725%20Hampshire.jpg
As we wrote in March:

Unfortunately it’s not an “apple” to be as the kitchen (and at least one bath) has been remodeled with a permitted estimate of at least $40,000 worth of new cabinets, counters and appliances since its purchase for $975,000 in 2006.

But the sale of 725 Hampshire will be another interesting data point on Hampshire having been priced at $959,000 and a little closer to market than was number 953.

The sale of 725 Hampshire closed escrow yesterday with a reported contact price of $967,000, officially “over asking” by $8,000 but also $8,000 under the price for which the Inner Mission home sold in 2006 prior to being remodeled.
Hot Or Not On Hampshire Continues With Number 725 [SocketSite]
Well “Over Asking” At $478 Per Square Foot For 953 Hampshire [SocketSite]

Comments from “Plugged-In” Readers

  1. Posted by Samuel

    A pretty good outcome for the seller. Probably lost about $100k including remodeling, commission, and mortgage interest. It’d have cost more for sure, but for the sake of argument assuming the seller had rented this house for $2000 a month, that would have come out to over $100k in a little under five years.
    So I think the seller still come out slightly ahead if he/she had put the money in the bank and rented.

  2. Posted by sanfrantim

    Could one really have rented an SFH in this area for $2000 a month in 06-11 period? I’m skeptical.
    [Editor’s Note: No, but Samuel is well off on estimates in terms of investment and holding costs as well. Transaction and remodeling costs would have likely run over $100,000 alone with holding costs (interest, taxes, etc.) likely running around $5,000 a month, pre-tax.]

  3. Posted by Willow

    Samuel: I’m assuming that was a typo and you meant $3000 per month, correct? (I say it would actually rent for more than 3K.)
    Even with the kitchen remodel this is a suprisingly strong outcome for the seller considering it was more or less a purchase at the peak of the market. I’m sure the sellers would overall be content with owning this home for the 5 year period. (No doubt they could have done better financially renting but it’s always easier to make that assessment in hindsight.)

  4. Posted by Samuel

    I was being conservative with the $2,000. Notice I said that it’d likely have cost more to rent but I settled on the very low side just in case.

  5. Posted by lyqwyd

    Your calculation is incredibly off.
    Based on purchase price of $975,000 in 2006 (5 year hold) They would be paying on sale:
    50,000 – agent commission
    60,000 – prop tax (1.25%)
    12,000 – ins (0.25%)
    6,000 – transfer tax (sellers half)
    40,000 – kitchen
    220,000 – Interest (Assuming 100% financing, interest only, at 4.5% APR)
    ——
    388,000 Total
    That doesn’t include maintenance, any costs during the original purchase (title, inspections, etc), Mortgage insurance, or any other sundry costs, but already that works out to be over $6,400 per month to live in that house.
    And given that most people here agree the mission has done relatively well over the last 5 years, that’s not all that awesome an outcome. They probably could have rented a much nicer place, and had no stress for $6,400 a month.

  6. Posted by [anon.ed]

    it didn’t include deductions either. YOu estimated only 4.5% for ’06, which was probably low, they actually put 20% down initially, later pulled out 150K (likely at a much higher rate), etc etc. They probably deducted quite a lot over those 5+ years. Plug in the numbers here if you feel like it: http://www.bankrate.com/calculators/mortgages/loan-tax-deduction-calculator.aspx
    Also if it otherwise would have rented for $3250 or so then they would have spent 200K on rent.

  7. Posted by lyqwyd

    30 year fixed rates were over 6% in 2006 on average, and this would obviously have been a jumbo loan, so probably a point or more above whatever was the going rate, while I may have forgotten deductions, I was quite favorable on the APR, and I left out a number of other expenses of ownership.
    If they put 20% down then they missed out on the opportunity cost of investing that money, 5 year t-bills were averaging about 4.5% in 2006, which would have yielded been about $44,000 over 5 years on a 20% down-payment.
    So $200K (rent) vs $300K (own with deductions). Still seems pretty crappy to me. They clearly would have been better off renting, and this is in one of the neighborhoods that has fared best since the RE bust.

  8. Posted by [anon.ed]

    Yeah I by and large agree with you lyqwyd. I don’t want to get into the “they could have deducted more/they could have deducted less” debate. I don’t care to figure out what they did for a living and whether AMT came into play or any of that. The problem with this one is 975K for a house such as this one, with lots of sort of basement space. We’re talking on Hampshire, in 2006, and it needed work?

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