More Cuts for Luxury Condos Already Listed at a LossOctober 25, 2019
Purchased from the sales office for $1.57 million in February of 2016, the 993-square-foot, one-plus-bedroom unit #8J atop the Lumina plaza building at 333 Beale Street returned to the market priced at $1.449 million this past September.
In addition to twelve-foot ceilings, two “spa-inspired bathrooms” and a modern kitchen outfitted with Gaggenau appliances and Caesarstone countertops, the luxury unit features a private balcony with city views, a large walk-in closet, a bonus den/office space by the front door, and a valet parking spot in the garage.
After a month on the market priced at a loss, the list price for 333 Beale Street #8J has just been reduced to $1.398 million, a sale at which would be 11 percent below its February 2016 price on an apples-to-apples basis.
And yes, the unit next door remains on the market and listed at a (now further) loss as well.
Comments from Plugged-In Readers
It’s obvious by looking at these numerous examples that prices topped out around 2016-2017. We are starting a downward trend that’s going to accelerate. I wouldn’t buy anything in the Bay Area until mid to late 2020.
Mid to late 2020 is not a long time from now. I’m curious as to why you feel that might be a good time to buy.
Yes, this site likes to sell that tale. It must drive clicks or something. But I guess you’d be surprised to know the following. Dollars per square foot average prices are up year over year for both single family homes and condos. Condos are down in sales volume pretty significantly. But single family homes are currently only down like 50 something in sales volume, total. And, yes,17 is up over 16 in price, and 18 is up over 17 in price.
Even more surprising is how some people can’t understand how an increased share of higher-end home sales and newer condos, both of which are relatively more expensive on a per square foot basis, can prop “average prices” up despite actual drops in values as measured on an apples-to-apples basis.
Of course, they tend to be the same kind of people that were belligerently arguing that sales volumes were on the rise and about to jump, you’ll see, when they were actually on the decline and are now poised to drop again.
Well, what’s funnier still is how other people fail to see that an increased dollars per foot cost necessarily makes everything shift toward “higher end” and can prop “average prices.” And sales volumes for single family homes, which is largely what I’ve been talking about, have been what I’ve said they’ve been. As of today they’re only off by 75. Do you not recall the panic you tried to stoke in fall 2018?
Since we are gazing into the crystal ball, I have to disagree with your outlook.
While I think we already are in the downward trend, I do not think it will last into mid to late 2020, as much as I would like it to. The evidence against Trump is overwhelming and he will likely be removed from office by early 2020. Otherwise he’s severely hobbled and expectations for re-election in mid 2020 will be dismal. Along with that comes the expectation of a return of foreign buyers and a later reinstatement of SALT tax deductions in 2022.
Furthermore, the turbulence in money markets is due to regulatory quirks which will be discovered and corrected by January, and is currently covered by Fed intervention. Any negative GDP “growth” in 2020 will be mild and short lived. It won’t amount to a technical 6 month recession and housing appreciation in the Bay will resume it’s upward trend for at least another two years starting by April of 2020.
I think if you are a buyer, November 2019 is your chance to buy at the trough while inventory is still high. Between Nov and April inventory will decline and finding a deal will be harder to come by. After April, you’ll be waiting until 2022 or 2023 for the next dip. If you are a seller, waiting until mid to late 2020 to sell is a better move right now.
I can’t predict the future, but I do know that current prices have pretty much hit the affordability ceiling. The average price in SF is now around $1.5M. That requires a combined income of around $300k. That number is not too crazy for DINKs, but for couples with children, or couples with at least one non-STEM focused career, it can be a stretch to bring in that much.
I think moving forward, the upper limit on the housing market is going to be more closely tied to wage growth. If we hit a recession and unemployment spikes and/or wages decline, we will see it in the housing market. Alternatively, if wages continue to grow at a fast pace, I think the market will have some room to grow. One potential confounding factor is that millennials are starting to hit child rearing age, so that could put the brakes on the SF downtown condos, while keeping the housing markets in far flung suburbs growing.
Trump likely isn’t going anywhere. So the very premise of your thesis is questionable. 20 Republican senators will not turn on Trump. The Dem’s decision to hold the inquiry in private is an obvious sign that the evidence is not overwhelming or they would want the public spectacle. Even if removed from office, Trump is not barred from running for president in 2020. Given his cash advantage and the likely Dem candidate of Biden or Warren, I would still put money on Trump to win as long as the economy continues to chugs along. People may not like Trump but they do love their wallet.
“Even if removed from office, Trump is not barred from running for president in 2020.” The Constitution states that if a President is convicted in the Senate and removed from office, he can also be prohibited from running again. By a simple majority vote, the Senate can prohibit Trump from holding,”any office of honor, trust or profit under the United States.” If convicted, the Senate would also approve this punishment.
The decision by the Dems to hold the inquiry in private also has a lot to due the House rules on impeachment inquiries that require it. Rules that were put in place by the Republicans in 2015 when they thought they could use them to quash any inquiry behind closed doors.
1. Trump may be impeached but he won’t be removed from office by the Senate.
2. The Trump tax cuts (SALT cap) isn’t going away until 2025.
Only newbs buy condos. Pros buy SFHs.
Stay away from townhomes too. In fact, stay away from anything with an HOA. Bad investment.
And the Potrero Hill SFH apple???
It is true that if one looks at socketsite’s carefully selected anecdotes, one might conclude that prices have fallen. But if you look at broader measures, or include the examples showing higher pricing since 2016-17 that socketsite filters out, the picture looks quite different. But people will believe what they want to believe, in search of clicks or other reasons.
But overall Case Shiller Dropped from 10+% to 0.2% and the mid-tier is down -1.5%. And the feel at open houses is much much colder than years ago.
The original buyer massively overpaid for this unit. This is more representative of his mistake than a general market decline. There are similarly large bedrooms with dens available in the area for 1MM plus, often with actual views. This unit has no view and being on the top floor of the podium in this high rise tower complex is worthless as well.
And the unit next door?
Or across the hall, all of which became comps for other sales in the building and neighborhood back in 2015.
Speaking of view units, A Signature Two-Bedroom Just Slipped Below Its 2016 Price.
This is really just a large anonymous hotel room, with a nice kitchen. Lots of white paint.
It would be interesting to know what kind of people buy condos like this in this price range.
When the market was up, the apples posted here were up:
Up 15 Percent Year-Over-Year For A Polished South Beach Apple
No Hill Street Blues For This Maniscalco Designed Home
They even “cherry picked” apples after the fact when it was up: “While we typically won’t feature an “apples-to-apples” sale if the outcome is already known, we are partial to year-over-year data points, especially with respect to units that are typical of a neighborhood.”
People here crying “cherry picking” are just in denial. Long time readers know that this site has posted many up apples. But it is not 2012 anymore.
Is there really only room for a single bed in the bedroom or is that bad staging?
I think that’s a full-sized bed, barely big enough for 2. i’d guess a queen might fit but 2 nightstands might then become an issue. i’m feeling it’s really not a bad place: kitchen very tasteful, great views, the den’s a bit awkward but then a couple might someday want such as a “starter nursery”/home office/other…
Not really a bad place? That’s the best you can up with? They’re asking $1.398 million! While you may think the kitchen is “tasteful,” it’s certainly not functional. Look at it again and imagine yourself trying to prep a decent meal, or even make yourself breakfast. (There’s no real dining room so maybe dinner parties wouldn’t be an issue anyway.) No appliances out on the counters as staged yet no room in the cabinets to store them. And the “den” is really the entrance hall. No one would ever seriously use that as a “starter nursery”.
I’m not invested particularly in what you or anyone else thinks of this place so excuse me if you don’t like my editorial. the price is simply currently what things locally cost. and yes the kitchen’s functional: i’d say leave appliances out if it’ floats your boat. if not well…tuck them away! you really don’t need to be so rude emanon: good grief.
Tuck them away where? The storage in that kitchen is minimal. In addition to small appliances, where do you store cookware, bakeware, food, spices, dinnerware, glassware, cooking utensils? No cabinets in the island (microwave and trash bin), the cabinets over the stove appear to be hiding the hood vent, the right side of the sink is the dishwasher, the tall cabinet is the fridge. The kitchen might be tasteful but it’s completely designed for show, not to actually use for cooking. No one is buying that unit for the kitchen. (But I guess the take away is no one is buying that unit….) You yourself said at best the bedroom is good for a queen bed plus one night stand. Good grief indeed!
My kitchen’s functional capabilities are so much worse and I’ve cooked decent meals dozens of times sometimes for delighted guests. It can be done. Though I admit one wouldn’t necessarily want it filmed.
It looks like cupboards all over the place: a lot could go in those. I guess I’m thinking for that kind of money you could work over the kitchen a bit if desired. If you were the buyer I’d suggest knocking out the island, and there could go your table for entertaining. OR do a custom table, with a functional component on one end for the micro. Then, If you have a boatload of lovely dishes, build a custom hutch to match, glass fronted, maybe on that wasted wall.
My appliances are all white so they don’t look that bad out. Again, you should see my kitchen: glorified closet. If one really wants to cook……but who does these days? Most of my friends just buy already cooked at TJ’s and call it a night.
UPDATE: Luxury One-Bedroom Takes a $180K Hit
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