As we outlined earlier this year:

Purchased as new for $1.53 million, or roughly $1,284 per square foot, in early 2008, right as the Great Recession was picking up steam, the two-bedroom Ritz-Carlton Residences unit #1702 at 690 Market Street returned to the market in early 2015 priced at $1.75 million.

Reduced to $1.65 million and then withdrawn from the market after being offered for rent at $8,500 a month, the condo was listed anew in 2017 with a $1.6 million price tag.

Reduced to $1.5 million this past July and then to $1.4 million in November, the list price for 690 Market Street #1702 has just been reduced again to $1.3 million (which is roughly $1,091 per square foot and 15 percent below the price which was paid for the unit in the first quarter of 2008, not accounting for the value of the all furnishings which are now included in the sale price as well).

And yes, having been financed in 2008 with 30 percent down and a loan for $1,065,540, the loan is now a little over $100,000 past due with a remaining balance of $1,015,514 and a foreclosure auction looming. Or in listing speak: “The timing is right!”

Withdrawn from the MLS and then relisted anew at the end of June, with the unit having since been emptied of its aforementioned furnishings, a trustee deed having newly been granted to HSBC Bank and a new $1.2 million price tag, the list price for 690 Market Street #1702 has just been reduced another 5 percent to $1.14 million, or roughly $956 per square foot, a sale at which would now represent a 25.5 percent drop in value for the unit since the first quarter of 2008 (with some ups and downs between).

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Comments from “Plugged-In” Readers

  1. Posted by Brahma (incensed renter)

    The HOA dues are now up to $2,827 per month, or a 2% increase over what it was when socketsite posted about this property back in February of this year. I’m sure the Hey Sucker Banking Company will find a well-heeled buyer that really wants to enjoy the hotel-like services & amenities to take this off their hands in short order.

  2. Posted by Philip

    The owner had the use of the place for 10 years, and was able to deduct the mortgage interest. Even though he took a nominal loss, he came out ok, when you consider the rental value he received, as well as the capital loss he could have used. Had he not priced the place at an ego puffing and unrealistic level, he could have sold and walked away just fine. Now his credit is screwed on account of the foreclosure.

    • Posted by Anonoly

      Oh please! The mental gymnastics of some readers is truly amazing. Let me simplify it for you. Owner bought unit for $1.53 million in 2008. Could not sell it for $1.3 million in 2019. Foreclosed! There is nothing positive about this timeline. Expect to see way more of this in SF in the coming months.

      • Posted by tipster

        The guy put in $500,000 of his own money. $1M@5.5% is about $4.7K per month, about $3800 per month after taxes HOA probably averaged $2500 per month, $1500 per month in property tax, about $1200 after taxes, so payments were about $7500 where the average rent was probably around $6500. So he lost another $125K on rental value, which he recouped partly by not paying $120K in mortgage payments. He also probably paid off about $100K in principal, which was added back into the balance.

        Total net loss was $600,000, as I suspect after selling fees, transfer taxes and penalty fees, he isn’t going to see a dime of the excess over the mortgage balance.

        He was NEVER going to walk away fine, at any point. What he should have done was to wait until 2011 to buy. THEN he would have been fine. Don’t buy right at the start of a recession when Days on Market is shooting up but prices are about flat, is the lesson to be learned here.

        Current DOM is up 79% from last year. Prices are about flat.

        • Posted by mvp

          “Total net loss was $600,000”

          This is a catastrophe level loss for probably 99.9% of people here. You will not be able to retire and nor will your kids have an inheritance let alone the long fall from a middle class lifestyle to moving back in with parents if there are any and a shot-credit slum level apartment if there are none. I cannot imagine how anyone can deal with this.

          • Posted by SFRealist

            Now just think if the owner had been paying rent. If a comparable rent is $6000/month, that’s $72K/year. Over the last 11 years, he would have flushed almost $800,000 down the drain. That’s what I call a catastrophic loss!

          • Posted by tipster

            Instead, he flushed the same amount in HOA, taxes and interest, IN ADDITION to the $600K. I netted out the rent in my analysis, but he paid that too.

            Note also that I did not include any loss for the $500K he had sitting for 11 years. He lost $700,000.00 by not putting it into an S&P fund. Total loss from owning: $1.3M in addition to the $6500 rent he would have paid.

            There is no scenario you can dream of where he came out ahead by owning. He would have come out ahead by $1.3M by “flushing his rent money down the toilet”. By owning, he flushed $1.3M more.

          • Posted by SFRealist

            I still don’t see that in your calculations.

          • Posted by tipster

            “so payments were about $7500 where the average rent was probably around $6500. So he lost another $125K on rental value, which he recouped partly by not paying $120K in mortgage payments.”

            He was paying 7500 per month, less the 6500 in rental value to net a $1000/mo loss. All I assigned to him in my original analysis was that $1000, not the remaining $6500, which he also paid, but I eliminated because either he collected it in rent or received that value from using the property, and it wouldn’t count as loss. (It was a little more favorable to him than it should have been, because it doesn’t look like the unit was occupied at the end, but I wasn’t sure. During a period of no occupancy, he was not collecting rent nor was he getting any value from its use.)

            Note that that same amount wouldn’t count as loss to the renter either: he got that amount in value, so your original statement about flushing down the drain was completely inaccurate. It’s not flushed down the drain any more than your cell phone bill is flushed down the drain: you get an equivalent value from it. Bottom line, if you want to consider that amount as flushed, you also need to add it to his loss because I did not.

            I didn’t see a 2% property tax in the listing info, so I had assumed 0.1% per month, but I may have been short. So there may have been another $100K loss.

          • Posted by SFMichael

            @tipster, but was he really paying it? If the property was foreclosed on, then he wasn’t paying the mortgage. And if he wasn’t paying the mortgage, it’s a good bet he wasn’t paying the HOA either.

        • Posted by SFRealist

          I believe the advice: “don’t buy at the start of a recession” is good for basically any asset.

          • Posted by Brahma (incensed renter)

            I honestly don’t know where to go to check historical values on US Treasury bonds, but I’m pretty sure if you loaded up on 30-year Treasury bonds in late 2007/early 2008 and held on to them during the subsequent reductions in interest rates to almost zero you’d be sitting pretty when it came time to sell them when The Fed started tightening in December of 2015.

            But for more risky assets, you’re correct. Tipster says above that the seller of this place “lost $700,000.00 by not putting it into an S&P fund.” Well, yeah. Very few people were putting non-retirement account money into the stock market in 2008 when the S&P 500 went down around 38%, so the returns of a stock market index aren’t a realistic way to quantify opportunity cost.

  3. Posted by BTCSF

    Are the financing details listed (down payment, mortgage balance, etc) available to the public and if so where can I find out this type of information on a property?

    • Posted by Asdf

      Those are not publicly available. The SF city recorder lists every mortgage (any property with one has a Deed of Trust, so if there is no Deed then there is no mortgage).

  4. Posted by Scott F

    Market and Kearny is “Mid-Market” now? That’s firmly in the Financial District.

    • Posted by Notcom

      I would call it the transition point: retail to the west, office/financial to the east. More traditionally, Market and Kearny (and Geary and Third…it’s a “five points” corner) was the city’s 100% intersection…hence the clustering of (then) important buildings around it.

  5. Posted by Oakland lover

    This is one of the coolest classic buildings along market st in a prime time location on top of transit and walkable to everything including great parks and the water….and in a prime and well established hood that is the intersection of the new and old parts of downtown.

    This is an absolute steal of a deal. Barely over 1m and under 1k per sq ft is such a deal.

    If more of these distressed units keep popping up in this building I might just know a potential cash buyer to “sell” this to.

    What does one suppose you could rent this out per month for?

    • Posted by curmudgeon

      It is not a steal when you consider the HOA’s (which, if anyone needs reminding, are not deductible).

    • Posted by Fishchum

      Transit?? Anyone who spends this kind of money won’t be using public transit.

      • Posted by Brahma (incensed renter)

        Yeah, they’ll fly over the traffic in a helicopter:

        Another company, Blade, started flying to New York’s three major airports…in the spring after testing the routes in previous years…one goal of Blade is “moving the word ‘indulgence’ away from helicopters,” according to its chief executive, Rob Wiesenthal. By offering what amounts to ride-sharing in the sky, Blade, which also has operations to airports and other destinations around San Francisco and Los Angeles, has made helicopter flights less expensive if still not affordable for everyone. “We basically say, look, congestion in the city has never been worse,” he said. “We turn a two-hour drive into a five-minute flight. We say this is not an indulgence, this is mobility.”

        Emphasis added to draw out the relevance to the thread. It’ll be interesting if newly constructed luxury condo buildings start including access to the rooftop helipad as an amenity to wealthy buyers.

        • Posted by bachman_erlich_overdrive

          If you think a $1.2mm condo means the owner takes helicopters to get places, your grasp of the SF real estate market is quaintly outdated.

        • Posted by patrick

          As if the NIMBYs would ever allow a condo tower with a helipad to get built.

    • Posted by maurice

      My sense for this building is that it’s a charmless 2nd or 3rd home for people who don’t know any better. I can’t imagine that anyone who knows san francisco well would choose one of these quasi-hotels at that location to purchase.

      • Posted by SocketSite

        That’s not entirely true. Regardless, keep in mind that second homes and investment properties tend to be leading indicators for the market as a whole.

      • Posted by Oakland lover

        That is exactly my thought for this buyer…… works for some people not others. In this case it’s a park some cash, rent out if wanting too and or air bnb it to hi end clients.

        I dunno if this is the low / bottom on the price for this unit but I do think anything sub 1k per sq ft it a super awesome deal for a location like this. If you hold this 20 years and collect rental $ on it it’s an amazing asset diversification Opportunity. Appreciation is likely but diversification is a bigger thing I think in this case.

        @ fishchum contrary to your opinion many very wealthy people happily prefer transit vs sitting on a freeway.

    • Posted by Thiiings

      Add $2,800 in HOA dues to your math…

  6. Posted by Wondering

    Why is the property tax higher than every other condo? It’s like 2%. That just kills the deal.

    • Posted by %formerly%whatever

      There’s Mello-Roos on this building

      • Posted by curmudgeon

        Good lord…the story is even worse than I thought. I’ve never heard of Mello Roos being used on a tower. It’s usually used for infrastructure like roads, parks, etc. Those poor hapless stuck folks who bought at the Shipyard also have to pay into a Mello Roos to pay for their beautiful landscaping (adjacent to and over property that is being re-tested for radiation). But I digress….

  7. Posted by thisishowicomment

    That someone paid 1.5 million for this is insane.

    • Posted by Hunter

      So ugly, right? Even from 2008—looks like it should be in a faux-Italian apartment complex in the Houston suburbs.

      • Posted by bachman_erlich_overdrive

        Right. Paint it white, put in the apple store kitchen and sell for 250k more.

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