The sale of 2416 Gough closed escrow yesterday with a reported contract price of $2,075,000. Purchased for $3,025,000 in July 2008, call it an apples-to-apples 31.4 percent ($950,000) decline in value for the “Exquisite Victorian Home on a wonderful tree lined street in Pacific Heights” over the past two years.
As we wrote in July: “Of course one could argue that the buyers of this property simply “overpaid” in 2008, but then so did everyone who relied on the individual sale as a market comp – or in the aggregate as it factored in to average and median sales price reports – at the time.”
The “beautifully remodeled Pacific Heights Victorian home” at 2312 Gough remains available at $2,142,000 having been purchased for $2,600,000 in July of 2004.
∙ Obviously They Simply Overpaid In Pacific Heights… [SocketSite]
∙ Apples To Apples On A Pacific Heights Tree Lined Street [SocketSite]
∙ Apples To Apples To Apples Again As 2312 Gough Returns [SocketSite]
Sold. $2.075. $592/psf.
Not bad. And above where most bears predicted.
Congrats to buyers!
Thanks, eddy. So down 31.5% and over a million dollars (with commission) in 2 1/2 years. Pretty consistent with the state of the market in SF. Still not “cheap” but a heck of a lot less expensive than a few years ago. Looks like a nice place.
As I have oft-pointed out, that there may be a number of SF residents who could pay more doesn’t mean they will. That’s not how supply and demand work.
I only focus on the sale prices. Personal losses (i.e., commissions) are not relevant to the comp here. This home and its comp, while tragic for the seller, is not all that bad. If this is the low water mark for sub-prime d7 SFHs, than Prime D7 has fared ok. 2011 is shaping up to be, and I project that it will be, a very telling year. No one can claim noise in the data due to gov. intervention, etc.. So comps set this year, and into 2012 will give some honest trend lines. Still a few more homes that will challenge this one (e.g., Franklin) for the low water mark.
32% down since 2008 for Pac Heights is quite the trend line!
Only a few months ago above posters were giving tipster grief for tossing around a 25% decline!
Actual losses (or gains) do have some relevance, since if in general housing is a good investment it makes sense for people to stretch a bit in the prices they pay. Conversely if housing is a money pit it makes sense to pay more conservative prices
“Not bad. And above where most bears predicted.”
I think I was the only person who made a prediction. 2.5 in July and 1.95 in January and it closed for 2.075, $80K above my last prediction.
The seller lost over a million dollars and you are crowing about the sale price being $80K over a three month old prediction from the most pessimistic person on this forum?
It’s a sad day when that’s the good news!
And really, “No one can claim noise in the data due to gov. intervention, etc..”? You think the fed QE program is just the natural state of the market? I guess it’s only $600 Billion, so it was easy to forget about it.
You need to get out more.
You need to get out more.
No argument there!
Regarding broad economic measures by the government: welcome to the new world and the next decade.
“What Might Sir Isaac Newton Say About These Apples?”
Um, apples just float higher and higher forever?
No?
“No great discovery was ever made without a bold guess”
There were people, including some friends and our broker who said that this was too much at $3m. This is a nice block of Gough, with an excellent row of old houses, facing the Greek consulate and a fine Arts & Crafts house on the SW corner of Vallejo.
Still a modest home in many ways, and the two-way stretch of Gough is used by people heading to the one-way part.
However the new buyer got a great deal at this square foot price: a real SF house in Pac Hts, easy walking to Union and the best part of Polk.
“eureka!”
No wait, that was Archimedes. Eureka is what I said. This seems like a good price, even for Gough. Congrats to the buyer.
I’m still not seeing how the 2008 price was out of line for the market then, as some people on the prior thread said, but I’m willing to look at the 2008 comps if they can point them out.
I love the title especially since Sir Isaac Newton lost a fortune in the South Seas Bubble. Even the sharpest minds can be blunted by the enthusiasm to make a fortune with little effort.
In Philosophiae Naturalis Principia Mathematica, he said “it’s only D3, D9, D10, and condos or TICs that have declined” so I guess even the great Sir Isaac was prone to some common misconceptions. He also missed that whole general relativity thing.
eddy wrote:
Is this going to be the new standard line now? Just as a matter of rhetoric, when a certain level of price depreciation is reached, the bulls just say that the sale of the apple under discussion sold “above where most bears predicted?” Where is this comprehensive survey of bear price level forecasts located so that we can all read it?
If an apple sells at 40% off, will bulls just say that “most bears predicted” a 60% off level and that therefore they are all wet? Nice strategy, if it works, but I suspect it won’t.
What about the level most bulls predicted? I admit I don’t have a comprehensive summary of what ss bulls were saying in 2008-2009, but as one example, just off the top of my head&hellipon December 28, 2009, “45yo hipster” wrote:
So now we’re at the -30% level, albeit for a few apples like this one. No one is smoking crack.
The only other gough sfh comps I can find are:
2422 Gough Sold 7/05 $2.35 @ 842/psf
2312 Gough Sold 3/03 $2.6 @ 652/psf (extensively remodeled in 2000)
2515 Gough Sold 08/10 @2.8 @ 740/psf
So this home @ $864/psf in 2008 is in the ball park. It does seem high to me but memory is short term. No doubt it was trumpeted as a big comp so damage done regardless. This home will be trumpeted as a low comp as well just a few years later. Such is the circle of life.
“This home will be trumpeted as a low comp as well just a few years later.”
unlikely.
This is — hands down — the best title of a post in Socket Site history.
It was equal parts lame, funny, ridiculous, unnecessary, and pitch perfect.
Our editor deserves a cookie.
Anybody else find this ironic: during the boom, real estate agents cherry pick comps to use as “evidence” that you could’t lose in real estate … during the bust, Socket Site cherry picks comps to use as “evidence” that you can’t win in real estate.
Pick a property randomly out of a hat as a test. How about 2515 Gough, cited above by eddy. Sold in 1999 for $2.0m and again in 2010 for $2.8m. Where is Sir Isaac Newton’s commentary on that one? Hmm, I guess the facts on that one don’t fit the agenda… No carnage on the roadside? Well, let’s not slow down to look at that one! Boring!
Perhaps the most ironic thing is that the readership (or maybe just the commenters?) don’t seem to have any interest in actually purchasing real estate. Half the people don’t even seem to live here (anymore).
I’m a sucker and I do get drawn back in here from time to time but it’s not surprising to me when I see that traffic on Socket Site is down ~50% YOY over the last 12 months. Cater to the perma-bear audience with non-stop Perez Hiltonesque Snark™ and the rest of us get bored and go away. What comes around goes around, I suppose…
How about 2515 Gough, cited above by eddy. Sold in 1999 for $2.0m and again in 2010 for $2.8m.
I wouldn’t mind this property being highlit as well…
the other day someone (I forget who) brought up this point and when I dug a little deeper the property they had discussed didn’t quite fare as well as initially reported…
this particular property sold for
$919k on 1/4/1999
$2.2M (not $2M) on 8/17/1999
$2.8M on 8/17/2010. (after listed for $2.995M June 2010).
the 2010 listing said “renovated Victorian”
the question I have is if the renovation was between jan and aug 1999… (likely given jump from $919k to $2.2M in just a few months).
or if the renovation was after 1999.
kind of weird to talk about a “renovated” vic that was renovated 11 years ago, but some will do so.
was this an apple?
if it was an apple: it had 2.2% annual appreciation over the last 11 years. not bad.
@”Dave”: yes, I also see the irony. I say stick to the statistical measures, while not perfect, do give a better view of the market in its entirety. In real estate, especially for the home you live it, it ultimately comes down to a single seller and buyer and their motivations to make a deal. It is not a commodity type transaction.
@Dave, technically 2515 Gough sold for $2.2 in 1999, over asking ($1.945) by 13% in 33 days. And it is an apple with the exception of some expected maintenance and upkeep. The same home was totally rehab’d and flipped in 1999.
Hey, maybe 2515 would have sold for $3.6m ($2.8 * 1.3) in 2008; but I don’t think so.
I commend the editor for keeping the site updated. Post volume is down and I’m sure it is less a priority these days due to other obligations, but this is hard work. Glad to have the “outlet”. 😉
“Perhaps the most ironic thing is that the readership (or maybe just the commenters?) don’t seem to have any interest in actually purchasing real estate. Half the people don’t even seem to live here (anymore).”
I’m not sure how you can infer that the readership isn’t interested in buying. My take is the exact opposite. Why bother reading a real estate blog when you’re not interested in transacting? Quite a few people interested in making such a large purchase are also interested in doing so with the best knowledge, hence reading SocketSite. Prior to blogs like this the major source of info was from within the real estate industry which is prone to self interested distortions.
[side anecdote : while working on the front yard this weekend one of the local realtors approached prospecting for the names of neighbors who might want to buy or sell (its always a good time, you know). I wasn’t in a hurry so we chatted a bit on the current state of the market. It was really awkward watching her backpedal when I countered some of her assertions with the truths about the market that she was aware of though trying to avoid. No worries because there are plenty of other blissfully naive prospects out there…]
And what is wrong with people living outside of the 7×7 being interested in SF? Those sorts of assertions reek of parochialism. Membership in “the SF resident club” isn’t required and I’m sure a healthy percentage of new buyers come from other cities.
“during the bust, Socket Site cherry picks comps to use as “evidence” that you can’t win in real estate.”
775-777 Sanchez was recently cherry picked by some posters who seem on the bull side of things.
A 4/4 on a double lot in liberty heights which posters seemed to think was quite a prime area.
It went from $3.7M to $3.8M in five years with what looks to be permits for a new bathroom and deck. A person with more construction knowledge then I can probably figure out the cost of these changes, but within a margin of error of a few percent this puts the price flat to Jan 2006.
This is certainly a ROI loss when considering selling costs, probably a significant one when considering opportunity cost/rental equivalent.
And this for for a quite high end property cherry picked by “bulls”
Considering a reputable statistical measure like Case-Shiller has SF MSA top tier prices back to Feb 2004 levels, this cherry picked semi-apple would seem to have done better then average unless the renovation was extravagant.
But it does seem to be more evidence that few if any purchasers of the 2005-2006 vintage “won” in the ROI sense.
Any data to the contrary would be appreciated.
“$2.2M (not $2M) on 8/17/1999
$2.8M on 8/17/2010. (after listed for $2.995M June 2010).
”
Note that I see the CS SF top tier index as
8/1999 95
8/2010 148
For a 55% increase over 11 years, with the subject property only showing a 27% increase over the same time frame. Which would put this property as worse the average.
Why is that ironic? Is it like rain on your wedding day?
Is 2515 Gough an apple? It looks like there was remodeling work done in 1999, but it’s confusing because the house sold twice in 1999, once in January for $918,750, and then again in August for $2.2M (on a $1.945M listing).
I see expired permits for what appears to be seismic work (mud sill + plywood), kitchen and MBR remodel, non-structural reconfiguration, as well as electrical and plumbing, all between the two sales. What’s strange is that not all the permits were closed.
In addition, the tax record for 2515 Gough says that it is 2.0 bathrooms and 2348 sqft, whereas the MLS listing said 3.5 baths and 3780 sqft. It seems like it would have been difficult to add 1400 sqft in such a short time between the 1999 sales, but I don’t know how else they could have gotten more than $1M more within 7 months.
Even if this is an apple from the 2nd 1999 sale, however, inflation accounts for most of the difference here. $2.2M in 1999 is equivalent to $2.879M in 2010. 2515 Gough actually depreciated in real terms!
So something selling in 2011 for 2.2%/yr more (in nominal dollars) than the 1999 price is now considered to be a “good” outcome? How ironic!
Actually, RE following inflation is not such a bad outcome. It took 12 years and a huge bubble ride to get there.
After all, RE is a leveraged purchase with maintenance/taxes/insurance costs. The leverage makes you win on any appreciation, which is usually eaten up by owner’s costs. It’s not supposed to be an investment.
Of course the PTB have invited speculation. The reason it worked is there’s not much other option for wealth building for us the plebe.
Oh man, put out a property that bucks the trend and out come the inflation / nominal / question the permits brigade. As for the 1999 flip, the same thing happened in 1999/2000 for 2312 Gough that did a major renovation in about 10 months from close to flip 875k to $3M. It happens.
It’s a crazy market. Mostly down, but lots going on. I think 2515 does show an interesting and worthy data point. They clearly kept the place modern, but the kitchen is straight out of 1999 so I assume any upgrades were marginal.
The buyer of 2416 got a deal here. I hope I’m around when this hits the market again someday.
” put out a property that bucks the trend”
Note though that this bucked the trend in a negative direction.
2515 Gough went up 27% over 11 years vs 55% for the CS SF top-tier index.
eddy, the permit talk was to figure out if it was an apple because I hadn’t yet read your post above. According to what you said above, it seems entirely plausible to add a ton of square footage (without permits) within 7 months in 1999, so this is likely an apple.
I do not advocate viewing primary residences as an investment, but 2515 Gough certainly failed as one if that’s what you’re trying to say.
I’m also not sure how 2515 Gough bucks any trend when we’re talking about bubble properties from 2003-2008, not from 1999.
It’s not surprising to me that traffic is down….after all we’re in that “paint drying” phase that ex-sfer always mentions. The high traffic days were full of stories of “one ginkons” and the like. And bulls and bears taunting each other.
For the record, I am a regular reader and a potential buyer. I owned, now I rent, and I’m still looking for the right time to get back in.
Yes, it’s obvious that selling a home for more than you paid is obviously a disaster. Duh, winning.
I think 2515 does show an interesting and worthy data point.
I agree.
I wonder if there could be some mechanism for getting apples up??? Maybe a once a week thread that is “suggested apples” or something? users could nominate properties and within that thread could debate the best “bullish” apple and “bearish” apple. then SS could put up the most liked bullish/bearish apple?
overall: I haven’t found the bullish apples that have been suggested of late to be super bullish, although they do show appreciation over the years. to me, it is far more interesting to have bullish AND bearish views, since if bullish properties remain flat then that is telling.
all that said, I find it unlikely at this juncture that we will ever have 50/50 bull/bear properties. there simply aren’t enough positive apples. we did just experience a RE dislocation! it would be like trying to be “fair” to Charlie Sheen and post both his current intelligent and his dumb statements in a 50/50 manner.
They clearly kept the place modern, but the kitchen is straight out of 1999 so I assume any upgrades were marginal.
thanks for that information.
Yes, it’s obvious that selling a home for more than you paid is obviously a disaster. Duh, winning.
as always, I find it difficult to talk about “winning” vs “losing” etc. These are qualitative judgments and thus the answer depends on your criteria.
using criteria of “did you sell for more than you bought” will possibly result in a different answer than “did you use less money over the years to buy and sell this property compared to renting an equivalent”.
For 2515 Gough it appreciated 2.2% per year.
This is far more than the 775 sanchez property that went up around 0.523% per year. Thus, by the “did it appreciate” criteria 2515 and also 775 were both “winners”
Although 775 Sanchez was a “winner” by the above criteria, however, the cost to own ran well into the $10-20k/month range. it is very likely one could rent an equivalent place for cheaper than that (my math for that was quite conservative and is on the other thread).
thus, by the “rent vs own” criteria, 775 Sanchez was likely not a “winner”.
but again, those are qualitative judgments. it invariably invites the “well you don’t have to move when you own” or “you can paint the walls” arguments…
thus, I prefer to look at the math of the argument.
======
lastly: the ad hominem attacks have been springing up a lot lately. it’s the return to the boring “bitter renter” arguments.
they are especially dumb arguments because many of the so-called bears own their own homes.
there is also the “you don’t live here” arguments which are no better. usually the last resort argument when a poster has no argument.
I guess the ad-hominem bulls don’t realize that life situations change? They assume that once you rent a place, or own a place, or move to a place you must stay in that exact same situation forever???
As a regular reader and very rare post-er on this site, I think it’s funny that people complain about apples being cherry-picked. It’s an open forum and people can post properties like 2515 Gough; I’m interested in trying to get a broad objective overview. Anecdotally (and not just from this site), there are far more negative outcomes than positive ones to me, but I try to be objective if other evidence is presented. Properties that would have sold quickly even pre-crisis go off and on the market for extended periods of time. In the not too distant past, people were saying the apples were only being cherry picked from the last two years, then four, then five . . . now we have one apple from 1999 to 2010 that shows some annual appreciation.
By all means, bulls– post lots of positive apples- there are readers who honestly want to see an objective overview. But I have no complaints about socketsite– it’s an open forum where people can post the other apples. And complain away, but socketsite is needed; in general, 90+% of “information” out there on real estate is vastly skewed/misleading to the upside by your local realtor, the NAR, the Chronicle advertising, I mean news section, etc.
Further to the comment above, there is a NV apple in the making on my street. Check out 567 27th St, #2. Condo built in 1989. Listed for $799k. Last sold in 2002 for $760k. Seems ‘priced to sell quickly.’ And, indeed, traffic was pretty high at the open house on Sunday and disclosure packages were flying. Any predictions?
In terms of “cherry picking,” do keep in mind we picked 2416 Gough back in July of 2010 when it had just hit the market asking $2,995,000 (a sale at which would have represented a 1 percent decline in value over the past two years) and we didn’t yet know the outcome.
3955 Cesar Chavez is another good NV apple, sold for $1.135M in Oct 2006 and recently for $1.025 for a 10% drop.
405 Beacon has two sales prices, one for the MLS and a lower one for the public record. Even the higher of the two shows a 16% drop.
NVJ, the Redfin record on 3955 Cesar Chavez says that the $1.025m sale (already 3 months old) “was not an arm’s length transaction.” What’s up with that?
Anyone have any idea why 3955 Cesar Chavez would say “This was not an arm’s length transaction”? It was dual-agented.
405 Beacon has a $35.5K discrepancy, but it looks like $15.5K of that is explained in MLS:
“Financing Comments: less $15.5k credit”
Btw, the sellers of 3955 Cesar Chavez bought 221 Clipper for $1.552M a few months ago for $102K above asking. You can check out the housing porn: they kept a lot of the upper level somewhat Victorian, did something strange to the kitchen, and made the lower floor more modern, with some odd traffic flow:
http://www.redfin.com/CA/San-Francisco/221-Clipper-St-94114/home/1265637
For some reason, EBGuy made reference to them for 1070 Sanchez in a prior thread — was there a data error in there somewhere?:
https://socketsite.com/archives/2010/11/annualized_appreciation_depreciation_of_8_percent_for_1.html
“For 2515 Gough it appreciated 2.2% per year.
[…]
thus, by the “rent vs own” criteria, 775 Sanchez was likely not a “winner”.
”
Even 2515 Gough with an 11 year hold, had a gross gain of $600k.
Net out $140k selling costs and $300k for 11 years of property tax and you’re left with a $160k net gain.
$160k over 11 years leaves a pretty thin margin for the monthly rent vs post-tax own costs to push the overall result one way or the other.
If a 1999 property cherry picked as a positive result is close to the buy vs rent crossover, it’s hardly surprising that later vintage properties show negative ROI.
I think we’re all saying the same things. Market is down. A lot. There are some homes that are faring much better than others. Buying now is risky.
The disagreement is that some feel that buying now is just crazy. Buying in any market is risky and each buyer profile has its own unique characteristics. But I contend that there are good opportunities out there. This home is case in point. It’s a good, maybe even a great, deal, IMO, for the buyer. Sales like this will provide a major floor for prime d7 SFHs in a similar condition. I still think 800 psf in prime d7 for an above average (not premium) finished home is a steal. What is the discount for living on Gough in a quirky home, beats me, but @ $2M this is a lot of house. There were some small vic’s on Webster in LPH going for near $2M just a few years ago. Those homes are probably down 15-20%, btw, so on a relative basis, I think the savvy buyers here did well and found a seller who could stomach the loss.
567 27th St (noted above) is contingent already. I think this true 2003 apple will be a sign of where the Noe market is now.