CFAH

733 Front #508

Purchased for $1,350,000 in February 2008, three days ago the sale of the “immaculate” two-bedroom, two-bath condo #508 at 733 Front Street closed escrow with a reported contract price of $975,000 ($668 per square foot).

Call it a 28 percent or $375,000 drop in value for the Jackson Square condo with parking, designer kitchen and nine foot ceilings over the past three years.

As plugged-in people might recall, last month the short-sale of 733 Front Street #407, a one-bedroom, closed escrow with a reported contract price of $450,000, 38 percent ($280,000) below its September 2007 purchase of $730,000.

In The Red At 733 Front Street Down In Jackson Square [SocketSite]
Jackson Square For 34 38 Percent Less In 2011 [SocketSite]

Comments from Plugged-In Readers

  1. Posted by tipster

    Geez $375,000. In Modesto, that would be a 200% decline!
    Those of us who did not buy because the herd was buying, or because the boosters told us this was the right time (as opposed to now, when they are saying “no THIS is the right time”), have saved $375,000.
    $375,000 will buy dinner out for two every week for 20 years and 4 new cars. Every person who owns a 2bd in that building can now have cereal for dinner every night and ride the bus in return for knowing that they fell prey to the whims of the boosters.

  2. Posted by A.T.

    Yes, an enormous loss. Add in another $50,000 in transaction costs and even more in own-vs.rent losses. Nevertheless, a decline of under 30% from the peak in SF is actually a decent result, relatively speaking. As I’ve said many times, for bubble buyers there are only degrees of bad. And the seller would have lost even more had he waited another year to finally cut his losses.

  3. Posted by tipster

    Do you think $375,000 plus transaction fees and owners premium down the tubes is enormous, A.T? To be honest, I think that’s really doing pretty well.
    Unit 2405 at the Metropolitan is now asking $386,000 [under what they paid], an even greater loss, and that’s not under a 2008 price, it’s under its 2005 price. They just lowered the price by $10,000, so I doubt they’ll lose that “little”.
    http://www.redfin.com/CA/San-Francisco/355-1st-St-94105/unit-2405/home/987776
    Would you call a loss of over $386,000 a bloodbath? Man, I would.

  4. Posted by Mike

    “tipster” how long are you going to go on and on and on with the same thing again, again and again. Your like an old broken record. Its sooooo tedious reading your comments.
    We all know by now that the market is down compared to 3 years ago but thanks for reminding us and letting us know that in all of your postings. You have way too much spare time on your hands.

  5. Posted by condoshopper

    i just want to say that i enjoy tipster’s comments. not just for any entertainment value, but also very good reality-checks for deciding what to pay for a potential property.

  6. Posted by the flippor(tm)

    what about tax deduction? It’s a deflationary world and inflation hedge.
    some people overpaid and short holds and selling in the teeth of bad market is never a good idea.

  7. Posted by tipster

    How long will it keep falling, Mike? It looks like it will keep falling at least through 2015.

  8. Posted by A.T.

    “what about tax deduction?”
    The flippor(tm) asks a good question. Unfortunately for the seller, there is no tax deduction for this housing “investment” loss unlike just about any other investment loss. At least a stock market loss can be used to offset capital gains, or even other income. Not so here.

  9. Posted by Mike

    I agree with you that it will continue to fall, I think SF is way overprices (and has always been) but I also don’t think it will reach a level that is more reasonable. I do rent have have no plans of paying twice as much as my rent to be able to say that I “owe my place” Its just the “look at me I told you so” comments that are sooooo tedious to read.

  10. Posted by A.T.

    It’s been often noted that there were two SF housing bubbles – about 1996-2001 and about 2004-2009. I’ve predicted the second would totally deflate (we’re pretty much there) but the first would only deflate a little; tipster has predicted both will deflate.
    Here is a property that illustrates the bubbles well – currently offered below the (second) 1999 price. How far back will it go?
    http://www.redfin.com/CA/San-Francisco/75-Folsom-St-94105/unit-1103/home/1774345
    1994 $230k
    4/99 $420k
    9/99 $555k
    2006 $775k
    2011 asking $514,900 after a foreclosure

  11. Posted by ex SF-er

    How long will it keep falling, Mike? It looks like it will keep falling at least through 2015.
    hmmm… perhaps.
    I agree that real housing prices will likely continue to fall for some time. in fact, it is possible that real RE prices will not hit their peak again in a generation.
    but we are looking at nominal prices. the echo bubble is in full swing in stocks and especially commodities. I still maintain that it is possible that the bubble will eventually extend into RE again IF (a big if) the bubble can be kept going long enough. it is very clearly the chosen policy path at this time.
    the problem of course is that continued commodity echo bubble will kill the “real” economy destroying the hopes of a housing recovery… the plebes won’t have money to buy housing if oil is back at $150 not to mention our little worldwide food crisis.
    will the commodity bubble kill the real economy before the Fed can reblow the housing bubble??? that is the kazillion dollar question.
    it’s been 4 years now since my original prediction about housing suffering terribly until Dec 2011… we’re getting near that initial prediction!
    interesting times indeed.

  12. Posted by bubblesurfer

    Geez Tipster…do you ever tire of gloating …. how many buyers do you think bought into the “sense of urgency” those despicable real estate agents were selling and raked in a huge haul as a result?
    Of course, you’ll prolly come up with a formula like ex-SF-er’s explaining how there simply is no way that no more than just a few could have ever possibly not lost a boat load of money in San Francisco real estate.
    So, you make a reminder here necessary….for every poor soul who fell victim to bad timing or over exuberance …… there are many more who did quite well and even got stinkin rich, and could buy you a steak dinner once a week and a new car every year for the next twenty years.

  13. Posted by happypeeps

    i have been watching this one. was initally listed roughly 2 yrs ago fro 1.395. seller should have been more reasonable at the get go. he/she would have gotten higher price and not have to pay the 2yrs of carrying costs. why do sellers and agents (whom promise higher prices just to get the listing) try to play games that no one is falling for? at end of the day, they are shooting themselves in the foot and wasting their own money and time.

  14. Posted by ex SF-er

    come up with a formula like ex-SF-er’s explaining how there simply is no way that no more than just a few could have ever possibly not lost a boat load of money in San Francisco real estate.
    I don’t recall ever giving such a formula, but could be wrong. or were you just making that example up?
    for every poor soul who fell victim to bad timing or over exuberance …… there are many more who did quite well and even got stinkin rich
    If we are talking recent history (last 5-10 years or so), I disagree strongly with this. if your statement were true we would not be in the midst or at the tail end of the so-called “Great Recession”.
    if we are talking long term (last 100 years) I agree with you.
    there ARE a very few numbers of people who came out enormously and maybe even obscenely rich due to the RE bubble/collapse of 2007 onward, when all was said and done. the rest of the people either muddled through or did poorly.
    But there is no way that there are “many people” who did well for every person who got their butt handed to them in this recent crisis. That’s what made it a crisis!
    But you don’t have to take my word for it. Simply look at Aggregate Housing Valuation for every state, the US, and even the globe from 2005 to present. You will see that rose, then plummeted, and then is rising slightly again but is not yet at pre-bubble levels.
    You can also do the same using Aggregate wealth for those categories.
    If more people made out well from housing than did poorly, we would see aggregate housing valuations increase from 2007 to present, or at least a positive contribution to aggregate wealth due to RE over that time period.
    Aggregate wealth is increasing significantly right now. mainly based on Equity and Investments though and not RE.

  15. Posted by embarcadero

    “[…] for every poor soul who fell victim to bad timing or over exuberance …… there are many more who did quite well and even got stinkin rich, and could buy you a steak dinner once a week and a new car every year for the next twenty years.”
    Who do you think pays for this? These people got rich off of money that will ultimately come from the US treasure, courtesy of you, me and everyone else in this country who pays taxes, including lots of folks who have yet to be born.
    I appreciate the continued reminders about the bubble and its aftermath. I would appreciate thoughtful commentary about what might be done to restructure finance, housing and even the RE industry to build a future that won’t be subject to periodic implosions and bailouts.

  16. Posted by sfrenegade

    Someone has to say what tipster says. My review of some old posts last week about One Rincon Hill vs. Infinity showed that tipster is reverse of SocketSite bulls in 2006-2007. Those bulls were certainly tedious to some and were broken records.

  17. Posted by lol

    ex-SFer,
    there is no way that there are “many people” who did well for every person who got their butt handed to them in this recent crisis. That’s what made it a crisis!
    Well, let me disagree on your rationale (though not the premise).
    Say Mr. Bubbleboy #1 managed to cash out $5M out of the bubble, while Bubbleboys #2 to #51 each lost $100K each in the popping of the bubble.
    Mr Bubbleboy #1 still has his $5M in his bank account, but he is probably not consuming 50 times what he was consuming before the bubble. #2 to #51 on the other hand, are busy consuming nothing to rebuild capital/credit. Hence in theory you can have a game with few winners and many losers with a zero-sum that end up producing a recession.

  18. Posted by tc_sf

    @lol — You seem to have shown the opposite of ex-SF’s point.
    You showed that a few people could profit while a majority lost. He was arguing against the notion that *many* more people could have profited vs the number of losers.

  19. Posted by sfrenegade

    “there are many more who did quite well and even got stinkin rich, and could buy you a steak dinner once a week and a new car every year for the next twenty years.”
    I’m with ex SF-er that bubblesurfer has no idea what he/she is talking about. There might be plenty of people who *on paper* look like they have a huge gain, but these people haven’t sold their houses yet, and don’t have cold hard cash to spend on those steak dinners and new cars. He/she simply doesn’t understand the math.
    As for embarcadero’s question on what could be done, requiring banks to hold a piece is a good start. You can argue all you want that financial markets will freeze up, blah blah blah, but going back to an intermediate position between old lending habits and new lending habits will hardly freeze the markets. Banksters are concerned about making money from the home loan market, not about helping the rest of us out by helping create a robust home loan market.

  20. Posted by Brahma (incensed renter)

    I have to add that I also thoroughly enjoy reading tipster’s comments; in addition to what others have already pointed out, they serve as a very useful corrective to real estate agent boosterism (wasn’t written about the market in The City specifically, but the general thesis of the article applies):

    …as the public has grown more skeptical of real estate industry boosterism, the National Association of Realtors, with the help of public relations giant Burson-Marsteller, has been training brokers nationwide to more effectively talk up market positives. Since February 2008, their “Surround Sound” public relations program has taught 3,500 brokers to counter negative news reports about the housing market, according to Liz Giovaniello, who directs the program for NAR.

    I don’t know how many buyers “bought into the ‘sense of urgency’ that despicable real estate agents were selling and raked in a huge haul as a result, but I’m quite sure that everybody on socketsite knows of at least two or three real estate agents that will be able to buy dinner out every two weeks for the next twenty years and at least four new cars over that time period.

  21. Posted by lol

    tc_sf,
    Yeah, I had started with several paragraphs, then deleted the relevant ones, and my post doesn’t make sense anymore in regards to ex-SFer’s post. Actually, I agree with him in retrospect.
    editor, when will we have a “check my logic” feature? Badly needed.

  22. Posted by ex SF-er

    editor, when will we have a “check my logic” feature? Badly needed.
    ROFL. yeah, we’ve all been there before.
    face it, I am quite compelling.
    I like to think of my logic as unassailable, leading even the smartest posters like you into thought traps and logic enigmas!
    🙂

  23. Posted by El Bombero

    ^ Nothing better than seeing a 2008 buyer eating a well-deserved loss. An expensive lesson to be sure, but in percentage terms right about at the average decline “from peak”.

  24. Posted by RenterAgain

    … but I’m quite sure that everybody on socketsite knows of at least two or three real estate agents that will be able to buy dinner out every two weeks for the next twenty years and at least four new cars over that time period.
    So true! I bought and sold two houses with the same agent. During the time between the first buy and the last sale, he bought a nice new car and moved into a posh neighborhood. (But, I can’t be begrudge him that success––he was very helpful in helping us time our sale and set the price right.)

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