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 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.
The resale of 333 Beale Street #8J has now closed escrow with a contract price of $1.39 million, which is officially “within 1 percent of asking” according to all industry stats and aggregate reports but down 11 percent ($180K) since the first quarter of 2016 on an apples-to-apples basis.
And yes, the slightly smaller unit next door remains on the market with a (further) reduced list price of $1.399 million, a sale at which would be at a real loss as well.
1100 HOA+ 1570 property tax + 3600 mortgage after tax = $6200/month after taxes.
15,000 in mortgage fees, + 70,000 realtor fees + 180,000 loss +10,000 transfer tax, divided over 45 months = $6100/month.
They paid $12,300/month to live in a 1 bedroom, plus the opportunity cost of the 300K, which, if put into an index fund, would have brought in another $4.2K per month. $16,500 per month in total for something that rents for $4500. Genius!
It is to the point where a drop in sales price is the norm in SF. In this case it is an outlier only insofar as the size of the drop. This and the Dolores Heights sale are especially large drops because, IMO, the previous buyers paid too much having been caught up in the irrational exhubernace that was sweeping SF in 2014 and into 2018. One prominent online real estate site is projecting a drop of .8% in BA real estate values in 2020. Compared to a modest gain nationally in RE prices.
Further reducing demand is the growing exodus of companies from SF. In many cases because their workers can’t afford to live in SF and have to reside far outside the city resulting in a long commute and less efficient employees because of that. If you think these high prices are not a real threat to SF’s viability as a business and tourist center think again – consider Oracle’s decision to move its annual One World convention from SF to Las Vegas. One World drew 60K people and it departure will cost SF $60 million/year. Other conventions are likely to also depart. The two big reasons Oracle dumped SF? High cost of hotel rooms here and the filthy streets. Those two factors were the top two complaints of attendees surveyed about their SF experience.
Keep in mind that indexed values for Bay Area homes are already down 0.7 percent on a year-over-year basis, and trending down, a trend which shouldn’t have caught any plugged-in readers by surprise.
Wow, I knew things were turning south in SF, but not this fast. Any investor worth his salt would be running for the doors by now. This downward trend will only accelerate.