Best One-Bedroom at The Brannan Effectively Fetches Its 2016 PriceMarch 2, 2018
Purchased for $1.16 million in March of 2016, “the BEST one bedroom unit at the Brannan with panoramic breathtaking views of the City, Twin Peaks & Bay Bridge along with floor to ceiling windows and sliding glass doors” returned to the market this past January with a new Wolf range in the kitchen, upgraded lighting and a $1.198 million price tag, a sale at which would have represented total appreciation of 3.3 percent for the 808-square-foot unit with parking over the past two years.
And yesterday, the sale of 219 Brannan Street #16A closed escrow with a contract price of $1.18 million or roughly $1,460 per square foot, representing total appreciation of 1.7 percent since the first quarter of 2016, not accounting for the cost of the aforementioned upgrades.
Comments from Plugged-In Readers
Finally, the overheated SF market is taking a much needed breather, at least some segments of it. This continuous upward appreciation in value just because the owner/seller decides to put in a high-end appliance and other “fluff” should be on the seller, not the buyer.
$1,460 per square foot is pretty high for a generic condo. The upgrades are maybe $5K for a Wolf range and some lights.
The cost of the range, which retails for over $5K alone, not including installation, is a good place to start when trying to account for the upgrades.
Oh come on, installation cost for a range? $150 tops – but probably included in the purchase and the cost to buy and hang a light fixture, even if it is a high end one less than $1000.
As we said, the base price of the range is a good place to start (rather than end).
$5,000 stove I assume to attract buyers who like to cook; yet no space in the unit to host a dinner party.
Nothing new here, just a confirmation that there has been slight upward, slight downward or flat price appreciation for newish condos in the SOMA area. Many buyers who have tried to sell after a short hold have lost money. Despite the appreciation here, the owner may have actually lost money given the upgrades and selling costs. This is a nice little unit with a very nice view but, at 1.18 million, one is not getting much for their money and questionable future prospects – IMO. SF condo buyers are maybe starting to wise up?
Hard to say if the seller lost money. He would have had to pay rent, and probably received tax benefits during ownership.
the transactional costs alone for buying plus selling the property already amount to 1 to 2 years of rent, without even mentioning any single PITI+HOA in between.
Speaking of rent, I’d be curious to know what this kind of unit in this building rents for. Hard to see it cash flowing to any significant degree. Not a good investment opportunity, but if owner occupied it could pan out over a 5 plus year window. It makes no sense to buy now in SF, IMO, if one is not planning on living in the unit for at least 5 years and better 7 or more years. Of course the unforeseen can come up and a person may have to unexpectedly sell in a short period of time. Maybe that was the case here.
If you haven’t actually run the numbers, how would you know “it could pan out over a 5 plus year window?” And if you have run the numbers, what assumptions are you using for holding costs, transaction costs, appreciation and effective rent?
On a seemingly unrelated, but yet related, note in terms of actually running the numbers, on a few different levels, according to Uber, being a driver “is flexible and rewarding” and helps to advance “career and financial goals.”
But according to a recent MIT brief, the median profit from driving is $3.37/hour before taxes and 30% of drivers are actually losing money once vehicle expenses are included.
Speaking of which, for those running the numbers at home, the HOA dues for the unit averaged around $950 a month over the past two years.
Do we really need to run any numbers here? Clearly a loss for the seller. How much exactly? Who knows? Opportunity cost? Who knows. HOA fees, and transaction costs alone cement the loss, even if they paid cash, and had no interest fees.
Regardless of the details, it’s clear people who bought in the last 3 or so years, in the SF condo market downtown in particular, selling now, are not in great shape and likely will eat some loss. Huge losses, no, but clearly a disappointing sale, if you are in this position.
That and the financial markets are clearly jittery now, not helping the local RE market for sure.
Well, because it’s not obvious it’s a loss. You don’t know what the seller would have paid in rent. Nor do we know whether the seller had tax benefits.
No one does, but that’s the point.
“[…] it’s not obvious it’s a loss. You don’t know what the seller would have paid in rent. Nor do we know whether the seller had tax benefits. […] No one does, but that’s the point.”
I get vertigo when I try to spin that fast…
Re: Running the numbers. A very rough estimate, but it looks like you can rent a similar unit for about $4k/mo, and a mortgage with interest and HOA would be about ~6.5k/mo. Assuming $2-3k goes to HOA/tax etc… that leaves you with ~$1k/mo in equity building over renting. 5 years seems a little low, but 7-10 years, and the economics could work out. Of course, if rents and prices start dropping, even mildly, you will quickly be in the red.
And another thing to consider, is if you have a timeline of 10 years, you will probably outlast another RE cycle. So even if things go down, if you are happy to sit tight for a while, than you might be alright in the long run. Definitely a risky time to be buying, but for some folks it could make sense.
A $1M mortgage will run about $3700 after deductions. Add $1200 per month in property tax and 900 in HOA and you are losing about $1800 per month. The prior owner had a lower rate and was able to deduct property taxes, so likely only lost about half that monthly.
Probably lost about $85,000 on the sale and any loan origination fees, and call it another $20K on the monthly costs over renting, and this seller lost $100,000 on a one bedroom. Putting it differently, they were paying $8,000 per month for a one bedroom.
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