Listed for $25 million in 2018, the rather spectacular new Russian Hill home at 2626 Larkin Street, “the crowning achievement of every artist, designer & craftsman whose passion & dedication created this [nearly 11,000-square-foot] masterpiece,” ended up fetching $20 million, or roughly $1,850 per square foot, in January of 2020.
Featuring “intricately designed & crafted stonework, the finest woods and plaster walls, museum quality lighting and glasswork,” along with “ironwork and hardware forged by hand & sourced from Europe’s greatest foundries,” steel framing and piers anchored on the bedrock below, the five (plus) bedroom home and parking for five (plus) cars returned to the market priced at $19.995 million nine months ago.
Reduced to $17.995 million this past May, the asking price for 2626 Larkin is now down to $15.0 million, a sale at which would be “at asking” according to all industry stats and aggregate reports but 25 percent below the price the home fetched in early 2020 on an apples-to-apples basis.
If you think you know market for high-end homes in San Francisco, now’s the time to tell.
At least $5mm loss in 3 years, wow. And those 3 years they got the worst of SF…I mean until the next 3.
If if were in the Heights, $25m all day long. It seems priced right now though. Great house!
2018 $25M
2023 $15M
High end luxury buyers aren’t impacted by interest rates?
Maybe this particular seller is. Assuming they are carrying a 30yr fixed at near the all-time low mortgage rate of 2.65% (just to consider the best case scenario) and assuming no additional payments, the Mortgage Calculator at Bankrate indicates that the balance of the loan still outstanding in July of 2023 would be about $14,719,018. The $900k commission for Nina Hatvany and her counterpart representing the buyer will alone ensure that if this property doesn’t bring in any bids meaningfully above the current asking, the seller will have to bring a check to the closing.
If Hatvany was repping this property when it was on the market in 2018 – 2020, she probably should have told the buyer at that time (today’s seller) their money was too young for a property like this.
I don’t know why people keep repeating “but financed at 2.65%” .. if you have debt financed at 2.65% you better hope your means of income/cash flow is also enabled by market financing at 2.65% or lower and not ~7%. If employment goes out the window – what does it matter at what rate it was financed at?
I think what you’re doing here is an example of what sports commentators call “Monday morning quarterbacking.” There was no way to tell, in advance, that mortgage interest rates were going to reach ≅7 percent when The Fed began hiking in March of 2022.
This seller put the home on the market about six months after The Fed approved the initial 25 basis point rate hike. If we assume that Jimmy is right and today’s seller was an investor rather than an earnest homeowner, they probably thought they could still get more than they paid two years earlier. You have to remember that between December 2020 and December 2021, the median US home grew in value by $52,667, out-earning the median worker, who pocketed $50,000. That’s the bubble that marcia’s referring to; it was probably clear to this seller that the bubble was deflating by late 2022 and they decided to ‘get out’ not knowing how long it would take to do so.
If they had been able to unload this property in 2022 for even a little more than they paid for it, leveraging that once-in-a-lifetime 2.65 percent or thereabouts financing would have been a smart move and the seller would be laughing all way up the back nine about this right now.
Does anybody really pay six percent commission on a $15 million dollar house? Or are you just trying to keep commissions high by saying this in public?
That’s a question I often ask. Some people really do pay the 6%, especially if they are old or naive or if the sale is handled by a lawyer acting as executor. My family was able to sell a Palm Beach house without any realtor involvement at all – we put it all over the internet. Buyers liked that there were no realtors involved. The house was unique enough that it also got an article in the Wall Street Journal. The title company handles all the paperwork.
High end luxury buyers need mortgages?
They pay cash.
They most certainly do not, but go on with that fantasy.
Such buyers might not need mortgages, but might choose to employ them anyway, or might make their home purchase decisions based on how attractive mortgage interest rates are, because they don’t want to tie up large amounts of capital in a relatively illiquid asset at the same time the S&P 500 is rising to a fresh 15-month high.
If the overwhelming majority of “high end luxury” buyers don’t take out mortgages at all, wouldn’t we would expect to see a marked divergence in sales between the “high end luxury” segment of the market and everything else as mortgage rates rise and the availability of jumbo mortgages began contracting earlier this year? Homes in the “high end luxury” segment should be selling on a trend unaffected by the increases in mortgage interest rates since The Fed started hiking in March 2022.
There was (is?) a lot of air in that bubble.
I believe the tell is more about wealthy people not wanting to invest their $ in SF vs. a narrative around a high cost of $.
Bingo
Yep, we bought a luxury house in atherton instead of SF. SF just can’t be trusted.
Are SF buyers becoming turned off by the insane property taxes required for a home like this in SF. If I had to guess they would be what…….greater than $200k/month?
Maybe $200K/year, certainly not per month.
At a property tax rate of 1.179%, $20,000,000 x 0.017 / 12 = 28,333.22 a month. Two easy payments of $170,000 a year!
Property taxes are basically the same everywhere in california
Chandelier over stairs looks awkward like it belongs in hotel lobby. But that doesn’t account for price cutting of that magnitude.
UPDATE: Russian Hill Masterpiece Just Resold for 50 Percent Less