Newish Hayes Valley Studio Drops Well Below Its 2016 PriceSeptember 14, 2022
Purchased for $545,000 in August of 2016, the 371-square-foot studio condo #307 at 388 Fulton Street returned to the market listed for $525,000 in September of last year, a sale at which would have represented a 4 percent drop in value on an apples-to-apples basis.
Reduced to $495,000 in November, newly touting “transparent pricing” and “not to miss 3% down financing available for qualified Buyers with VERY competitive interest rates,” 388 Fulton Street #307 sold for $495,000 at the end of December, at which point the average rate for a 5-year ARM was running around 2.41 percent, which would have equated to a total monthly payment of around $2,600 a month, including property taxes, HOA dues ($479) and insurance, assuming a 20 percent down payment.
Having suddenly returned to the market listed for $509,000 this past June, an asking price which was reduced to $495,000 in July, 388 Fulton Street #307 is now listed for $455,000 and touting a “motivated” seller, a sale at which would be 16.5 percent below its 2016 value, with an 8 percent drop in value on an apples-to-apples basis over the past 9 months alone.
At the same time, with the average rate for a 5-year ARM having jumped to 4.64 percent and poised to climb, the monthly payment for the studio, assuming a $455,000 sale price and 20 percent down, would now be closer to $2,900 a month, or 11.5 percent more than 9 months ago. And in order to match the relative affordability of the condo at the end of last year, the sale price would need to be closer to $400K, which would represent a 27 percent drop in value from the third quarter of 2016 on an apples-to-apples basis.
Comments from Plugged-In Readers
The seller’s agent probably advised them that they were in for a serious haircut trying to flip a 371 ft². condo after a six-to-seven month hold. Hopefully the HOA restricts owners at 388 Fulton St. from renting out their units or turning them into AirBnBs so this person can bear the full impact of their decision.
I imagine anyone trying to sell a condo, 6-7 months after buying it, in a market impacted by high-interest rates and a dropping stock market without trying to longterm rent it out (very few COAs restrict that) is probably in some pretty dire cash flow straits and/or really needs to get outta town. I’m not quite sure why you seem so pleased by that specifically (vs look! more semi-affordable housing!)
Keep in mind that while mortgage rates have effectively doubled from last year’s all-time lows, they’re effectively back to being closer to average and not particularly “high.”
If the seller has a 30-year fixed mortgage, at last year’s all-time-low rate, then they should hold it and rent it out. Its a condo and the rent can be raised along with inflation (unlike units in rent-controlled buildings) and eventually their rental income will far exceed their mortgage payment should inflation remain high. If inflation instead drops and interest rates drop with it, then the price of the unit should go up too and then they can sell if they wish.
Perhaps this listing indicates that the seller instead has a short-term mortgage that is becoming variable-rate soon (if not already). Really too bad if thats the case….
As a SF landlord, market rents are not going to cover the ownership costs associated with this unit. Interest rates will remain above 5% for at least the next 18 months so it sounds like the seller just rather cut their losses and pull-off the band aid instead of holding on for a few years. Studios also really don’t appreciate much in general so this is probably the path of least resistance.
That’s not a studio. That thing is a walk-in closet. Per sq ft of what now? $1600? It’s worth $1000 a sq ft at most. And what are the HOA’s?
The listing says $1226 per ft.² which is about twenty percent less than the price per ft.² currently quoted for Unit 709 for sale at 766 Harrison St., the infamous CubixSF!
Super small condos (I agree with the “walk in closet” assessment, but even worse at Cubix) really serve to separate people from their money and enrich developers, they don’t deliver commensurate value, which is probably why the trolls posting here down thread say that SF needs more of these units.
Politics from sacramento requiring increased density are going to continue driving the trend. The end result will be family of 3 living in dorm room size condos with generational mortgage, like tokyo market.
That is wrong on every count.
Almost $500K for a micro-studio condo, and you have to pay $638 a month for HOA fees (according to the listing). With 3% down on a 30-year fixed, with the HOA, property tax, and insurance, a buyer is looking at approximately a $3,500 a month payment. You could rent a nice studio apartment for approx. $2,200 a month.
The HOA is actually $479 per month, as noted above.
I realized there is a larger unit that had those HOA fees. Still $160 less a month does not make it significantly better a deal. I would say rent instead and you can likely afford a larger place for less a month.
Hayes Valley is great, but it’s an island without services. No accessible grocery stores, terrible public transportation, and a neighborhood that shuts down too early. That Trader Joe’s cannot come soon enough. It would be the catalyst to turn Hayes Valley into a real neighborhood.
There are plenty of people who would likely disagree with your assessment, across the board. Regardless, this unit sold for $545,000 in August of 2016, and $495,000 at the end of last year, based on the relative desirability of the neighborhood, building and demand at the time.
I think hayes valley is worse today than in 2016, in terms of crime, homeless, drugs, encampments
Not unlike other neighborhood sub-markets in SF.
Jimbo, you are correct. I moved into Hayes Valley while the Central freeway was being removed. Hayes Valley, for the next decade was undergoing a renaissance. That renaissance took a sideways turn when Marlena’s closed and gave way to a hipster bar. Later my beautiful Edwardian was twice marred by antifa thugs, a quadruple murder, and my street became littered with junkies and inebriates. A year ago I left.
we’ve had friends who left as well. there are really good things about Hayes Valley, but if its not safe, then that wipes out all the good things
You’re right about the grocery store, but it has fine public transportation (21 bus, close to Civic Center BART and Market St Muni), and I’d argue pretty much all of SF shuts down too early. Hayes Valley doesn’t strike me as much of an outlier here. Hayes Valley is boutique-heavy, and those tend to close earlier, which might be the root of what you’re alluding to. Upper Haight is similarly dead at night because it’s retail-heavy.
The Whole Foods on California is less than a mile away, as is the Safeway on Market and the Upper Market Whole Foods as well. The Mid-Market Whole Foods is closer to a half mile, or a flat 12 minute walk, away, as is a semi-weekly Farmers’ Market. Nabilas is a flat 6 minute walk away. All of which brings us back to the unit, rates and market at hand…
It’s a 12 min (although maybe sketchy) walk to the massive new whole foods at civic center.
“The positioning of the commode wrt to the vanity is bad feng shui”…
“This isn’t the real Hayes Valley”…
“Hayes Valley?! That’s practically the Bayview!”
“You call that a range?”…
“I’ve seen better views in the BART tube”…
“Fleas, no doubt”…
This game needs a name. Realtor roulette, anyone?
Man was that ever forced…
By way of comparison, here are actual comments from this very post:
“That’s not a studio. That thing is a walk-in closet. Per sq ft of what now? $1600? It’s worth $1000 a sq ft at most. And what are the HOA’s?”
“Almost $500K for a micro-studio condo, and you have to pay $638 a month for HOA fees (according to the listing)”
” […] but it’s an island without services. No accessible grocery stores, terrible public transportation, and a neighborhood that shuts down too early.”
“I think hayes valley is worse today than in 2016, in terms of crime, homeless, drugs, encampments”
All of which is Realtor® Roulette™, aka throwing shade on properties with price reductions, in order to steer the explanation for the reduced price from a popped real estate bubble to defects with a given property, the argument against which is simply that somehow those defects didn’t obtain when the property formerly sold for a higher price.
so according to you: unlivable city, Brahma, Jimbo and Pean Dreston are real estate agents.
Wow that is not how I had them pegged thanks for the insight.
Brahma sure doesn’t sound like a real estate industry [professional] to me. The other three sure do. I might be wrong. YMMV.
None of those commenters seem like realtors tho but hey keep on keepin on with the fake it’s all good.
Speaking of forced, I’ve got a lot of sympathy for the seller. Buy a condo in December and your homeland is invaded a couple of months later. Putin price discovery; that is rough.
“[…] a neighborhood that shuts down too early.”
This pithy observation also clearly explains RE prices in Pac Heights and Sherwood Forest.
You don’t understand why the latter are expensive without nightlife whereas the former is not? Not even remotely comparable draws / demographic
The comparison is intentionally absurd to draw attention to the bogus conditionality. What time a neighborhood “shuts down” has no bearing on why prices fall.
Sure it does, that’s why people live there and it stands to reason if it gets sleepy, prices will go down
“[T]hat’s why people live there ”
You have data on that?
It’s five blocks to Safeway, six to Whole Foods. Not to mention Nabila’s and other small grocery stores within three to four blocks.
SF needs more of these units. There, I said it. 371 square feet is plenty of space for someone out there, whether that’s because they aren’t home much or just need a lower price point. Other cities, notably New York, have lots of these “closets” which provide natural price point diversity. I’d love to see more buildings include a 10% allocation for efficiency studios in the same way we have BMR requirements.
What’s the market rent guess for this place? $2500? $3000?
Tough to see how new multifamily projects will pencil out if new (albeit small) condos are going for less than $500k.
As a point of reference, the unit was being offered for rent at $2,200 in February of last year.
I actually think this building looks pretty cool (the black portion on the corner… the white part looks so out of place and awkward). Reminds me of Beetlejuice movie.
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