As we wrote a year ago last month:

“Speaking of list price reductions in San Francisco, the asking price for the “rarely available” corner one-bedroom unit #802 on a penthouse level of the Palms at 555 4th Street, a level which is outfitted with gas stoves and Sub-Zero refrigerators, has just been reduced for the fourth time.

Purchased for $770,000 in February of [2015], the unit returned to the market this past July listed for $829,000, a sale at which would have represented total appreciation of 7.7 percent, or roughly 5 percent a year, on an apples-to-apples basis.

But having been reduced to $819,000 in September, to $809,000 in early October, to $795,000 at the end of October, and then to $789,000 as of this morning, a sale at asking would now represent total appreciation of 2.5 percent since early 2015, or an average of 1.4 percent a year on a straight-line basis, for the 670 square foot Central SoMa condo with a separate storage unit in the building and a deeded parking space in the garage.

With 20 percent down and the prevailing rate at the time, the 30-year mortgage payment for 555 4th Street #802 would have been roughly $2,800 per month when purchased in early 2015. Based on current rates, the monthly payment would be $3,000 at asking. And in order to match the $2,800 payment today, the purchase price would need to drop to $740,000, which would represent depreciation of 3.9 percent over the past two years.”

Subsequently withdrawn from the MLS without a reported sale at the end of last year, 555 4th Street #802 has just been listed anew for $790,000, a sale at which would now represent total appreciation of 2.6 percent on an apples-to-apples basis, or roughly 0.9 percent a year over the past three years.

And based on the current benchmark mortgage rate, the purchase price would still need to drop to $740,000 to match the aforementioned mortgage payment of $2,800 a month (which doesn’t include the current HOA dues of $600 per month nor taxes or insurance).

16 thoughts on “Apples-To-Apples for a Central SoMa Penthouse Condo, Take Two”
  1. That is one seriously depressing apartment. Layout and finishes on par with my starter 1-bedroom apartment I rented when I was 18 years old. Priced the same as my 3-bed house in Oakland. Who would buy this? Someone who just really, really wants to live right by a freeway?

    As for “rarely available”, unit #827 sold less than a month ago.

        1. Most starter rentals aren’t outfitted with Bosch appliances and sub-zero refrigerators. Regardless, we’re guessing that the rent on your first apartment wasn’t around $3,400 a month (which is the going average asking rent for a one-bedroom in San Francisco or a three-bedroom in Oakland).

          But if you still don’t understand, you might try running the numbers with a range of assumptions for property appreciation rates and rents, perhaps starting with expectations for a “hot, hot, hot” market circa early 2015 and working your way down.

          1. SF real estate is overvalued and buyers are fraught with irrational exuberance. The bottom will eventually fall.

          2. People have been predicting that the bottom will fall out for years. For decades.

            Not going to happen. This is the new normal.

          3. Over the decades, San Francisco real estate has been one of the best investments in America this side of New York.

          4. 0.9% per year is not even close to the best returns in America, barely beats inflation. And you are forgetting about costs to stage and sell. Probably been vacant this whole year they have been trying to sell, no rent income or use of property that whole time.

    1. That was a bubble that exploded. Even then, SF’s prices fell much less than almost everywhere else. We’re about at the same level again, but this time it’s not a bubble.

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