Another Noe Valley Apple Is Picked As 3976 25th Street Closes Escrow

That’s an excellent result for the seller, who was very smart imo to accept an offer quickly. Who knows how far down they would have had to go to find the next highest bidder?
After standard sorts of transaction costs, we’re only talking about $275K or so in capital loss over three years, and that’s really not too bad in light of the enormity of the bubble. Congrats to the sellers here!

Looks like the Noe Valley’s price has not dropped that much. From $2.9M to $2.8M. So that’s like the price went back to 2006? or slightly earlier? I thought overall market price has gone down to 2004/2003 range. So until this house (or similar houses) actually sells for say $2M or $1.5M from $2.9M, I say the single family home market bubble has not popped here in SF. $2.9M to $2.8M is not what I called popped. And yes, please do not average in Bay View houses. Those foreclosures don’t count. I want to see nice houses (NOT Condos) like this one at Noe/Castro/Pac Heights/etc. that actually sells for cheap prices for me to believe prices in SF are actually dropping dramatically.

Don’t worry, jaja. This is just another example of a clueless SF realestate-specuvestor overpaying in the hyped-up, stock-option-frenzied, (not-“real-san-francisco”) enclave of Noe. I’m sure it’ll be back on the market in six months at 40% off.

Losing $275K *plus* carrying costs over three years isn’t an example of a “clueless SF realestate-specuvestor overpaying in the hyped-up, stock-option-frenzied, (not-“real-san-francisco”) enclave of Noe”? Sounds like one to me. Also sounds like Dave has been drinking the realtor Kool-Aid.

Also sounds like Dave has been drinking the realtor Kool-Aid .

Kids: Hey Kool-Aid.
(Kool-Aid Man smashes through the fence)
“Oh yeah!”
So you took Dave’s comment as fascetious, and it made you think that us realtors must have already got to him with a pitcher or two of sweet refreshing mind control serum eh? Hmmmmmm. Don’t know.
Dave?

There remains a lot of demand for super prime finished properties. Buyers in this range do feel like now is the time to buy and are closing on properties that are priced in the 2005/6 range.
I’ve said for a while now that apples are good market indicators, but the best indicator of where the market is headed is to look at the unfinished prime SF homes owned for 10+ years that are not attracting wealthy suckers. These homes are still getting developers but they are selling for much lower. I’ve not kept a log of these homes, but 123 Laural, view home on Broadway, view home on green, baker street home, washington street home. All of these homes have sold for 15-25% below prime prices; and 30-40% below prime finished prices. Maybe this weekend I’ll go dig up all the homes I’m talking about here and post up the exact address / metrics.
These 2 Noe homes are fantastic and are still commanding a premium, and lots of interest. Plus Noe has gentrified substantially thereby permanently altering the financial landscape (similar to Williamsburg Brooklyn in NYC)

The possibility that real estate whether nationally or locally would reach a floor was dashed in just the last 4 weeks, with this back-up in interest rates. And the back-up in interest rates is just the beginning of what will be one of the worst bear markets in government bonds of all time. A recovery in real estate–save for a very small uptick, or a series of small upticks that merely get pushed back down again–is now nearly impossible.

I seriously doubt the market rose a further 10% or more from November 06!
But hey if thats what it takes to make this house fall in line with the supposed fall from peaks – believe it!

“I seriously doubt the market rose a further 10% or more from November 06!”
For a REpornaddict you sure don’t know much about real estate.
Using anonanon’s averages…from 746 in Q406 to 881 in Q108 is a 18% gain. It would be a 15% drop from Q108 back down to Q406. Add 3.4% and call it a 18.4% drop from peak. Or just use the averages and call it a 25% drop from Q108 to Q109

Those low interest rates really WERE something!
2.8M *0.7 financed @6%/12 payments per year= $9800.
But that was last month’s price with last months rates. This month:
(This Month’s price)*0.7*0.0675/12=9800 (to make the same payment)
This Month’s Price=9800*12/(0.7*0.0675) (to make the same payment)
This Month’s Price=$2.489M to make the same payment.
10% drop in one month.
Just sayin’

It is really funny to see two homes selling on the same block in the same week both at over $2.8M touted as “proof” that the Noe Valley market is collapsing. There have only been eight homes ever sold at that level or above in NV.
The Bears have come completely unhinged. Looks like we will have to wait until next spring for that much awaited 50% drop in home prices.

2008? the peak in Noe Valley? REally?
again,if you had come on this board and claimed that anytime during 2008 you would have been laughed at. seriously.
but now, it suits the picture you want – that this house is much more than 3.4% down from peak – it’s suddenly ‘oh, yeah, 2008 was the peak’…’prices were rising well after this house sold in November 2006 – by at least another 15%…’….

A lot of whining and hot air from REpornaddict and anonn but nothing of substance. How about some numbers?

3.4% is the new 25%.

Nope, 25% is the new 25%.
Look at anonanon’s numbers and do the math. Peak $/sf price in 07Q3: 883 (or 08Q1: 881 to get YOY change). 09Q1 $/sf price: 662. 662/883 = .7497. Down 25% in one year.

REp, as far as I know $/sf is always reported as an average. But find us the numbers reported as medians and see if the result is any different. I doubt it. You make a typical real estate bull argument — “yes, the broad, verifiable numbers show a big decline but some other number that I won’t give you would provide a different result. Trust me.”

and throwing around averages and medians to disprove apples..
I nominate this thread for “Best of Socketsite”

Anna, this thread is anchored by a number, an apple. In fact, three Socketsite posts were devoted to two properties on 25th street that got peak-type prices at this late stage. And I call it a late stage because that’s the Socketsite conventional wisdom.
And Joe, what’s your deal? In all seriousness I have grown tired of random contrary positions, positions contradicting the most basic of concepts, such as Noe Valley/Bernal/Potrero/Glen Park have gentrified over the last decade. To me it’s seemingly solely based upon “oh look, there’s anonn, I’m going to contest him.” So, what’s your position? If you’re going to argue with me constantly that’s OK. But you know who/what I am. What are you? Are you a perspective buyer looking to take advantage when the bottom ultimately drops? Someone who feels abused by the last market’s craziness? What is it?

anonn, a simple question: Did Noe peak in 2006? If not, when did it peak and how much higher did it go?

Jeez. anonanons numbers aren’t even medians they are averages. since when did posters suddenly attach such weight to them?
since it suited their arguments to do so I guess.
and i say again, they show prices in q408 higher than the whole of 06. but the common opinion here was that the bottom had fallen out in q408. did that really mean > 2006 prices?
also, looks like I really should have bought in q105 and sold 3 months later though. Man, 15% gain in 3months – an annuallized gain of 70%!

Trip the point is that if the $2.8 on this house is 25% off peak then that peak was $3.5M. But, this house would never have gotten that number.
Here is some more fun with math (as this is what is really going on). This house sold for $700/ft. Let’s say the current peak price for this hood is $930/ft. (For this number, I used accross the street). So this house sold for 75% of the peak, now. If it would have sold for 75% of the peak dollar at the peak of the market ($3.5M) it would have sold for $2.625M, so infact this house is doing great and is up from the number at the peak.

“is that if the $2.8 on this house is 25% off peak then that peak was $3.5M”
actually, no…its $3.73m.
it seems the bears are actually incredibly bullish about what prices were as recently as 2008!! having read this site for much of that year, I am amazed!

anonn, you just hate being called on your B.S., huh? So the answer is for those who call you on it to “post less”? Oh, I forgot, you “win every argument.” So predictable.

anonn: you’re constantly using median $/sqft to make your point but suddenly can’t quote the numbers for noe? agree with anna, a bunch of hot air.

I just wanted to interject a little about this focus on apples. There is a reason that Case-Schiller has such large boundaries for the SF MSA — you don’t get enough apples for a small population like SF. OFHEO has smaller boundaries — but it includes refinancing as well as purchases. OFHEO does publish a purchase only index, but not for cities — the sample sizes are too small.
The “state of the art” (pdf) for trying to measure house price is to treat it as a diffusion process, with a log-normal distribution. In other words, one standard deviation is “stretched” exponentially. So the prices follow brownian motion centered on some “true” value, and you need to collect a lot of samples to get a reasonable estimate. Moreover, the apples wont be harvested simultaneously, so to compare an apple that fell 2 months ago with one that fell today, you would want to assume that some brownian “drift” occurred over that period.
The point of all of this, is at the end of the day, trying to focus on a handful of apples to gauge a specific neighborhood is absurd. You are just collecting noise.
Now, you could focus on median $/sqft, but then you have mix effects. You could look at census data — but that primarily measures sentiment i.e. it’s a poll, not a transaction-based index.
In either case, getting data for home prices at the level of SF really needs to be done in 1-2 year timeframes. If you want data for a specific hood — well, maybe you look at 3-5 year timeframes, depending on the number of transactions.
Another thing to keep in mind is that housing is not liquid. The last “bear market” SF had involved nominal declines for 19 consecutive quarters. Real declines lasted 25 quarters. Moreover, that was just a counter-trend rally in a 25 year secular boom.
Folks, we are only 8 quarters into this bear market. The proper time frame even for the “froth” should be measured in terms of 5 year periods, and secular booms and busts will reveal themselves over at least a full business cycle (e.g. peak-to-peak) or 10-20 years.

Just to add to Robert’s post about trying to draw too much of a conclusion from any particular apple (or small set of apples) over a relatively short period, it’s also worthwhile to emphasize once again that even “apples” generally exhibit selection bias. All other things being equal, until you get into a situation where there is a large percentage of “forced” or otherwise “unemotional” sales, there will be a bias to understate actual value declines in any examination of sold apples.
For instance, 3976 25th exhibited only a ~3% decline since its 2006 price. (Let’s leave aside whether 2006 was “peak” or whether it cold have sold for north of $3M at some point.) This sale shows that the current seller was able to absorb a roughly $275K capital loss (perhaps a company was covering it? perhaps they are rich enough not to care, etc.).
On the same street, but on a less desirable stretch, someone paid $2.725M for a lesser house (one which anonn termed a very “circa 2002 HGTV remodel):
https://socketsite.com/archives/2008/11/an_elegant_noe_valley_apple_still_on_the_tree_4545_25th.html
After almost six months of trying, and a cut in wishing price to more than 3.5% under its 2007 sales price, the property was withdrawn. Clearly, that property would be down more than the one we are looking at right now, but we don’t see the objective sales price. We can infer that the loss would have been too much for the seller to bear. Selection bias.
We’ve seen this in other Noe properties as well. 714 Duncan, for instance, is now pending at what looks to be well under 20% under its 2008 sales price (we’ll know soon enough how much under).
https://socketsite.com/archives/2009/04/four_weeks_riper_and_another_cut_for_this_noe_valley_ap.html
On almost that exact same stretch of street, however, 826 Duncan looks to have been withdrawn, with the latest wishing price more than 7% under its 2005 price. Again, more data on value declines drop out. (If anyone knows whether 826 was actually withdrawn or sold, data would be appreciated.)
One can keep going with this, just thinking about the NV apples we’ve seen on SS. 4214 26th would have sold for well under 5% of its 2007 price. How much more? Well, we don’t know – it could be 15-20%. We can infer, though, that the seller cannot face the loss, and so will continue to pay a mortgage on the asset that he would clearly rather not “own” anymore. (The bank of course owns it, and he is just renting it until such time as the value gets back above his hurdle.)
https://socketsite.com/archives/2009/03/4214_26th_street_a_remodeled_noe_valley_apple_on_the_tr.html
By contrast, 4176 26th, another house almost across the street was an unemotional seller (bank), and thus the apple saw a 21% decline since 2006.
Obviously, there’s no reason to keep going with this, the pattern is clear.
Over time, what Robert refers to as “noise” ultimately gets shaken out, as people progressively become less “emotional” (for a number of reasons) and the data trends coalesce around a central trend.
BTW, this selection bias is also at work in both the median sales charts we know as well as the Case Shiller series, which correct for mix issues but still cannot overcome the selection bias inherent in the fact that it can only examine repeat sales. Obviously, at some point the percentage of “forced sales” becomes so great as to overwhelm and perhaps reverse the selection bias, but I think we can agree that we are nowhere near that stage in Noe Valley and other “nice” nabes in SF. Yet.

Does anybody know for what price 123 Laurel sold?

“I don’t give a hoot about “apples” ”
seems very much to be the current way of thinkig on this site now!

LMRiM,
Pretty interesting explanation. Sellers withdrawing their listing, not willing to see their overpaid properties fall into the wrong “grubby hands”. At some point hubris can border to stupidity, but who are we to judge?
They’re ready to throw good money (earnings, savings) after bad (neg equity) and we will never thank them enough for retiring all that real cash from the money supply.
The Deflation bug works in mysterious ways and upside down debt payment eating away consumption cash is a darn efficient one. Still upside down tomorrow, but you wrote your monthly checkS! I hope paying a mortgage is a pleasure for you, because that will be the sole benefit you’ll get for your money. Everything is gone once it is in the mailbox.
Kudos also to specuvestors who are subsidizing tenants day after day, year after year. Like guys who have 100% financed rentals with I/O loans and will not break even in the next 10 years. They’re stuck, stuck, stuck. And they still maintain the place clean at a loss (of real money). Ah, all these unforeseen expenses coming with all rental (I have these every month on 2 rentals thankfully free of debt) that generous appreciation was supposed to cover by far… To these generous souls, the renter crowd says THANK YOU.
Again, before the wolves start tearing my post to pieces and dismiss it as a renter rant, I am definitely interested in buying in SF eventually (not at these prices) and could afford any place in the first 95% percentile of the current supply. It’s just that these prices are silly in too many ways. Any non-insider investor should stay away from SF today.

Over time, what Robert refers to as “noise” ultimately gets shaken out, as people progressively become less “emotional” (for a number of reasons) and the data trends coalesce around a central trend.
There is no particular evidence that people become more rational over time. Perhaps over the span of human history, but not on the order of a few years.

There is no particular evidence that people become more rational over time.
I totally agree with that statement. Arguably, people are becoming less rational and more foolish, as they make the same mistakes over and over again even though the historical record of man’s achievements and failures becomes easier and easier to access.
My statement regarding people becoming “less emotional” should have been worded better. What I mean is that over a longer period, many other factors influence the decision to sell a residence (e.g., divorce, job change, need to move to a larger place, job promotion or demotion, death, etc.) that ultimately overwhelm the desire to not face the loss from selling at what is perceived to be a low price. (Note, even long timers with a lot of equity – like our friends in Forest Hill Extension who imagined last year that their house was worth $1.25M and are now renting it out because they discovered it was only worth $950K – are not immune from the reluctance to realize losses, even when the losses are only reductions from a perceived higher level of profit.)
Every month my outstanding balance of my mortgage goes down another thousand dollars. This is a real benefit.
For me, every month that I rent the $1M Tiburon 3/2 for $2800, I estimate that my bank account is $3K higher than it would be had I bought it, and that’s a real benefit for me. And of course I am not even counting the $100K in capital loss I estimate I would have suffered had I bought the place last July instead of renting it. Not to mention the $60K in used house salesman commission that would have to be sacrificed either, if and when the CA tax situation makes it more advantageous for me to establish residency in a no income tax state.
There are a lot of benefits to home ownership, but there are also significant detriments and risks. Today, a person buying is literally paying to assume the risks and detriments, as the spread between purchase and equivalent rent costs demonstrate in most parts of the Bay Area.

Yeah, you’re probably right, eddy, and that’s good advice/criticism. But where’s the fun in being all well thought out and reasonable? :-0

For me, every month that I rent the $1M Tiburon 3/2 for $2800, I estimate that my bank account is $3K higher than it would be had I bought it, and that’s a real benefit for me
Yeah, that’s great and in your financial situation, it obviously makes no sense to buy. But it has not always been that way in the Bay Area, and in some locations arguably, the purchase decision pencils out. Maybe even in The City in places like Bayview and Excelsior.