe Valley home.
That’s not the kind of appreciation that was being sold, or bought, by most at the end of 2004. And while the temptation will be to see this as proof that home values in Noe have been holding steady, it’s a temptation we’d avoid (unlike chocolate).
As an aside, while there were 29 single-family homes and 39 condos/TICs listed in Noe at the time this home hit the market a month ago, there are now 38 and 52.
∙ A Noe Valley Apple Ripens As The Orchard Expands: 1604 Castro [SocketSite]
is this the “real” SF?
@scurvy: yes, but it’s a 2/1, so I’m surprised (add it to my surprised pile).
I can’t imagine anyone moving into a 2/1 “for the long term”, so maybe it’s the “low price”, kind of a cubix effect in Noe?
Look, the place is worth more money than in 2004 so put the “real” SF crap asside. Noe still costs more than it did in 2004. Did the person make money, NO. But as a buyer it still costs more than it did in 2004.
I agree with Sparky.
regardless of how poorly this place performed, it did appreciate over 4 years.
it would be interesting to note what it’s peak selling price would have been? (I wonder if it would have sold for more in 2006 as example)
“The biggest runup started in late 2004 through summer 2006. If you look at any neighborhood in SF the difference between 2004 and 2005 will be enormous.
Posted by: fluj at May 27, 2008 11:18 AM”
Well, it looks like we’ve chewed through most of that “enormous” runup, at least as far as this little SFH in the real SF is concerned. I wonder how SFHs are doing in the “unreal” SF?
The seller was smart to accept this offer quickly. Prices are clearly down from peak (who knows how much), and with inventory building rapidly and the economy heading into the toilet (with layoffs only now just starting), NV prices will go down a long way.
We have a feeling that isn’t the kind of appreciation that was being sold at the end of 2004.
Wow. The housing market is weaker today than it was in ’04? I had not heard this.
And while the temptation might be to see this as proof that home values in Noe have been holding steady, it’s a temptation we’d probably avoid.
Yep, when one sees values holding steady, one might be tempted to assume that values have in fact been holding steady. No doubt about that one.
Including closing costs and agent fees, the buyers probably either broke even or lost a bit of skin there, but no biggie.
Add this to the fact that the 8% appreciation or so is less than inflation, this all points to the fact that this property is now selling to late 2004 levels.
Noe went on going up way into 2006 and even some part of 2007. Of course each block and each house is different therefore I will not call the end of Noe’s peculiar resilience yet, that’s a risky game. I have been proven wrong so many times on Noe, including some neighbor’s houses I was ogling that went 100K+ over asking earlier this year.
But maybe, as sparky is always pointing out, maybe people will stop bidding 1M+ on fixers.
“Look, the place is worth more money than in 2004”
umm… 2.2% appreciation minus 3% inflation… I believe that means this property has actually depreciated and is worth LESS.
In 6 months the comments will be “Look, the place is worth more money than in 2003” 😉
Phatty, do you have more money because of inflation than you did in Dec. ’04, if you don’t then the price tag is bigger. The Dow was at 10,700 in Dec. ’04, that’s really held up to “inflation” too.
“In 6 months the comments will be “Look, the place is worth more money than in 2003″ ;)”
I don’t think you’ll have to wait 6 months, Fronzi.
Here’s an apparent “apple” in Eureka Valley that’s been languishing for a long time:
http://www.redfin.com/CA/San-Francisco/444-Douglass-St-94114/home/1884303
It sold in August 2002 for $1.1M. Any bets on how far down the seller is going to have to go to sell it now (already 160 DOM and 3 reductions)? I say a “2003” price!
Noe is now at 2004 Prices.
Phatty, do you have more money because of inflation than you did in Dec. ’04
I know I do. Euro currency investments at a safe 4% guaranteed rate. I have gained a solid 12%/year after tax in average in USD from the time I sold properties in 2005-2006. Good thing I sold some of my Euros not long ago though. 1.60 was too good to be true. Just like 200%+ RE appreciation in 8 years was too good to be true as well.
There is a very nice comp for this place: 4090 25th sold in August 08 for $1.15 million. This house has an extra room and a more updated (but maybe smaller?) kitchen, but perhaps a less desirable location.
So I’d say it sold for somewhere in the range of 5 to 15% less than it would have sold for two months ago. Whether that’s a general trend or just a post-crash or seasonal variation–– who knows?
More Noe data, anyone?
in the trenches
I have walked past 444 Douglass a few times. Not checked the place out though. I love this stretch of Douglass, but the other side of the street has a bit more appeal, imho. The stairs a block away make this a pretty quiet street and some neighbors have made a fantastic job of making the sidewalk green.
Hey, I completely agree with fluj on this one! — Noe Valley saw substantial appreciation between 2004 and 2007 (actually, I agree with fluj on lots of things). Looks like that appreciation has now disappeared. And I don’t think anyone would reasonably argue that there is not more downside to come, although we can debate how much farther down we’re likely to go. I second the kudos to the seller for grabbing this one and taking the “low” offer. Looks like the current flood of Noe sellers were a few months too late.
“In 6 months the comments will be “Look, the place is worth more money than in 2003″ ;)”
I didn’t pick the dates out of mid air, I was commenting on the dates of the last sale and this sale. 2003 has nothing to do with it.
The whole notion of Noe “holding up” *even if* this sold at the same price it fetched in 2004 + inflation (and it missed that by a rather large margin) is absurd. Today the Dow closed at prices it first saw in January of 1998. Does that mean that the Dow is “holding up”? Of course not. The proper point of comparison is today’s price vs. the peak price (probably 2007), and the trajectory & angle of the curve since then. If tomorrow a Noe property that last changed hands in 1968 fetches 1000% its most recent selling price, it won’t be proof that Noe is suddenly “appreciating,” will it?
That said – however smug some may be feeling about this particular owner not making a killing on this property, methinks that said owner will be feeling & looking awfully smart 18 months from now for selling NOW at this price… We’re about 5% of the way into the tech layoff cycle, and the impact of that + the market melt down has yet to be even marginally reflected in the local real estate mkt…
2003 has nothing to do with it.
I agree. For now. I just pointed to the flak bears were getting not long ago. First it was the “no it is going up” responses, with good enough data points. Then it was: “hey, prices are steady”. Suddenly, Noe proves not to be so immune.
I have been on this board since May 2008 now. One day I will copy/paste the bulls’ attacks on my market comments from this 1/2 year into a nice tidy post. I think another 1/2 years will bring us more “unheard of” situations with more rationalizations.
I know the beast. I was happy to get my first place in 94 at 10% under peak price. 2 years after someone bought a foreclosure with the same floorplan at 50% what I paid. I rationalized as much as I could for a year, but her place was nicer and I has to realize the market had tanked. This taught me a valuable lesson and luckily I had some dry powder left.
I mean that 2003 has nothing to do with this purchase, in that it sold in 2004 and 2008. And in general I don’t think 2003 will have much to do with future values. 2002 might have some say. Hopefully, 2000. I doubt 1998…but dare to dream.
I’d rather talk about design. I love the white on white monochromatic paint scheme. sets off the dark entry door very nice. good curb appeal. very cool. and refreshing for a change not to be a 9 color paint scheme like you see all those pot smoking hippies do over in the Haight.
Yeah, 2002 would be a return to some sort of median. But markets do overshoot on the way down, I think. The truth is: a lot of people are still focused on RE as an investment and many are trigger-happy and slowing down the decline. What we need is another fad that will suck the remaining wind out of the RE sails.
The best deals I did were between 1997 and 2000. Everyone was focusing on dot-coms and RE was so “old economy” and boring. Who would buy a place to get 6% ROI on rents when the stock market gave you 25% as a sure thing. When RE will be this ugly thing nobody wants to touch this will be a great time to buy.
Are you serious with “refreshing for a change”? The trend has been to paint everything white (or gray) for the last few years. I’m actually sick of all the white on white. There is nothing wrong with a 9 color paint scheme done well.
I’d much rather have owned this place and lived a great life, than rent some crappy rental. Furthermore, i’d much rather have my money in this home, than i nthe stock market. OUCH!
The best deals I did were in 1998 and 2002. So I wouldn’t mind a return to either of these.
2001 to 2002 was still OK for me but all the lower-hanging fruits were gone. All my friends were asking for advice starting in 2002, sign many were running towards the next bubble.
“I’d much rather have owned this place and lived a great life, than rent some crappy rental.”
Totally agree. That’s why I rented a much nicer place in 2004 for $4500 a month, have lived an ever better life and saved $15-20K over the past couple of years.
fonzi/sparky: do you really think multiunit properties (2-6 units) are going to go back to 2002 or 2001 price levels? i dunno, i think that’s optimistic. maybe back to 2004/05 levels.
remember, there are alot of people that made alot of equity money in RE investments here, and every one of them i speak with, belives SF RE will rise again in a few years. therefore, they are all eager to re-fi, pull cash out and buy again in the city.
i think there is a dedicated market for SF investments, and that group, in general, has alot of equity/cash to buy more SF RE. that would prevent the prices for tanking back to 2002/01.
i brought my first property back in 1994. those were the days you could casually look at a property, and be able to return to it casually in 60 days, and it would still be there. i just don’t think we will be seeing a stale market like that in SF, not with all the SF RE money that was made over the last 10-15 years (note i said 10-15 yrs, not last 4-5 yrs!) that’s my perspective.
This is exactly the type of topic/discussion that would get me totally excited a few weeks ago. Luckily, i think i have “outgrown” that by now.
in the past 2-3 month when i was addicted to SS, I spent a lot of time reading and posting. And the more time I spent here, the less time I had to follow the stock market, and saw my portofio shrinked $100K in the matter of months.
Now that I shifted more attention to stock market, I sold early morning yesterday and avioded what could be another $25K drop in 2 days.
I still enjoy checking in now and then, but would never make “forward-looking” predictions on RE market movements. One benefit of RE investing, at least to me, is that it does not require daily attention.
I am now thinking of getting back into the stock market at market close tomorrow.
If this owner had put his money into equities in 2004, he’d have a very nice NEGATIVE return, which is made VERY NEGATIVE when adjusted for inflation.
Let’s face it.
This apple shows that the sky is not falling. That’s all that it shows. Nobody expected houses to surge in value from 2004 – 2008. But it held its value.
And that exceeds expectations for all of the silly bears on this site.
fronzi you never owned in this market. And people asking for your advice is a sign of a bubble? more like an apocalypse. Just kidding. But geez man. You’ve been all searching platitudes for months. Now you’re posting fake experience derived summations.
Late had already witnessed a runup, folks. This thing last sold in December. I think this shows relative stability more than anything. We never really saw the smaller sq ft 2/1 Vics go for much more than a million.
NewBuyer,
I continue to be amazed at the strength in the fortress. I have to squint pretty hard to see cracks appearing, but I do see them.
Here’s a property in my favorite part of the town (North Beach) that I have been following. A nice 2/2/parking/views. On the market for 85 days, originally listed for $839K, the latest $40,000 price cut has brought the list price down to $779K. Last sold Aug 2005 for $820K. Ouch!
http://www.redfin.com/CA/San-Francisco/600-Chestnut-St-94133/unit-303/home/1919195
Some of these places are becoming irresistible… some people are jumping in and likely will get hurt. I have to subject myself to a healthy dose of SS to avoid doing the same.
🙂
er that was late 2004. For whatever reason, it was late 2004 that saw prices sort of level to a more gradual climb. Some quarters more than others. And believe it or not, Noe experienced a dip in fall 2006 too.
“Now you’re posting fake experience derived summations.”
Good to see you’re back! And how you know this?
This is somewhat dissapointing, but this is also a niche market property. How many single family home buyers are looking for a 2/1? I’d like to see a more desirable property, like a 3bed/2bath, and see how it fared.
“How many single family home buyers are looking for a 2/1?”.
I will never get this line of thought. A couple or a single person does just fine in a 2 bedroom 1 bath house. Not everyone is looking for lots of square feet. I hardly think this is a niche market. There is a very recent sale of a one bedroom house on Levant Street that sold immediately.
“but would never make “forward-looking” predictions on RE market movements.”
And another Bull shifts to Neutral….
It’s all very micro.
I’d like to see a more desirable property, like a 3bed/2bath, and see how it fared.
Would you settle for a 4/4.5 and how it’s faring? (An Elegant Noe Valley Apple Still On The Tree: 4545 25th Street)
Now you’re posting fake experience derived summations.
Fake? Good old f!uj, you’re so wrong about that. But if this is what makes you happy, just believe it and go back to being the productive fluj that enlightened us so many times.
“Noe is now at 2004 Prices.”
as per Spencer..
well actually no, based on this property 9% above December 04 prices – so much more above early 04 prices.
fonzi/sparky: do you really think multiunit properties (2-6 units) are going to go back to 2002 or 2001 price levels? i dunno, i think that’s optimistic. maybe back to 2004/05 levels.
I don’t know neither. But we’re back to 2004/2005 for some areas/buildings. And I agree with your comment that there is a lot of money waiting. But do not underestimate the power of psychology. Some people could jump too early and become sacrificial lambs, scaring many people from doing what you just said.
SocketSite will be a great place to see this, with the apples to apples comparison. We already see a few not-so-profitable flips, some apples sitting unpicked for months and buyers playing the wait-and-see. Who knows what the apples to apples comparisons will bring us in a year? Maybe prices will pop back up and I’ll eat my humble pie.
But if the market doesn’t deliver on its promises of quick and easy riches, some flippers will go back to their day jobs, some late-in-the-game realtors will discover a new reality and find another niche to try their luck. The intense pumping that we are starting to see fade away will stop completely. That could be a good time to buy.
REpornaddict,
True when you do not take inflation into account. But you’ll admit that the 10%+ annual appreciation compounded over 2 years (until the apex of the market in Noe) have been mostly eaten up for this specific property. I can’t say for all Noe, but my guess is this is one sick canary.
fonzi/sparky: do you really think multiunit properties (2-6 units) are going to go back to 2002 or 2001 price levels? i dunno, i think that’s optimistic. maybe back to 2004/05 levels.
I have no idea where the 2-6 unit stuff will go. And I don’t think those will go together anyway. I think that 2-3 unit places will come down a lot more than 4+ unit places. A lot of people live in and may sell 2-3 units, while 4+ are typically landlord properties. The latter won’t sell if it makes sense $ wise now, and they expect rents to go up or stay flat. Plus, there is a lot less sales and run-up/down of these as they are mostly looked at as long term holds when they are bought. Also, there are people who have RE money who will buy up any good deal that comes along in this marketplace.
As far as SFH’s and 2 units, I think we will see 2002-2003 prices. As Fronzi said (and this sale shows), 2004 pricing is already here for finished houses. Not true for fixers and trophies, they remain at 2007 pricing.
IMO one thing that will drive prices back up will be the limited amount of flips that come to the market in 2009-2010. Smart flippers aren’t buying, and dumb flippers aren’t finishing and selling half done stuff. I see a lot of permitted drawing sales, and even more drawings w/o permits sales coming in the near future as well, to further weed out the finished house market. This will drive up competition for homes to some degree.
Welcome back fluj! If only we could get Satchel (er… Millionare) back too…
Don’t forget the deductablity of the mortgage interest, the fact that that person would have had to rent (at what price), thatthey would have lost a lot more if they had placed the money in an S&P index fund.
fonzi/sparky: you both gave thoughtful, and reasonable assessments on the 2-6 unit future market. my comments:
i absolutly agree that there are more than a few flippers getting their asses handed to them. and i also agree (and am befuddled by) that ‘fixer’ properties have not tanked (yet.) i am just amazed that total POS are selling for 2007 prices.
a great example, but it did just BOM: http://sfarmls.rapmls.com/scripts/mgrqispi.dll?APPNAME=Sanfrancisco&PRGNAME=MLSPropertyDetail&ARGUMENTS=-N202880596,-N224206,-N,-A,-N15878682
2500 folsom st (huge, vacant 6 units, multiple bldgs) a probate listed for teaser price $999k. i thought it was an interesting project at 1.5, maybe 1.6. well it was bid up to $2.23…which is just freaking insane! but that was before the lehman brothers/stock market blow up, so now it’s BOM. i’ll be curious to see what it goes for now.
i agree that finished units/homes are dropping in price, but i’m waiting to see if the same happends for 2-6 units. as you guys said, it’s a totally different market, and i’m sure there are others waiting for good deals to come by and they will pounce. we’ll just have to wait and see how slow it will get for investment properties in the next 1-2 years. still i suspect that there won’t be large wholesale discounting, maybe an occasional good deal that will go quickly.
Great comments on the multi-unit/investment properties. I suspect many people on the site are interested in this aspect of sf re.
Note to the Editor: May we have more threads on similar topics from time to time, please?
Prices are still too high on multi-family in SF (and cap rates are too low). Some of the dumb money may be gone or taking a break (Lembi, BX, Lehman), but, as noted above, others are still stepping in. The key is where do you think rents are going over the next few years. Anyone still buying today at cap rates of 5%(+/-) is counting on rents continuing to rise. I know investors in mid-size properties who, after getting blown out of the water over the past few years when Lembi was buying everything in sight (and bidding prices up to yield cap rates of 2%), are now willing to step up on a 4 or 5% deal. They think rents can only go one way – up.
“”Now you’re posting fake experience derived summations.””
“”Good to see you’re back! And how you know this””
I know this because it is all very micro, bro.
“Fake? Good old f!uj, you’re so wrong about that. But if this is what makes you happy, just believe it and go back to being the productive fluj that enlightened us so many times”
And you, for your part, continue posting incessant searching platitudes in an attempt to learn while appearing intelligent. This behavior is warranted in your mind by a time spent as a landlord in a vague European country the name of which we have yet to ascertain. Play your role. Forget that such behavior brings to mind the girlfriend we don’t know who lives in the Niagara Falls area.
Here’s another Noe-vicinity apple (I think), showing similar 2004-2008 appreciation: 3620 25th St, a 2/1 condo in a Marina-style, 2-unit building, sold in April of ’04 for $671,000 and in Oct. of 2008 for $795,000.
If you look at the data the big run-up ended around Mar 05 so this is a consistent data point.
@cse:
Nope. 3620 25th St isn’t an apple, because they did an unpermitted kitchen remodel in 7/06.
Well it’s a cheap-*ss looking kitchen, so if this isn’t an apple it’s at least appleish.
That said, I’m quite open to diemos’s argument that the market in this area has been pretty flat since ’05. It will be interesting to see what happens to 1205 Guerrero, a “glorified 1 BR” Eastlake condo (marketed as a 2/1), which appears to have sold for $635,000 in 2005, and which was just listed for $649,000.