While listed as “in contract” as a short sale on the MLS, the 1,385 square foot two-bedroom known as 50 Lansing #802 is once again scheduled to hit the courthouse steps this afternoon with $963,138 owed on an original $880,000 first.
Acquired for $1,100,000 in December 2006, the purchase also employed a $220,000 second for yet another anomalous example of 100 percent financing in San Francisco.
At the same time, the 1,586 square foot two-bedroom at 50 Lansing known as #805 has been on the market for five days listed for $1,299,000.
∙ Listing: 50 Lansing #802 (2/2) 1,385 sqft – “$850,000” [MLS]
∙ Listing: 50 Lansing #805 (2/2.5) 1,586 sqft – $1,299,000 [MLS]
The owner is a bartender.
$1.1M, they gave him.
That’s why I left the market in 2006. The unwind is just now starting here. No bartenders are going to be given loans for this place to replace him unless prices fall by a lot.
83K on the top of the first? I guess the “owner” got tired of renting from the bank on an underwater property.
About bartenders and such. This bartender certainly outbid other people, who are probably happy they got outbid in retrospect. But most of these other people still do make a legitimate market. At a much lower price point, though.
Like “in contract” and “850,000”.
Shouldn’t anomalous be in double quotes too? Does the “yet another” stand proxy?
Since this building is being featured, let’s also include the two other units set to hit the block later in the month.
#804 (651 sq.ft.) Purchased for $664k in 2006 (appears to be a first & second from Countrywide).
NOTS on Aug. 11, 2010. Alameda address for taxes. No worries, they’re investors.
#703 (965 sq.ft.) Purchased for $771.5k in 2006 (Countrywide again) and refied in 2007 with IndyMac.
NOTS on Feb. 4, 2011.
“83K on the top of the first? ”
Perhaps fees added onto the loan balance?
fees, late payments, penalties, etc…
Or maybe it was a wonderful Neg-Am?
To purchase this at $850,000 the next bartender will only need either:
-an income of over $225,000 and $110,000 for a down payment to qualify for a FHA loan.
-or, an income of over $190,000 and $170,000 for a down payment for a non-govy loan.
I’m sure there are qualified buyers lining up for these places.
> To purchase this at $850,000 the next bartender will only need either:
> -an income of over $225,000 and $110,000 for a down payment to qualify for a FHA loan.
> -or, an income of over $190,000 and $170,000 for a down payment for a non-govy loan.
i’m quitting my job and becoming a bartender.
give the guy a break; he didn’t want to be “priced out forever”.
In 2006 $1.1mm got you the 2BR, 1385 sf place (@ $795/sf) next to the Bay Bridge on-ramp in the middle of nowhere.
In 2011 it gets you this 3BR, 2000 sf Pac Heights place (@ $579/sf) with half the HOAs:
http://www.redfin.com/CA/San-Francisco/1749-Broadway-94109/home/28938846
In 2012?
Good things, and a lot less debt, come to those who wait. SFHawguy’s post is right on – the incomes and savings among the pool of SF buyers simply cannot support these prices. When the no-down, anyone-with-a-pulse loans dried up, so did demand.
When the no-down, anyone-with-a-pulse loans dried up, so did demand.
The problem is that these former buyers are still restricting supply. So demand dried up, but supply did too with people like this guy because he prevented the supply from increasing. When the supply goes up, the decreased demand will have an even greater effect. That’s why prices are only down 35% so far. No big increase in supply, but that’s coming soon.
he didn’t want to be “priced out forever”
When bartenders get to borrow 1M+, you gotta ask yourself who else would price them out. SF Examiner BART exit distributors? Cleaning ladies? Students nannies? Shoe shiners? That was pretty much the top of the bubble.
the incomes and savings among the pool of SF buyers simply cannot support these prices
At least not in sub-par locations. These abuses deserve to be gored and exposed in plain sight as a cautionary tale of what you CAN do is not what you SHOULD do when all the checks and balances are gone.
I know being a lowly bartender is no good, but there’s a fair number of them that make easy six figures plus in the city.
Yes, there is really good for bartenders in the City and all around. The same goes for distributors. They should be able to afford places up to something like $600k or so depending on down payment and all the rest. Around $1.2m is double that, which oddly enough seems close to the scale of the full deflation.
I don’t doubt there are a few bartenders that make 6 figures.
But even at $100,000 a year they would not be able to afford a $600,000 home. I use the calculator at http://www.idealhomebrokers.com/calculator/ and the default setting is for a buyer with a $100,000 income. Here’s the maximum home price that income can buy:
FHA financing: $382,185 (31% front-end DTI and 3.5% down)
Current Standard: $525,081 (34% front-end DTI and 20% down–which would be $104,000).
Under traditional underwriting someone making $100,000 could only purchase a home for $408,655 (28% front-end DTI and 20% down)
I know being a lowly bartender is no good, but there’s a fair number of them that make easy six figures plus in the city.
I don’t think there is any reason to disparage one for being a bartender. In fact, I dated (and fell in love with) an SF bartender in the 1990s.
however, a 6 figure salary (like $100k) is not enough to afford a $1.1M property. I would say a $1.1M home stretches a $150k salary too, and maybe even $200k/yr salary, but I am very fiscally conservative.
any chance this bartender made $200k/year?
^He was 24 years old in 2006. What are the odds?
this would be hard to afford on a 200K salalry too… Not if you paid tax on the tips.
^He was 24 years old in 2006. What are the odds?
I dunno…
in the bartender world it is possible to make the most when relatively young. (young hot people get to work at the big clubs which brings in lots of $$$).
hot bartender often = massive tips.
it’ll really be hard to tell how much this bartender really made, because so much of their income is potentially undeclared.
they can make $1000/night on a Sat night at the big clubs.
$100k/yr is definitely possible, but probably not prolonged duration.
$150k/yr is a stretch.
$200k/yr? I’ve never heard of it, even in the SF bartender scene but I could easily be wrong.
“That’s why prices are only down 35% so far. ”
Yeah sure.
Would it kill some of the more chemically balanced bearish posters on here to deal with the lunatic fringe yourselves every now and again? It’s pretty boring for bulls to have to do it all the time. Diemos did it the other day, and that was pretty cool.
^Agreed. IF this place sells at asking, that is only down 23% from 2006. Not 35%.
Of course, that is a big IF. But I suppose it’s possible that a middlin’ 2/2 condo right by the freeway gets $850k.
i like the $1.3 million unit
i don’t know about the price but i love the terrace.
Personally, i think you need to make >$300K /yr to afford a $1.1M condo.
Anyone who makes <$200K and doesn’t have a trust fund or super huge savings shouldn’t be spending more than $700K and is likely better off renting.
It’s funny to see fluj[anon[n].ed] nitpick a fairly ballpark estimate on the percentage loss on these sorts of bubble condos, especially once you recall that he spent a few years on ss trying to push the lie that everyone was buying with cash during the bubble.
Remember “subtle” money? anyone? LOL.
Everyone was buying with cash? Nope. People buying with cash right next to people buying with tons of financing? Sure. Cash buyers getting preference? Of course. You see these huge cash loss fallouts all the time on here. You all gawk at them. Yet in your world they did not happen? And you reduced what I objected to to “bubble condos.” That’s not what I objected to. That was not the language. Bears and bulls alike thought that there was condo overbuilding and it was unsustainable, especially in various parts of SOMA.
anyone want to hire me as a bartender?
i’m needing a $300k/year job. i’m pretty conservative and i don’t want to stretch too much when i buy my $1.1M condo by the highway.
Re: Cash
I earlier posted a link to the DQnews report on cash buyers in the Listed Inventory thread.
Looking at the data since then, it appears that currently (Jan 2011) SF has the second lowest proportion of all cash buyers in all the counties they surveyed.
For the 10-year monthly average SF has the 8th lowest (out of 32) proportion of all cash buyers.
http://www.dqnews.com/Articles/2011/News/California/CashSales/CACash110228.aspx
Unless you have a view why would you bother with the Lansing? I’ve been into several units and they are OK but that part of Rincon Hill is not very attractive. I’d personally buy into the Infinity or SF BLU.
“For the 10-year monthly average SF has the 8th lowest (out of 32) proportion of all cash buyers.”
No, it’s 11th, with another six counties within a half a percentage point or so, and on average higher than the Bay Area as a whole and SoCal as a whole. Regardless, 1 out of every 7.5 houses sold over the last 10 years is a lot. The methodology acknowledges the following: “ The all-cash deals were transactions where there was no indication in the public record of a purchase mortgage recorded at the time of sale. Some of these “cash” buyers could have used alternative financing arrangements outside of a typical, recorded purchase mortgage. Also, in some cases cash buyers might be taking out mortgages after their purchases.
But it doesn’t include people who put down large amounts of cash but wanted to have a small, manageable mortgage.
^ The people who put down large amounts of cash for purchases in the 2000’s were the suckers. They put their cash on the line in a competition with people who were smart enough not to risk anything – like the bartender here.
Re “cash deals” – who cares? Merced County shows just under 1/2 of all sales were all cash, about the same as last year. So we’re supposed to conclude that the housing market there must be strong and healthy? At best, high numbers of cash buyers jumping in simply signifies that one can now profitably buy low-end places and rent them out at a profit. The percentage of cash buyers doesn’t say much about the broader price trends.
Bottom line in SF is that sales volume remains low and listings continue to increase. Through the wonders of supply and demand, that drives prices lower, as we are seeing with numerous “apples” just about every day.
How many times will it take you to voice your opinion(s) before everyone agrees? Is that what you guys are going for? No matter what gets talked about on here you say the same things. This cash down thing is perfectly in keeping with what many of us who are actively involved in the marketplace have been saying for some time now. And it’s a new bit of data. Yet cue your same takes, talking not about the information, but rather about your opinions of who cares, people are stupid, hell in a handbasket, dah dah dah.
People who bought 2000 – mid 2004 with cash are probably showing paper profits, actually. “Who cares?” Um, the subject was raised, it’s pertinent, and your take is better suited for another thread.
errr, not “cash down” “all cash.” I still had the large cash down thing on the brain. Also, SF is not 11th. It’s 11th from bottom but pretty much right in the middle of the 32 counties, really. Consider how much more things cost in SF than all the counties higher than it.
“People who bought 2000 – mid 2004 with cash are probably showing paper profits.”
Probably true for 2000-2002, maybe 2003 for some areas. And those who paid cash from that point through 2009 are showing paper losses. Who cares? The same is true for buyers in these years who financed some or all of the purchase – the “paper” loss/gain is the same. As I noted, high numbers of cash buyers does denote one thing – one can now profitably buy low-end places and rent them out at a profit. But nothing more than that.
Probably true for 2000-2002, maybe 2003 for some areas.
It was mid to late 2004 when the market really broke northward. That fact has been illustrated ad infinitum on this website.
A.T.
This is not accurate. Someone with 30 to 50% down can be cash-flow positive, including PITI, as long as he doesn’t compete with live-in buyers, who react less rationally than your average landlord investor.
lol, you are absolutely right! So the “cash buyer” numbers probably don’t really even have the slight significance that I noted.
I did not really imply that. I just pointed that it doesn’t always take an all cash transaction to make a profitable rental venture.
I am sure that, provided you can get the financing and there’s nothing wrong with the place/area, buying a 60K rental unit in foreclosure-intense areas with 50% down should pan out OK.
Cash Flow Positive != profitable.
It would take decades to earn back the money spent on an all-cash purchase, yet it would be cash flow positive…
“Someone with 30 to 50% down can be cash-flow positive”
That’s true, but “cash-flow positive” doesn’t mean something is a good investment. Proper investment requires evaluating the risk and the return and determining whether they are appropriate.
I wonder if the “all cash” issue has anything to do with the MERS disaster.
For background, MERS is a private mortgage recording system that was set up by the banks to avoid the fees for recording a mortgage as the mortgages were being refinanced by the same limited set of banks. MERS recorded a mortgage with the country recorder as belonging to MERS itself, and then when a mortgage was refinanced, MERS did not record it with the county, they just recorded it at MERS allowing the banks to avoid the recording fees they were paying to the counties. If this happened several times, the banks could save a lot of money. Millions of mortgages and refinancings were recorded this way.
At the same time, the county recorders saw much less volume.
Then two things happened, some states refused to allow MERS, who was the holder of the mortgage at the county recorder, to be listed on the foreclosure documents because they didn’t really own the mortgage. So the last mortgage had to be recorded *at the county* as a transfer from MERS to the last bank who provided the financing before the foreclosure could proceed. As a result, the volumes are probably way up. And the counties are probably getting behind in their recording activities.
So if Dataquick, who is used to pulling the mortgages from the county one month after the closing to see if any mortgage was recorded (and if not, the sale is recorded as “all cash”) reports that all cash sales are now through the roof.
I suspect the all cash sales are probably up, for a variety of reasons, some investment, some bank of mom and dad who are now required to fund the whole purchase instead of just the down payment because junior can’t qualify for a loan at all. But it’s also possible that some of the spike in “all cash” purchases is an artifact of the county recorders being backlogged, as their volumes have suddenly shot up.
That means the mortgages are taking longer to be recorded and Dataquick is misinterpreting them as all cash, when if they would wait another month or two, they would find the spike isn’t real.
This is just a theory I have – not tested and no basis. I suppose it would be easy enough to call a county recorder that has seen the greatest spike and ask them (if someone has that info, and can let me know which counties are on top, I’ll make the call if I can get through).
I find tipster’s theory to be a little far-fetched. Even if MERS were the issue (and I doubt it), banksters don’t need to re-record all their mortgages at once. They only need to re-record if they want to foreclose.
Well, I just checked San Diego and they said it was a 2 day backlog. My theory is down the tubes.
Sure, cash flow positive doesn’t mean it’s a good investment. I also agree that someone who puts actual money at risk should have a decent return.
But if you’re cash-flow positive after paying PITI, it’s a decent outcome. First, you’re paying off some principal, which you need to add to the top of the net cash. Second, you still have equity in the property which hopefully should retain some value (even more so if it’s a cash-making rental), therefore no real need to “earn back the money” apart from a basic business goal.
J,
decades to earn back the money spent on an all-cash purchase
That’s not the issue. We’re talking about heavy cash down, not 100% cash. 30-to-50%. A bit of leverage (2X, 3X) helps make the numbers work better.
Of course, decent deals are still tough to find in pricey SF. But they’re out there. The key is not fighting the Johnses.
tipster wrote:
I haven’t read the original report from DQ and haven’t made an attempt to obtain it, but I did read this story yesterday in the Los Angeles Times, Cash-only home sales rise in California:
I don’t know if that means Orange County also happened to have a higher rate of cash buyers than any other in the state or not. The article also mentions that a high percentage of cash buyers is not uncommon in parts of Santa Barbara county, for example, but I suspect that means that the rate of increase in cash buyers wouldn’t compare to Orange County.
although the number of all cash buyers is interesting, I think the TREND of all cash buyers is more interesting than overall numbers.
so if SF’s all-cash buyers went:
10%, 10%, 10%
vs
10%, 20%, 28%
vs
10%, 5%, 2%
I think the TREND is more important for forward looking RE performance than absolute number.
===
I also think that in general overall CLTV characteristics are more important than percentage of initial all cash buyers.
IF PULLED CORRECTLY, the data on all cash buyers affect the aggregate CLTV statistics for each local RE area, and thus total CLTV takes all-cash buyers into account.
thus, at this point in the RE cycle, I think CLTV is more important than original mortgage vs no mortgage…
to be intellectually honest, in the mid 2000’s I studied the type of loans (IO vs Option ARM vs 30 year fixed) and also the CLTV closely like a hawk… but that was partly because those numbers changed so much from 2000 to 2006.
but I’ll use me as example.
I initially bought my house with an 80/20 loan, because I wanted to keep cash on hand in case of expensive house issue after purchase.
my original home cost 2x annual household salary I think. (but we knew our salary was going up).
so my initial CLTV was almost 100%.
*(actually I think I may have put 5% down cash so CLTV was 95% but can’t remember anymore).
I paid the piggy back loan off within the first year I believe. (may have been 15 months).
so my CLTV was 80% by the end of year one.
but 2 days ago I decided to pay off my mortgage. thus obviously CLTV 0% now.
what is a more important data point to my local real estate market? the orginal loan statistics of my purchase? (95-100% CLTV, not an “all cash” buyer”) or my current status(no mortgage, CLTV 0%)
I would say my CLTV now.
=====
now obviously, if you have a major change in all-cash buyers, that lowers the chance of future default or foreclosure, etc.
thus it should be watched as well, and anon.ed’s point is clearly valid.
but I still think that CLTV statistics are more “important”.
Re: SF’s position. DQ lists some counties separately as well as in a region (i.e. Bay Area and SF) I was looking at a list with some regions collapsed and some expanded.
DQ just put this out yesterday and it seemed related.
My main takeaways from this were
1) SF has not had a historically high % of cash buyers
2) Post bust, % cash buyers are up
3) All cash buys are dominated by low end and foreclosures.
I think the above run counter to many people’s assumptions.
Re: % “all cash buyers ” vs average “% cash”
The % “all cash buyers” is just what DQ happened to post yesterday. For average % down I believe something posted a WSJ article a few weeks ago that showed the median down payment going to zero during the boom. Data about average (mean) % cash could probably also be dug up.
The % “all cash” is good to look at with the other two data pieces since some of the data on %DP only considers homeowners with a mortgage.
Re: MERS, even if the banks re-record at the county level, I don’t see why they wouldn’t also update MERS. I don’t know for sure, but MERS is so easy to search I assume that DQ would search it as well as the county records.
Re; The LA Times article seems to be based on the same DataQuick report I linked above. But I can’t find the info on Newport or info by price point in the original DQ release.
The LA times has this:
“In the Southland’s $1-million-and-up market, 29.2% of buyers paid cash last year — the highest percentage since 1994, DataQuick statistics show. For homes selling for $5 million and up, 62.2% paid cash.”
Since the SoCal average is 29.5% the $1+ number is not out of line, but the $5+ number would seem to indicate that maybe all cash deals have a bi-modal distribution at the high and low ends. This makes some intuitive sense since the private mortgage market is so dry.
@ex-SF — One additional use of the % all cash buyer is for looking at how demand will be affected by changes in lending standards.
@tc_sf:
agreed.
anti bartender
feeling abounds here, what a
bunch of non tippers