Purchased for $1.4 million in July of 2014, the ‘stunning’ top floor condo #5 at 181 South Park, a two-level unit with a double-height ceiling, oversized steel-framed windows with city views, and parking for two cars, returned to the market listed for $1.45 million this past August.
Reduced to $1.375 million last month, in what some assumed was an attempt to spur a bidding war, the sale of the 1,178-square-foot unit, which also features a private roof deck, has closed escrow with a reported contract price of $1.25 million or $1,061 per square foot.
On an apples-to-apples versus “median price” basis, call it a loss of $150,000 (10.7 percent) in value for 181 South Park #5 over the past fourteen months, or depreciation of roughly 8.8 percent per year. And as we reported earlier this week, the inventory of condos listed for sale in the city is currently running 23 percent higher versus the same time last year.
Doesn’t seem consistent with the outrageous figures we come to expect in desirable locales like South Park.
Another possible indication real estate market has peaked in SF.
Selling a year later makes me wonder if the idea was to flip this for a nice profit.
Maybe the simple answer is that these condos were never worth those lofty valuations in the first place?
Precisely. Like we haven’t seen this cycle happen time and time again. “Purchased for $3M in 2005, on the market for $3.5M in 2007 and reduced to $2.7, and sold again for $2M in 2011.”
This sounds like hyperbole. Overall the market didn’t drop 30% (10-15%?) but there’s always a chump willing to overpay in a bidding war. If you have an apples-to-apples 30%+ decline, I’d love to see it.
Got in contract during a stock market hiccup, with uncertainty about interest rates.
As a buyer, one is always getting an asset that, while affected by the overall market, has its own valuation. I would venture this is a ‘safer buy’ in terms of limited downside than many of the transactions we’ve seen recently. Good luck to all.
Gorgeous unit, but the reality is an open loft like this is really only suitable for a single person or couple with no kids. Regardless of the price psf, that limits the number of buyers and puts a cap on the price.
Great apple comp. Note to buyers who don’t plan on living in a place for more than 5 years, don’t get to crazy on buying places at high market premiums or overbidding by too much (or at all). This place goes into contract in 7 days and sells a few weeks later for 10% over asking. Sells 1 year later for 35k less than the 2014 ask price. Add in broker fees and transfer tax and this is a devastating net loss for the seller in terms of financial pain. Borderline mail in the keys territory. Probably paid in cash so kinda hard to mail keys to yourself.
Anyway, not sure this is the end of days for SF real estate but not the first we’ve seen and wont be the last. Short term buyers will almost always get burned badly (Scott st). Caveat Emptor
no one remarks on the architecture of this building which is so pathetically hideous my brain stutters looking at it.
I couldn’t respond because I suffer temporary paralysis when I see that fake Juliet balcony on the tiny window on the left side of the facade (I assume its evil twin lurks behind the tree).
Why is the ground floor window arched? So that it reflects the arch ceiling in the top floor unit that is for sale that no one but that unit’s tenant and their guests ever see?
Oh, and let’s do some brick too; gotta have brick, or as we say, brick tile. And who’s dryer vent is the key, central, organizing element of the facade? Oh, and that sun shade! Is that the runner up for the new SFMUNI bus canopies – great that you could reuse the design.
There are just too many cliches on the exterior that as a registered architect I must turn away.
How do you know there wasn’t cash exchanged under the table, on top of the transfer price?
We don’t, but that could be said of the original transaction as well; let’s just call it what it is: “another successful sale !!”
Mostly because it would defy logic. #1, it sat on market for a while and had its price reduced. So this fact alone indicates that there was not ho multi-bidder market driving demand/price on this unit. #2 & #3, you have two agents from different brokers involved in the transaction neither of whom would risk the legal and reputational ramifications of committing this kind of fraud. #4, it’s pretty rare that buyers / sellers directly communicate on such a transaction and the risks of doing a back-ended deal like this are very high for two non-connected parties. The potential amount of “cash” exchanged is both generally insignificant relative to the lower tax benefits, yet at the same time is reasonably complicated to just transfer cash under the table from one party to another without risking a whole host of money transfer / tax laws.
So, in summary, I think we can dismiss this idea altogether. Other than some loosey goosey, hey, throw the furniture in for the purchase price type deals on multi-million dollar homes, this type of backend, non-arms length transactions between two unconnected parties is pretty rare. Although I’m sure it does happen and frankly, I’m surprised it doesn’t happen more often.
You just succinctly explained why it doesn’t happen more often.
It doesn’t make sense for $150k. But on a $10m sale the stakes are a bit higher.
I definitely believe we are entering into a more favorable climate for buyers.
The average rate of units sold per month in South Beach in Q1 / Q2 2015 was 26 units sold per month with an average inventor of units for sale at 26 units or right below. This works out to an absorption rate of 1 month of inventory (26/26)
Currently there are 59 units for sale in South Beach with an average units sold per month at 23 or 2.56 months of inventory (59/23).
I think you are right. A favorable time for buyers and for landlords as rental demand increases and homw ownership declines as it has in recent years as a percentage of the population. This will of course turn around and reverse at some point.
I’m not seeing it. I would far, far rather be a seller than a buyer in SF right now. I still see very mediocre places in undesirable neighborhoods fetching higher-than-ever prices — over $1000/sf. That was top quality Pac Heights pricing not that long ago. Maybe we have seen some tick down from astronomically crazy high to simply astronomically high, but I haven’t seen data even to support that notion. The ed. here seems to have a good eye for trends.
That said, I’ve been saying for several months that buying in this market is (imho) extremely risky, and one should have a comfortable cushion to be able to absorb a loss if one needed to sell. Looks like these 2014 buyers were likely able to do so.
Good analysis. SF’s affordability is below its historic norm which ain’t great to begin with. Its part of the trend as you refer to it. Does not mean SF prices will collapse by any stretch but the recent surge in prices probably halts and levels out for a number of years.
SF is a poor investment opportunity for a lot of reasons. If one is buying to own it is risky too unless one can weather a small downturn which buyer/owners, presumably staying put for years, should be able to do.
The inner Bay Area is over-priced IMO but, that said, in the rental market – outside of SF – there is potential. Just got involved in a syndication in Mt. View next to Google and it for rental units. Plan is to increase the density but do so with rentals and not condos.
The one trend to keep an eye on is the bubble within the millennial generation. Biggest population group now in the US. This group is looking to rent, generally, for the next half-decade plus. That puts or will put a damper on home price increases for the immediate future.
baly theregyl
Seems like a decent price
The sellers bought this place at 200 Brannan in March of 2015, so I’m guessing they didn’t like something with the layout. From the recorder’s site, they were cash buyers both times.
The buyer of 181 South Park #5 is CCC Ventures Inc. Now I’m intrigued.
“POP” goes the bubble!
it still sold for >$1,000 psf. thats a lot for a crappy loft next to a syringe filled home encampment park
And right next to a Shell station (visible in the photo) to boot. Still some psycho selling prices here and elsewhere in SF.
Nice try moto, but the only time South Park had a homeless encampment was in the aftermath of the 1906 fire, as of course did even less hospitable climes, like the Richmond. And the lads hanging-out at the lower end of the park favor the premium malt liquor available legally and in tallboy singles.
This building is located in the less desirable part of South Park, though. And may be better used as a startup office than a residence. After all, it is right between the old Odeo/Twitter office and the old Instagram office. Quite a few $ billion golden eggs laid thereabouts.
BTW, a small building next to the old Twitter office on South Park is for rent. Only $18,000/month for 1700 sqft. Must be the short walk to Willie Mays Plaza and the fine dinning at Zeke’s.
i know its not an encampment, but there are always plenty of homeless there drinking and using drugs. I know because i frequent the Chef and the Butler. great restaurant. grumpy owner
moto, they aren’t homeless, they live across the street in that red brick building, and in the SROs on South Park. They were hanging out in South Park long before you or me.
There’s an occasional homeless guy like any urban park in SF, but most of them live and hang out over by the freeway. Checkout the space between the 5th St ramps. And the men’s shelter right there.
Most of the drug use in South Park these days are techies vaping. Dev ops types taking cloud computing personally.
Part of the problem this “modern” building is down right ugly. There was not an attempt to fit it in/compliment the other architecture of South park. I love brick (faux granted) but this use of it on the façade is as fake as faux brick has to be in SF given earthquakes.
Didn’t see the unit myself but a friend who did found it underwhelming and much less attractive than the photos led him to believe.
Having recently purchased and looked at a ton of comps in the past six months, I think it’s fairly obvious what happened here. The seller didn’t follow the cardinal rule in this market — list the property at 15 to 25 percent less than what it’s actually worth. When prospective buyers see a $1.4M price tag, they’re going to assume it’s going to go for $1.75M and not check it out. And a buyer who’s actually looking to spend that much is going to be looking for something bigger and better, and so will not be interested.
If the seller had started by listing it at, say, $1.3M, he might have at least broken even or taken less of a loss.
Checked out the place, claimed to be 2bd2ba, but technically only one loft bedroom plus an unenclosed big den and asking over $1.4M, it was a bad move.
If the Den enclosed by the seller and asking $1.2, people might probably willing to bid up more.
But then you’d have giant walk in closet. It would need an Emergency escape and rescue opening which shall have a minimum net clear opening of 5.7 square feet.
@ sfdragonboy: My sentiments exactly.