301 Main Street #9E
From a plugged-in tipster and Infinity resident late last week:

A second resale at the Infinity [#9E] is hitting this weekend…I looked at this one back when the sales office first opened and it was listed for just under $900k, if my memory serves me correctly. This resale business seams especially interesting in light of the clause, at least in the contract I signed, that restricts sales for the first two years.

Upgraded and currently asking $885,000. No mention of any relocation. And yes, a complete Infinity update is in the works for later today (or possibly tomorrow).
UPDATE: The listing for that “first” resale (301 Main #4B) was just withdrawn from the MLS.
∙ Listing: 301 Main #9E (2/2) – $885,000 [Climb]
A Listed Infinity Resale (301 Main #4B) And Reader’s Report On Sales [SocketSite]

78 thoughts on “Another Infinity Resale (#9E) Within Those “Restricted” Two Years”
  1. Great photography. the common areas are great looking.
    The views (or lack thereof) are quite unfortunate. the main living space is also a huge letdown. Part of it is those cabinets which I’ve never been able to get over, but those can be easily replaced.
    I’m mostly underwhelmed by that Living space. Enough room for a couch, but that dining table is really squashed in there. don’t San Franciscans have people over for dinner?
    there must have been a better way to reorganize this space.
    As example: if the entry door opened to the left (into the hallway) instead of the right (into the kitchen) then the kitchen could be pushed back a few feet, and it could be in a U shape along that back wall, freeing space for a Dining table.
    honestly, the lack of planning for these high end condos is striking IMO.

  2. An update on the Infinity? That is a waste of time – the developer ruined the best available lot in the city by designing a building with apartments that don’t fit a dining room table. This isn’t the Jetsons! How about an update on the Radiance, Arterra, Millennium? At least those buildings are livable!

  3. This isn’t the only floorplan at the Infinity, and to judge the project soley on this unit would be capricious at best. There are many, many different choices, including the 2nd (superior) tower which is scheduled to start selling in the very near future. I would be suprised if you cannot not find a unit at the Infinity that is not suitable for your needs.

  4. you guys are kidding right? the living area is pretty comparable I thoguht for infinity I thought.
    I’ve seen ORH and Arterra etc and I think Infinity is actually the same size with the appearance of more space I think because of the rounded building. am I wrong?
    fwiw. I love the neighborhood, the amenties and the look of the building. i like it a lot more than the others you mentioned.

  5. paul-why do you think the 2nd tower will be better? better cabinets would be nice but the floor plans are identical correct?

  6. I toured this unit on Sunday and the layout is not ideal for a full table, but it is certainly possible. In fact, the builder has a identical staged unit that includes a table and couch. I think the owner of this 9E went for an oversized couch instead of both, which is actually smart if only two people live there. Really none of the Infinity units are great for tables, but who at the infinity has a four person meal in their unit that often when you are blocks away from great dining?
    I also toured 11E which is listed for $975, so I think the price is pretty good on 9E if you don’t need a view. I need one personally, but I bet this goes quick to someone who wants to get in at the Infinity location for under $950. There is really no other way.

  7. Following the rule that any discussion of Infinity must include ORH and vice-versa, I see that #2103 at ORH was just reduced $100k. Still way, way overpriced at $1,075,000 for a 2/2 IMHO given that you can rent the same thing in the same building for under $4000 (and save the $775 HOA dues on top of that).

  8. Tom Said “I also toured 11E which is listed for $975, so I think the price is pretty good on 9E if you don’t need a view. I need one personally, but I bet this goes quick to someone who wants to get in at the Infinity location for under $950. There is really no other way.”
    Hey Tom–Good news. There actually is a way. Wait 3 months.

  9. you guys are kidding right?
    no, I’m not kidding. I would have liked to have a dining room with my $885k 2BR condo.
    and I think it would have been EASY to shift the entrance to the left (in the picture above) which would have allowed you to push the kitchen back a few feet, and make it a “U” kitchen that was open to the DR/LR area, which would have given room for a DR.
    you could also have made the bathrooms or Bedrooms a bit smaller (although I know that’s unpopular as well). But I guess SFers don’t care much for Dining Rooms so they allocate more space to Bathrooms?
    sorry, but in my world “luxury living” doesn’t include a dining room table squashed up against the kitchen peninsula.
    in fact, looking at just the pictures of the unit only (not the incredible amenities) I would never have guessed that this was a luxury anything, but that’s because i’m in the midwest now and we have different (not better, just different) opinions on luxury.
    the amenities are great though (the lap pool, the exercise room, etc etc etc).
    FWIW: a lot of the “luxury” towers have this massive space misallocation problem.
    I’ve only been in a few ORH 2 Bedrooms, but the space was laid out better with easily enough room for a DR table and 4 chairs. but the configuration was very different. also the ORH 2BR I saw was around 1250-1300sq ft I think… not sure how big this Infinity unit is (I can’t see the sq footage).

  10. Yeah- I agree int he sense that ALL of them could use with bigger living areas.
    For example in ORH-only a few of the units have nicely sized living rooms. And you usually have to buy a lot more space elsewhere to get the nicely sized living area.
    If you have a view unit, you want to spend a lot of time and entertain in the living area. So I agree with what you are saying but I am not so sure that at least the majority of the infinity units (maybe not this one) are on par with everything else out there-specifically orh, beacon, arterra or whatever.

  11. Cooper,
    Much of the 2nd Tower will have unobstructed views of the bridge and water. I have been told they will begin sales of the 2nd Tower soon.
    I just closed 2 units for buyers at the Infinity last week and have two more offers in negotiation. Sales seem to be picking up.

  12. This unit was perfectly sized at the time it was sold. This was targeted at the typical buyer at the time, someone who had just graduated college, had no real savings or other assets other than a cheap sofa and a guitar, who was looking at a starter crash pad on a $50K salary.
    The cost? Just under a million bucks, with upgrades. Upgrades? Well, we can’t have our new college graduates living in anything other than the finest luxury, and why not? I’m sure there was enough cash left over to buy that flat screen.
    That was then. Whether these are suited for today’s market? Different story.

  13. but I am not so sure that at least the majority of the infinity units (maybe not this one) are on par with everything else out there-specifically orh, beacon, arterra or whatever.
    Oh, I see what you mean. don’t get me wrong, I think most of these “luxury condos” have horrible layouts, but I’ve voiced that in the past. I didn’t mean to single out Infinity
    I’m a sucker for traditional space allocation. A living area where one can entertain oneself or guests. A Dining area where one may eat. A kitchen where one may prepare foods. bathrooms where one may groom and toilet. And sleeping areas where one may sleep
    of course one may mix and match these, so long as there is space allocated for each.
    there are a few relatively recent changes in planning which IMO are flashy but don’t always work in day to day living:
    -the persistence of huge closets at the expense of usable living space. if you need lots of storage you can always put in storage units from floor to ceiling. but it’s harder to rip out a closet.
    -the propensity to have bathrooms out of proportion to the rest of the unit. Like 225 sq ft bathrooms but then a 150 sq ft living/dining shared space.
    -the propensity to add islands in the kitchen, even when they obstruct rather than add workspace
    -Lofts for more than 1 person. if more than 1 person then they must by necessity live an “in sync” lifestyle IMO. (no, not the band!)
    obviously, lots of people will disagree with my gripes. it is after all, a personal preference not a law or dictum.

  14. Ex SF-er, I do agree with you that calling this unit “luxury” is a real stretch. I’d go so far as to call it fraudulent (in their defense, they only refer to the amenities as “luxury”). I stayed at a Residence Inn in New Hampshire for a couple weeks last summer for a trial, and, I kid you not, it was quite similar to this unit. It did not have Bosch appliances and the 2 bedrooms were smaller (1 BR suites were booked so they upgraded me). But the two units had a very similar layout and feel (right down to the tiny “dining area”), and I think most people would put the two units in about the same league.
    And the Residence Inn also had a nice indoor pool. And free breakfast every morning and cocktails every evening!
    I’m actually not a big fan of “luxury” (my clients here ribbed me for staying at a low-end suite rather than a nice hotel) but I know it when I see it, and this ain’t it.

  15. Having toured and bought at the Infinity (ok no side comments please because even having bought in this economy I really am happy with the decision so please let me enjoy it). I have a few comments about the above. Having lived, rented and bought in 6 different places over the past 10 years all between Nob Hill (the real one next to Grace), mission bay (loft), fidi, and another luxury high rise + floor 30 with pano bay and bridge views, I can honestly say the Infinity has been my favorite by far. Service is top notch with relatively favorable HOA in comp to what one would pay at say Millenium for everything but “Hotel Services”, amenities are fabulous, and the developer team is top notch constantly reviewing and improving the project as a whole as things are tested out, comments are made – they listen to who lives here and want the community members to be happy which is more than many developments/ developers can say. This is a business and I expect them to want to make money but for the first time ever I live in a place where I feel like that is not the bottom line be that it is or not; they want this development to shine..and I feel it shows and to me, it is worth paying a bit more. As for the units, you really need to visit each one, many are different. Most units are very bright, lots of light, some have 10′ ceilings, some have large den areas where you could do a small formal dining area, and some are 3 bedrooms of which perhaps you could use as a formal dining? I am sure the unit bought above met the needs of that particular individual, maybe not everyone but I do agree there is something here for everyone. I would be surprised at the resale price but I figured this would happen but took a risk to get in the unit I wanted while others wait on the sideline. It will be interesting to see where pricing lands once tower 2 opens up.

  16. Forgot to note: The only downfall I can see for some perhaps is in fact the style/finishes of the units. They are simple, modern but some people like this.. Cabinets are not favorable and the base carpet color is hideous, but anyone could have seen this when viewing them in the sales center (I did, but cared less as I want to change them out anyhow)… I believe the thought process of offering a very base line pallette was an assumption that most people will in fact want to change it out.. will see what tower 2 brings as obviously the climate has changed relative to people having tons of cash sitting around to renovate with. It is much more difficult to change the overall building than the finishes in your own unit and my guess is you could get a pretty good price on labor and finishes these days and get exactly what you want put in.

  17. At this price point, without a view and a poorly designed floor plan, why live here? (Although I will admit the building and location is first class.) BTW, am I the only one that thinks a pedestal sink in the second bathroom is not good enough? The deeding parking is a big plus.

  18. Deeded parking is huge and the size of the stalls (Many of them) seems huge. I have a sedan and I could still fit 2 motorcycles, bikes, storage etc. in my space or even two mini size cars (not sure the rules allow for it) but it is nice to not be crammed in next to my neighbor. Willow pedestal sinks are not that bad but the tile in the 2nd bath is like the base carpet – hideous. All easy to change out of course.

  19. I still can’t figure out why the size of bathrooms seems to have gotten so big in all new construction. What are people doing in these bathrooms?

  20. hung out with a friend of a friend (new friend now), who rents a 2bdr on the 16th floor with water views for $3800/month

  21. GWTF: I see where you are coming from and I’m glad you are enjoying your unit. As I mentioned, the building and location is excellent. When you live in a high rise you generally are asked to make compromises in terms of space and storage. (Which is fair enough.) However the foyer and “study” in this floor plan could have been reconfigured. There’s enough overall square footage here to include a reasonable dining area.
    The floor plan really is ill conceived and judged more harshly through the lens of the current RE downturn. Agreed, the pedestal sink is relatively small. I was just surprised to see it…

  22. About the layout, yeah, a little sub-optimal. But I’ve looked at a lot of units over the years and I actually cannot recall a development that I thought was well designed. Anyone?
    Most of these buildings are built from the outside in, and the room layouts almost seem like an afterthought.
    Disclosure: I bought at the Infinity and love living there.

  23. I love the little chart on the right side of listing site, SF prices are sky rocketing fast in ’08!
    $4k to rent this place? Pfft.

  24. Yes I agree; for some reason layouts in most SF units are strange to say the least and do not use the allocated space as wisely as possible.
    Willow I agree this particular unit could have been positioned differently to allow for a small dining area. Unfortunately the entrance does not allow much opportunity for a plan shift. Many units have more flexibility to rectify any layout issues one may have. (My unit does).
    As for compromises in terms of space, storage etc. I could see this being a problem for those that like lots of space, and having lots of things. Some units have high ceilings and room to build in extra storage above the kitchen cabs fyi. and extra little corners to do the same if desired. For those who do not want the upkeep of a house, lots of sf., hate having storage/mass consumption, and just want to live a simple life this type of place is perfect.
    Of all the units I scoured prior to buying I think the Brannan layouts are similar, and I always thought those were small but the styling of the building hit a home run so I just accepted it. Never lived there but love the property.

  25. “withdrawn” – meaning pulled to keep/rent etc.? or it sold? (sorry not an RE expert) so I apologize ahead of time for the novice level question.

  26. @ anon
    Actually, I have toured all of these properties (as many on here have) and I would say Millenium is the only one that has logical layouts that make good use of space. ORH=random columns. Infinity=the much discussed lack of DR space. Of course, I wouldn’t really lump Millenium together with Infinity and ORH, it’s a different level of product….speaking of which, how about a millenium update, socketsite? Seems like they would have to be stalled on sales right now…
    GWTF- not ripping your building and very glad to hear you’re happy with your purchase. 🙂
    With that said, I think the more important distinction here is the suitability to the economic times of ALL of these buildings. All are really high $$/PSF, all have high to very high condo fees. The SF high life that supported these buildings is crashing down around our ears. The higher the starting price point, the farther there is to fall…

  27. lies..damn lies – appreciate your noting your not ripping on the building but if you were it’s ok. I love it here so I take no offense to “Infinity” comments; it is all subjective.
    Yes agreed – the more important discussion here is where prices, purchase power, jumping off the sidelines all plays in to the big scheme of things.

  28. I have to comment quickly that I agree with gowiththeflow. I love living at the Infinity and plan to be here for a long time. I think there is a place for everyone and if you want a large formal dining room, then perhaps you want a different kind of living space altogether. I am still not sure why people feel what they want in a home is right for everyone else. Buy what works for you and be happy with it. I love my view of the bridge and water, amount of space, and the overall feel of the place and amenities. I am here to stay and doing so happily.

  29. Ok – if the thread changes course from “Infinity” finishes and layouts to lies damn lies “suitability to the economic times of ALL of these buildings”.. I want to clarify my saying “Having toured and bought at the Infinity (ok no side comments please because even having bought in this economy I really am happy with the decision so please let me enjoy it)” was really kidding for the most part.. I would love to hear thoughts on this – especially from LMRIM if they decide to jump in here….peanut gallery, NV Jim, and the others who typically post great info with a tell it like it is/ like they think it is viewpoint.

  30. This unit is perfect for those who dont want to pay that unsustainable premium for a view, want decent space for a 2bdroom, all the amenities, want to be in the main tower, location, new building, etc. This comes out to $750sqft as opposed to $1,000+ sqft for something with “partial view”. Is a partial view worth 33%-50%+ more for each foot of living space?
    Am I missing something here?

  31. “I think there is a place for everyone and if you want a large formal dining room, then perhaps you want a different kind of living space altogether.” At this price point we’re not asking for a formal dining room but at least enough space to put a table that seats four people. Is that such an outlandish requirement?

  32. Willow, then maybe that person shouldn’t be trying to by a place one block from the water in SF. Try a different location and I know you will find more space for your $. If you want to live in this kind of location you will pay more. That is true everywhere.

  33. At this price point we’re not asking for a formal dining room but at least enough space to put a table that seats four people. Is that such an outlandish requirement?
    Agreed. My apartment in Paris was quite small. much smaller than this place. And yet it had a kitchen with an island that people could sit at, a little cute area you could seat 6 people for dinner, a nice little living room (this was all in one room, maybe 20 ft by 25 ft or so) and then had a small bathroom and a small bedroom. but it had sky high celings so one full wall had storage from floor to celing, I could get everything in that unit!
    it looked something like this (but this isn’t it):
    this linked place has only 730 sq ft and is only 1 BR, but look how much room is available for the LR and DR area. It still has a nice but small bathroom.
    The bedroom is quite small and most Americans would want a big closet which this doesn’t have of course.
    The kitchen is also quite small.
    but compare this LR/DR space to the one in the pic above. IMO this space is far more guest/entertaining friendly.
    My point isn’t that my linked space is “better” just that there are different ways of organizing small spaces to achieve different ends.
    In SF, the architecture seems to really favor huge bathrooms and oversized closets and often big bedrooms to actual LR/Dining space IMO.
    surely there could be a compromise?
    Perhaps this happens in SF due to the number of non-related people who share condos?. so each person lives in their master bedroom suite with a small adjoining living space?

  34. Another infinity resident here:
    I actually have a nice sized ‘plus,’/den area that a lot of people suggest I turn into a formal dining room (keep in mind that I already have a full size dining table and couch in my living room). While they’re nice suggestions, am I really in the minority when I say that in the past 3 years I think I’ve hosted a grand total of 5 dinner events (Thanksgiving dinner, etc.)?
    Granted, I spent my fair time in SF studios, 1BR’s, and 2BR’s (w/roommates) so space was always an issue and maybe I’ve conditioned myself to this mode of thought. Either way, any dedicated dining room area would eventually turn into an informal office soon or later w/me. I would almost rather – and am contemplating – getting rid of the dining room table, add/build on a bar to the existing kitchen counter and have more living room space. To me, it’s about getting the most out of the space you’re given in the context of your lifestyle (love the amenities and proximity to restaurants and bars). This coming from someone w/the perspective of a mid-western’er where space (and parking!) doesn’t come at such a big premium.
    Maybe a straw poll: how many dinner events have you hosted in the past year and/or plan in the next few months that would warrant a dining room?

  35. SFOSEA – I probably should not have included pricing in my previous post because that’s not really the essence of my comment. (I get the whole SF is an expensive enclave thing…I’ve been living in a ridiculously overpriced home for several years. Yes, I drank the cool-aid too!)
    It’s all about the layout. Bottom line is that the floor plan for lack of a better description really sucks and wastes a lot of precious space that could be used more efficiently. (The living and dining room combined is the same size as the bedrooms. Does that make sense?)
    My comments do not translate to the entire Infinity complex. I actually like it a lot!

  36. Paul Hwang wrote, “I just closed 2 units for buyers at the Infinity last week and have two more offers in negotiation. Sales seem to be picking up. ”
    I see a 7 resales in ORH in September.
    Obviously these are just resales. Buy why wouldn’t there be any sales in October and November?
    I can’t help but comment how out-of-whack the rent vs. buy continues to be at Infinity and ORH. Assuming this Infinity unit can rent for $4000 per month, that’s a monthlt GRM of 221. And accounting just for HOA, property tax and insurance, that’s a Cap Rate of 3%. If you assume wear and tear of .5%, that’s a Cap Rate of 2.5%.
    A resale at ORH is listed by Paul Hwang for $1.075M.
    Or you could rent it from him for $4350.
    That’s monthly GRM and Cap Rate of 247 and 2.3%.
    Thse numbers, although somewhat better than a year ago, continue to be unreal even in the not “real” SF.

  37. Willow, agreed. I think there are things all of these developers could do differently. Personally, we looked at the Millennium units too and felt like they were just as bad as most in terms of space usage unless you paid a VERY large amount for a bigger unit.
    Unfortunately I think developers have responded to the idea out there, promulgated by design shows and magazines, that we should all want big master suites with large bathrooms and closets. Unfortunately, the flip side of this is that a lot of buyers have drank that Koolaid as well and won’t look at a unit that doesn’t have those. People insist on having space for a king bed in place of larger main living areas and everyone wants a soaking tub separate from their shower when most people never take a bath (IMHO).
    I think the silliest thing in the Infinity was the useless island space. It was too narrow and their was no overhang to put your counter stools under. Just that modification would have made the space more functional for dining and informal entertaining. We ended up redoing the whole kitchen and now have one that works much better, and is not just like all the other Infinity kitchens.

  38. Sorry for the confusion, trying to multi task here… What I was trying to say:
    This thread for the most part has discussed layout issues, finish issues etc.
    Poster lies damn lies than attempted to steer it into discussion about high $$/PSF and condo fees of the Infinity and other similar buildings relative to how the economny crashing may or may not change this (unless I mis-understood).
    In my first post I asked posters to go light on me. (Noting that I bought in this economy tends to welcome crazy looks and very opininated comments these days).
    Being conditioned to this type of response I was really for the most part kidding; I do want to hear what people have to say.
    So the question is per “lies damn lies” post:
    Is the Infinity, ORH, Millenium etc. going to be able to sustain current pricing? Do people really think the developers of these types of buildings plan to slash prices going forward?
    I personally do not think they will or at least hope they won’t. Most properties of this type and caliber have eithe been put on hold, or have slowed the time line of building = less availability, less competition. If anyone does build it will be a few years out for anything to be move in ready. Not knowing what will happen next year i.e. lower rates, followed by high inflation, bail outs, etc. there are many an opportunity that may push people to want to jump off the sidelines.

  39. Chuckie,
    GRM is Value / Yearly Rent (20.6 in the csae you refer to)
    Cap Rate is NOI / Value (Difficult to determine unless you know all the expenses).
    In any case you should not buy a condo in SF for GRM or Cap Rate. There will be some great deals on NNN commercial space in the coming year that may be more suitable for your needs. I can think of one off the bat that would be proforma 10% Cap.

  40. Willow I agree with your points regarding the posted layout but also believe it being a good or bad layout depends in large part on the purchaser and how they want to and plan to use it.
    sfjhawk I too have a large den that could easily become a formal dining for a table of 6-8. I would need to demo one small little closet but it could work. Thing is I don’t want to spend the money until I live here for some time; see how I use the space. For some reason no matter how hard I try to cook and eat in, it does not work be it while living at the Infinity or other places in close proximity; there are too many good places to dine around here. We also seem to have the issue you do with areas turning in to work space.

  41. “Cap Rate is NOI / Value (Difficult to determine unless you know all the expenses).”
    I am just using HOA, property tax and estimated insurance to calculate Cap Rate. These items are fairly standard.
    “In any case you should not buy a condo in SF for GRM or Cap Rate.”
    I know, you should buy for “pride of ownership” 🙂
    More seriouly, as these sellers are finding out, Cap Rate does matter if you end up having to rent your property.

  42. Not being in RE or finance I don’t understand why one would not calculate mortgage/int deductions in when determining the should I rent or buy number? No need to explain unless you really want to but it can make a difference no?

  43. + 33%-50% psf for partial view – uh, no. Interesting thing is I don’t even think appraisals add that much to the unit value when calculating a view.. maybe 5-20%? Of course that does not take in to account what an actual buyer in a decent economy would pay for it..

  44. gowiththeflow,
    Cap Rate and GRM are used to quantitavely comare income properties, where really only the lease terms and quality of tenant matter. Cap Rate is determined prior to debt service.
    I think it’s always better to own if you plan on staying 5 or more years in an area.
    When you “own” you feel much more stable than when you rent (i.e. not bothering to unpack boxes, because you don’t know how long you will be there, owner may raise rent / sell, etc.).
    Financially, the good thing about real estate is that you have time on your side, you just have to be able to survive the trough of the sin curve. There are also tax benifits from owning real estate as you have indictaed.
    The most important questions you have to ask yourself, are if you will be happy there and if you will be there longer than 3-5 years.
    If the answer is “no” then it is probably more prudent to rent.
    If the answer is “yes” then the decision would be geared to your own personal financial situation and goals.
    I think the Infinity is a great project with unlimited potential, but not everyone may agree. There is nothing wrong with that.

  45. Paul
    Are you smoking crack? “It is always better to own if you plan to stay more than 5 years”. I challenge you to publish actual math that compares monthly mortgage+taxes+HOA-tax deductions versus monthly rent. I can guarantee you that even at 5-6% jumbo mortgage rates, you wouldn’t even get close. Plus, rent is totally negotiable in these buildings. Have you checked out how many units are for rent in the Infinity, Watermark, 200 Brannan, The Brannan, etc? Again, what calculation are you using to state “it is always better to buy than rent if you stay 5 years.”

  46. Paul thanks for the feedback. I think the rent vs. buy argument changes on a case by case basis. I was just wondering why when I see this debated I rarely see anyone factoring in the deduction aspect of it all. Realistically in some cases it could be the make it or break it point of paying taxes on a higher income bracket. This obviously could prove to be very helpful come the next few years or maybe now for some. Regardless I still am happy living at the Infinity, and happy I bought when I did. Knowing what type of economic environment I was buying in, and watching this all unfold I still think it was absolutely worth it, and I have no regrets.

  47. Gowiththeflow,
    Exactly, some of these units are going for +25-50% or more with a view (compared to the absolutely no-view units). Can you believe it. For instance lets look at two extremes. The lowest $/sqft unit is about $650 and the highest, ie penthouse is going for $2,000+. Thats a 200% premium per foot. Its basically saying that 2/3 of the value of the unit is the view and 1/3 is the space. Does this seem realistic?

  48. Amom when you put it that way I can believe it. Your not just talking extremes now, but major extremes. Comparing the penthouse to an absolutely no view unit is a completely different analysis than what you were talking about prior. When compared to the going rate for other prime penthouse locations in the city, I actually think $1500-$2000 psf is fair. The views that high really are amazing, much more so than the lower floors.

  49. Denise,
    Real Estate is a long term investement and has several beneficial financial attributes:
    1) It forces you to save instead of blowing (or smoking) your money away on “crack”.
    2) Provides favorable tax benefits.
    3) Is a hedge against inflation.
    4) You feel more grounded / stable and allows you to work more efficiently in your life.
    If there are more people and those people have higher incomes 5 years from now (i.e. jobs), the probability is that rents and home prices will also be higher.
    In college I would have killed for a $10 / hour job, now the guy at In N Out makes that. I thought if I made $50k a year in salary I would be set. If that were true today, I would have difficulty supporting my family. 10 years from now the guy at In N Out will be making $20 / hour, and the average professional salary will be $200K / year (i.e. senior engineer with 5 years of experience). That engineer is not going to think twice about dropping $ 1 mil on a 1 BR or paying $5000 / month in rent.
    There are some great deals out there right now, if you make $60K / year you can buy a 3 year old 3000 sf house for less than $200K in parts of the bay area! Even in San Francisco there are great deals to be had. Right now, the buyer is king!
    The probability is that the person who owns a property for the next 5+ years is going to be financially ahead of the person who rents for the next 5+ years.
    PS I am not smoking crack.

  50. @Paul Hwang
    How about hedging against deflation? Not so good there, esp. with leverage. With cash, knowledgeable investors have multiple options to deal with both deflationary and inflationary trends.
    Grounded/Stable, more efficient in your life? You’ve seriously got to be kidding on this claim. Not only is that statement baseless, it’s completely untrue. With rising unemployment, renters have better ways of coping with relocation and mobility that will certainly be confronting many families in area. Furthermore, they won’t be saddled with a 6% surcharge if they decide to take a position outside of their commuting zone.

  51. Dealmaster,
    Are you proposing that there will be deflation for 5+ years?
    Are you also proposing that the person who has rented for the last 5 years feels more stable then the person who has owned for the last 5+ years?

  52. Paul Hwang wrote, “Cap Rate and GRM are used to quantitavely comare income properties, where really only the lease terms and quality of tenant matter. Cap Rate is determined prior to debt service.”
    As the correction is taking place, GRM and Cap Rate are a quick and dirty tools to judge if the valuations are starting to making any sense. To me, the numbers I calculated above for ORH and Infinity, indicate either that there is quite a bit of fat in the asking prices or that these buildings are special.
    “I think it’s always better to own if you plan on staying 5 or more years in an area.”
    Looking back, that’s mostly true for people that bought in “real” SF in and prior to 2004 due to the rapid price appreciation that was going on. It’s already proving not to be true in d10 and other marginal areas.
    Anyone that bought in 2005 or later seems to be under water and will likely be under water for many years to come.
    Looking forward, I suspect that it will not be true for a lot of the “real” SF either in the next year or so and for many many years t come.
    But for now, real estate professionals can continue to make that claim and be mostly correct in “real” SF IMO.
    “Financially, the good thing about real estate is that you have time on your side, you just have to be able to survive the trough of the sin curve.”
    Very good advice… make sure you have a 6-12 months of salary saved to tide you over in case of a lay off, divorce, relocation etc. Alternative will be a forced sale or losing your down payment to a forelosure. Do. Not. Buy. If. You. Don’t. Have. A. Large. Reserve. Set. Aside.
    “I think the Infinity is a great project with unlimited potential”
    “It forces you to save instead of blowing (or smoking) your money away on “crack”.”
    I spend most of my money on booze, women and boats; the rest I waste 🙂
    “Is a hedge against inflation.”
    Except when it is not.
    “You feel more grounded / stable and allows you to work more efficiently in your life.”
    Paul, is that another way to say, “Buy now or be priced out forever”?
    “The probability is that the person who owns a property for the next 5+ years is going to be financially ahead of the person who rents for the next 5+ years. ”
    We’ll need an armchair economist to take that on 🙂 I will say this though that IMO we have entered an era where real estate, especially your shelter, is an expense item much like the food you consume or gas that you burn. For a long time to come, the buyer will financially come ahead of the renter only if the buyer’s monthly expense inluding interest, property tax, HOA, insurance, down payment opportunity cost, maintenance costs etc. are less than the rent he would pay. Appreciation will not bail him out.
    Learning about Cap Rates, GRM, rent vs. buy calculators and most importantly plugging-in is a great start 🙂

  53. “Anyone that bought in 2005 or later seems to be under water and will likely be under water for many years to come.”
    Chuckie I hate to say it – although I agree with some of your comments I know many people that bought in 2005/2006 both in SF and parts of the east bay that sold as recently as 2007 and 2008 who were not underwater and actually made a boat load of money on top of what they put down originally. No joke.

  54. @Paul Hwang
    Yes to both questions. By the way, is the inflationary scare the new selling tactic in SF real estate? “They’re not making any more land” becomes the “They’re printing too many dollars”?
    I’ll entertain the inflationary scenario once we start seeing it in wages. At that point I can change my investment strategy to reflect the new reality. Can I do the same with RE?
    And yes, I feel a lot more comfortable and secure as a renter. Like LMRIM, I rent in Marin at a 200+ GRM. It’s probably worth an extra $1200/month over the last 4.5 years. The extra savings will provide a nice buffer in the case of unforeseen financial difficulties. No $6k/month monkey on my back makes DealMaster a very comfortable and stable sort in these scary times.

  55. DealMaster where have you been all day now if only we could get LMRIM, PGallery, etc. on here this could be fun. I knew you would have a blast on this thread once you saw it hence my initial but sarcastic “ok no side comments”; truly have been dying to here what you and a few others have to say.

  56. The new selling tactic in San Francisco is the same as the old; “Show people the deals”.
    I do not think there will be delfation for the next 5+ years as you have stated.
    I do not think renters of 5+ years are more stable than property owners of 5+ years as you have stated.
    Any reasonable person would agree.

  57. Oh paul,
    Most people think I am a reasonable person–I think we are in a period of asset delflation and that starts and ends with real estate.
    I think that at best for real estate it will stop going down in 10% steps this summer, but then you get 5 years or more of -3% deflation or so. Maybe if we are lucky we get some flat years at the tail end.
    It’s not like it hasn’t happened before. In fact at this point given all the data we have, its unreasonable to assume that won’t happen.

  58. Real returns (adjusted for, say, median CPI inflation) will be negative for SF for 10-15 years. For parts of the Bay Area that have already seen significant corrections, maybe only 5-10 years going forward.
    As for nominal returns, that is a little tougher because the outlook is very cloudy right now whether the Fed can “thread the needle” between flat to modest CPI de- or inflation (say, -2% to +4%) and mass inflation that would be very destabilizing to leveraged assets like SF houses (significant CPI deflation IMO is as unlikely as significant wage inflation). I’d guess negative nominal returns for 5-7 more years in SF, alhough the bulk of declines will happen Q2 2009 to Q3 2010. The nominal outlook is significantly better for areas that have already wiped out (say, much of the lowest priced areas in East Bay, Novato, etc.), but the mid- to high-end everywhere still has some significant nominal declines ahead of it.
    This was a once in a lifetime overvaluation/bubble. I’ve spent a lot of time in financial markets. Much of the discussion these days reminds me of how people in 1997-2001 used to talk about stock returns. Stocks in aggregate represent real productive assets that generate positive real return. And yet we have now seen more than 10 years of negative nominal and real returns. That was considered unthinkable, and numerous “rolling 10 year” investment horizons were touted to show it. The future was not as they had thought back in 1997-2001!
    Redidential real estate is not a productive real asset. It is primarily a consumption item, and as such derives its value primarily as its input value in the chain of productive enterprise (primarily).
    SF (and some of the resource constrained and older expensive suburbs like the southern Marin towns, Rockridge, Hillsborough, etc. – just to pick a few areas illustrative of the category) also has the tremendous distortions of prop 13 to “unwind”, which have festered for more than a generation now. The effects of prop 13 (primarily: apparent insurance value, actual reduction of supply, and subsidization of an older, larger and less wealthy cohort by a much smaller and much wealthier newer cohort) have been “tailwinds” for SF property values over the last 30 years (the last 20 especially), but will become headwinds over the next 20.
    All just my opinion and (semi-)guesses!

  59. I have a more concise version of Satchel’s projection.
    Once we get a 70% reduction in SFO condo values and 50% reduction from peak to trough in Single Family homes in aggregate it will be smooth sailing for real estate!

  60. “4) You feel more grounded / stable and allows you to work more efficiently in your life.”
    it also:
    5) Cures baldness.
    6) Gives your skin a warm heatlhy glow.
    7) Improves gas mileage.
    8) Turns you into a total babe magnet.

  61. Real Estate is a long term investement and has several beneficial financial attributes:
    1) It forces you to save instead of blowing (or smoking) your money away on “crack”.

    This is no longer true due to Home Equity Loans and HELOC’s.
    a substantial number of people have tapped their “equity” in their homes to buy other things (cars, boats, college educations etc).
    I think buying a home is just fine in this environment so long as you
    1) have NO expectation for gain whatsoever in the near term (10 years)
    2) understand that buying a home is CONSUMPTION and not investment.
    3) have a substantial cash cushion to whether the current recession which for all intents and purposes looks to be a doozy. (hopefully 1-2 years of liquid cash to pay all your bills).
    once you factor in those ideas, then you are buying for the right reasons… shelter.
    any added house price appreciation is a bonus, but you aren’t depending on it. any depreciation is tolerable, because you planned on the possibility.
    I’ve said a bunch of times: I would expect this RE downturn to bottom around Dec 2011… that’s still 3 years from now. after that RE may still not go up for some time.
    I’m worried about next year’s real estate values. The first part of this RE downturn was simply because RE is too unaffordable, even during boom times. The job losses are JUST NOW HAPPENING. thus, think of the pressure on RE going forward with a nasty recession baked into the cake!
    next year will not be pretty, although again as I’ve said before never underestimate the govt interventions.

  62. @gowiththeflow:”I know many people that bought in 2005/2006 both in SF and parts of the east bay that sold as recently as 2007 and 2008 who were not underwater and actually made a boat load of money on top of what they put down originally. No joke. ”
    This 2bed/2bath/parking/views 1400sqft condo last sold in August 2005 for $820K. 3 years later, in August 2008, they started by trying to sell it for $839K. After several reductions, the list price was $735K in November. I now see that it finally went under contract after 117 days on the market.
    I could post example after example like this in SF and across the bay area.
    I would love to see some examples of what you’re talking about.

  63. Oh the apple I mention above is in North Beach. Many people will consider that to be “real” SF. No, maybe not paco 🙂

  64. Full Disc I am not in RE or Fin so have no idea how you compare apples chuckie; I am just responding to your comment specifically that all purchases 2005/2006 equate to a loss if sold in 2007/2008. Yes I agree you can find many, many examples of people losing out but there are some that are still making money. Keep in mind the definition of boatloads of money varies from person to person; to be fair I only note a few at 3% or more annual appreciation. I don’t know anything about the buyers, sellers, or what happened in the transaction, if they completed upgrades etc. but they made money so it seems. I should also note these were bought in areas that at the time were “up and coming/ good location” and it seems that philosophy of buying helped shelter them a bit? Most as you can see are in the Mission Bay area, SOBE area.
    855 Folsom #511 2005 $875k and 2008 949k +3% / 536 Sea View Drive El Cerrito 2006 $765k and 2008 $835k +3.4% / 300 3rd street (forgot the apt #) 2005 733k and 2008 815k +3.5% / 38 Bryant St #808 Sept 2004 (not sure this counts) 840k and 2008 1.1m +8.1% / 650 Delancey #107 2005 1,020,000 and 2008 1,195 +4.8%/ and 38 Lusk #1 2006 875k and 2008 1,250 +18.5%. I located others but I think this is a fair start. I am just trying to make a point that if the timing is right for some and one is willing to be patient they can still make a profit.. they may have to wait longer going forward but its not impossible.

  65. I also came across some with much higher profit margins but gave the benefit of the doubt something atypical may have taken place transaction wise, upgrade wise etc.

  66. I have to agree with Paul. Buying last year may not have been the best finacial move nut it has allowed me to concentrate ok other things. I now make more money, feel more responsible and carry that over personally and professionally. The benefits have been unexpected. It is sad that costs are so higf, I think it prevents people from experiencing a very important transition in life in experiencing buying your first property. Likely leads to the high rate of ummarried people in SF. Also allows me to move on and focus ok life instead of wasting time and stressing on what and when to buy.

  67. I bought in 2005 and sold in early 2008 with a 40% gain. Took the proceeds and reinvested in a place I love at the Infinity and plan to live here long term. I have no preconceptions about making that kind of profit again, but feel confident that in the long run I am ahead of the game not giving my money to some landlord, getting the tax break, and knowing I own my own place that I can alter/improve as I want.

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