As we wrote this past October:
Originally asking $957,000 through the sales office in 2007, 310 Townsend #303 ended up selling for $850,000 in November of that year (a discount of 11.2%). Back on the market today after a two year hold and asking $785,000 (7.6% below it purchase price, 18% under the developer’s original list).
Let’s call it an effective rent of around $4,000 per month for the one-bedroom plus den condo over the past two years not accounting for transaction costs or any capital loss (assuming a sale at asking). Call it closer to $9,200 per month if you do.
Reduced to “$599,000” as a short sale in April, the sale of 310 Townsend #303 closed escrow today with a reported contract price of $670,000. Yes, officially “12 percent over asking!” (but 21 percent under its 2007 price).
We’ll let you redo the math.
∙ 310 Townsend: Available And Selling [SocketSite]
∙ We Have A 310 Townsend (#303) In Progress [SocketSite]
Wow deja vu. These units at 310 Townsend were some of the first ones I looked at the beginning of my buying process. This was back in 2007 and I remember thinking that they were reasonably priced.
Prices have come a long ways.
Still, for a 1 bedroom unit with no light (from what I remember that same brick facade also acts as a fantastic guard against any natural light), $670k is not a bad price for a distressed sale.
This place gets lots of light. It’s a nice and large 1 BR. But there is a lot of decent 2BR inventory that is now on the market in this range.
Supposedly these units do not have good sound isolation. And obviously the train noise could be an issue.
agreed with J, i think i would’ve preferred a 2BR for this price. i think the person paid a little too much for this one, i hope it came with parking.
So the math looks to be about $11,500 / month for that sweet one bedroom. Ouch
180k loss
17k taxes
33k to the broker
230K total
20 months of ownership
230k /20 months – 11.5k /month.
Then insure the thing and pay HOAs
670k for a 1 bdrm. Ouch! Another short sale in 18 months. These should be in the mid 500’s, tops.
as this went signifigantly over asking my question is : was this short sale a cash deal or financed?
been there, you forgot the interest and transfer taxes.
mikel, you clearly don’t understand the scam that has just been perpetrated on you, so let me help you. Assume FHA loan @ 3.5% down, with 6% back from the seller to cover “closing costs” which I’m sure included HOA, etc. for 3 years.
670K *6 (5% interest – if that, 1% prop tax)% /12*0.72 (non deductible portion)=$2400.
Total payments for 36 months 2400 * 36 = 86K
Subtract 18K in state and federal tax credits 86K-18-68K.
Now divide 68K by 36, and you get: ta da $1900 per month out the door. Think you could rent this for that? Not a chance. And I’m sure there is more of the 6% that got funneled back into your pocket, so the real number is probably lower.
Want your 3.5% down back? No problemo, just stop paying the mortgage in year 2.5 and pocket the payments for 6 months minimum, but don’t forget to take that third year tax credit!
Every scammer in the country has been having a field day while you sat around thinking real estate was over priced. It wasn’t, you just didn’t realize how to play the system. So mikel, come again and tell me what was the fair market price for this unit? About what the buyer paid. Tops.
And boo hoo, you have a foreclosure on your record. By then, you and half the country – won’t mean a thing. Rent for two years and buy to your heart’s content.
Jut for fun, let’s see what the price is today, when the $10K in federal credit comes out.
After tax payments over three years have to go down by $10K. That lops about 5% off the price. Next up, the government will soon only allow 3% in “closing costs” to be wrapped into the loan, so take another 3% off (It’s actually more than this because you get the entire 3% up front, to be applied over the three year window you are looking at – it isn’t spread over the entire 30 year life of the loan like a 3% discount on the purchase price would be, but I’m too tired to figure out the effect: I’m guessing it could be as high as 10%). Then the $8K CA tax credit will be gone, for another 4% off. So the price on this baby falls by a MINIMUM of 12% and maybe as much as 18% by the end of next month. Any wonder why prices are diving by about 10% all over the city in the last two weeks?
So you see, all of those programs allowed a buyer to justify signing up to have the FHA pay this price to the bankers for this unit, and then promise, with absolutely NO skin in the game, to pay the FHA back. What it really did was allowed Nanci Pelosi to hand over your money to the bankers and the rich and powerful holding the loan, who got out of the PRIOR loan with a smaller loss than would otherwise have occurred. Oh yeah, and the FHA paid the bankers an origination fee for their “trouble”. The buyer will pay for 2.5 years, but, surprise, that’s past the next two elections and past the presidential elections. How lucky was that!
Will it be short sold for $100K less in three years? Absofukinlutely. But the bankers will be out of the picture, Nancy Pelosi will be heading for retirement and you’ll be stuck holding the bag.
Remember that in November when you see her name on the ballot. You think she’s such a wonderful gal: she set you up to take the fall in three years and when push came to shove, she took care of the people who mattered the most to her: the bankers, and the rich and powerful who were holding this loan. Trust me, I’m not faulting her alone, any decent Republican would have done the same thing.
You think the timing of any of this was an accident? So that the problems would hit right after the presidential elections? Guess again, my friend. Guess again. It’s a lovely time bomb for our next president from the guy who isn’t planning on winning a second term, and doesn’t really much care. Three year tax credit = G-E-N-I-U-S
And finally, lets review who got the money here, because this is really the perfect example of how our political system works. Did the seller get anything out of all of these programs? Nope. Not one dime. They took every cent he had in the property: remember – short sale. The buyer? The buyer thinks he screwed the government, but now you realize (and you’re in the process of seeing) that to get him or her to buy, the price would have had to have fallen to the level where he would have made the very same payment – as it is now in the process of doing. So the buyer didn’t see one cent. He’ll still short sell the place at the end and he’ll make the same payments he would have made if the price was lower without all of those programs. He of course didn’t have to put anything at risk, but that’s OK, ha ha, he didn’t have anything anyway. If it weren’t for that feature, he wouldn’t have bought and then we would have had not enough buyers. So who got the money from the government here? The bankers and the rich and powerful who were holding the loan. The money was siphoned from the treasury into their pockets. The little guys, the buyer and seller, saw not one cent of it. Funny how that worked out that way! What a coincidence! Keep voting for “your” party, suckers, whatever that party is. They are really on “your” side –NOT. Do I fault them for setting you up this way? Nope. That’s the system they have to play in and they are playing it well. We’re just too stupid to see 15 chess moves ahead like they do.
Ha I like tipsters “best case scenario” its possible but you would have had to hit every nail on the head, and you forgot to factor in the PMI no? and rates werent under 5% on a FHA in 07
A bad deal? Certainly! Speaker of the House Pelosi made someone buy an overpriced condo? Responsibility is with the buyer.
Mw, my FHA analysis was for the 2010 loan, to show current buyer did not overpay, but only as long as the tax credit applied. And those days are over.
You missed that entirely.
And NP did nothing to force anyone to do anything. She enabled the buyer to justify making FHA overpay by making a promise everyone knows he won’t keep
Hey Tipster,
Sorry to burst your bubble, but, if I remember correctly, this building doesn’t qualify for FHA loans.
If the buyer used conventional financing, it only changes the amount the buyer put at risk, lengthens the time the buyer will have to stop making payments without being kicked out to recoup the amount at risk, and makes it a little cheaper on the payments side.
It doesn’t change the fact that all of those tax credits and such will drop the fair market price of the home by a lot, which is what we are seeing now that the first of the tax credits have expired. It also would almost certainly be an agency loan, and that is a government insured loan.
By the way, there is a typo in my original analysis, I mistyped an equal sign at the end:
“Subtract 18K in state and federal tax credits 86K-18-68K.”
should be
“Subtract 18K in state and federal tax credits 86K-18=68K.”
I’m not sure i understand tipster’s point about a future short sale. He’s assuming that EVERYONE is as smart and calculating as he is, so the buyer will figure out EXACTLY when to get out to minimize his loss and maximize our pain. But the whole line of argument falls apart if we assume the buyer is just a regular person with a good job, income that can cover the mortgage, and likes the unit and plans to stay there for 5-7 years, rather then some profit-maximizing real-estate Machiavelli. Economists put most people in the first category, not the second – that’s why there are still MILLIONS of people paying for their underwater mortgages. Are they deluded? Maybe. But they represent a more accurate description of the buying public then tipster’s cynical buyer. So in a rosier (and more likely scenario) the buyers credit helped someone get into a unit they liked and planned to live in, even if the market value fluctuates over time.
tipster i think you should retire on that one. you can’t do any better in delusion land. did you buy the wrong weed this morning? new dealer or something?
* not an fha qualified building – strike one
* not including the extra high cost of the loan when IF it was an fha loan – strike two
* not only not correcting “been there’s” bad math but adding more bad math by adding transfer tax to the seller costs – lender pays those costs when buyer sells short. and what about the “savings” of not paying your mortgage for 6 to 9 months of the short sale process????
yeah, he lost his principal but he most likely didn’t pay anything above that to get out – the bank ate it – he certainly did not pay realtor commissions.
i didn’t bother to read the rest of your post – i suppose there’s some point in there that is completely white washed over and discredited by bad math, dillusional assumptions and pure hysteria, but i’d need to smoke something too to try to decipher it.
new buyer most likely had impeccable credit and 20% down and most likely did not get credits from the bank to purchase. but why deal with reality when your world is so much more fun?
and yes, bad deal for new buyer. $675k for a 1BR? that extra SqFt is in a windowless “den” aka large closet or storage room. had they let it foreclose this sells for $600k tops
good point katdip – and it made me realize it was tipster who is the buyer of this unit. congrats tipster – having a foreclosure or short sale on your record with rock bottom credit don’t cost you a cent in the future. great move. when you can’t beat em, join em. let’s all ruin our credit and form the “good credit is for losers club”
we assume the buyer is just a regular person with a good job, income that can cover the mortgage, and likes the unit and plans to stay there for 5-7 years, rather then some profit-maximizing real-estate Machiavelli.
Wow, if there are only short term speculators and people who are in it for the “long run” of 5-7 years, no wonder bankers are doing so well.
Over 5 to 7 years, you pay almost NO principal down on a regular 30Y fixed, even at 4.7%. Then you move on to the next property and do another mortgage, and so on… You might build equity through appreciation. MIGHT.
The end result is lifetime indebtedness where you paid someone for the right to live in a place (+ all other costs, but I agree you get to choose the paint).
I don’t call this homeownership. I call this renting with liabilities.
YEp – did some bad math, sorry.
Throw in 20 months of interest on a 90% loan of $765 and tax effect it to get to roughly 36k in net interest, or another 1800+/month. Only $13,300 per month! even sweeter.