The apples to apples short sale of 1150 Folsom #1 closed escrow today with a reported contract price of $720,000. Purchased in October of 2005 for $829,000.
From the plugged-in leasing agent for the original developer (but unrelated to the sale):
This is a lovely loft development designed by Sternberg-Benjamin Architects. A lower corner tri-level with great big open space at street level.
Lots of windows and light. The kitchen is gorgeous with yards of green counter space and great light. It can be a bit noisy, but if you like central SOMA neighbohood this is a wonderfully scaled space.
Two bedrooms, two and one-half baths, one parking space and 1,654 square feet.
∙ A Folsom Rausch Lofts Short Sale (Assuming 3.3% Appreciation) [SocketSite]
Wow. That’s $435 psf and puts 2008 pricing on this unit below 2001 prices when the units began to sell new.
From an earlier post by poster “FSBO”, here are the dates of sale, sales prices, and $psf #’s for the 10 units that make up 1150 Folsom:
1 10/14/2005 $829,000 ($501)
2 8/23/2005 $649,000 ($541)
3 9/28/2004 $575,000 ($479)
4 4/21/2006 $650,000 ($542)
5 2002 $585,000 ($316)
6 4/21/2005 $1,035,000 ($534)
7 7/18/2004 $803,000 ($432)
8 2/1/2001 $960,000 ($498)
9 6/27/2006 $886,525 ($477)
10 N/A $925,000 ($478)
It’s interesting that it actually closed. Were I the buyer I would have walked away a long time ago, or demanded another $50K drop in price to match the obvious erosion in demand for SOMA condos.
(IIRC this place was “active contingent” for at least six months)
PS. There’s another unit (#9) for sale in the same building:
http://sfarmls.rapmls.com/scripts/mgrqispi.dll?APPNAME=Sanfrancisco&PRGNAME=MLSPropertyDetail&ARGUMENTS=-N210375815,-N226392,-N,-A,-N15959212
I really liked this place from the pictures when SocketSite first featured it. I knew the area was borderline, but we went to look at it anyway, thinking it may be an opportunity to buy something at a reasonable price in a developing part of town.
Long story short, this is a great unit in a great building…in a terrible location. I’m sure I’ll offend someone who lives here, so sorry in advance, but I would not want to live in this part of Soma at any price. And with the economy the way it is, I wouldn’t bet on the area improving markedly in the near future, either. But somebody did get a great loft for $435 psf.
Delancey, while that listing is not the worst area of Soma and it’s “cheap”, it’s still not reflecting a large enough soma discount. Lower, or off the market people….
I’m only saying this based on the pictures of the other unit for sale. However, doesn’t the style look a bit stale and uninteresting? That might have helped to drive down the price.
Too bad they have in-unit laundry. The could’ve sipped Stella while washing their duds at BrainWash Cafe and Laundromat.
http://spedr.com/ftev
About the unit #9 that is for sale, I bet we can figure out why they’re selling even though they will take a potentially large loss (look at picture #10 in the listing).
Buying that place in 2006 is going to wind up costing them 4-5 years’ worth of private pre-K/early elementary school tuition.
Theme song for the rest of the underwater owners here (again, credit to FSBO for originally noting it):
http://www.youtube.com/watch?v=N5Ts4M3irWM
(“stuck in Folsom Prison and time keeps draggin’ on….”)
I can’t speak to the condo, but I have to disagree with Dude about the neighborhood. This area isn’t sterile like the Marina, but it’s not dangerous, it feels more like a city than a south bay suburb, and there are lots of good restaurants, bars and nightclubs within just a few blocks.
This area is in better shape that it was in 2001 or even 2005 and if I thought I could have gotten this place for $720K I would have made an offer too!
They also have #9 listed for rent at a preposterous price: $3700
http://sfbay.craigslist.org/sfc/apa/915278727.html
Can someone tell me what a short sale actually means from a buyers standpoint? Are you taking on additional risk by getting such a low price? Is it worth the headache to do this? When I looked at places short sale seemed to be something to run from..
How is $720k “such a low price”?
At $585k (the 2002 selling price), this looks like a nice enough little place to call home… no reason to think it won’t go back to 2002 pricing here.
Scurvy – I was the original owner AND this was not a staged unit. This was all my furniture in the pics. Would love to see the inside of a home of an openly judgemental person!
All – after all this time (1 year), I had to endure all of the sarcasm and shallow judgements of people sitting on the sidelines. My wife and I loved our home and did the best we could under severe family issues. The reason the property was listed for so long was because the bank refused to refinance us until the last month before the sale even though we had the income. We would of happily paid more for the unit and stayed there the rest of our lives if the bank would have worked with us. Regardless, all of you do not know the whole story about other peoples HOME. Although I like freedom of speech in the US, it is sad good people have to take such kind of open abuse from hateful people. I sincerely hope the new owners enjoy the property, building and neighborhood as much as we did.
James,
1. Do you think the sale price of $720K about reflects the current prices in the area? Have the prices gone down in the meantime and are continuing to go down more? What do you think about the pricing on #9
2. What was getting the short sales approved like? I imagine it was pretty hard. How long did it take and what did it entail?
Thanks in advance.
James,
Some Socketsite advice; Don’t get sucked into an argument with unreasonable people.
Life is good and you will be fine.
Paul
Chuckie,
1. Based on the research I have done, the price should have been around $770k for the unit. Depending on who you talk to, this figure will be +/- $25k. In my humble opinion, we are at the bottom for San Francisco. But I am no expert. I cannot comment on unit 9 other than it is a beautiful unit with many upgrades.
2. This all depends on the bank you would be dealing with. Some banks are great to work with while others are horrible! I would not want to get into details on my situation in an open forum.
Again, because this is viewed by many people, I do not want to talk details. Depending on who you are and what type of information you want, I would entertain talking with you offline.
This sounds like a textbook example of what I have been talking about. You have what was likely a very low down, if not zero down, 3/1 arm on a property that has gone down by $100K. (I realize that James thinks it’s $50K, but he likely has several motivations for believing the drop was as low as possible, and the 100K drop was clearly the best offer after a lengthy listing period, so I’ll go with the market here.)
People took those 3/1 arms to get their payments as low as possible. A 3/1 arm requires the entire amount to be paid back in 3 years, which happens to be about the period of time the former owner (whether it’s James, or someone else – anyone can come on here and claim to be the former owner) owned the home. The “1” means it adjusts every year, usually subject to a yearly and total cap. Because the risks to the lender are so low under that circumstance, the interest rate is low. People took these arrangements for all sorts of reasons, but one reason was to stretch to get into the home.
So, many people who took these loans had no money and no real chance to save very much – they were spending everything on the interest payments.
Three years later, the bank calls and says to refinance, the owner will need to cough up the $100K drop, plus 20%-30% of the new loan amount, almost $200K. This is in spite of the fact that the owner never missed a payment, and the bank specifically qualified him for a loan from which no real savings were possible.
If the bank thought this were the bottom, they wouldn’t require the 20%-30% down. The down payment protects them against the risk of further loss. The bank put their money behind their belief that prices would fall more when they took a $100K loss in order to get their money back now, rather than take even less later by refinancing the owner with nothing down, which would have at least allowed them some chance of a recovery later. The bank has information the owner does not, and no emotional tie, so again, I’ll go with the bank here.
So it’s a difficult situation: there is no way these borrowers are going to be able to come up with $300K any more than they could jump to the moon. The banks specifically targeted people who had no money and were going to pay everything they had, and now have turned around and asked them for astronomical sums.
Many people who bought in 2005 refinanced in 2006, so these problems are next year’s problems, not this year, for most people. But with a ton of layoffs, prices aren’t going higher between now and next year, so there will be many more people in the former owner’s position. Those people who have jobs are still going to be forced to sell, along with now even more people who will be forced to sell due to a job loss.
At least the current owner got out now, and didn’t lose very much money. It would be really great if a retiree who loaned the owner the money came on here and explained how they might now lose THEIR home because they got stuck with the $100K loss, so that we could see the other side, which has been largely ignored.
And finally, anyone who lists their house for sale is inviting discussion, good or bad. If they don’t want any discussion, they can list it without photos. It’s all part of life in the fast lane.
I thought the inside of the place was beautiful, with that huge wall of windows, the furnishings are prettier than mine, and though it isn’t much of a residential neighborhood, and probably has more than its share of homeless people and property crimes, I’ve never felt unsafe there day or night.
James,–sorry for your loss. The crazy credit bubble extracted its heaviest price on people like you by inflating real estate prices well beyond reason.
I do disaggree we are anywhere near a bottom. A couple years ago my forecast was a 40% overall drop. Right now, it looks like we have got as much as another 30% to go. My guess is, in a year you’ll be able to buy that property back for 500k.
James – I don’t mean to sound callous but I have to agree with tipster. It sounds like you stuck the bank and its shareholders with a six figure loss but it’s a critical comment about your furniture that you think is the injustice here?
I am truly sorry that you lost your home and I hope that you and your family land on your feet but I am even more sorry for those people who through no fault of their own have seen their retirement accounts take a massive hit because other people borrowed too much and are walking away from their obligations rather than repaying their debts.
James,
Nice trade. I’m not sure why you are so upset. You had a zero down mortgage (public record) so you never had any skin in the game. In order to get the short sale approved, you had to miss some payments I’m sure, and I bet that you missed your last tax payment of more than $5K as well, too (public record). So, you got to live for free for a while in a very expensive city in a unit that you liked.
You clearly didn’t have the income or the assets to qualify for a $800K house in any period in human history except the short window of time in which you were able to live well past your means, which you took advantage of (and it looks like you enjoyed living there and it sure is a nice looking unit). Moreover, you probably paid less than equivalent rent – or d*mn near close – on a neg am loan. And, after all this, you got to stick BofA (through first franklin by way of Merill Lynch, again all public record) with the loss! The taxpayers will be eating that loss, ultimately, through the programs the Fed and USG has instituted to save insolvent banks. Like I said, what’s to complain about?
Now if you really like living there, why don’t you go over to unit 9 and try to negotiate a good cash rate to rent it. They’re looking at a large loss after transaction costs even if they can sell it here. Unit 9 gets to keep the tax deductions and get some tax free rent money, you get to stay where you like (at probably an even lower cost than your old mortgage payment) and unit 9 takes all the very real risk that these units go down another 20-30% from current prices!
James,
One other thing (if you are really the owner of this unit that just sold).
“We would of happily paid more for the unit and stayed there the rest of our lives if the bank would have worked with us.”
Pull the other one!
Here’s a direct quote from the owner of this unit when he had it listed on Zillow with a “make me move” price of $1.05M (!!) in late 2007:
“”I have done extensive research for SOMA. Currently, the price per sq ft ranges from $550-600. At $600 a sq ft, my home should be priced at $1,050,000. I was curious to see if I could get a little more consdering the condition of the property. So, to answer your question, there have been some upgrades. But more importantly, the space is probably one of the best in the city for someone who wants a true luxury, urban environment. Additionally, I would sell with everything included (furniture, housewares, etc). THE PRICE OF 1.1M IS WHAT I WAS PLANNING ON SELLING IT FOR IN THE SPRING OF 2009. [emphasis added] Since this is a “make me move” scenario, I was just seeing what was out there. Besides, the home shows perfect. Hopefully, that answers your question.”
(This language is no longer on Zillow but was noted on SS back in February.)
It looks like this was just a speculative gamble. Like I said, nice trade – I wish I would have been smart enough to see the opportunity! It didn’t really work out very profitably of course, and you might have a tiny stain on your credit, but it was a good risk/reward bet from the outset. If only the market had continued to go up, you’d be laughing. As it is, you should be pretty happy with the very limited downside you’ve suffered.
retail guy wrote, “Can someone tell me what a short sale actually means from a buyers standpoint?”
Here’s a good link:
http://www.redfin.com/buy-a-home/short-sales
wow. tough crowd.
this story does highlight the difficulty with determining who is a homeowner victim and who is really a speculator in disguise.
I wish the best for James’ family. In the end they clearly could not afford this home, regardless of what the bank allowed them to borrow initially.
but that is no different than a significant percentage of SF homebuyers that I know. after a while people got numb to the idea of paying 5x, 6x, even 10x annual salary for a home- when really 3x is stretching a budget thin. the continual appreciation of RE from 2001-2007 hid a lot of these budget problems (people could just sell or refinance when cash got low) so it made it look “safe” to overborrow so much.
let’s see if the government decides to re-start housing appreciation. they can do it if they really want to, although it would likely destroy our currency.
The idea to restart home appreication is absolutely insane. They never should have gotten to even where they are now. Property goes up 3% PER YEAR –or whatever the CPI is. Hisotorically that’s what it does. If it’s going up consistently year after year more than that–somethign is wrong.
If thegovernment bails out a bunch of irresponsible people by destroying our currency I shall take to the streets!
Cooper writes, “The crazy credit bubble extracted its heaviest price on people like you by inflating real estate prices well beyond reason.”
Utter nonsense.
LMRiM shows clearly how “James” gamed an opportunity and stuck others with his tab.
Did James take a second or third job? Did he look for a renter to share costs?
Or did he indulge the hallmark of this era by behaving like he was “owed” this 6-figure asset?
Michael said:
“I am even more sorry for those people who through no fault of their own have seen their retirement accounts take a massive hit because other people borrowed too much and are walking away from their obligations rather than repaying their debts.”
Whoah there with blaming the homeowner for retirement account hits. (I’m going to simplify a lot to keep this post within reasonable length) Retirement funds were whacked because unsuitably high risk mortgage-backed securities (MBS) were decorated with AAA ratings, making them eligible for pension and insurance company investment.
Retirement accounts were also hit by the near-collapse of the financial system, said collapse happening because after spinning off “investment grade” tranches of MBS there still remained the toxic waste, which largely stayed on the books of the securities-originating firms. They ran out of suckers to buy that crap, and eventually it made them insolvent. Some are being bailed out by the taxpayers, others failed or were taken under.
Michael, if you want to blame someone look to the massive and semi-intentional failure of regulation. We had (have) a system where the ratings agencies did not get paid unless they issued a high enough rating that the bonds could be sold. We have a system where Wall Street employees are hugely compensated in the short term for deferring risk to the medium and long term, and suffer no consequences if reality shows that risk to be mispriced.
If you want names to blame, try bubble-lover Alan Greenspan and deregulator-in-chief Phil [Gramm], and more importantly those who put them in power and kept them there. Blaming the individual home-owner for the bubble and mispriced risk is just silly.
Debtapocolupse sad” Utter nonsense.
LMRiM shows clearly how “James” gamed an opportunity and stuck others with his tab.
Did James take a second or third job? Did he look for a renter to share costs?
Or did he indulgthe hallmark of this era by behaving like he was “owed” this 6-figure asset?”
I think you missed my larger point in that EVERYONE who bouht a home in the 2005-2007 period especially was ripped off. Especially if they put cash down. These guys were essentially paying for everyone else running up prices.
I agree with your point that speculators or people that lied on loan apps were just as irresponsible that pushed all the bad paper.
Cooper,
I agree that SF property values will probably fall over the next two years but, based on your math of 3% annual appreciation, a 30% drop is too severe.
Historical data:
1991 -2.59%
1992 -1.78%
1993 -3.85%
1994 -0.25%
1995 3.28%
1996 1.60%
1997 7.98%
1998 16.12%
1999 13.33%
2000 32.59%
2001 -4.60%
2002 -0.90%
2003 0.10%
2004 15.90%
2005 15%
2006 -1.40%
2007 5.20%
Total 95.73% appreciation (not including 2008)
A 3% annual appreciation rate compounded for 18 years is 65.28%. Given SF property values have fallen at least 12% since the beginning of this year; we have at most another 18.45% further to go.
“If you want names to blame, try bubble-lover Alan Greenspan and deregulator-in-chief Phil [Gramm],”
I don’t disagree. But after thinking about this very question for a long time recently, I’ve come to lay the lion’s share of the blame at the feet of Paul Volcker, as crazy as that sounds.
By the late 1970s, the Fed (under academic clowns like Burns) had lost just about all respectability. Volcker, a giant in both physical stature as well as respectability, restored faith in the Fed through his tremendously good stewardship of the institution through a tough period. He did his job too well! The faith in the Fed that resulted allowed charlatans like Bubbles Greenspan and fools like Bernanke to operate unchallenged.
IMO no regulation will ever work as long as the monetary system is unsound and charlatans are directing the cost of money for the reserve currency of the world by fiat. Believing in the tooth-fairy of increased regulation is a pipe dream.
(Look at what is happening right now. Congress, for instance, is simultaneously decrying the criminally loose lending standards of the past while directing similarly criminal lending by Fannie and Freddie today, exhorting banks to keep extending credit to an insolvent consumers and stealing money from alternative productive uses in order to prop up outrageously high union jobs in Detroit. Are these the “regulators” who are going to make the system work?)
I don’t disagree with cooper either. A lot of purchasers who put their own hard-earned cash down will suffer greatly because of the inflated real estate values caused by unsound monetary and credit policy. Many really had no way of understanding that the prices were illusory (note that these are precisely the people who will NOT be bailed out). Just let’s not break out the handkerchiefs for people who put ZERO down and then try to claim some moral high ground (“it’s my home, after all, and my furniture”) about how mean all the “hateful” people are!
Coop,
O, I C
Dear M,
If I took your chart as being correct, than the appreciation is 237% over that period not 65.28% You don’t add the columns up man. It’s multiplicative.
btw. 1.03^13 =70% appreciation.
Oops.
Math Correction
1.03^18=70%
M’s chart= an index of 237 or 137% appreciation.
So the natural index value is 165 (cz its only 17 periods) vs 237. So if you believe those numbers and that theory more than 30% to go.
“Did James take a second or third job? Did he look for a renter to share costs?”
You missed my point: unless a renter was willing to pay $300,000 in advance or the second job paid a $300,000 signing bonus, the owner was out of luck. The bank told the owner to hand over $300K or give back the keys. It’s not the income that’s the issue, it’s the down payment.
It’s not just this owner. That’s what they are telling everyone. Who the hell can do that? No one.
People in the bay area have high incomes but the cost of living is so high, they have almost no savings. That used to be just what the doctor ordered for getting a Jumbo loan in the bay area, but now that won’t get you anything. It’s going to be a disaster. And the super-conforming loan limits are dropping as the layoffs are getting started. Perfect storm anyone?
tipster,
I think the second job or roommate idea was to pay off the existing mortgage and avoid the refinancing, so no new capital would be required.
With the tax on short sales and jingle mail being retracted (and do you think Congress will let that exemption expire? Ha!), the hit to one’s credit rating is the major disincentive to simply leaving when one is underwater. And if hundreds of thousands or millions of people are in the same situation, how bad will it be? Someone will do business with that large a group of people.
Of course, there is the hassle with moving, the social stigma of losing a house, and the loss of the emotional investment in one’s house. But taking in renters or driving a taxi has some of the same consequences.
Which leads me to wonder how hard people are going to work to stay in their houses. We talk about the number of layoffs coming, and other forces that will cause people to have to sell, but once the attitudes of the people who could suffer and still service their debt changes, that could really open the floodgates.
I agree with cooper.
“M’s” data (SOURCE PLEASE) calculates to 18 years of appreciation of 137%, or 5% annual housing appreciation over 18 years
3% housing appreciation over 18 years is 70%
4% over 18 years would be 102%
5% over 18 years would be 140%
of course, it’s hard to use this data as it starts in 1991 which was at the beginning of the housing recession.
if you start in 1995 (using M’s data) you get 159% appreciation over 13 years. (7.5% annual appreciation).
not saying that starting in 1995 is any better than 1991 (it’s not because it starts right before a boom), just saying that you can easily pick your data to ‘prove’ your message.
that said: this data seems to contradict what many people say. SF housing values are not very stable. They seem to boom-bust. hardly the “RE never loses value” message that we were bombarded with in the mid 2000’s
that said:
the thing that makes SF’s RE problem so severe is NOT the absolute level of appreciation over the last 10,15,20 years etc.
it is the housing price/salary ratio (which has escalated over the years, even when you ONLY look at buyers and not renters), and the down payment % over that time period.
1996-2000 was a much bigger RE boom in SF than was 2001-2007. however, 1996-2000 was supported in part by rapid massive wealth accumulation in the Bay area, something that was not replicated in the 2000’s.
much of 2000’s RE appreciation was due to leverage.
Not a loft.
I would make a serious bid on the #9 loft that Delancy posted at $750K, even in this neighborhood. As a single guy, I can learn to outrun the banditos in the neigborhood. teh palce is huge
Spencer, what would you do with such a huge place for you alone ?
or would you buy hoping prices will go up and resell in a few years ?
invite frineds over, adopt a large dog, put a trampoline inside (ala Big), have a nice housewarming party, baske in the glory of homeownership. pray that the neigborhood improves. rinse and repeat