The number of single-family homes and condos in contract to be sold across San Francisco has dropped around 15 percent over the past month, including a 6 percent drop in the seasonally adjusted pace of sales over the past two weeks.
At the same time, the average asking price per square foot of the homes which are in contract in San Francisco is one (1) percent lower, not higher, than at the same time last year; around 2 percent below pre-pandemic levels; and over 10 percent below its pandemic-driven peak with inventory levels having effectively held over the past month and now inching up.
Several units at 301 Mission are selling <$1,000/SF. This one (namelink) is selling for less than $500/SF (about half its 2015 sale price). I have been wondering for several years if lenders would stop lending on that building. Has that happened?
Traditional lenders haven’t been making loans against units in Millennium Tower since at least late 2016. From May of last year, in the S. F. Chronicle article by J.K. Dineen headlined Millennium Tower: Sale of $14 million penthouse is first huge test for S.F.’s famous leaning building, sixth ‘graph:
I have no idea what happened with the sale of that referenced penthouse apartment, but Ph 1D (2 bedrooms, 2.5 bathrooms, 2,230 ft.²), which has been on and off the market since that same time frame, is now again on the market asking $4,495,000, or a 25 percent decrease from the asking in May of 2023.
My layman’s reading of what I think is the listing of the property described in the aforementioned S. F. Chronicle article at realtor dot com leads me to believe Grand Penthouse A (i.e., Apt Gpha— 2 bedrooms, 3 bathrooms, 5,009 ft.²) on the 60th floor of the Millennium Tower had its listing removed earlier in July 2024 without a sale after fourteen months on market.
“…buyers either need to pay all cash or get a private, high-interest ‘hard money loan.”
Why would anyone bother? There are plenty of buildings that are not leaning!
I think that was asked and answered in Katherine Clarke’s story on the same subject penthouse apartment, published in the WSJ May 15, 2023 , Penthouse Atop San Francisco’s Millennium Tower Asks $14 Million, starting in the second ‘graph:
Obviously, it’s been a while since the Millennium Tower opened, but in 2009 it was the tallest residential tower in San Francisco. So even overlooking the discount that some wealthy, but still value-oriented, real estate hoarders will be unable to resist, the ultimate buyer will get something for their money that isn’t even available at the overwhelming majority of the “buildings that are not leaning”.
Ultimate buyer ?? I think you mean the next buyer (unless of course you’re trying to signal something ). Anyway, you’re likely familiar with “confirmation bias”? That’s where one’s perception is skewed by only seeking out – sometimes if only sub-consciously – information and views that support your preconception; in this case the view – no pun intended – is colored by (only) including someone who bought there; those who refused to do so are implicitly excluded. So while the property will be sellable as long as that first group includes at least one person, the market may bevery limited.
Personally, I don’t see the attraction of living next to a bus station: yes the building is tall, but that’s useful only at the uppermost floors – at least in most directions – and even there it’s no better than nominally shorter buildings built at higher elevations….of which SF is rumoured to have several !
So, rich guy speculated and listed the property for sale 7 years later at slightly over breakeven, assuming 5% commission.
Not to mention the HOA fees for the unit you name linked above will put you back $1974.00 per month.
And in exchange for those monthly fees, you’re getting “a 5 Star amenity” building:
• 24 hour onsite concierge and security
• indoor heated pool and fitness facility
• screening room
• owner’s lounge with bar and table service
• access to Michael Minna’s International Smoke.
Has anyone else had this as their last updated article from socketsite? Wondering if there’s something wrong with my phone or if this site has taken a lengthy hiatus?
SF real estate died.
We once went to a reception in that apartment. Perkins was a very gracious host. The views were spectacular, and the main space was huge, and the food delicious. But both of us, and other friends, including Perkins’ peers, felt it was not a home. It was more like a modern hotel, albeit with excellent objects and furniture. We were happy to have been invited. Given his wealth, we would certainly not live there. Of course, he had other places too.
Warcho… Just dropped the Mic
In other news, mid-market office building at 989 Market, sold at 80% discount.
Would that support office to residential conversion?
At six stories, the building at 989 Market would in my view be perfect for live/work lofts. But I don’t expect that to happen. The new owner will probably position it as less expensive offices, given their lower cost basis. I’m cynical about how real estate operators go about their business.
From the article headlined Half-empty downtown S.F. building to be purchased by L.A. investor at a major discount, by Laura Waxmann, posted yesterday, third ‘graph:
The percentage of discount for acquiring the building is kinda irrelevant, isn’t it? Whether or not a residential conversion “pencils out” depends on current construction and conversion prices. At $115 per ft.² for a cost basis you’d have to add in the cost of conversion, marketing expenses, and legal fees to get a gross cost for the completed units, then compare that to the $900 – $1,000 per ft.² you’d presumably be able to obtain for the completed units, which itself assumes that we are currently near the bottom of the price decline. As this site’s editor likes to point out, the building/site for 100 Van Ness, which is the ur example of a successful office to residential conversion, was under $200 per existing square foot back in 2008.
From what I’ve read (as a layman), a general rule of thumb is that the ideal profit margin for a property development project should be 15–20 percent or more of the project’s total cost.
which itself assumes that we are currently near the bottom of the price decline.
Yeah, this is probably the single most important statement here. And although by no means a crazy assumption, it’s easy to disagree with it.
I don’t think developers try to time the market. The time frames are too long. Who knows $/SqFt for condo sales in 2.5 years?
The thing is, lease rates for office space are also declining, just at a much slower rate, in large part due to the duration of leases and the ability of lucky tenants to sublease space they are vacating prior to the end date of their commercial lease.
As a pre-war building, 989 Market St. should be considered a prime candidate for conversion to residential. $200 per existing square foot back in 2008 is about $290 in today’s money. As it stands, however, it was renovated (and seismically upgraded) in 1991, so the listing agent for the just-completed sale was marketing it as “High-End Creative Office Space” (even though its still categorized as class B). With about half the building currently leased, BH Properties will probably tell themselves that if they just work a bit harder, they can manifest a new high dollar tenant into the currently vacant three floors and make the building cash flow positive based on the new, lower cost basis, making more money for their company than they would by converting to residential. This is, for practical purposes, what this site’s editor means by “a matter of the relative value of each use”.
Is this the end of SocketSite? The site hasn’t been updated in two weeks, and there’s been no advertising for quite awhile.
Kick itmention “office>residential conversion” and see if it movesI’ve been wondering the same thing …
Me2
Kind of a weird way to go out though… Wouldn’t the editor at least want to write some sort of goodbye note? After all, it’s been quite a long ride. Maybe something happened unexpectedly?
‘specially given that the dependably sarcastic respones to charges of “cherry picking” and bias were one of the highlights of the site. Given my druthers, I’d pick snark over boosterism any day (well, maybe not Sunday mornings.)
Let’s try this:
“I think the real estate market in San Francisco is strong because I see a lot of over asking sales!”
This is the longest I’ve seen this site not updated. Love the content but stay for the comments. Hopefully Socket hasn’t been taken out by the NAR mafia. This would be the ripe time to be reporting since the markets are probably softening even more. Hopefully it’s just a much-needed vacation.
There was an interesting take in Financial Samurai, and while I don’t agree with its premise that “The reason why SocketSite’s traffic has tanked is because SocketSite has been overly negative on San Francisco real estate since its founding” – OTC I think any “tanking” reflects the broader RE market (particularly CRE) – there was some interesting backgound info.
An announcement that this site is going away would at least end any speculation. What are the best remaining sites for SF real estate news?
Ess-Eff-Y-I-M-B-Y, if you just want RE news, or perhaps I should say unfiltered boosterism. The RDA of snark and skepticism will be harder to satisfy. While sad, it is rather ironic isn’t it: the one story that caught plugged-in readers by surprise…
Well, the domain name expires today and has not been renewed, though there are still 11.5 hours left. I’ve looked and looked, but couldn’t find any evidence of what happened to the editor.
“If you think you know the contemporary Domain Name market and comps, now’s the time to tell.”
Warcho, yours is my favorite post of the week; made me laugh out loud.
This is Brahma (incensed renter) fault. His low value posts have suppressed traffic.
Is this really the end? If so, I’m really gonna miss it.
Well the domain name renewed. At least the domain name will continue (possibly due to an auto renew setting at the ISP), even if there is no content. Now we have to figure out what happened to the Editor.
Really bad news. I am not a real estate worker, nor an SF investor any longer. I have enjoyed socketsite for many years and will miss it, especially the postings about houses in northern SF, and the comparisons to other cities. At least it was frank and honest.
May SS Rest in Peace and Rise in Glory!
I fondly remember Burbed from down in Silicon Valley and Marin POS. Socketsite never reached the same level of snark but I would hate to see it go.
Perhaps the editor finally bought the dream home in SF. Nothing but cheerleading from here on out.
Maybe. Or the editor has spent the best years of their life operating this site, witnessing their friends, neighbors and acquaintances get wildly wealthy in and around the digital/startup/VC-funded economy knowing that those people are not as smart, hardworking or educated as they are, and decided to move on and do something else.
Is the editor a schizophrenic ? I ask because most people begin a statement with “I”, rather than “we”. Or maybe it’s just an editorial use of we…quite literally. Then again, it reenforces my view that there is – or was – more than one person involved with running the site.
Did the editor use a “they” pronoun? If not, what is wrong with “he”?
Going out without any sort of announcement makes one suspect something unplanned like a medical or family emergency. If it was a technical glitch you’d expect some temporary landing page or something on social media.
Or maybe the pace of sales in SF has slowed to zero and there’s nothing the write about 😉
Either way a sad ending and I hope for the best for all involved.
No, the editor uses (or used) “we”. Not saying the editor’s schizophrenic. Nothing’s wrong with “he”.
While I usually use “they” in the singular form, when the gender of the person being referred to is uncertain, or because the person uses that as a personal pronoun like Judith Butler, in this specific instance I used it to be consistent with the plural form.
I think Notcom’s almost certainly correct that there is more than one person involved with running the site, but there isn’t necessarily more than one person posting the actual content.
Maybe they got sick of reading your dumb-ass word salad like the rest of us.
I’ve been reading for many years and I never remember a break this long. I do indeed hope everybody is OK. The abrupt departure is unusual.
Miss the content. Hope it comes back.
So finally my posts are not blocked, and now it’s the end?!
Investing in RE for 20yrs in SF, has given me gray hair. It was a wild ride before and right through the pandemic – appreciable all your comments (…maybe not Brahmas). Learned a lot here about the various viewpoints.
RIP Socketsite – unless of course there’s a massive (AI) resurrection and we boom again.
Cheers folks!
I knew we were in trouble when the site crashed several months back and when they brought it back up, it was in a generic (visual) format and they never made any effort to get it back to looking like it looked before. I am thinking the editor(s) fell out of love with this labor of love.
But if it’s gone, I will certainly miss it.
Maybe the editor has a very good reason for just ghosting us (car accident, coma, serious illness?) but I for one am very upset to be left this way. We deserve answers.
I close my eyes,
Only for a moment and the moments gone,
All my dreams, pass before my eyes in curiosity,
Dust in the wind,
All we are is dust in the wind
is this site officially over? its weird there is no news about this
This sucks! Really miss the content and comments:/ Hope everything is ok for those who run the site. “Hello, hello, hello, is there anybody out there?”
Somebody is there. Saturday, I posted a reply that the moderator declined to post. Nothing offensive so it’s puzzling.
Not necessarily. My understanding is that the moderation system in WP is semi-automated, depending on what plug-ins the site owner decided to install and configure. Your reply could still be sitting in a moderation queue waiting on human approval. Or it could have been declined by a bot.
I believe certain kinds of content – links and words that suggest a link to other sites – are automatically flagged for review; so without a moderator (i.e. human) to review it, it will just be deleted. So far from suggesting a presence, the deletion actually suggests the opposite.
I wonder what happened to Adam. Hope he is ok.
Me too. Best guess is a family emergency, the kind that haves you drop everything to focus on what is truly important. If so I hope the pathway out of the agony is within range and well lit.
If there is no SS, there is no point of living in SF. I’m leaving! I hope the Editor is OK ;(
If this is the end, I am going to miss Socketsite.
I’ve been following the site since ~2005 when I was researching buying an apartment in 1 Rincon Hill. 1BR ~$630K with ~$700 monthly HOA with assigned parking. Its been an interesting ride since.
Thanks for all the work Adam!
In close to two months, has no one spoken to Adam, the owner of socketsite? What happened to him? Abandoning a project of this quality and duration must have been related to severe medical or financial problems. Surely he has not just disappeared. The fans of socketsite should find out what happened and what is going ot happen next.
I agree … I’ve googled a few times but found absolutely nothing new. Just makes the whole thing stranger.