Another Luxury Two-Bedroom Nearly Fetches Its 2016 Price
July 23, 2019
Purchased for $1.85 million in the first quarter of 2016, the 1,178-square foot unit #14B in the LUMINA tower at 338 Main Street returned to the market listed at the same price, or roughly $1,570 per square foot, this past March.
While not one of the signature units with a wall of glass and balcony, the “luxury 2 bedroom, 2 bathroom home” does offer some bay/bridge views from each of its rooms along with the same amenities and a parking space in the building’s garage.
And after a three-year hold, and a little over four months on the market, the re-sale of 338 Main Street #14B has just closed escrow with a contract price of $1.80 million, or roughly $1,528 per foot, down 2.7 percent on an apples-to-apples, versus “median price,” basis.
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The only thing that matters is whether it went “over asking”. Had they priced this property at 1.5, when it sold for the same price, 1.8, that same sale price would have been a “smashing success”, in spite of the loss the seller took.
And had they priced it at 1.5 and sold it for 1.8, it would have had “multiple offers” (all but one below $1.8M), another indicator of “success”, in spite of the loss.
No. The sale would still mark a loss, not a success.
The asking price is just a starting point for negotiation/marketing and it is economically meaningless.
Exactly. No one except real estate agents cares about ‘over asking’ or ‘under asking’.
Ouch, this is just painful. Expect more of the same in 2019-2020 with price declines accelerating.
The only thing that matters is that the mortgagee and the real estate agents all made money. That, and it flew off the market in a bit over a head-spinning four months.
I like this unit. Not too big, decent views, and I don’t need a balcony.
I’m guesstimating they sunk 200-300k into this in interest expense, closing costs, hoa, sales fees etc.
Even if they bought all cash still lost at least 100k here on depreciation + sales fees.
Oops.
You also need to factor in what they would have paid in rent if they had not lived here.
well then if i was considering everything i’d probably also factor in opportunity cost of not having 200k in the stock market for those 3 years….oh boy…
Although not if that money would have been spent on rent. Or if they have received tax benefits. It’s very hard to know how someone did without knowing their entire financial situation, which we don’t.
This debate is pointless. With 20-20 hindsight the seller clearly would have been better off renting this whole time. Even cash returned more over this period than this unit, forget about any alternative investment. But even if they planned to stay at this unit forever, if someone whispered in their ear in Q1 2016 that over the next 3 years Nasdaq would gain 69.6% while their newly acquired unit would lose 2.7%, they wouldn’t have believed them. This result must be beyond disappointing to the previous owner. Let’s hope the new owner does better.
What would this rent for? $5000/month? If so, then 3 1/2 year’s rent would be $210,000.
Interest on 1.8M @3.5% was $63K per year. Property taxes $22K, HOA $14K. Rent would have been about $6K/mo, $72K per year. A lot of Lumina owners are investors, so this guy was bleeding $27K per year and rents were going nowhere.
So after donating $100K to his Tenants, he then wrote a check for $100K to the realtors and SF transfer tax so that he could take a $50K loss. $250K Gone. Poof.
If he lived there himself, he could have taken a deduction on interest of up to 1.1M (now capped at $750K) which would have been worth about $10K, and another $5K on property taxes for 2.5 of those years, giving him about $45K of relief from the numbers above. Under he’d get all of about $7K per year in tax savings, or about $21K of relief. No matter how you spin it, this guy lost a bundle. The guy who bought it will do even worse.
Is it any wonder why prices are falling?
This is not my actual point, which is that if rent for an equivalent place was $6K/month, then the owner would have spent about $240K on rent over the last 3.5 years. So the question is whether he lost more than the $240K he would have lost had he rented.
That’s the exact question tipster answered above. The owner lost/paid at least $400K.
$400K at a minimum? I don’t see that in the comment. I’m not completely sure that math works.
A little higher up in the same tower and with a signature wall of windows, A Coveted Two-Bedroom Just Slipped Below Its 2016 Price.