715 Cole: Interior
The sale of that “Cole Valley Apple With Potential” we picked out in April has closed escrow with a reported contract price of $1,300,000. Purchased four years ago for $1,326,000.
715 Cole: A Crispy Cole Valley Apple With Potential On The Tree [SocketSite]

36 thoughts on “Off The Tree And Into Our Apple Cart For 715 Cole (Valley)”
  1. Listed for 1.089M in July 2005, had it sold for 1.3M back then everybody on this forum would have been talking about ridiculous bubble prices. Now, today, its 1.3M sale from a 1.326M list can only be viewed as evidence of relative stability. For this property only, OK? Maybe this micro area.
    But I did notice in the Mallorca thread how quickly folks started talking SFRs when the anecdote was a condo. This city saw a whole lot of condos built during the “bubble.” Not so with SFRs. Do you really think that’s nothing?

  2. “had it sold for 1.3M back then”
    Um, I believe it did: “Purchased four years ago for $1,326,000.”

  3. Actually not too bad. Only down slightly from its 2005 price – but still down of course – which shows the variance in the SF market on the way down.
    Following on our discussion in the other thread (on 228 Mallorca) about financial returns, prop shark shows 10% or about $132K put down in the first loss position. If we assume normal sorts of transaction costs on the way in and way out for the sellers, about 80-85% of the downpayment went poof. At least there was presumably no negative credit event, so I have to say that if you are going to buy that late (2005) in an obvious bubble and wait until after the peak to sell, this sort of loss is about as minimal as one could have expected.

  4. Yeah. SFHs in good areas and condos are certainly faring mucho differently right now.
    Which is no surprise, given the inventory differences – less SFHs to choose from than this time last year (although not sure how this looks by district) and alot more condos.

  5. SS – can you pull the pics from MLS when you feature a place? It would be nice to go back and check out the pictures from this place, but since it’s closed escrow the MLS listing is no longer valid. Just a “would be nice.” 😉

  6. anonn, I don’t understand what point you’re trying to make. It did sell for over 1.3 (1.326) in 2005, according to the post. Nobody but you is talking listing prices.

  7. “can only be viewed as evidence of relative stability. For this property only, OK? Maybe this micro area”
    More like “for SFRs in safe areas in this price range” A modestly priced 3/2 is going to have more appeal in an environment where people actually have to qualify for loans. So I’d expect the lower end of the SFRs in good areas to stay a bit ahead of the curve (2004/2005 prices instead of 2003/2004 prices), until of course, the upper end drops into a more affordability range.

  8. Is there any concrete research/data showing if there is any increase in value to be derived by restoring the Victorian facades on these buildings?

  9. A negative 80-85% return on investment on a SFR for a 4 year hold is a good thing? Only in the eyes of realtors whose commissions for selling this place have not changed.

  10. My point is clear. A 1.3M sale would have been viewed as an insane bubble sale price last time around. If you’re not talking about list price, that’s fine. I don’t need to view things the same way as you people.
    “Good” is not something I said, Michael. It would be nice if you didn’t always insert verbiage.

  11. This area has improved quite a bit over the last few years which certainly accounts for some of the stability. This is a good home and someone could live here for 10 years, make some nice improvements, have great home, reasonable taxes (for SF) and probably do OK. Could this place be ‘worth’ $1.1mm in 2011 — sure, but locking in low rates, and getting a home you can enjoy for 10 years and insuring against inflation and higher interest rates isn’t such a bad thing, IMO. So long as this person don’t have to sell in

  12. I don’t think that LMRiM’s analysis included the imputed rental value of this home, so the loss is not as bad as 80%. Still bad though.

  13. Oh, I get it. JesseP said “good.” He isn’t a realtor. So “only in the eyes of realtors” = just another hater comment from Michael. yawn.

  14. Wow, anonn — no need for the anger. What’s up with the “you people”? I didn’t insult or belittle you or your profession. I don’t recall ever tussling with you or insulting you in the past. Your point was not clear — it always helps to explicitly state your conclusion at least once. I’ve always thought you get unfairly targeted, but I’m beginning to see why you draw such ire.
    I’m guessing that you mean something along the lines of — this would have been viewed as an insane bubble price, therefore the fact that it’s only down a little means (1) it wasn’t insane back then, or (2) prices aren’t falling as much as some claim, or (3) ??? something else ???
    You still haven’t explained your reference to listing prices or what that means to you. Randomly throwing around snide remarks isn’t going to persuade anyone.

  15. Milkshake – about imputed rent, I’m assuming that the after tax effective burden of buying in SF in the 2000s has almost always been above rental equivalent cost. (There are some exceptions – very undesirable nabes/properties, special deals, neg-am loans even though technically the neg am just time shifts the burden by capitalizing the interest, etc.) Therefore, 80% is very ikely understated as a “loss” for 715 Cole, as I assume a relatively comparable property could have been rented for the true after tax carrying cost of the pucrhase ($1.2M of loans on this place!).
    My frame of reference is a bit limited – having rented a $1.2-1.3M house for $3100/mo in these years – but I think the idea that it has generally cost more to own than to rent is pretty much accepted around here on SS, especially with regard to SFRs. In fact, many posters say it was “always” like that (of course, they’re dead wrong, but most people’s frame of historical reference only extends back a few years, maybe 10-15 at the most) 🙂

  16. You know what dch, “you people” has become a thing unto itself. I typed it quickly and should have known it would come across poorly. My fault. I should have said, “many posters on here.” Michael’s silly realtor bash illustrates why I might choose to be preemptive, surely.
    I don’t understand why you do not get my point, tho. I’m basically saying that people on here discount wild overbids way out above list price or traditional price structures for areas, yet clamor to point out exact percentage of loss. I find it to be a dichotomy; I find it to be a double standard. My perspective is that of someone who made reasonable overbids and many times came up short. A -15% return, after a four or five year hold, for someone who bid 237K over asking on a property that — and I’m guessing here — really only had high 600s per foot comparables at the time should be viewed as an obvious potential eventuality.
    The mentality of pointing out percentage loss for shorter holds comes from a place containing an assumption. The assumption is that “the bubble market” was completely made up of wild overbids. It wasn’t. Somebody else might have made a more savvy six percent overbid on a neighboring property the following week.

  17. Anonn- I too did not understand your point from 9:09am. 11:04 post is much clearer.
    Regarding the issue of asking price vs. sold price: It seems like using asking price to infer anything is not too useful. Deliberate underpricing seemed to be epidemic in SF (there was a particularly egregious under-pricing agent out here in the West Side). For quite a while asking prices seemed to be fairly divorced from any expectation of actual sales price. But since every seller would have had a different approach,it’s hard to see how the comparison of ask vs. sold is meaningful.
    However you do make a valid point about the market not comprising only wild overbids. So perhaps the better comparison for isolating a wild overbid (or perhaps more precisely “overpaying”) would be to compare the sold price with the avg. sq/ft comps at the time…..

  18. I summarily already went there by saying I would guess in the high 600s per foot. But you made me go ahead and look it up, doggone you. The 20 5-B SFR sales in 2005 averaged 704 a foot.

  19. Hmmm. So, on a psf basis, this sale would represent about a 10% increase over comparable 2005 properties? [I think there was a comment in earlier thread that the asking price for 715 cole was about $800 psf.]
    So many ways to look at the same data … Isn’t that what makes SS so much fun!

  20. The assumption is that “the bubble market” was completely made up of wild overbids. It wasn’t.
    I doubt this data exists, but I sure would love to get my hands on it. I think it would be very very interesting to see what the average purchase price to listing price ratio was during the dot com bubble, then the post dotcom downturn, then the most recent boom, and now.
    My TOTAL GUESS is that there were more bidding wars and properties going WAY over asking during boom times compared to down times, but it is only a theory. And I have no idea if it is just a small difference or huge between those time periods.
    I will tell you, however, that anecdotally I saw a fair number of bidding wars in the mid 2000’s on SFHs, and see almost none now. (that said, none of my close family or friends are buying this year so I’m not really “plugged in” as it were)
    For instance, I personally got into a bidding war in 2003 not once but twice… and finally ended up having to buy my home BEFORE it went on the market with no contingencies. I’d never do that in this market even if I were looking.

  21. ex-SFer,
    Here are a few data points. There were 20 SFR sales in district 5B in 2005. Here is by how many percent each sale went over listing price (rounded to the nearest percentage point and sorted low to high):
    So half the sales went above asking by 14 percent or more. So far for 2009, we have the following:

  22. This neighborhood doesn’t have a whole lot of SFRs. That’s almost the beginning and the end of it. Interestingly:
    20 sales in 2005 averaged 704 a foot
    14 sales in 2006 averaged 654 a foot
    12 sales in 2007 averaged 611 a foot
    10 sales in 2008 averaged 642 a foot
    5 sales so far in 2009 at 702 a foot, with three listed and three pending.
    Of course, smaller samplesets can vary wildly, particularly if you consider this neighborhood. It’s the Haight! It does not get funkier. Just glancing through I saw some ginormous near-total fixers and really funky layouts.
    All that said it looks pretty same-same from “peak bubble years.” Which is of course what 1.3M now from 1.326M then shows in the first place. It is also displaying 4 year holds with no improvements — and that facade is screaming for an improvement — often end in capital losses.

  23. thanks for the distribution anonon, but do you happen to have a source for your data?
    I agree, it’s hard to make much of these small data sets.
    there is a bullish and a bearish case here. but overall seems to indicate what we’ve seen before. current SF pricing is around the 2004-2005 level. 2005 prices were astronomical, so one shouldn’t get too saddened that we’re at those levels today.
    in the same way, as I’ve often said, 2000 pricing was also astronomical, so I wouldn’t be surprised to see future pricing equivalent (inflation adjusted) to 2000 pricing… and perhaps even lower due to overshooting…
    but it’ll take several years to do so… if we’re lucky we’ll stay on my projection of 2.5 more years to the “bottom” (Dec 2011). then we can start the slow recovery phase.

  24. LMRiM: I’m assuming that the after tax effective burden of buying in SF in the 2000s has almost always been above rental equivalent cost …
    In year=0? Sure. This has been true in this market and many others for way longer than just the last decade. Lots of people plan on owning for longer than that, however.
    I think the idea that it has generally cost more to own than to rent is pretty much accepted around here on SS, especially with regard to SFRs. In fact, many posters say it was “always” like that (of course, they’re dead wrong…)
    How do you figure?

  25. Dave, I believe LMRiM is referring to after tax IO debt service + prop. taxes + maintenance. If you define this as “carrying cost”, and equate it to equivalent rent, you can estimate the hit taken by the owner, after including transaction costs.
    For example, here is a quick and dirty calculation of defining monthly costs (for new owners):
    .65*(monthly mortgage payment) + 2*.01*Value/12
    — where I am assuming maintenance costs of 1% and prop taxes of 1%. Not wedded to this formula — it’s just an estimate.
    With this definition, we can look at the median carrying cost per room for new owners, and compare it the median rental costs for new renters:
    carrying cost/room | YEAR | rent/room
    117 | 1980 | 98
    332 | 1990 | 219
    481 | 2000 | 425
    634 | 2005 | 475
    670 | 2006 | 486
    754 | 2007 | 536
    N.B: This is per *room*, not bedroom. I use this statistic as it does a better job of tracking things like square footage than just the number of bedrooms.
    Also note — the universes are different here: the “quality” is higher for owners, so the median owner equivalent rent should be higher than the median rent. How much higher? 30%? 20%? For me, 20% is a reasonable premium, but this is really subjective.
    It does look like owner equivalent rent was higher than carrying costs in 1980 and 2000, and lower in 1990 and the ’05-’07 period.
    Keep in mind that both 1980 and 1990 were “peaks”, and that prices fell by about 1/3 following those peaks, whereas rents did not. Also keep in mind that 2000 *should have been* a peak, but was not, and that rents fell after 2000 whereas purchase prices continued to climb.
    So, it’s fairly safe to say that you don’t need to go back to year 0 to find owner equivalent rents [more] than the carrying cost, and in fact, it’s quite common.

  26. Phew. Thankfully the median $ per sq foot peaked for the area in 2005.
    That has saved countless attempts to show that although the house is only 2% down from 05 its actually 20%+ down from peak etc etc…

  27. The MLS is the source for that data.
    anonn: thanks, I knew your source was the MLS. do you think that is anonanon’s source of the overbid distribution too?
    (my original question about source was to anonanon which I mistyped as “anonon”)

  28. @anon: Sorry you really make no sense. I don’t understand what you are so angry about, but maybe you should spend the time to express yourself fully in your first post (rather than mistating the listing price). The fact that it takes you five points to say something is really a reflection on you, not everyone else.

  29. It does look like owner equivalent rent was higher than carrying costs in 1980 and 2000, and lower in 1990 and the ’05-’07 period.
    I don’t understand why you say that, when your chart has owner equivalent carrying costs higher than rent for every period.

  30. Uh-oh, there goes the neighborhood: 1021 Cole was foreclosed on June 9 for $1,083,150. Previously bought for $1,400,000 on 9/22/08. Appears to be a fixer from the Zillow pictures.

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