338%20Spear%20%2310C.jpg

Purchased for $522,000 this past September, 338 Spear Street #10C has returned to the market asking $599,000 for the Infinity Tower Two one-bedroom seven months later.

In terms of comps (versus the apple to be), 338 Spear Street #9C sold for $510,000 in October 2009 while 338 Spear Street #11C sold for $565,000 the month after. 338 Spear Street #12C sold for $535,000 this past August.

Of course those 2009 sales were all so last year (and The Infinity is now nearly sold out).

∙ Listing: 338 Spear Street #10C (1/1) – $599,000 [MLS]

Comments from Plugged-In Readers

  1. Posted by SFRE

    “…all so last year” – great one.
    Its hard to justify the price when only in the past 6 months the same stack of units have sold for cheaper. Of course, however, asking isn’t selling, and there is a lot of 1/1s on the market (Paul actually has one listed in the “C” building for $598k, though not on MLS, and it may be bigger [its listed at around 842sqft, and this one has no info on sqft]).
    Given the pricing of the other units this should be listed/sell at around $520k. But “should” doesn’t necessarily mean “will”, and it could definitely sell about $520k.
    We are likely to hear about (1) lack of inventory, (2) Infinity [close to] sold out, and (3) better real estate environment.
    However, I think (1) there is plenty of less expensive 1/1 inventory at other buildings in the low $500s. If it was a 2/2, then yes, there is a lack of inventory. (2) Who cares that the infinity is close to being sold out. (3) the better real estate environment is somewhat true, but not enough to justify a 10% price above comps.

  2. Posted by Jeff

    For how much would such a place rent?

  3. Posted by SFRE

    Good question. I would guess around $2,900-$3,000 (asking).

  4. Posted by ex SF-er

    it’s nice enough for starter housing.
    it should command starter housing pricing, plus a small premium for being in a luxury building. I have no idea what that pricing would be.
    typical of SF “luxury” condos there is little to no room for a dining room table. At least there are restaurants nearby… or you could use that random island (who thought of that?)
    the floors are nice.
    although it really doesn’t have a “view” per se, its view is somewhat interesting IMO. plenty of things to look at. peek a boo Bay bridge, interesting architecture nearby. you’re high enough to get some sky views and to see the tops of buildings.
    overall a decent starter place.

  5. Posted by lolcat_94123

    No way does someone pay $3k/mo for this 1 bedroom. There’s so many better places, in better neighborhoods, with more space, and views, etc etc etc for that price (or less) in SF. Corporate rental maybe..

  6. Posted by SFRE

    I’m not saying its worth it, but people are stupid.

  7. Posted by J

    “it’s nice enough for starter housing.”
    One thing I’ve taken away from the last few years, is that a starter housing purchase is a flawed strategy due to transaction costs. It is just a bet on appreciation.

  8. Posted by Tweety

    $600K -> Purchase Price
    $120K -> Down Payment
    $480K -> Mortgage Balance
    $2,600/mo ~ $480k @ 5% 30 y fixed
    +
    $691/mo = assoc. fees
    =
    **$3,291/mo** for a 1 bedroom, albeit luxury, condo! HFS! And, the purchaser has $120k locked into an asset that is no longer “guaranteed” to make easy money. Ouch!

  9. Posted by SuckaFreeCity

    Tweety–good numbers. I think this looks pretty attractive as far as bay area real estate goes. Look at the alternative—Say you rented for 5 years at $2600 month–and spent $156,000 in rent. Then what, where are you?
    Alternatively if you bought this place and rented it out you would come close to cover your costs and reap the benefits of appreciation, 5-10-15-20 yrs down the line when you sell. Also, let’s not forget the mortgage interest is deductible. Yes, there are property taxes, as well but those are deductible.
    Its actually looking close to break even cash flow right now if you rent it out immediately. Not bad for an SF investment. Plus it’s not rent controlled. It’s 4 blocks off Market street and prime for anyone who wants to walk to work–aka will always have a good tenant.
    Not to mention if you live in it for a few years and then rent it out–it’s a great building in a great location. Looks like a good bet.

  10. Posted by ex SF-er

    I have a better idea:
    don’t buy and rent it out.
    instead, put your $120k downpayment in a Treasury and get risk free returns.
    You’ll probably make more on much less risk.
    The problem is that buying this to rent it out is doing so at razor thin margins. a lot of work for not much $$$.
    also:
    just an FYI:
    the $2600/mo is only Principal and Interest
    Taxes and insurance are extra.
    (probably $575/mo extra for taxes, and a few hundred a month for insurance?)
    also:
    in general you can’t get a 5% fixed mortgage on a non-owner occupied rental property
    mortgage deductions on rental properties is complicated…
    not to mention tax free capital gains on sales of rental property.
    regardless…
    I can’t imagine buying this at $600k to rent out at $3k/mo.

  11. Posted by Willow

    I’m speculating this is a flip based on the short hold period. If that is in fact the case the seller is going to lose quite a lot of cash. Based on the comps this should sell for no more than $535,000.

  12. Posted by SFwatcher

    3291 + 625 (property taxes/month) = 3916$
    If you rent it out for 2600$.
    Loss per month = 1316$. Per year: $15792
    Loss after tax deduction: $11844
    Loss for 5 years: 60000$
    If the selling price is same in 5 years, the total loss would be: 60000$ + 36000$ = 96000$.
    And if you are an investor, you have to count opportunity cost for 120K (3% CD interest): 13500(after tax).
    So total loss would be: 96000 + 13500 = 109500.
    This doesn’t count any maintenance fee + occupancy rate, etc.
    So, I don’t think it still makes sense for investment.

  13. Posted by SuckaFreeCity

    SF Watcher–You paint a bleak picture. But I don’t agree with the picture. Rents and price appreciation will go up over five years. Your numbers don’t play out.

  14. Posted by xyz

    So many renting haters on this board. Why all the animosity cause someone wants to buy a condo?
    I rented a nice 750 sq ft condo with view in North Beach, and it cost $2700 a month with parking . That is typical of a newer 1 bedroom in SF in a nice area.
    A mortgage of $2600 a month will result in roughly $2300 in interest, which is fully tax deductible. A higher income level carries a tax bracket of almost 40%…so you’ll save about $800+ a month in taxes. Property taxes are also tax deductible.
    $2600 – $800 = $1600.
    $1600 + 600 HOA = $2200.
    Plus property taxes ($700 – tax deduction = $500)
    so your total outlay is about $2700 per month after tax savings. Very close to renting a nice 1 bedroom in the city.
    You do the math, it’s not that far off from renting.

  15. Posted by SuckaFreeCity

    You got it xyz. I never heard of anyone renting their way to riches before…

  16. Posted by Shza

    If you’re in that high a tax bracket, you will get hit with the AMT and property taxes will not be deductible. Also, xyz, you’re ignoring the nearly $700/mo in HOA fees. It’s pretty far off from renting.

  17. Posted by JimBobJones

    “Its actually looking close to break even cash flow right now if you rent it out immediately. Not bad for an SF investment.”
    Wow, you’re suggesting this on more than one thread, so you must be serious. This is just clueless, amateur investing advice. Please learn how to calculate return on investment before you give this sort of advice to people. Assuming that 5 years of appreciation will somehow give you a positive return is bubble-time thinking.

  18. Posted by Shza

    Apologies, xyz — I saw the HOA number in your post as soon as I hit “post.”
    “SuckaFreeCity,” obviously most people with massive wealth haven’t acquired it through home ownership. There are many more lucrative investments than a cash-flow negative condo in SF.

  19. Posted by J

    “I rented a nice 750 sq ft condo with view in North Beach, and it cost $2700 a month with parking . That is typical of a newer 1 bedroom in SF in a nice area.”
    Not anymore. Rents have been dropping just like house values. It’s the economy.

  20. Posted by SuckaFreeCity

    Shza–It can be done through ownership of multiple homes –not just one
    JimBob–Yes, I think an SF condo in South beach is a solid way to go. Price appreciation due to lack of inventory, location and jobs in SF are on my side over time.

  21. Posted by ex SF-er

    If you’re in that high a tax bracket, you will get hit with the AMT and property taxes will not be deductible
    this is not technically true
    You can still deduct mortgage insurance even when you hit AMT.
    I know, because I hit AMT every year now.
    The problem is that mortgage deductions often put you into AMT in the first place… thus, you end up not being able to deduct your OTHER expenses.
    it’s hard to explain this so here are some COMPLETELY MADE UP NUMBERS.
    Scenario one:
    you have $50k in deductions… don’t hit AMT. And rent.
    Scenario two
    You buy. You now have $40k in mortgage deductions plus the $50k in your other deductions
    But you now hit AMT.
    Thus, you get $40k of mortgage deduction, but your $50k other deductions is no longer allowed… perhaps you’re now only allowed 20K in other deductions.
    So renting you get $50k deductions
    owning you get $60k total deductions… but you THOUGHT you were going to get $90k deductions
    the calculations are tortuous and very person specific which is why I completely made up numbers.

  22. Posted by anonn

    Rents have been dropping lately? You must not have a friend looking for an apartment right now. 2K for a crap 1 br if you’re lucky.

  23. Posted by Shza

    Shza–It can be done through ownership of multiple homes –not just one
    That’s brilliant. One cash-flow negative condo won’t make you rich, but simultaneously losing money every month on multiple homes — PROFIT!

  24. Posted by ex SF-er

    JimBob–Yes, I think an SF condo in South beach is a solid way to go. Price appreciation due to lack of inventory, location and jobs in SF are on my side over time.
    so what you’re really saying is that your strategy depends on adequate property appreciation.
    specifically it needs housing appreciation to be more than transaction costs, taxes, and negative cash flow over the time of the hold.
    in other words, you’re a speculator.
    on a side note:
    you don’t rent your way to wealth, because renting is a form of consumption.
    Likewise, you don’t own your way to wealth either. Owning is just another form of consumption.
    One can of course invest one’s way to wealth, and RE investment is one form of investment. But I have to honestly say that your ideas of buying negative cash flow properties with low cap rates and a ROI that depends upon asset appreciation seems a bit… uh… naive or risky.
    And trying to make it up on volume? even more risky.
    Have you been paying attention to the realities of levering up to buy and manage negative cash flow properties?

  25. Posted by Shza

    this is not technically true
    You can still deduct mortgage insurance even when you hit AMT.
    I know, because I hit AMT every year now.

    You misread my post. I said “property tax” can’t be deducted under the AMT. True, right?
    (I also get hit with the AMT every year but, thankfully, have not purchased a home since arriving here in 2004.)

  26. Posted by ex SF-er

    If you’re in that high a tax bracket, you will get hit with the AMT and property taxes will not be deductible
    oops… duh, I’m sorry, I misread that.
    You are correct, if you hit AMT you cannot deduct property taxes.
    I had mortgage interest deduction in my brain.
    as a double brain fart I said “mortgage insurance” above but meant mortgage interest.

  27. Posted by JimBobJones

    “JimBob–Yes, I think an SF condo in South beach is a solid way to go. Price appreciation due to lack of inventory, location and jobs in SF are on my side over time.”
    Except that they aren’t if you knew how to calculate return on a rental property. If you actually included taxes, maintenance, insurance, HOA, improvements, inflation, and transaction costs, you’d be crazy to think that a cashflow-negative condo is somehow going to magically result in profit in 5 years without undue appreciation (of the kind one notices during a bubble) — historical appreciation in SF just doesn’t agree with you there.

  28. Posted by J

    “Rents have been dropping lately? You must not have a friend looking for an apartment right now. 2K for a crap 1 br if you’re lucky.”
    He said rent was $2,700/month on a 750 sq ft 1BR. I say you can now do muuuuch better, whether it is as low as $2k or not.

  29. Posted by Sfwatcher

    Ex sf-er was right on point. You cannot speculate if you want to be a landlord. Keep in mind, just as rents can go up( as you say), it could go down too. And property value could go down too.
    Even after prices coming down 10-40%(depending on property), it’s still not that great for investment. Buying to live in a home is a different ball game.

  30. Posted by Michael

    Brand new 1 bedroom with parking ASKING $2300:
    http://sfbay.craigslist.org/sfc/apa/1703121013.html
    High floor with parking, balcony and views ASKING $2552:
    http://sfbay.craigslist.org/sfc/apa/1700039035.html

  31. Posted by Legacy Dude

    People should pause a moment to reflect on the fact that the entire global economy has been crippled by a proliferation of morons thinking that the path to easy wealth was overpaying for non-productive, cash-losing assets. It’s a sure bet as long as it’s done in volume, and over a long enough time horizon. Like 5 whopping years. And as long as the government bailout money keeps flowing endlessly to enablers of financial stupidity like FHA. Ask the people who bought during the first round at Infinity – at $900 psf – how their investment is doing given TS slashed prices to move units in tower 2.
    Anyway, since poor math skills are a prerequisite for the content real estate investor, I ran some numbers through excel. Assuming $600K purchase and 20% down on a 30-year loan at 5%, the payment is $2,577 per month. Add $691 in HOA and $625 in property tax, and your gross monthly payment is $3,893. You can overstate phantom tax deductions all day long, but this still doesn’t pencil as buy over rent in today’s market. Here’s a studio at the Infinity trying to rent for $2,200, which leads me to believe a 1-bedroom would go around $2,600 +/- $150.
    http://sfbay.craigslist.org/sfc/apa/1703063910.html
    More importantly, after a 5-year hold, less than $40K of the principal has been repaid. That’s the only equity you’re contractually guaranteed to build assuming you make your payments. And that essentially gets eaten by ongoing maintenance and transaction costs when you sell. So buying this today, at this price, is yet another bet on future appreciation (see first paragraph).
    I’m amazed that people have learned seemingly nothing from the economic events of the last 2 years.

  32. Posted by SuckaFreeCity

    “if you knew how to calculate return on a rental property. If you actually included taxes, maintenance, insurance, HOA, improvements, inflation, and transaction costs, you’d be crazy to think that a cashflow-negative condo is somehow going to magically result in profit in 5 years without undue appreciation (of the kind one notices during a bubble) — historical appreciation in SF just doesn’t agree with you there.”
    An owner occupied unit bought now at the Infinity or elsewhere could do just fine. Call it what you want, home ownership, investment, whatever…it beats renting your way to riches. I know how to calculate return on rental property. You forgot tax deductions of mortgage interest, property taxes, home buyers credit and capital gains exemption. Different strategies for different folks and time frames. I stand to make some money I what I have going in South Beach. So do a lot of other people.

  33. Posted by anonn

    Yeah, and I said “crap 1 BR.” Not, nice condo in a nice building 1 BR. I’m talking run down flat on a busy street somewhere. That’s why it slays me when I near people talking about rent going down so much. It’s not.

  34. Posted by Outsider

    1. I can’t understand why one is called a flipper if he/she sells a property within a year of purchase. There are plenty of circumstances under which one may have to sell unexpectedly.
    2. To come out even, one needs to account for $30K of commission, $10K of original closing cost,$15K of window covering, wall painting etc. So if the purchase price is $522K, one needs to sell at around $575K to get most of one’s money out – hence the $599K asking.
    3. There is no great safety on treasury. If rates go up as little as 1%, your 10-30 year bonds would take a big hit.

  35. Posted by JimBobJones

    “You forgot tax deductions of mortgage interest, property taxes, home buyers credit and capital gains exemption.”
    No, I certainly did not. Deductions of mortgage interest, and property tax if you aren’t an AMTer, are assumed because they’re obvious. If you really think the home buyer’s credit and the capital gains exemptions are what transform cashflow-positive into cashflow-positive, you’re doing it wrong.
    Good luck if you think buying a cashflow-negative rental property for 5 years is smart real estate investing; you will need it. The only way that would be true is if we get bubble-time gains in the next 5 years.

  36. Posted by Legacy Dude

    Where’s FormerAptBroker when you need him? I’d like to hear his opinion here.

  37. Posted by SuckaFreeCity

    Whatever Jim Bob. Good luck renting. Fixing and flipping and being a real estate investor.

  38. Posted by JimBobJones

    For what it’s worth, people make another intangible flaw when comparing the costs of buying vs. renting.
    When I have rented in the past, I have had a higher tolerance for flaws — e.g. wrong school district, too few bedrooms for my future plans, bad layout, less than ideal kitchen, less than ideal yard, etc.
    When I have bought in the past, I cared about all those flaws because I was committed for a longer period. That meant I was likely to buy a nicer place than I would ordinarily rent because I wanted to minimize those flaws.
    That means, while I might considering renting a $2500/mo place, I might only consider buying a $3200/mo equivalent-rent place. The extra $700/mo might be worth the flaws in the rental housing because I may only be there for a year.
    So while it’s certainly fair to compare the same property for buying vs. renting to determine whether one is overpaying for that particular property, it doesn’t necessarily tell the full story about whether one would be financially better off buying vs. renting.

  39. Posted by SuckaFreeCity

    Did you guys see this? Buying versus Renting.
    http://www.nytimes.com/2010/04/21/business/economy/21leonhardt.html
    [Editor’s Note: Don’t worry, we’re going to run that piece tomorrow. But we have a funny feeling it doesn’t say what you think it said.]

  40. Posted by JimBobJones

    “Where’s FormerAptBroker when you need him? I’d like to hear his opinion here.”
    I would love to see FAB’s opinion too. FAB is generally one of the most accurate on calculations and investment advice.

  41. Posted by JimBobJones

    SuckaFreeCity, I’ve seen the NYT calculator before. It doesn’t include all the total cost of ownership and is a simplistic calculation based only on headline payments. Missionite’s calculator is one of the best for buy vs. rent.
    But if you’re buying an investment property, you need to make a different calculation — return on investment. Even if buying vs. renting shows that buying is better, return on investment might not be high enough to go through the hassle of having a rental property. If your ROI isn’t high enough, why bother?
    Out of curiosity, what is your answer to “How much do you expect home prices to go up each year?”

  42. Posted by ex SF-er

    sucka:
    you are changing your argument.
    Your primary argument was that this nearly pencils out if you were to buy and rent it out immediately.
    you wrote at 229pm:
    Its actually looking close to break even cash flow right now if you rent it out immediately. Not bad for an SF investmen
    This is clearly not the case.
    I doubt that there is a competent real estate investor out there who would believe this, although I’m willing to be proven wrong.
    Your new argument is different, using the pad as an owner occupied domicile.
    I think that it may pencil out better here compared to as a rental investment, but I still think that most people would come out ahead financially if they rented now, and bought when the rent:own comparisons were more favorable to owning. (notice, I’m not discussing the “pride of ownership” premium here).
    and I guess my disclaimer:
    I am a homeowner.
    I have a fair amount of wealth for my age (mid 30’s).
    most of it was derived outside of RE investments, although I do have significant (for me) RE holdings.
    so I’m not a poor bitter renter. Quite the opposite in fact.
    my goal isn’t to pick on you sucka, but I just feel that you don’t have a firm grasp of investing.

  43. Posted by OneEyedMan

    As a comp when you get appraisal on $599K for a 1/1 w/parking here be sure to exclude the Watermark 1/1 place only blocks away and on another SS post that just closed at $402K. This unit is just not $197,000 nicer, imho

  44. Posted by SuckaFreeCity

    “How much do you expect home prices to go up each year?”
    I was referring to the article, not the calculator, because I think it’s interesting that it was written on the first page of the NYT this morning that many areas, in the author’s opinion, have the turned the corner to become a buy vs. rent city. SF is one of them. The author uses a formula of price divided by annual rent. If your ratio is less than 20, he believes it’s good to buy.
    My answer is that it is way to early to tell how property will appreciate each year. But I do believe that for 5 years it won’t exceed inflation by much. We are in a cycle. The down part of the cycle and the trick is to sell at the height of the market. I believe the market will trend upwards faster starting around 2015. It will rise and fall over time like any market.

  45. Posted by ex SF-er

    3. There is no great safety on treasury. If rates go up as little as 1%, your 10-30 year bonds would take a big hit.
    ???
    Treasuries are the safest investment on the planet.
    it is true that Treasuries can gain/lose value over their lifespan due to changes in interest rates, but Treasuries give you a GUARANTEED return over time.
    I would also add that few non-institutional investors buy 30 year Treasuries.
    I’m struggling to think of a safer investment than Treasuries, even with the current possible Treasury bubble.

  46. Posted by Willow

    As eloquently stated by ex-SF-er the five year hold and rent strategy simply does not make financial sense. You are going to be bleeding serious dollars on a monthly basis. Which leaves the other remaining option: hope for appreciation to offset these losses. Do people seriously think that a smallish one bedroom on a lower floor in the Infinity is going to be worth $715,000 in 5 years? I think not.

  47. Posted by SuckaFreeCity

    Ex-SFer—To be clear, I made different points. What I think is that it is a good long term investment and agree it doesn’t quite pencil right now as an investment–but with a 30 year note at 5% it looks good. (No rent control, good location, growing area, etc etc. all the reasons people buy in South Beach). The owner occupied route is key right now, I believe price appreciates in 2015. Do you agree?

  48. Posted by J

    “in the author’s opinion, have the turned the corner to become a buy vs. rent city. SF is one of them.
    Not true! From the article:
    http://www.nytimes.com/2010/04/21/business/economy/21leonhardt.html?ref=business
    “But in a handful of other areas, including San Francisco, Seattle and Portland, Ore., house prices remain significantly higher than they were before the bubble began. People who buy a home in these areas will face higher monthly costs than if they rented, even after taking tax deductions into account.
    How wrong can you be???

  49. Posted by SuckaFreeCity

    That’s funny, it read differently this morning at 6am in print…anyway it’s an interesting article.

  50. Posted by JimBobJones

    “But I do believe that for 5 years it won’t exceed inflation by much.”
    Then why do you think appreciation within 5 years will make a property a good investment? If we hit the Fed’s inflation target of 2%, compounded over 5 years, we are talking about 10.4% appreciation. So we are talking about $62.4K in profit on a $600K purchase price.
    When you sell, you will pay more than $33K to your realtor plus transfer costs (about $4500), plus you already paid closing costs on the prior loan, so we’re already below $25K return just on the property itself.
    Even if you make rental income by being cashflow-negative in the first year of rental, even on the second year, and make modest sums in the third, fourth, and fifth years, your total returns are still abysmal for an *investment*, especially if you lose a month or two here and there between renters.
    If you’re talking about living there, we’re talking about two different things. Investment is investment and housing is housing; to keep money in your pocket, don’t confuse the two.

  51. Posted by ex SF-er

    The owner occupied route is key right now, I believe price appreciates in 2015. Do you agree?
    I agree that it would be a better financial decision to buy this as an owner occupied residence and use it for consumption instead of trying to buy it as a real estate investment.
    I agree that there will be downward pricing pressure on RE nationally, and likely also in SF, at least through Dec 2011… but would be unsurprised if 2015 is a workable date.
    However, I’m not sure after that. There are major secular changes coming to our country due to changing demographics and I’m not sure if they will be bullish or bearish for housing.
    Remember, the last 50 years we saw emergence and then maturation of the baby boom. That is an anomaly that affected all markets as that cohort grew older, earned more, had more disposable income, and spent that income at higher ratios than any other generation in the past.
    much of the secular bull market in equities and RE since the 1980’s can be directly attributable to the Baby Boomers… it is possible that we will see a longterm secular downtrend due to their retirements, downsizing, and deaths. their spending power will be hard to replace. Much will depend on immigration and birth statistics, as well as regional in/outflows.
    therefore, I’m not prepared to make longterm forecasts because we’ve not seen a demographic shift like this in our economy before.
    I am not opposed to investing in RE.
    I just wanted to point out that your above mentioned strategy relies on appreciation. this is a risk. it is up to all of us to independently analyze the likelihood of that risk.
    since RE investing is work-intensive I prefer to invest in cashflow positive properties so that any appreciation is icing on the cake
    this is not possible in general with SF RE at this time.

  52. Posted by EBGuy

    People should pause a moment to reflect on the fact that the entire global economy has been crippled by a proliferation of morons thinking that the path to easy wealth was overpaying for non-productive, cash-losing assets.
    I’m going to disagree slightly; morons were definitely necessary. You also needed some very smart hedge funds exploiting what Magnetar called systematic relative value mispricing. That is, Magnetar went long in the crap tranches of CDOs they helped sponsor and short the higher tranches (through CDSes). Those who plied the “Magnetar trade” actually created a demand for moron mortgages. They kept giving the alcoholic more booze long after it should have been take away. No wonder the drunk hit the wall with his foot still on the gas…

  53. Posted by SFRE

    There is a 2/2 at over 1,000sqft at the Metropolitan that Paul has listed for $599k. There is no way that a 1/1 sells for anywhere near $599k. Granted the Infinity is a better building, but still I’d take size and price.

  54. Posted by Fish

    The rental market doesn’t look that hot to me: http://mullinslab2.ucsf.edu/SFrentstats/data/DAYneigh_1.png
    I wouldn’t pay anything close to $2900/mo for this dump w/ no view. $2500/mo at the best. Which means, according to NYT calculator, the price should be about $430k, not $599k.

  55. Posted by SF Buyer & Seller

    Not a bad deal, given the lack of inventory. The ‘market’ at-large is not picking up yet, but we are seeing pockets getting multiple bids and unforeseen attention: this is definitely one of those pockets. There are no closer to financial district projects as one to this. One Rincon is beside the highway and all the 05/06 properties lie underneath the bridge with noise – if I had the money for a down payment, I’d say this is a safe bet with good upside, with expected positive alpha relative to peers.

  56. Posted by Legacy Dude

    I’m just curious if any of you savvy investors are factoring exogenous variables into your – ahem – “forensic” analysis of the market? For example, what if some type of sovereign debt crisis occurs, global liquidity is strained, and mortgage rates go up 200 bps? What if the Chinese bubble implodes and they stop buying our debt? What if the U.S. loses its AAA rating? What if there’s a regime/ideology change in DC, and they decide it’s not longer viable to keep burning billions in the Fannie, Freddie, and FHA firepits? What happens to local prices and your 5-year sure bets under any of those scenarios?
    So many people seem to be spouting off polemics embellished with buzzwords like “non-linear dynamics” and “expected positive alpha relative to peers.” Sounds like Soros and Paulson themselves are buying Soma condos! Just curious how much actual analysis has even taken place here, or if it’s just a bunch of bored realtors talking their books with phrases pasted from Yahoo Finance articles.
    Not long ago this site was full of similar types claiming there would be no recession, and that SF prices would never fall. We all know how that turned out…

  57. Posted by nnona

    “I stand to make some money I (sic) what I have going in South Beach. So do a lot of other people.”
    I’d say this City isn’t SuckaFree after all.

  58. Posted by Outsider

    LD @ 8:47 AM – All the disaster scenario you outlined should always be considered but the probability is low enough they should not sway one’s investment plan. Major nations have shown willingness to work in semi unison to resolve at least financial crises witnessed by this past recession and EU’s response to Greece’s potential fiscal meltdown.
    More close to home and pertaining especially to California, as I had mentioned before, is the effect of a massive earthquake. We all know it’s coming, it gives no warning, there is real way to protect against it and the effect may be worst than any financial crisis we have seen. A 8.0 tremor will destroy or damage most structures. Even the newly erected buildings will not be spared. Hundreds of thousand of jobs in the immediate Bay Area will be lost not because of the economy, but because the places to do business are no longer around or cannot be certified for occupancy for many, many months if not years. Repair demand will overwhelm by a thousand folds the capability of local and even out of state contractors and material for repair or rebuilding will be severely strained and the prices driven up. Few will be buying real estate and lender will not be making real estate loan as soundness of each property is difficult to establish and appraisal value impossible to determine. Most surviving condos, with or without earthquake insurance, will fail simply because the assessment for repair will be so large few owner will be able or willing to come up with the money especially in the face of massive devaluation of your unit and job loss. Many of those lovely victorians that are desired by so many will be condemned and lost forever. This is not some fantasy doomsday prediction. This is reality. Factor that in before you buy. Or may be this is the best argument for renting…

  59. I’m somewhat of an alarmist regarding The Big One. It will be very bad though I’m not so sure quite as bad as Outsider describes. Damage will be widespread though many bay area homes will be habitable once the mess is cleaned up and the glass is replaced.
    One of the biggest impact on RE prices will be the reduced number of residents. Sadly part of this will be due to quake caused deaths (expect somewhere in the range of 2000-20000 for the whole bay area). However the bigger effect will be a mass exodus of people who leave first just to find a viable home/job but then remain in their new cities having become comfortable and not wanting to relive the disaster.
    Though I disagree with the scale of the nightmare, I do agree completely with Outsider’s closing comment : “This is reality. Factor that in before you buy.” I’ll bet that the majority of buyers hardly even consider that the Big One could obliterate their RE investment even if they’re insured for quake damage.
    NB : Ever since that Baja California Norte quake a few weeks ago there’s been quite a swarm of little ones around Calexico : http://quake.wr.usgs.gov/recenteqs/latest.htm

  60. Posted by anonee

    legacy dude,
    “Not long ago this site was full of similar types claiming there would be no recession, and that SF prices would never fall. We all know how that turned out…
    who, exactly said such things. this site was “full” of such types you say? i’ve never seen any example of that. please show us.

  61. Posted by diemos

    Here are a couple of nice little “blast from the past” threads so that you may compare and contrast the change in tone over three years.
    http://socketsite.com/archives/2007/11/when_good_comps_go_bad_in_the_marina.html
    http://socketsite.com/archives/2007/05/the_socketsite_scoop_on_that_rincon_hill_short_sale.html

  62. Posted by anonn

    Seems like people interpret “long” and “short” amounts of time based upon their own internal clocks, and not respective of what the local real estate market is actually doing. To me, 2007 is already a long time ago. Yet everybody on here is always on about comparing to peak. (The site was dominated by bears that year, not bulls.) Let alone two years prior to that, when apparently this site was dominated by condo speculating bulls.

  63. Posted by J

    Those who cannot remember the past are condemned to repeat it.
    This is the new reality that we face in 2010.

  64. Posted by anonn

    Not really. Not for SF. I ventured that it was true of the last markets, but few bears believed me. In hindsight, looking at the relatively few foreclosures compared to other regions and cities, can it be doubted that SF buyers often put more cash down?
    But that’s not my point. Now, today, everyone is putting more cash down. They have to. That’s not repeating any bearish model of history. Clearly.

  65. Posted by Anon E. Mouse

    anonee, this quote is pretty famous:
    http://socketsite.com/archives/2008/06/a_concerning_comp_and_empty_shell_at_the_ritzcarlton_re.html
    It’s over. Sorry. Scare tactics are dead. San Francisco never really took a price hit and it won’t, either.
    Posted by: fluj at June 23, 2008 9:57 AM
    I haven’t been reading this site for too too long, but these arguments over whether there were bulls or bears making wrong predictions here at various points is silly and usually ends up with tons of hyperbole. There were certainly some bears here claiming that there would be an immediate 30-40% drop, and they were wrong (probably partly because housing is not very liquid). But to suggest there were no bulls here making claims that SF wouldn’t be affected is also silly. Just check out this from even as late as 2008:
    Newsflash to bitter renters: Owning property in California has been and will continue to be a one-way bet over the long term. Instead of taking that European vacation every summer, why not save that money for a down payment?
    Posted by: Mystery Realtor at February 14, 2008 10:31 AM
    And there were definitely people who suggested foreigners would save SF, in case people think no one ever said that:
    Only a matter of time before some of the condos coming online spend more to advertise in Europe and Asia than here in the US. Plummeting dollar to the rescue!
    Posted by: anon at July 25, 2007 8:22 AM
    You can read other California real estate blogs about expensive areas, and you’ll see bubble deniers too — Burbed, and in LA, Manhattan Beach Confidential.
    I personally think things are shaking down as they often do in housing busts — some immediate drops, but a longer slower drop in real value due to inflation.

  66. Posted by anonn

    Well, that was wrong as it turned out. SF took that price hit, the one the bears had been talking about having already happened for 18 months, about three months later. I wonder if all the people talking about how SF had already been cremated throughout 2007 and throughout the first nine months of 2008 was frustrating or affected the thought process in any way. Further, now, in hindsight, I wonder how the relatively small price hit that did take place compares to “never really took a price hit and won’t” to “SF is going to see 50% declines, and I’m going to buy a 3/2 SFR in Cow Hollow for 1M.” Food for thought.

  67. Posted by anon

    Whew, embarrassing. I guess that’s why that fluj guy never posts anymore. One would have to have no sense of shame to say something that proves to be so wrong then keep showing up and harping on people who got it right.
    As for this place, SOMA condos will likely continue to be one of the weakest market segments. They just built too many, and these would never have sold, or been built at all, were it not for the easy bubble money. The whole city will continue to drift downward, but these places will likely decline faster and farther because such a high percentage were bought on bubble money.

  68. Posted by anonn

    Which is closer to correct in hindsight, right now, as we see 5 to 10 % shifts by and large? SF is not going to take a hit, or SF is going to get utterly decimated?
    Which is more embarassing? Surely it’s the “I’m going to buy a house in Cow Hollow for two bits” crew. YMMV.

  69. Posted by Anon E. Mouse

    I’d love for you to find me the people who were going to buy a 3/2 SFR in Cow Hollow for 1M, as it sounds like hyperbole. You can’t deny that even those 30-40% predictors were right in many cases, even if they weren’t right about Pacific Heights mansions.
    But plenty of people made bad predictions, anonn. We should probably get over it, and we should probably at least characterize it as what it was. I wasn’t even looking for another quote to give you, but happened to find this while looking for something about the Octavia Plan:
    Whatever. Anyone who bought a house in Mill Valley or many other places in the BA for $500k in 89-96 now has a house worth a couple million.
    Much to the chagrin of many readers here, many units are still getting sold and deals are still closing. Just goes to show that while some people may think a building, neighborhood, or market is bad, a ton of people strongly disagree.
    A few signs of reaching/passing the low point are already coming to surface, at least in the more desirable areas. I’m betting on a strong pickup in sales and median prices in SF in Oct & Nov. Anyone else think that August 2007 is the low point for sales?

    Posted by: anon at October 26, 2007 11:43 AM
    http://socketsite.com/archives/2007/10/a_pluggedin_reader_and_hayes_55_page_buyer_reports_60_s.html

  70. Posted by anonn

    Spencer, you’ve been summoned. Tipster, Diemos, Foolio, LMRiM, feel free to also tell Anon E. Mouse all about what you were holding out for.

  71. Posted by anonn

    You can’t deny that even those 30-40% predictors were right in many cases, even if they weren’t right about Pacific Heights mansions
    Oh. I can deny that. I do deny that. Pacific Heights Mansions, Noe Valley, the Mission, Potrero Hill, Glen Park, the Sunset, The Richmond, District 8, heck, even most condos we’ve seen. Thirty to 40%?
    Define “many.” Does it have anything to do with the concept of the overwhelming majority of everything we’ve witnessed? Because it it does, then I categorically deny it. If it’s here and there a few dozen anecdotes usually to do with a bank owned property, then your idea of “many” differs from mine.

  72. Posted by anon

    Here are a few places, two in Cow Hollow and one close, that didn’t get quite that far but the direction is pretty clear.
    http://www.redfin.com/CA/San-Francisco/2243-Greenwich-St-94123/home/1049686
    http://www.redfin.com/CA/San-Francisco/2552-Hyde-St-94109/home/939985
    http://www.redfin.com/CA/San-Francisco/215-Moulton-St-94123/home/1357638
    The “5-10%” crowd lost that bet, and that “San Francisco never really took a price hit and it won’t” guy was about as dead wrong as one could be.

  73. Posted by Anon E. Mouse

    “Which is more embarassing?” [sic]
    Get back to me in several years. We don’t know the answer yet, as inflation matters too, even if a lot of people are content looking at the headline number.
    To anon@12:01’s point, there were certainly people predicting that the massive influx of overpriced condos wouldn’t be a problem:
    I also think that all the new condos being build especially the highrises are filling a desired gap. These types of units are very popular in the other “world cities” and are pretty much non existent at this point. That is why some of these buildings are attracting people like Gore and the guy who bought the three penthouses at the Regis. They are not worried about property values.
    Posted by: Anonymous at November 15, 2006 4:06 PM

  74. Posted by anonn

    Ha. And in comes the cherrypickers. Typical.
    For the record, I maintained throughout that the glut of overpriced condos would pose the biggest problem.

  75. Posted by Anon E. Mouse

    Those Cow Hollow prices from anon@12:19PM:
    2243 Greenwich is 25% off nominally and 33% off real.
    2552 Hyde is 29% off nominally and 32% off real.
    And I already pointed out yesterday that 215 Moulton is back to its 2001 price despite work having been done on it.
    Bank-owned properties are comps too. I still don’t understand the tendency by some to discount them.

  76. Posted by Anon E. Mouse

    “And in comes the cherrypickers.”
    But you cherrypick the most bullish properties too. This is not a very good criticism.
    The handwaving (as well as the hyperbole) on both sides is a problem.
    It’s interesting, Manhattan Beach Confidential, which I mentioned earlier, started doing comprehensive lists of apples (MB has 3 distinct areas/neighborhoods that this was broken down into — obviously there would be more for SF). Maybe that’s what’s necessary here to get some truth rather than handwaving, although it takes a lot of work.

  77. Posted by anonn

    You think? Seems to me that I provide data showing 700+ SFR sales, compared to another 700+ from the same period last year, and get screamed at for using averages. That’s what I do. Then I quietly mention that a median comparison from the same periods also shows 80K better YTD, and nobody says boo. You know. Stuff like that’s more in keeping with what I do.

  78. Posted by Anon E. Mouse

    Comparing medians and averages on a yearly basis only tells you so much. The comparison doesn’t account for mix, and doesn’t account for renovation. I know people certainly got told not to look at medians on the way down, so I’m not sure why they’re any more valuable if, as you’re suggesting, things are going back up.
    That’s why Manhattan Beach Confidential’s campaign for apples, like SocketSite’s, has been successful. MBC noticed that many Manhattan Beach properties were being significantly renovated/rebuilt and put back on the market (in some cases with a lot more square footage), much like a lot of places here. It hardly makes sense to compare medians when you’re talking about improved housing stock that should be worth more.

  79. Posted by anonn

    Mix happens year in and year out. So does renovation or improvement. But nobody said that any of these things are perfect.

  80. Posted by Anon E. Mouse

    Mix can noticeably change. Do you think SF high-end is doing better now than 18 months ago? Do you think $700-950K got boosted by FHA changes relative to earlier? Do you think loan modifications have prevented some short sales and foreclosures in SF in the last 18 months?
    Renovation is similar. Contractors’ willingness to deal with residential jobs of various sizes is something that has been in some degree of flux over the last few years too, and so have costs of materials and other things.
    I don’t think it’s easy to handwave either of the two.

  81. Posted by anonn

    Handwave? Well, seemingly you find it easy to pass off a relatively tiny and homogenous area like Manhattan Beach as something comparable to SF for some reason. Not apt. Maybe a neighborhood or three. And yeah, apples are good for neighborhood sussing.
    Is SF high end doing better now than 18 months ago? 18 months ago being late October 2008? Definitely. Have 700 to 950K houses been boosted by FHA? Definitely. Have loan mods prevented some short sales and foreclosures in SF? yes. Last 18 months? no. More like last 10 months, there.
    I don’t think your contractor points are as strong. Materials, from what I’ve heard, haven’t gotten cheaper. Oil has remained expensive, so interstate trucking has remained expensive. The deal with contractors right now is that total fixers are damn near impossible to finance for non end users.

  82. Posted by Michael

    If medians and averages are the way to go:
    Median SFH May 2007: $976k
    Median SFH March 2009: $690k
    Median SFH March 2010: $790k
    29% drop 2007-2009
    19% drop to today
    Average SFH May 2007: $1,330k
    Average SFH March 2009: $895k
    Average SFH March 2010: $1,113k
    33% drop 2007-2009
    16% drop to today
    “as we see 5 to 10 % shifts by and large?” Good one flujanonn.

  83. Posted by anonn

    Uh huh. Let’s pick a high month, pick a low month, and slap in last month for good measure? Nice one, Michael Q. Hatred.

Add a Comment

Your email address will not be published. Required fields are marked *

Recent Articles