655 5th Street
As we wrote in January:

Eleven years ago the two bedroom and three bath townhouse known as 655 5th Street #9 sold for $781,000 down in SoMa. Seven years and a thousand or two new neighborhood condos later, the 1,774 square foot unit sold for $1,018,000 in 2007 by way of an $814,400 first and a second for $152,700.

Yes, this was yet another case of only 5 percent down in the “it’s different here” San Francisco and with “only” $50,900 in equity at risk. Lo and behold, this past November Wells Fargo foreclosed on the first with no bidders at $746,547.

Yesterday the property was listed for sale on the open market for $777,900, a sale at which would be just below its year 2000 price, “only” 24 percent ($240,100) below 2007.

The list price for 655 9th Street #9 has been reduced to $674,900. The bank is now asking 34 percent ($343,100) under its 2007 sale price, 14 percent ($106,100) under its year 2000 sale. And according to the listing, “offers anytime.”
∙ Listing: 655 5th Street #9 (2/3) 1,774 sqft – $674,900 [MLS]
Unfortunately Wells Wasn’t Requiring 30 Percent Down At The Time [SocketSite]
30 Percent Down Or Interest Rates Up As Proposed By Wells Fargo [SocketSite]

Comments from Plugged-In Readers

  1. Posted by Tweety

    $50K is still a lot of money to me.

  2. Posted by A.T.

    ^ Yes, but $343,100 is a lot more!
    A million dollars for this place. At 5th and Townsend. Another example of the broad madness then, top to bottom. At a 34% discount off peak, this place should sell at the new asking or a little less. On the plus side, with the 25-40% discounts in Real SF, you can now buy quite a nice place for the same price as this very unspectacular place went for just four years ago, and with better interest rates to boot.

  3. Posted by lol

    In Britain, this type of construction would be called “council housing”. I guess it is good business to sell these constructions for top $$$ to young professionals who drool at any whiff of new car smell. One born every second.

  4. Posted by sparky-b

    11 year old carpets don’t have a “new car smell” anymore, that’s for sure.

  5. Posted by A.T.

    very true about the carpets! Of course, the “new car smell” in new carpeting is off-gassing of toxic chemicals. I’ll take pre-gassed carpets any day!

  6. Posted by snafu

    the HOA fees of 537 make it a deal braker, why do HOA fees continue to be so high in SF ?

  7. Posted by Hunter

    The pictures on MLS just look too depressing, how in the world will this place going to sell in the upper $600k?

  8. Posted by Mole Man

    This location is close to a lot of things without being up against a freeway or busy street. The design and construction are awful, but “council housing” is small while these units are if anything grossly large.

  9. Posted by Brahma (incensed renter)

    Since the practical “floor” for HOA fees is $300/month, I think that a $537 HOA payment for a 2 bd/3 bath 1774 ft² place is eminently reasonable in relative terms.
    Lots of similarly-sized places have an HOA about $100 more per month.

  10. Posted by sfrenegade

    $537/mo probably didn’t seem bad when the mortgage could have been above $5K (assuming the first at 6% and the second at 9%), but it seems bad if you consider that, according to Redfin, the mortgage would be $2816 at 4.75% on the current ask with 20% down. It’s like paying a loan on an extra $100K in principal.

  11. Posted by Spencer

    you have to ask yourself what kind of a nut paid >$1M for this unit. Jesus

  12. Posted by tipster

    ^The nut who figured knew he’d sell it for 1.2 next year.

  13. Posted by lol

    At the time it was difficult to give a fair value to anything. Rent-vs-buy was out of whack for already 9 years with no sign of correction. The mere $573/sf of the 2007 price looked reasonable to other world-class cities that had already shot past $1000/sf. Google employees would see their stock shoot up past $1000 in no time and make every seller a millionaire.
    But if you followed the rent-vs-buy model closely for this type of units (this is rental quality, but somehow people are buying them), you could guess these blah condos would collapse under their own weight.

  14. Posted by tc_sf

    There was a previous thread where ex-SF’er did a back of the envelope calculation of how many households could afford a $1M house.
    When considering the supply side for $1M houses it is worth considering that if places such as the one featured here could fetch $1M how large does that make the pool of potential $1M places during a bubble?

  15. Posted by A.T.

    “how large does that make the pool of potential $1M places during a bubble?”
    Well, the median price of an SFR selling in 2007 was $900k and for condos/TICs $800k. So by this rough measure, just under half the homes in SF were “million dollar homes.” Much smaller percentage now.
    Of course, the sales of relative crap like this place fed into everything else. If that is worth $1mm then surely this 3/2 in Noe is worth $1.6mm. And if that is worth $1.7mm, then surely this 4BR place in Pac Heights is worth $3mm. And so on. This is why everything is falling now and not isolated neighborhoods or homes.

  16. Posted by lolcat_94123

    I can’t believe the place sold for almost $800k 11 years ago.

  17. Posted by lol

    Yes, this is precisely why the rent vs buy calculation is one of the best proxies for supply/demand analysis. If a market can only sustain 3K rents for certain property types, starting off with a 5K mortgage doesn’t really make sense for the same property. But it is something that was pretty common with new condos in 2007-2008.

  18. Posted by The Milkshake of Despair

    “At the time it was difficult to give a fair value to anything.”
    Figuring out value of property is always tricky and the volatile market made it even harder. What happened during the boom is that buyers gave up on value altogether and simply tried to work out what number it would take to “win” the bidding war. This value and price diverged.

  19. Posted by PaulO

    11 years ago? Thats 2 bubbles ago!

  20. Posted by Buy High Sell Low

    The HOA is indeed high, but it’s even worse in the South Bay where sub $300K 2/1 condos have ’em just as high.

  21. Posted by Brahma (incensed renter)

    The HOA is indeed high, but it’s even worse in the South Bay where sub $300K 2/1 condos have ’em just as high.

    Which tells you that relative to San Francisco $675k 2/3 condos, the HOA amount is reasonable.

  22. Posted by tipster

    Sold: 10% under its 2000 price. Lost decade plus one year and 10%.
    Apr 21, 2011 Sold (MLS) (Sold) $701,000
    Feb 25, 2000 Sold (Public Records) $781,000
    Thanks for playing, suckers!

  23. Posted by Jimmy (No Longer Bitter)

    $800k was real money back in 2000! Run-of-the-mill houses in San Mateo were selling for less than $500k back then.
    Now the tables have turned! Supply has soared in SoMA, young people are growing up, starting families and fleeing to the suburbs and the appeal of gritty urban living seems to be fading fast yet again. Meanwhile a total dump around the corner from me sold for $850k … things are looking good in not-quite-Hillsborough.

  24. Posted by curmudgeon

    Jimmy, you are over-personalizing. Urban life remains very very popular. Population has been growing in SF pretty consistently. Neighborhoods continue to gentrify.
    This project was always ugly and stupid, and simply looks much more so today, now that much nicer stuff is available nearby.

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