650 2nd Street #502

Purchased for $2,300,000 in 2004, seeking $3,125,000 in mid-2008, and then returning to the market in January of 2009 asking $2,750,000, the sale of 650 2nd Street #502 closed escrow yesterday (3/18/09) with a reported contract price of $2,450,000.

That’s total, not average annual, appreciation of 6.5% over the past five years and a contract price of roughly $585 per square foot.

24 thoughts on “As We Wrote, It’s Not Quite 2004 For 650 2nd Street #502”
  1. This reminds me of Unit D in my building with the big struts.
    I think it was 1.7M, and then they cut it to 1.395ish and it went into contract.
    I have struts like that in one of my bedrooms but along the wall where it isn’t hugely obstructive…but is living with those struts a big deal does anyone know?

  2. Congrats to the seller here. It looks like he started out an unrealistic wishing price of $3MM+, but got religion and reasonably quickly cut the price enough to get out basically whole. I’d guess he’s out a tiny bit after transaction costs, commission and transfer taxes (maybe a $50K loss since 2004, maybe less?), but I’d say that’s not a bad result, especially if he really liked living in the space and felt the carrying costs/opportunity costs were equivalent to the value he placed on living in that space.
    Does anyone know when in 2004 this place sold? Just eyeballing, the 2009 sales price also looks to be roughly in line with what Case Shiller says about upper tier indices for SF MSA (even though C-S tracks SFHs, not condos). The December numbers (latest available) show that the upper tier is back to April 2004 prices.

  3. aww… I was secretly hoping I’d win the lottery by the time this place sold. I still would have paid 3.1M for it. 🙂

  4. Seismic Truss Braces: In a public occupancy in SF you would need to put some sort of permanent obstruction or guardrail in to prevent access to portions with less than 80-inches of clearance, the principal concern being sight impaired people.
    I once met with DPW in hope of getting an exception for braces in exam rooms in a medical project (We had no problem with putting guardrails at the public space locations). We met at a table positioned directly under a pair of braces (just like the ones in the loft photo) in a conference room at the DPW Mission street Building. I sugested that we would add our braces if they added theirs, and to this day there are no braces in those exam rooms.

  5. 1) Thank god they had some of their money in SF real estate. The same investment in the stock market could’ve broken this person over the same period.
    2) After tax deductions on interest, property tax deductions and not throwing money away on rent over the past 5 years, I’d say this person came out way ahead.
    3) Renting this place over the last 5 years probably would’ve cost this person around $360,000 conservatively. Good thing they bought. They basically occupied this space for free over 5 years AND saved themselves the rent money.
    NOT BAD for someone who bought so close to the peak, I’d say.

  6. yeah…and, one might think that at first blush. But run the numbers. Interest, HOA, property taxes, maintenance, and selling costs are extremely expensive at these dollar amounts. My back-of-the-envelope calculations show that the owner paid about $700,000 out of pocket (i.e. net of tax benefits and sale price) to live in this place for 5 years. So if he could have rented it for less than about $12,000/mo, he would have been better off renting. And he got in pretty early — bought about 3 years before the peak. But he did get out while the gettin’ was (still pretty) good.

  7. During the credit bubble, aka the housing bubble, brokers couldn’t wait to tell you that RE is a great investment. When the market tanks, they tell you that it could have been worse (based on the unwarranted assumption that the subject owner would have been fully invested in the DOW). It’s always a good time to buy or sell.
    At 1.3% avg. annual appreciation the subject owner probably came close to breaking even in nominal dollars, of course that’s assuming facts not in evidence. ATBE, he lost in real dollars.
    BTW, the observation that if you buy you saved money you would have had to spend on rent is a statement and not an insight. If you rent, you’ve saved the money you would have had to spend on buying. No information is provided in the post from which you could deduce the former was less costly than the latter.

  8. I am amazed that the seller got this value.
    its better than most objective measures – and ftm most peoples judgement – say the market is in SF.
    i dont rememeber but i think i forecast a much lower sale.

  9. Trip – I think the point ‘yeah ..and?’ is making that the S&P 500 was 1173 at the end of 2004 but closed at 784 today, a drawdown of 33%. So, at least in terms of this person’s downpayment, he/she was certainly better off breaking about even than losing 33%. So, depending on the size of his/her downpayment, he/she may have been better off buying than renting.

  10. warehouse – the EIR calls for Acquisitions and Demolition or Underground Easement.
    My guess is that the project will find the latter choice much lower cost.

  11. The note at the bottom of page 5-28 indicates razing only if Cut-and-Cover tunnel is built.
    “[1] Properties listed would be acquired and demolished under the Cut-and-Cover Option. For
    the Tunneling Option, underground easement would be required for the listed properties.”

  12. Milkshake & jworm,
    Good point.
    My point is that a property facing some sort of potential eminent domain action will probably take a hit in final sales price vs. a property without such a cloud…and therefore should not be treated as an open-market comp.
    For what it’s worth the following document (if I’m reading it correctly) shows the proposed Caltrain/highspeed rail tunnel at a depth of approximately 30′ directly under 650 Second St. (See figure 2.2-14 on sheet 2-27)
    Personally If I lived there, I think I’d probably hope for the “aqusition and demolition” vs the underground easement.

  13. NP,
    Take another close look at the sectional diagram on sheet 2-27 of the tunnel EIR.
    Here’s how I see it:
    650 2nd St. is the third building (the tall one) from the right – just where the tunnel arcs through before entering Second St.
    The diagram indicates the elevation of Second St.(the dashed line) at 650 2nd St. to be approx. 30′ above sea level. The diagram also indicates the top of the tunnel (the double line) at that same point as being at 0′ above sea level.
    Therefore, according to that sectional diagram, the top of the proposed train tunnel should be approximately 30′ below 650 2nd St. (Less if the building has a basement.)

  14. I’m with Louis – I’m surprised they got what they got.
    The Backward Running Value Time Machine has stalled at 2004, apparently. At least for now. Err, in the +$2 million market. In this neighborhood.
    Or… for this property, at any rate.
    What I mean to say is that any economist worth his (or her) salt can use this data point and draw an infinite number of lines through it, while flaunting speculation and empirical Truth.
    Which is why we need either more data points or fewer economists.
    Or both.
    And more Time Machines… definitely, more time machines.

  15. To Question:
    This unit is actually a combination of 3 units so the dues are probably at least $500 per = $1500.
    Really expensive carrying costs…

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