As we wrote last November:

Purchased for $800,000 in December 2006, Odeon (181 O’Farrell) #508 was taken back by the bank. It’s been listed at $601,400, a sale at which would represent a 25 percent drop in value over the past three years.

While the list price was reduced to $542,700 in December, the sale of 181 O’Farrell #508 closed escrow on 2/12/10 with a reported contract price of $530,000, a 34 percent drop in value over the past three years (but “only 2 percent under asking”).
Oh My (And Bank Owned) At The Odeon On O’Farrell [SocketSite]

Comments from Plugged-In Readers

  1. Posted by diemos

    Wow, who knew that the key to creating affordable housing was to get rid of the “affordability products”.

  2. Posted by Mole Man

    That is just plain wrong. The bubble was a combination of out of control hype mixed with a huge amount of fraud. Affordable mortgage products that were carefully controlled by the lenders have consistently performed well and continue to have relatively low rates of default. There is a huge difference between a fraudulent NINJA loan and a deal that required extensive documentation of steady employment and savings.
    Sloppy and stupid analysis is what made this mess, only ever makes things worse. These blanket statements are a lot like saying driving can be dangerous, so everything will be fine when high gas prices get rid of all cars. Sloppy observations turn out to be false when closely examined, and the simplistic projections will not happen. Paying for houses with an alternative payment plan is just another way of paying for houses and won’t distort markets significantly. Having a fraud party blow out is different, and it is notable that the market correction has been messing up even prime mortgages with 20% down and all the rest. Fraud and diligence are the issues, not some magical past that we might return to by clicking our heels together.

  3. Posted by anonymous

    If I bought at the Odeon and paid $800k and had a place now worth $530k, I’d walk. What else can you do? It will take a minimum of ten years to get that price back up to the purchase price plus some beyond that to break even.
    Say you put down 10% and have a payment around $3500 a month, plus the HOAs (which I’ll guess to be around $500/mo) plus $300/mo for nearby parking you’re looking at $4300 a month. You could rent a similar unit in that building or somewhere else for $2800/mo saving yourself a whopping $1500/mo.
    In the same ten years that it would take to MAYBE build your equity back to the point where you’d walk after sale with your $80k downpayment, you could, if you saved that $1500/mo, have close to $200k in the bank.
    You’d be a fool not to walk.

  4. Posted by anonymous

    My work associate just reminded me that I didn’t include property taxas which would be about $10k a year. So add another $100k to that potential savings amount bringing it to $300k!
    Holy expeletive.

  5. Posted by UniSquid

    Unique location and a great building… a steal at $530,000.

  6. Posted by wow

    That’s not a steal by any metrics. As long as you can rent a similar place for a fraction of the real ownership cost, this is not an economical buy, and by very far not a steal. These are emotional prices based on the will of a segment of the population to do whatever it takes to put down roots, even if it means making decisions that do not make much sense. There’s no “steal” in SF as demand for purchasing is still out of proportion with the rental value.

  7. Posted by Alexei

    If you’re wondering whether to walk or not, whatever you paid as a downpayment is a red herring. It only matters what you’re going to pay going forward.

  8. Posted by deshard

    I’m an Odeon buyer from ’07 and I’m definitely struggling with whether or not to walk. If values in the building are at +/- 65% of what I paid, then shelling out $5000/mo (inc. mortgage, HOAs, taxes and parking) when I could lease for $2500-3500 depending on how big, how updated and location and save $1500-2500/mo. and as anonymous said, have close to $200k in the time it would take to maybe be closer in value to my purchase price.
    I can afford my monthly nut, but why do it when I’m essentially just throwing $$$$ down the toilet.
    Sure, my credit will tank for several years, but I don’t foresee needing any new credit for some time.
    Hmmm. Food for thought, or should I say, money for thought.

  9. Posted by diemos

    Beware the deficiency judgment. Get an expert opinion on your situation before walking away.
    You might want to wait for HAFA to come into effect this year. That program includes an anti-deficiency clause.

  10. Posted by sfrenegade

    “Beware the deficiency judgment.”
    Doesn’t apply if all you have is a purchase money mortgage, but may apply on refis. As a practical matter, it doesn’t seem like that many lenders try to get deficiency judgments, even when the law permits them.

  11. Posted by Boufano

    Do HELOCs used in the initial purchase (not a recourse loan, I believe) count as “purchase money mortgages”?
    Also, I read that if the same institution owns both the first and the second, no deficiency judgement for the second is allowed.

  12. Posted by sfrenegade

    Boufano — the HELOC question is a good one. My guess is that the court would interpret that as a purchase money.
    I don’t recall off the top of my head if what you said about the same institution having 1st and 2nd mortgages is true though. My impression would be that the bankster could judicially foreclose on both liens simultaneously and still get a deficiency on the 2nd, but not sure. If the rule were as you say, I’m not sure why a bankster would ever give someone a 2nd mortgage when they already have the 1st.

  13. Posted by anonymous

    If you sell your home in a short sale I believe you can purchase again in 2 years. I think it may be 5 years or longer with a foreclosure.

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