CFAH

733 Front Street #508 Kitchen

Purchased for $1,350,000 in February of 2008, the two-bedroom Jackson Square condo known as 733 Front Street #508 returned to the market the past March asking $1,375,000. Reduced a few times and touting “Bring Offer!” at $1,249,000 five days ago, the Jackson Square condo was relisted anew this past Friday at $1,237,500.

Industry stats now reflect an official three days on the market for the 1,459 square foot number 508 and a sale at $1,237,501 would be reported at “over asking” (perhaps even with an exclamation point). A sale at $1,237,501 would also reflect an 8 percent decline in value for the Jackson Square condo over the past two years.

Also on the market at 733 Front Street, number 407. Purchased for $730,000 in September of 2007, the one bedroom was listed for $760,000 this past January. Reduced to $730,000 in February and then to $629,000 in April, for the past two months it has been listed on the MLS as a short sale at “$549,000” but without any mention of bank pre-approval at that price.

In May the two bedroom and two and one-half bath 733 Front #506 sold for $1,550,000, it has been purchased in June of 2008 for $1,700,000, 4 percent under its asking of $1,780,000 in 2007 and a 9 percent drop in value over the past two years.

∙ Listing: 733 Front Street #407 (1/1) – “$549,000” (Short Sale) [MLS]
∙ Listing: 733 Front Street #508 (2/2) 1,459 sqft – $1,237,500 [MLS]
733 Front: A Few Condo Floor Plans (And Some More Pricing) [SocketSite]

Comments from Plugged-In Readers

  1. Posted by anonee

    wow, that’s interesting…so a one bedroom condo has crashed all the way down to half a million bucks! and two bedrooms are fire saling at $850/sq.ft.!
    [Editor’s Note: There’s a big difference between cheap and cheaper. And to most people a drop of 8-9 percent ($100,000+) on a two-bedroom is significant, and worth noting, especially when a highly leveraged investment is concerned.]

  2. Posted by A.T.

    Well, a really nice SF place falling from $760,000 to $549,000 (down $211,000, assuming it goes for asking) in less than three years certainly is a crash! So much for the “not in SF” theory of real estate investment advice. I do, however, agree with anonee’s implied point, which is that even the current prices for these places are far too high to be sustainable. Further declines are baked in.

  3. Posted by meep

    my understanding is it is very difficult for someone who is not an investor with a cash offer to purchase a short sale in a desirable location.
    if that is the case the short sale price may not be a benchmark for the sale price a non-cash buyer can expect.

  4. Posted by alazyman

    To add to meep’s point, list price is usually set low to attract some offers to bring to the bank.
    And in fact, I have read, the seeling agent has some incentive not to bring a “too high” offer. This is so that if the offer falls through for whatever reason, they don’t want to have to scare up another high offer.

  5. Posted by tipster

    “So much for the ‘not in SF’ theory of real estate investment advice.”
    The decline is being managed, just like it was in Japan. If prices fall too fast, everyone walks away from their mortgage and sticks the losses to the people holding the mortgages, who are generally VERY rich and VERY powerful. Um, that’s not gonna happen in a political system.
    However, if prices fall slowly, more (though not all) of the losses are absorbed by the individuals who bought the places, through the loss of their downpayments. People tend to move every 5-7 years. If you can keep the loss within that time period within the range of equity held, the rich and powerful don’t lose one cent. Everyone else contributes a little bit so they don’t have to.
    So prices will fall a few percent per year to the extent that is possible. And interest rates will be held low for awhile to convince people to refinance, giving up 0 down mortgages and in some cases even second mortgages that would be worthless if prices fell too rapidly for 10% or 20% or 30% down mortgages, whatever they can put into the system so that more of the loss is theirs, lessening that of the rich and powerful. Even 3.5% from the plebes is something, when you also get an extra 1.2% in interest every year for 3-5 years. And of course, the excess loss goes to the government, who will spread that loss back to everyone. Everyone but the rich and powerful.
    Satchel used to say that Bernanke was brought in to “manage the deflation”. I think he’s doing a fine job so far.
    Please, someone, buy one of these places. They look cheap, and in 3-5 years, they’ll look cheap again. Make a big down payment, please. It’s all set up for you to contribute your hard earned capital to the system so that someone rich and powerful can have it instead of you. When you go to sell, you’ll find out what your contribution to the mess is going to be.

  6. Posted by don_juan

    saw price reductions all around at open houses on sunday 7/11/10. that can only signal “wait wait wait” to prospective buyers. where is the bottom?
    on the rental side, they seem to be quite expensive, at least in noe valley — it seems that they can fetch 2600-2800 for true dumps – falling apart rabbit hutches.

  7. Posted by A.T.

    It’s been fun looking at redfin on Mondays lately as you see a flood of reductions on places that got no traffic over the weekend. Redfin shows 181 new listings in the last week, 151 reductions, and 54 sales. Listings have not slowed down (unlike a typical seasonal pattern) but sales have slowed a lot since the tax deals expired. The next installment of the SS inventory chart will be interesting.
    [Editor’s Note: Hold that thought for a few minutes SocketSite’s San Francisco Listed Housing Inventory: 7/12/10 (and now back to 733 Front on this thread).]

  8. Posted by anonee

    @a.t.,
    hoo boy, a one bedroom condo trades for $760k? was that the market around town for this kind of product? i wonder what % of condos sold for that kind of $/sq.ft in the last 5 or 10 years? i wonder how representative these ‘luxury condos’ are of the ‘real sf’ market?
    @tipster,
    great to see the overarching conspiracy is still intact. boy the rich and powerful sure are smart and cohesive!
    btw, what happened to all that blather about the ‘arm reset tsunami’ we kept hearing about?

  9. Posted by A.T.

    anonee, I see I misread the post and I stand corrected. This 1BR only sold for $730,000 in Sept 2007; i.e. that was the market price. So it is only down $181,000 in a little under 3 years. Nothing to see here, move along.
    Also, see my post above on reductions re the ‘arm reset tsunami’ — the charts always indicated it would hit SF from 2010-2012.

  10. Posted by anonee

    a.t.,
    ok got it. $700k+ one bedroom condos and $1.3m+
    2bdrs represented the sf market.
    and the arm reset tsunami is still in the mail.
    [Editor’s Note: No, but they did represent the market at 733 Front which just so happens to be the topic of this post.]

  11. Posted by diemos

    “what happened to all that blather about the ‘arm reset tsunami’ we kept hearing about?”
    As Madge used to say, “You’re soaking in it.”
    Which brings up a topic that I’ve occasionally wondered about. Will this thing play out so slowly that the changed conditions will simply be accepted as the “new normal” without acknowledgement that things have actually changed? That’s what’s so fun about reading old threads from a couple of years ago. It really throws the changes in attitudes and opinions into stark relief.

  12. Posted by anonee

    @editor,
    so do you care to speculate on what % of the market places like this represent? it kindof seems like you only like to highlight a tiny and exceptional slice of the overall market when it fits in with your agenda-but hey, its your site..
    [Editor’s Note: You’re exactly right, the vast majority of San Francisco properties have seen declines of greater than 8-9 percent over the past two years. Thanks for pointing that out.]

  13. Posted by anonee

    @editor,
    thanks for pointing out that prices have gone down over the last 2 or 3 years.
    as for the % of the market that this type of product represents? how about the % of the market represented by $650/sq.ft bernal? or $3m bolinas ranches? or, well, you get the point…

  14. Posted by chguy

    anonee, try this place: http://www.redfin.com/CA/San-Francisco/469-Clementina-St-94103/unit-17/home/2000951
    bought for $325k in 2003, sold for $560k in 2005, on the market today for….$350k. low-end place, not so nice neighborhood, even bigger crash. if your point is that high-end places don’t represent the market, then welcome to the rest of the market.

  15. Posted by tipster

    Yeah, EDITOR! What about the % market for 2 bedroom units in the 2 tallest buildings west of the Missisippi? Please compare that for ALL units west of the Missisippi! It’s an insignificant slice!!
    Or two bedroom units in recently built, upscale buildings near the financial district. Like these!
    Or condos in 34 unit buildings on busy streets in Pac Heights? How many could that represent, hmmm?
    or, well, you get the point…

  16. Posted by anonee

    ok chguy,
    so your point is that sf re is in general priced at 2003 levels? $/sq.ft. has gone back to 2003 levels? as for welcoming me to the ‘rest of the market’ i gotta wonder at your selection.
    how about we put it to a test? we tell the prospective sf buyers that they can buy any house,multi-unit or condo in any neighbourhood at the prevailing prices of 2003. what would that prove you might ask? it would show that choosing wisely would be very profitable. it would also show that buying overpriced luxury condos or $650/sq.ft. bernal, or clementina anything, was a bad idea. iow, there are good and bad opportunities in any market.

  17. Posted by chguy

    anonee, my point is that the RE crash in SF is widespread, and growing. and your point is…what, exactly? that people now would be glad to pay 2003 prices? maybe they would; the sellers of those places are just a bit less happy about it, though.

  18. Posted by anonee

    @chguy,
    my point, you ask? if you read ss you would believe that everything is crashing and has crashed. but that is not the case. that’s why i say some are more equal than others when picking places to buy. some would have bought in ’03 and be underwater now; others would have a quite different outcome. if you do not believe this then play the game i suggested in the previous post.

  19. Posted by marina girl

    you may choose to disregard tipster’s conspiracy theory because the degree of cohesion is too unrealistic for a plan so broad, but that scenario, regardless of who’s managing it and how, IS happening. the deflation is real and it is being managed, and the advantage flows to the rich and powerful most directly. good for all of us that you don’t want to see it; the more people that remain unaware, the less conspiracy required to manage the process effectively.

  20. Posted by ex SF-er

    Will this thing play out so slowly that the changed conditions will simply be accepted as the “new normal” without acknowledgement that things have actually changed?
    bingo. as I used to say a lot: This will be like watching the paint dry on a painting of grass growing.
    already I am hearing all these people say “well OF COURSE San Francisco had a little RE pressure with the rest of the country… that was obvious years ago!”
    but those of you who’ve been here just remember what socketsite was like back in 2007 when I would get absolutely creamed when I dared mention that maybe, just maybe, SF wasn’t as “special” as people thought it might be and maybe, just maybe SF real estate would fall in value.

  21. Posted by EBGuy

    Most impressive, all this in a building with only a single NOD (which was subsequently canceled). Don’t worry, there’s some Countrywide and WaMu (see #407) in the building to keep things interesting…

  22. Posted by suspicious

    Alright, let’s be constructive!
    This is an interesting are of town, that until recently, seemed to hold higher $/sq prices longer than nearby areas? Thoughts?
    There is a mixed income housing building being built nearby. Thoughts?
    I bet you can charge higher rents here than most parts of town since you could get the financial crowd and also the short term corporate crowd. Thoughts?
    733 Front looks really cool, but I think this 1bd may have a view only of a dim courtyard.

  23. Posted by MortgageMaker

    I don’t buy his theory but if you want a good conspiracy theory regarding managed deflation:
    http://www.oftwominds.com/blogjuly10/con-of-decade07-10.html
    [Editor’s Note: Or from our achieves at the end of 2007: Promoted From Comment To Post: Satchel Does Deflation. Now back to 733 Front once again…]

  24. Posted by anonymous

    when I dared mention that maybe, just maybe, SF wasn’t as “special” as people thought it might be and maybe, just maybe SF real estate would fall in value.
    You’ve also conceded that its resiliency has surprised you. A lot of bears and bulls alike thought that super pricy condos were vulnerable. But bakc in 2007 there was a big group of recent condo buyers on here.

  25. Posted by anonee

    ex-sfer,
    i would like to see a post where someone says that sf re would never fall, or re only goes up. i would like to see where you ‘get absolutely creamed’. altho i get your point i believe that you are overstating and exaggerating.

  26. Posted by Michael

    “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

  27. Posted by anonee

    ok, i stand corrected.

  28. Posted by anonee

    @marina girl,
    “the deflation is real and it is being managed, and the advantage flows to the rich and powerful most directly.”
    i believe the deflation is real. i believe that TPTB are always managing things and as ever throughout history that the advantage flows to the rich and powerful most directly.
    but this statement is rather curious “good for all of us that you don’t want to see it; the more people that remain unaware, the less conspiracy required to manage the process effectively.”
    what do you mean? and why do you address this to me?
    @mortgage maker, i like chsmith’s take on things and think that the greatest con (part I&II)are pretty close to correct. i’m a little unsure tho about how the oligarch’s will transition from short term to long term debt holdings.

  29. Posted by GoodBuyBadTimes

    @Suspicious
    “I bet you can charge higher rents here than most parts of town since you could get the financial crowd and also the short term corporate crowd.”
    Not so appealing for short term corp rental with no parking — there is too much corp rental inventory in South Beach with parking for 733 to be competitive.
    The sales team just did a fantastic job of getting top dollar for 733 when it was flipped from commercial. I looked at it and assessed the premium as too far out there to appeal to anyone other than someone with very specific needs re vintage, location or some other factor.

  30. Posted by ex SF-er

    You’ve also conceded that its resiliency has surprised you
    have I? I don’t recall that but it may be true. I have never expected widespread devastation in SF RE. In fact, if you look back to my 2007 posts I said repeatedly that I thought that SF RE would lose only a SMALL amount from a nominal standpoint, and that most of it’s losses would come over 5+ years due to inflation.
    I may have been surprised when SF RE rose in value (based on Case Shiller) for 12 months this early in the game, but I honestly can’t remember. I wasn’t overly shocked though because I’m well aware of “Dead cat bounces”… but I may have elicited surprise in a post… don’t remember.
    But I’d say the overall trajectory of SF RE is about what I’ve always thought, maybe even worse than I originally thought. A long slow drawn out process that takes forever that hides the true extent of the losses (in real terms) from the masses.

  31. Posted by marina girl

    wow, thanks for the re-link to the deflation post. so cool to re-read it and the first few comments, especially. great insights, questions, and clarifications. what happened to satchel et al? can we have a 2.5-year anniversary re-visit of that? interesting times indeed.

  32. Posted by michiko

    Satchel’s analysis is still valid. I’ve debated with him (in my head) over the last few years as I made the decision to short sale my Marin property and become a renter. Appraised value of that property has continued to drop, and “the grass growing” is a lot faster in Marin, which Satchel also described.
    Over time the deflation scenario seems to be playing out. I’ve noticed the predicted price inflation in essentials especially food.

  33. Posted by A.T.

    Man, for December 2007 that was an amazingly prescient post by “Satchel” and also by “SurveyKid.” I had never heard of this site then. Back then, most people I knew were still denying there was any real housing problem “except maybe in Stockton,” denying SF would ever see housing prices fall at all, and not even contemplating that the stock market could fall 50% (although it gained back about half), or the unemployment rate would rise above 10% and stay there, or there could ever be such a thing as deflation in the U.S. And these guys were already thinking past developments that you didn’t really read about in too many places for another 10 months. Good stuff.

  34. Posted by marina girl

    agreed. what i’m not smart enough to figure out on my own is how the fed’s actions in the bailout phase have jibed with his insistence that they aren’t incented to “turn on the presses”. i definitely don’t have my finger of the pulse of any of those “velocity of money”-type stats, so i’m just not sure if this is what he was predicting they’d do or not.
    and surveykid should have plenty of time to answer now that the census is winding down, right?

  35. Posted by dub dub

    @marina: Prior to the bailout Satchel felt direct monetization/QE would have “IMMEDIATE” negative consequences:
    https://socketsite.com/archives/2008/01/justquotes_fed_cuts_rate_075_percentage_point_in_emerge.html#c336854
    But he was wrong. That’s because Satchel was a libertarian, who underestimated the awesome power the government wields over the economy, especially when the population and *markets* are wholly complicit in the arrangement.
    You see that thinking all over that thread, littering his otherwise deep and prescient thinking in Jan 2008.
    Direct QE seemed “impossible”, even to him, to say nothing of what eventually happened (is happening), and here we are, twittering our facebooks on our ipads eating cupcakes, waiting for the school but to take us to work 🙂
    I miss his posts though.

  36. Posted by michiko

    I’m not defending Satchel’s record, in fact I disagreed with him about much. It’s just that he had thought about money and economic theory deeply and that was challenging.
    For a current take on deflation, take a look at this (www.hoisingtonmgt.com).
    ” … monetary policy is not working in spite of the widespread contention that the Fed is wildly printing money. The line of reasoning by many observers is that the Fed’s actions will soon lead to faster economic activity but with rapid inflation. The rationale seems to rely on the work of Nobel Laureate Milton Friedman … Friedman’s transition mechanism from money to either inflation or deflation appears to be poorly understood by those who assume that increases in the Federal Reserve’s balance sheet are tantamount to inflation. To understand the fallacy of these arguments, first consider what constitutes money …”

  37. Posted by NoeValleyJim

    Nice to see tipster and deimos come around to the slow steady grinding school of real estate loss. Though I along with ex-SFer have always thought that most of the loss would be through a moderate inflation rate, that is easier for people to swallow and better for the government’s balance sheet in the long run.
    I think they are still trying to organize a moderate inflation rate, but it is hard when there is so much anti-inflationary force at work. I expect QE round two very soon here, since it looks like direct stimulus is politically off the table. Too bad, that is what we really need more of. It would be kind of amusing if the teabaggers got enough political power to force the government to engineer another recession, shooting themselves in the foot. Just look at Ireland for what an “austerity budget” would bring.
    There was a band of us warning about the housing bubble back as early as 2004 over on Patrick.net and I think even The Economist ran it as a cover story in 2005, but most people were too busy making money to pay any attention.
    I still expect inflation to pick up from here in the next few years, economics is a much more powerful tool than it was before computers. The Fed has done an amazing job holding off The Great Depression II. Really incredible, we have a much greater amount of debt overhang today than we had in 1932 but so far at least we have come out of it much more easily. But we also have a much more productive economy, so we have the ability to service that kind of debt. I have my doubts as to whether the taxpayers are willing to accept the kind of demands that it will require to actually pay it all off though. We shall see.

  38. Posted by A.T.

    A critical difference between the Great Recession and the Great Depression is we now have a much, much larger social safety net. That has allowed millions of people to hang in there rather than being thrown into the street within a month or two of losing their job.
    I agree with NVJ’s post except for his prediction of inflation. I don’t see it for at least 7-8 years, and after that we’re all just guessing. Credit continues to be drained from the system, we have lots of excess capacity, and high unemployment is dampening demand. I’d bet on deflation over the next several years rather than inflation. That’s not to say that some commodity prices might not rise, but that is not the same thing as inflation but just means we’ll all be poorer.

  39. Posted by michiko

    nvj – sounds like you’re a Keynesian – maybe even a Krugmanian … My take is that the Fed has papered over the problems, not addressed them. Over the last year and a half, that’s prevented a slide into Depression, but high unemployment and soft consumer demand (overindebted consumer) have made for a weak recovery. Since rates are effectively at 0, what QEII do you expect? More mortgage buying?
    A.T. – you’re right about the safety net. I do know far too many people young and old that remain unemployed over a year. And their benies have not been extended.

  40. Posted by lol

    Yeah it can be a long controlled unwinding. Just don’t forget trust has been shattered across the board and it will take a long time to mend. Burned in 2002, burned in 2008 and the fundamentals are worse now than in 2002. Also, everything is so tender right now that any “unforeseen” event (like a sovereign default) will quickly unravel into a bigger global mess.
    I see it like a car going down a 20% hill with no brakes, no shock absorbers, no driver. You hope you’ll get to the flatland in one piece. Just one bump and you’re toast.

  41. Posted by Brahma (incensed renter)

    NoeValleyJim wrote:

    I expect QE round two very soon here, since it looks like direct stimulus is politically off the table. Too bad, that is what we really need more of.

    From bloomberg, posted today, Fed Officials Saw Rising Risks, Trimmed Growth Forecast:

    Federal Reserve officials saw no need to boost stimulus to the economy while trimming their forecasts for growth and noting that risks to the recovery had increased, minutes of their June meeting showed.
    “The economic outlook had softened somewhat and a number of members saw the risks to the outlook as having shifted to the downside,” minutes released today in Washington said. “The changes to the outlook were viewed as relatively modest and as not warranting policy accommodation beyond that already in place.”

    So not only is direct stimulus politically off the table (due in no small part to David Brooks of the New York Times being a one-man well poisoner, going around on every broadcast medium he can and saying that fiscal stimulus doesn’t work and only serves to increase the deficit) but QE isn’t going to happen, either.
    Kinda confirms what michiko wrote; with interest rates at zero it seems like The Fed is hanging their hat on the passive approach of saying that rates are going to stay that way for “an extended period”. And of course its easy for the FOMC to keep saying that for an extended period, until deflation sets in in earnest.

  42. Posted by diemos

    “Nice to see tipster and deimos come around to the slow steady grinding school of real estate loss.”
    Calumny!
    When the gov’s interventions start causing aggregate incomes to increase at 10% per year you will be able to convert me to the long slow grind of real estate values correcting.
    Right now all that’s happening is that a giant bubble of liquidity has kicked the can down the road. None of the problems of affordability have been solved. Remove the liquidity and prices would collapse.

  43. Posted by tipster

    Is it me or did real estate values everywhere in SF just fall by 10% this past two weeks?
    Hardly “slow and steady”, I’d say.

  44. Posted by A.T.

    Reminds me of the old saw: “How did you go bankrupt? First slowly, then all at once.”

  45. Posted by lol

    I see that the price went down to a round 1.2M around 7/14.

  46. Posted by sfrenegade

    “btw, what happened to all that blather about the ‘arm reset tsunami’ we kept hearing about?”
    Well, first of all, I believe we’re talking about Option ARMs specifically. And according to the charts, it would be more like 2010-2012 and later, so any influence of Option ARMs has probably just started. Many Option ARMs start recasting (as opposed to resetting) 5 years in, and many were issued from 2005 to 2007.
    This is an amazing story about a $4M+ Option ARM on an almost $6M purchase in Irvine. I didn’t even know you could do that! It makes me wonder if there were 7-figure Option ARMs here in SF.
    http://www.irvinehousingblog.com/blog/comments/how-to-lose-2650000-in-irvine-real-estate/
    It’s also worth noting there are two things helping the Option ARM market in terms of government intervention. First, interest rates are still extremely low, so the interest portion of the recast payment is lower than expected. Second, I believe there was a government program to help some of the Option ARM people (although like many of the programs, I believe it’s in the “extend and pretend” nature).

  47. Posted by SocketSite

    The list price for 733 Front Street #508 has just been reduced to $1,150,000. Once again, purchased for $1,350,000 in February of 2008.

  48. Posted by SocketSite

    The list price for 733 Front Street #508 has just been reduced to $1,100,000 (18% under its 2008 sale).

  49. Posted by El Bombero

    Down 18.5% – at least $300k thrown away, not even counting the carrying costs. Very encouraging, and great to see.

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