Purchased for $675,000 in May of 2015, the 623-squaere-foot unit #308 at 1875 Mission Street (a.k.a. “M1875”) returned to the market priced at $649,000 two weeks ago, a sale at which would have represented a net 3.8 percent drop in value for the studio over the past eight years, despite the fact that the frequently misreported index for “San Francisco” condo values is “still up 25 percent!” over the same period of time.
Outfitted with wide-plank oak floors, radiant heat and “an open kitchen with custom cabinetry for ample storage in addition to a Bertazzoni range, Bosch Dishwasher, Liebherr fridge, quartz countertops, and elegant gold-flecked glass backsplash,” the unit is located in “a modern boutique condo building,” with a rooftop deck, pool and lounge, “[s]et in the heart of the vibrant Mission District.”
And after a week on the market, the list price for 1875 Mission Street #308 has been dropped by 11 percent to $575,000, with the listing now touting “Transparent Pricing.”
If you think you know the market for condos in “[o]ne of SF’s most vibrant neighborhoods,” “located near trendy shopping, restaurants, great nightlife, tech shuttles, and 16th BART station,” now’s the time to tell.
It’s not a one bedroom. It’s an alcove studio.
This place is on a pretty rough stretch on Mission. If your vision of Mission life is being immersed in murals, hot yoga and artisanal coffee shops – this is the opposite: What you got is stolen goods vending in the street and trash strewn about, blowing down the street. The Target a few blocks away is closing in a couple weeks time.
Disagree. 15th and Mission is fine. The Target under the freeway doesn’t move the needle one way or the other.
This unit seems like a decent value on its face. Good location, HOA dues of “only” $640 a month which appears to include internet and the heated pool. The problem is that the bedroom is really just a glass partition hiding a cutout for a queen bed. The cutout area is small enough that the queen bed is against the wall on one side which is mildly insulting for an adult paying $4,700 a month all in. In a buyer’s market like this, that flaw alone is enough to drive prices down.
Separately, these kinds of units are going to continue to flood the market for decades to come. Single family homes aren’t being built anymore. Neither are full floor flats. This isn’t an asset I’d be excited about owning 20 years from now.
So much space given to the bath compared to the “bedroom”. Weird.
This building was completed in 2015, so this property might be interesting to mom and pop landlords concerned with the relative lack of supply of units not subject to rent control. Let’s do a back of the envelope calculation!
Last I checked, in Dec of 2022, comparable 1 bedroom, 1 bath units in this building were renting at $3,600.00 per month. If we assume that same amount can be had for Apt 308 today and a conservative 5 percent vacancy rate (due to the current exodus), that produces a gross yearly rent of $41,040. Adding property taxes, property insurance, HOA fees and ignoring everything else adds up to $16,596 of total annual expenses. Subtracting that from the gross yearly rent produces an NOI value of $24,444.
Since the listing is now advertising “transparent pricing”, let’s assume our potential new owner will be able to acquire the property for its reduced list price of $575,000 and 4 percent for closing costs. That sum of $598,000 goes into our denominator, yielding a cap rate of < 4.1 percent.
I expect one of our local real estate geniuses to snap this up promptly.
would someone really pay $3500/ mo to live in that location?
i cant imagine this would rent for more than $2700
You forgot to deduct a 5% management fee ($2,052/year in your scenario). Needs to be deducted, even if the owner does it themselves. The revised NOI and cap rate would be $22,392/3.74%. And that doesn’t include leasing fees, equal to 1 month’s rent every 1-2 years.
The 10-year Treasury closed at 4.68% today. No management required.
Good points. Noted! As far as using the yield of 10 year Treasury bonds for a hurdle rate, investing in U.S. utility company stocks and REITs have been looking quite unattractive lately in comparison as well. The selling of both sectors during the past weeks has been pretty wild.
$3600 a month to rent that? Man, I feel old. I’ve been saying this for decades now. “They want $1200 for this?” “$2000 for that?” “You’re what? Paying $2800 for this?” Looks like by the time I retire, I’d have to pay per month (if I rent) what I used to pay per year when I first started working!
$552K
According to the agent’s comments on Redfin, this is a Saitowitz building. He worked with the existing facade, despite the historical survey’s comments that the building lacks any architectural or historical significance. As such, this is not as bad as the standard Saitowitz design. Compared with similar-size units in fancier downtown mid-/high-rise buildings, the interior of this unit is reasonably well designed, as are the roofdeck and the lobby.
$499K
Fabulous view out the window, across the light well, of the blank wall of the adjacent building.
$368K
This is just a glorified studio – not a 1 bedroom. Not a bad location, but these units were way overpriced for the neighborhood when they first sold. The layout is also a bit awkward and not really suited for a couple, thus limiting the prospective buyer pool. If we remember correctly, an actual 1 bedroom in this building that had parking included was recently sold for $650K. So much for transparency. No view and looks like no windows in the sleeping nook of this drywall box. Should be priced under $500K.
I interpret “transparency” as “We can see right thru them!”
🙂
Well, this building was a conversion to condos. Prior to 2014 it was a warehouse, which explains why Stanley Saitowitz, as Dixon Hill mentioned above was able to restrain himself from designing yet another Brutalist cast concrete sarcophagus.
I won’t argue with your point that this unit is small (623 ft.²) for what is supposed to be a full 1 bedroom in the Mission District, but Apt. 410, a floor above this one and also an advertised 1 bedroom, 1 bathroom unit — albeit 27 percent larger in floor area — sold for $925K in The Fall of 2021, or about a 9.5 percent increase over it’s listing price in May 2015. Perhaps that was just due to the premium associated with it being the penthouse for this building.
Every third-party automated valuation provider cited on the listing indicates an Oct 2023 market value of > $626K, so I’m pretty sure it will not close for “under $500K”.
ICYMI, from yesterday. Another tech wave is coming for San Francisco’s Mission District:
There are no survey results discussed, it’s just anecdotes, but at least it avoids quoting real estate agent boosters pimping for commercial real estate landlords.