J.K. Dineen hits the front page of the San Francisco Business Times with a great piece titled, “Competition runs high: Luxury condos vie for buyers on Rincon Hill.” And while the piece focuses on the Metropolitan, it might just be a bellwether for other developments around town. A couple of choice quotes…
First, with regard to increasing competition and rising rates:
Alan Mark, President of The Mark Co., which is marketing more than half of the city’s new condo developments, said some owners are rushing to sell because they are worried about 4,000 to 5,000 new units coming online over the next three years. In addition, many have adjustable five-year interest-only loans, and with interest rates on the rise, they are in a position where they are forced to sell because they will not be able to pay the higher mortgage.
“They want to sell at the top of the market,” Mark said.
And then there’s that little issue of blocked views:
McGuire’s [Malcom] Kaufman said it has been surprising that so many Metropolitan owners seemed unaware of all the Rincon Hill development that has been in the pipeline for more than four years.
“You better know what is going on around you before you plunk down three-quarters-of-a-million dollars,” he said. “It’s amazing how many people don’t.”
No kidding. And while people once had a BS (“Before SocketSite”) excuse for not knowing what’s going on, there’s no longer an excuse for not being “Plugged In.”
∙ Bay Buildings: The Metropolitan (333/355 1st Street) [SocketSite]
∙ 2,700 New Condos On Sale Soon [SocketSite]
∙ QuickLinks: Cause And Effect [SocketSite]
Interested parties can advance their knowledge of South Beach/Rincon Hill by taking a look at issues #43 and #44 of Pulse of the Market. See http://www.SFpulseofthemarket.com
– Malcolm Kaufman
My name is Steven Krystofiak, President of the Mortgage Brokers Association for Responsible Lending. http://www.mbarl.org I have a letter in a word document form that highlights the risks of the current loan industry unrealized by regulators and economists alike, mainly due to stated income loans.
Email me at contact@mbarl.org if you want me to send you a copy.
~ Steve Krystofiak
13 main points in the letter are;
1. Stated income loans are associated with fraud, and started to become popular in 2002.
2. Banks originate these loans because they are profitable and then sell them to reduce their risk.
3. Fraud is encouraged by the banks
4. Stated income loans help no one.
5. Exotic loans originated with stated income are now causing foreclosures or forcing homeowners to refinance into negatively amortized loans.
6. Stated income loans are why home prices have skyrocketed. They have caused a large demand in the US housing supply.
7. Banks have sold their loans and have already made their profit. Investors will soon realize stated income loans are too risky and stop purchasing them.
8. Almost anyone can get a stated income loan for $950,000.
9. Stated income loans cost consumers hundreds of dollars a year because of higher interest rates.
10. Stated income loans allow tax cheats to purchase homes easier.
11. Stated income loans are not always faster than fully documented loans.
12. Appraised values are often inflated. Underwriters are basing their decision on inflated home values, inflated incomes and inflated assets. The only “real” number is the FICO (credit) score. This is why underwriters have become focused on FICO scores.
13. Rules are not enough, they must be enforced.
As a owner/resident at The Metropolitan, I’ve had a number of gripes: mainly related to the company that previously managed the property.
In all fairness to the comment about buyers not being aware of views being blocked by new construction — caveat emptor. I looked at properties in both the north and south towers, asked my realtor about new construction, and was honestly advised about it. I also took a look at the city plan (which clearly shows several years worth of future construction plans). Based on that I bought a unit in the south tower and have fantastic views of the whole financial district panorama.
In the last year or so the new management company has made several improvements to the building (mostly small stuff, like adding motorcycle and improving bike storage).
They (management company / HOA) have, more recently, gone a bit nutty adding rules — it’s starting to feel more like living in an apartment building than a “luxury condo.” Now they’re talking about adding speed-bumps… in a garage that is already narrow enough with 90-degree turns that make it practically impossible to speed through. I’ve been here since day one, and have *yet* to see someone tear through the garage.
I’d much rather see them use our ($900+/mo) HOA fees to actually *improve* something rather than keep piling-on more restrictions. They also recently had the brilliant idea that they’d simply stop giving resident’s visitors elevator key cards (after calling the owner for approval) — requiring the homeowner to come down to the second floor and personally escort every guest. Bearable if you’ve only got an occasion guest… obnoxious if you’re having a dozen people over.
I guess enough people griped… because they made a 180 on that policy and re-instated it. It would be nice if they maintained the same level of service as when I bought my place.