As we outlined over a decade ago, units #402 and #403 atop the Cape Horn Lofts building at 540 Delancey Street were combined to form a single 3,000-square-foot penthouse condo, with over 1,000 square feet of private outdoor space, which sold for $3.1 million in October of 2008.
Resold for $3.0 million in August of 2011 with the market having declined, the rather incredible two-level unit, with “a palatial floor plan that evokes tranquility, warmth, and privacy,” “abundant natural light,” “premium finishes, fixtures, and appliances throughout,” and two parking spaces in the building’s garage, returned to the market priced at $3.6 million this past April, a sale at which would have represented net appreciation of just 20 percent over the past twelve years, including the market’s rebound from 2011 to 2015.
Reduced to $2.995 million in June and then dropped to $2.500 million in October, the resale of 540 Delancey Street #402-3, “a truly magnificent gem,” has now closed escrow with a contract price of $2.325 million, down 22.5 percent on an apples-to-apples basis, below its 2011 value, despite the fact that the widely misreported index for “San Francisco” condos values is “still up over 100 percent!” over the same period of time.
$3M in the S&P 500 in 2011 would be worth about $11M today. Even if they had put 20% down, that would be worth $2.2M in the S&P.
They also paid around $5500 per month in taxes, HOAs and maintenance. Just the realtor fees were $700 per month, transfer tax another $100/mo. Assuming a $8500/mo rent, the extra $2200 in rent above the taxes, etc would have cost just under $350K, compared to the $8M (or $1.6M) gain they lost, along with the $675K lost from the sale.
They truly were “throwing their money away” by owning.
That is some spectacular revisionist analysis there. Yeah, we all would have done things a little differently in 2011 if we knew the future…
There are no guaranteed returns in the stock market. And. unless you are flipping houses the primary purpose of a home is to live in it, not to make spectacular gains.
Ultimately, even at its new price “well below” its 2011 price, you have a condo the size of a typical suburban home, but located in a lackluster area and only affordable to the wealthy. For perspective, after her career really took off, the international pop star Doja Cat spent slighty *less* money in 2021 for her first home in *Beverly Hills*. So, no, I am not impressed that prices have gone from insane to merely ludicrous.
I noticed you didn’t mention the cost of insurance. Funny I just got an email from my former State Farm insurance broker in SF asking me for contact information for anyone I know in Miami. She said, ” CA is horrible now… no company will insure any home, commercial buildings, and condos… few insurance brokers charge arms and legs for insurance. This one guy got home insurance that cost 40k..
Lenders are given up since insurance is so expensive..It’s really bad here in CA.”
Anyone care to comment?
Having sold all our property in SF in 2020 and moved out of state I have no first hand knowledge of the current state of affairs with regard to obtaining homeowners insurance and loans today in SF.
My Ex broker is my only current source and she sounds panicked and ready to head to Florida.
Huh, like, in Florida, insurers are falling over themselves to expand business? Only a matter of time until State Fame pulls up the sticks as well… If anything, we get to smart over how things there are taking the slide – the state’s Insurer of Last Resort is now the main provider of home coverage.
Well if she thinks that things are “really bad here in CA”, wait until she arrives in Miami. She’ll find out soon enough that rising sea levels due to climate change, Florida being heavily exposed to seasonal North Atlantic tropical storms and major residential buildings and other infrastructure clustered on its coasts and very low-lying land, insurers are increasingly seeking to reduce their financial exposure, by either underwriting fewer storm-exposed risks or withdrawing from many Florida markets completely.
As we’ve discussed previously around here, over half of Miami will be under water within our lifetimes, and uninsurable at any price well before that point. Perhaps she plans to parachute in, extract the maximum amount of commissions while it is still possible and then retire elsewhere with her “winnings”.
Well Brahma, you really didn’t answer my question.
As the president of my condo association here in Florida I am well aware of the insurance fiasco taking place in Florida,Texas, the Eastern seaboard, Louisiana, the tornado ripped Midwest. Re-insurance cost are skyrocketing across the country driving insurance premiums through the roof. That said, is it true lenders in CA are no longer making loans to borrowers? Insurance companies refusing to issue policies? Admittedly we have a major insurance issue here in Florida. But lenders are still making loans.
A commercial broker friend tells me some banks in CA are no longer lending on commercial CRE. CRE markets across the country is about to crumble in 2024 & 2025 with leases expiring and CMBS loans ending. Commercial loans which were in the 3% range 10 years ago are now 5.7 to 6.5%. Buildings sit empty. Leases are expiring. Companies that remain are looking to reduce space and renegotiate leases lower making it almost impossible to service the debt on the building. But I digress.
As for “climate change” and “rising sea levels.” I lived in SF for nearly 40 years. Lived in CA since 1977. Drove along I-80 thousands of times. Am still waiting for the Bay waters to cover the west bound I-80 section leading the the Bay Bridge entrance…..waiting….waiting….still waiting.
Ah but Brahma did: your sole question was “Anyone care to comment?”
And comment was offered.
I can’t speak to whether lenders are making loans in California’s fire-prone areas or if insurers are refusing coverage in those areas, other than to share my personal experience that in urban areas, both are still readily available to qualified buyers (just at higher costs). And while I am an interested observer when it comes to CRE, in that area I can’t even offer anecdotes other than what I read in the news.
I would be surprised to learn that the risks due to climate change around the the west bound I-80 section leading to the the Bay Bridge entrance is anywhere near comparable to Miami’s vulnerabilities, because the South Florida city is built on limestone, so water moves through low-lying areas of the city (which is the majority of the high-priced areas of it) very, very easily.
Look at that comparison another way. If they’d taken just that 20 percent down payment and invested it in the Chinese Stock market, (let’s say we use the iShares China Large-Cap Equity ETF as an equivalent to the S&P 500 for US-based investors) on 1 Aug 2011, held on through thick and thin and then sold those shares at market close on 27 Dec 2023, they’d be looking at a decline of over 44 percent! Their US $600k initial investment would be worth, in nominal terms, just over $330.4k at the tail end of last month. The 22.5 decline for this property looks like a flesh wound, by comparison.
I miss the embedded map from olden times…
Me Too!