August 23, 2007
Apparently Only Eight Condos Left At The Palms (555 4th Street)
A plugged-in tipster passes along an email from The Palms touting “Only 8 [condos] Left!” and 3.875% financing (down from 4.625%) until the end of the month (albeit a “2/1 Buy-down, interest-only based on 5/1 ARM and 10% down payment” and it excludes two bedrooms). The Palms' eight (according to the email):
∙ 555 4th Street #807 (2/2) 1,174 sqft - $1,156,000 (2 car parking)
∙ 555 4th Street #826 (1/1) 682 sqft - $621,000 (1 car parking)
∙ 555 4th Street #834 (1/1) 682 sqft - $621,000 (1 car parking)
∙ 555 4th Street #841 (2/2) 1,026 sqft - $1,039,000 (1 car parking)
∙ 555 4th Street #843 (2/2) 1,238 sqft - $1,189,000 (2 car parking)
∙ 555 4th Street #900 (2/2) 1,111 sqft - $991,000 (2 car parking)
∙ 555 4th Street #924 (0/1) 580 sqft - $559,000 (1 car parking)
∙ 555 4th Street #925 (1/1) 682 sqft - $631,000 (1 car parking)
We can't help but wonder about the use of short-term money for a long-term investment in this interest rate environment, could have sworn that the developer was reporting only 5 units available as of last week, and can't help but be reminded of a reader's recent dilemma.
Regardless, and once again, we'll marvel at the three condos offering two (2) car parking and
simply leave it at that welcome any current residents' insight or perspective on actually living at The Palms.
∙ Another Reader’s Dilemma (And Chance To Play Armchair Analyst) [SocketSite]
∙ The Palms: Financing Incentives And Inventory Update [SocketSite]
∙ The Palms (555 4th Street) Update: 65% Sold [SocketSite]
First Published: August 23, 2007 3:15 AM
Comments from "Plugged In" Readers
Even the Palms (where a large percentage of buyers are first time and probably subprime) has been closing consistently about 6 to 10 units a week. Seems like a perfectly normal market to me. But I have to admit it’s far more entertaining to dig and blow up every factor why the market with its “greedy owners” should be doomed. After all, where’s the justice in life without at least a bit pessimism?
Posted by: blahhh at August 23, 2007 5:14 AM
Those prices are pretty high. I got a significantly larger 1 bdrm at the Infinity for only a little bit more than they're trying to get at the Palms.
Posted by: anonSF at August 23, 2007 7:09 AM
Um, sorry to disappoint, but Craigslist has been plastered with Palms rentals.
Maybe it's people buying them and renting them at a loss, but I had assumed it was the developer taking them off the market and renting them for a year.
Posted by: tipster at August 23, 2007 7:43 AM
And at the rents they are asking for at the Palms ($3600 for 2BR), the owners/landlords are taking a nasty financial hit each month if they paid anything close to the asking prices listed above. I guess that planned flip didn't work out so well . . .
Posted by: anon at August 23, 2007 8:13 AM
Anyone know if the parking spaces are deeded? When I was there a month ago many of the 1bdr came with leased parking and not a deeded space.
Posted by: JJ at August 23, 2007 8:35 AM
Blahhh: I'm with you. And as you can see by the subsequent posts from Tipster (as usual) and anon 8:13, the ONLY way to buy in this market is at a loss, because apparently NO ONE makes significant down payments or can escape the horrors of an exotic loan. Strangely, the payments on my 30-year fixed at a great rate with 40% down and tax breaks don't seem to be killing me. As for the Palms specifically, I have firsthand knowledge that recent sales in this development have indeed been in line with the "high" prices listed. Even this seemingly challenged development appears to be doing OK.
Posted by: seehsee at August 23, 2007 8:38 AM
Well, there is something to be said for a building that is almost 100% sold, rather than under construction. I've moved into two new highrises in the last 4 years and I can say that buildings are never completed when originally estimated, and once complete there is always at least a year or two of teething problems (and people moving in every day, which is really frekin annoying due to loooong elevator waits). So prices should be higher for a new unit that you can move into right now than a unit that will be ready in six months or maybe 12.
Also, if some owners are renting their place at a bit of a monthly loss, or even a big one, so what, as long as they can afford it and are building equity. I will certainly be buying another unit as soon as I can swing it.
Posted by: AC at August 23, 2007 8:53 AM
Yes I have to agree that Palms did fairly well in almost selling out the complex (though they have been selling for over a year).
And $900-$1000/sqft is still quite high for a building with medium grade finishings, mediocre location, long, dark apartment like hallways and small bedrooms.
Comparing this building to the Infinity treetops makes me more bullish on Infinity since both are price similiar, but Infinity is a vastly more superior product in a supreme location...
Posted by: missionbay res at August 23, 2007 8:53 AM
3.875%, even with buydowns, is a great financing deal for the next five years in the current environment. However, these prices are very high for a building that I would describe as mediocre at best.
Posted by: anono at August 23, 2007 9:06 AM
Blahhh. every post you make is [filled with] lies and BS. No matter what topic you post on. I live at the Palms. this "full of renters" crap is BS. Just not true. Plus, who gives a crap. Someone owns it and is responsible for it. The place is simply excellent: location etc. the 2/1 is a great way for someone to get into the housing market. afte a year an a half, they benefit from the tax breaks home ownsership provides (and it becomes fairly comparable to what most would pay in rent -- that goes straight out the window). It's that simple. This subprime BS that you and others on socketsite (usually an "anon") spout off about is mostly about homebuyers in Fairfield, etc. and isn't about SOMA condos.
Posted by: grrrr at August 23, 2007 9:57 AM
"a large percentage of buyers are first time and probably subprime"
I'll give you first time buyers but not subprime. As we all know there are no subprime buyers in San Francisco.
"been closing consistently about 6 to 10 units a week"
That's funny math considering they only had about 100 to sell as of last September which would make it closer to a consistent 2 sales a week.
"recent sales in this development have indeed been in line with the "high" prices listed."
They might be "high" but those prices are less than what I was being quoted for similar lower floor two bedrooms in the building almost a year ago. So much for building equity.
Posted by: SteveO at August 23, 2007 10:09 AM
It does seem like quite a few Palms units are showing up on Craigslist, so I guess this indicates they were purchased by investors. Wouldn't the math look something like this for a 2BR:
- interest costs of about $6,000 per month (7% on the $1M+ purchase price, ignoring principal but including opportunity cost on down payment if any - and not using any cheap 3% money).
- property taxes of about $1,000 per month.
- HOA dues of about $500 per month.
- insurance of about $100 per month.
So the total cost (excluding principal repayment) would be about $7,600 per month. It looks like the asking rents are about $3,600 per month - but you probably should deduct from that a 6% leasing fee (or mgt fee) and the unit will probably be vacant for at least a few weeks per year due to turnover, etc.
So the net monthly loss is about $4,500 per month before recognition of tax deductions. Maybe these add back about $2,000 per month. The net "loss" of, say, $2,500 per month equals $30,000 per year - or about 3% of the purchase price.
So I guess if the property appreciates by more than 3% per year, the investment will look OK. Of course, rents may rise too - but so will HOA fees and there will be wear & tear on the unit over time (and probably special assessments from the HOA).
Looking at it strictly from an investment perspective, if I thought that condo prices over the next 5 years or so will go up by a solid 8% - 10% - 12% per year compounded, this might look like a pretty good investment. But if I was expecting stagnation or even a decline, I wouldn't make the investment now.
Posted by: Palmsdown at August 23, 2007 10:33 AM
“This subprime BS that you and others on socketsite (usually an "anon") spout off about is mostly about homebuyers in Fairfield, etc. and isn't about SOMA condos.”
For your information I happen to be bullish on the SF market and think the 1% subprime situation will soon be replaced by the media’s next favorite reason for boom/doom.
“Blahhh. every post you make is [filled with] lies and BS. No matter what topic you post on. I live at the Palms. this "full of renters" crap is BS. Just not true. Plus, who gives a crap.”
An insult would receive more sympathy when you back yourself up with the proper evidence, as you can see I didn’t mention a word about renters. Everyone lies including yourself, the difference is that I don’t care enough to do it on an internet forum, and most certainly not for the reason of reading disability.
Posted by: blahhh at August 23, 2007 1:22 PM
“I'll give you first time buyers but not subprime. As we all know there are no subprime buyers in San Francisco.”
:) I'll leave this one for people like tipster.
“That's funny math considering they only had about 100 to sell as of last September which would make it closer to a consistent 2 sales a week.”
Around last Sep up to Dec was the slowest time for the Palms. They still had over 50% unclosed inventory left at the end of the year with a normal drop out rate. And then their sales picked up going into spring. The math works, but I also have all the prices on their closed units from public record. This project did fine.
“They might be ‘high’ but those prices are less than what I was being quoted for similar lower floor two bedrooms in the building almost a year ago.”
Yes some of them are lower now than before. And this is very normal as any project gets close to the end of sales. It makes more sense economically at this point to lower prices and sell quickly than having the whole team stand by for just 8 units.
Posted by: blahhh at August 23, 2007 1:29 PM
I live at the Palms. About six or seven weeks ago I went into the sales office and talked to our sales person and was told that there were only 16 left at that time. So the pace seems pretty consistent. Back in April, I think there were 40-50 units , if I remember correctly. All these units now listed are in the top two floors (8&9). We only bought there earlier this year, so we only saw units on those two floors. However, my understanding is that they come with better finishes/appliances than the lower floors (although I have not been in any on floors 7 and below). We got a subzero fridge, hardwood in the living/dining area, custom closets, bosch appliances, nice cambria stone countertops (which is better than granite for a number of reasons unless you just like the aesthetic of granite), carrera marble in the door threshold and for the counters in the bathrooms. All in all, some pretty nice stuff.
We are very happy there. The residents do seem to skew on the young side but not everyone. The people I've talked to are nice folks, professional, seem responsible, etc. The front desk staff is great and always greets people when they walk in. They are really helpful when you need them for packages or need to call them about other issues, in my experience.
I've been in most of the units that are listed as still available. I have to say, the two-story townhouse units (like 841 and 843) have fantastic large balconies with downtown views. Also, there are plenty of floor to ceiling windows in most of the units. Unit 900 has a lot of glass and great twin peaks views, if I remember correctly. The parking is deeded for the two bedrooms, I believe, not sure about the one bedrooms. We got a 2-br and it came with a deeded spot. I believe the 1-brs left all face the courtyard, but haven't been in all of them.
I believe the finishes and feel of the building are comparable to other nice buildings in the area. (just my opinion, but we happened to see someone's unit getting remodeled recently and they were basically downgrading some of the stuff...who knows why. Guess they have cheap taste...anyway...). And, I love the location. Better than Infinity for me, which makes me probably the only person to post on this site that thinks that. I work a block from Infinity and walk to work every day from the Palms. I'd rather live in SoMa than over in the Infinity area or Millennium tower or Rincon --- for now. Who knows what will actually take place to this part of SF over the next five years. But the Palms location is only two blocks from Whole Foods and Safeway, there are nice restaurants across the street, and it's just a few blocks to walk to all that new South Beach/Mission Bay development. I'm used to walking, so it seems close to me.
The only thing I wish the Palms had better would be a better shared outdoor area. However, that was lower on my list than getting a good space with something of a view and lots of closets at a reasonable $/psf -- and we paid less than the current list price psf on the units now left. The hallways are very long, but....I don't live in the hallway so don't really care about that. Plus, the kicker for us was the ARM with the buydown. A friend of us who is in the mortgage biz told us when we were looking that we should really look at the Palms for that reason, knowing that he had not financial interest b/c he doesn't work for the banks offering the deals.
In closing, I think the name "the Palms" is tacky, but the name of the building was definitely not a deciding factor for us.
Posted by: palms_rez at August 23, 2007 1:41 PM
“It makes more sense economically at this point to lower prices and sell quickly than having the whole team stand by for just 8 units.”
It might make more economic sense for the developer/sales team to cut and run at this point but the lower comps are to the detriment of those who purchased last year. Incentives and discounting don’t happen in a normal up market.
Posted by: Michael at August 23, 2007 1:54 PM
I am another Palms resident. I've lived there since October, and like palms_rez I'm very happy with living there any my purchase. Quite frankly, I don't understand the amount of Palms bashing that goes on this site, and I'd love for someone to explain it to me.
Sure, there are properties with nicer amenities, better views, better $/sqft. But the #1 reason I liked the Palms was for the location. I didn't buy my unit as an investment; I bought it as a place to live and for quality of life. Two blocks form Whole Foods. Two blocks from Safeway. Far enough away from PacBell that you aren't terribly inconvenienced when there's a game, but close enough that you can partake in all the restaurants and commercial business that has sprung up from it. I work in Redwood City, and I'm a 2 block hop onto the freeway. The Metreon, Westfield, Container Store are just 10 minute walk away.
If I have any complaint about the Palms there would be two. The first would be their tactic of selling units in stages. When I looked back in Spring 2006 they were only selling through the 6th floor. They wouldn't give me much detail or pricing on floors above that so I felt some pressure to buy in, especially because I really liked the location and the building. My second complaint would be that they only added gas stoves to the upper floors, probably after a lot of people complained or wouldn't buy because of the electric ones they have in the floors below.
But I dare anyone that moves into Infinity or Rincon to not find something to complain about. So I too am happy at the Palms.
Posted by: Another_Palms at August 23, 2007 2:07 PM
“About six or seven weeks ago I went into the sales office and talked to our sales person and was told that there were only 16 left at that time.”
That would be 8 sales over the past six/seven weeks. At best that’s a consistent 1.3 per week.
“Back in April, I think there were 40-50 units”
So at best 42 sales over the past 16 weeks? That’s a consistent 2.6 sales per week.
grrr is right Blahhh, you don't know what you're talking about.
Posted by: SteveO at August 23, 2007 2:16 PM
"It might make more economic sense for the developer/sales team to cut and run at this point"...What nonsense. There is just 2% of the project unsold after 16 months of a challenging market. The builder could leave those units vacant for the next 20 years without a care in the world as they are free and clear. He has in fact been cutting and running for the last 150 sales..all the way to the BANK!!!
Posted by: Wayne at August 23, 2007 2:18 PM
Does anyone know what restaurants are opening below the Palms? With the Mint Plaza and the locations on 2nd Street (South Park) being filled w/ retail, why is it so hard to fill the Palms?
Is it the location or the buiding?
Posted by: um at August 23, 2007 2:20 PM
One issue I have with the The Palms is from an urban design perspective. It is a very boxy monolithic structure that appears to go on for blocks
Does anyone know the background on this? Was it a matter of zoning or the developers preference? I would have liked to see an allowance for an additional floor or two in exchange for a break into two structures perhaps with an alley to break up the street
We see this in other parts of SF too. For a long time so fearful of height that we end up with some stubby looking buildings
Posted by: zig at August 23, 2007 2:28 PM
Wayne - I'll agree that's great for the builder but that's still not so great for the buyers whose money the builder is taking "all the way to the BANK!!!".
Posted by: Michael at August 23, 2007 2:40 PM
Michael..agreed. Such are the vagaries of a free market. If the developer was losing his shirt(which he has in the past) I very much doubt that he would be getting a lot of sympathy from "the buyers whose money the builder is taking" or anybody else on this site.
Zig @ 2.28. It is primarily a planning issue. The zoning for that site is actually 4 stories lower. It was in planning for over 5 years and the city only agreed to it when the builder promised to build a new 56 unit building at the corner of Gilbert and Brannon, and donate it to the City.
Posted by: Wayne at August 23, 2007 2:49 PM
I don't think Palms location is terrible, but there are several negatives associated with the location. First, it's a short block from a freeway off-ramp. That in itself promises lots of traffic day and night on Bryant and 4th.
Second, the prime view units facing downtown actually looks right down on the ugly industrial buildings across Welsh street and across Bryant. Beyond that you're looking an ugly freeway before you see the skyline. At night, it's pretty but during the day it's really not a nice view.
Third, the area is a hotbed of homelessness, especially at night. I certainly wouldn't feel safe walking under the freeway or the surrounding blocks at night.
Finally, I agree with zig that the building is a huge, long, monolithic structure that resembles those block long apartment buildings we see in the inner cities (except for the color and design of course).
As a long term investment, it's hard to fathom those units appreciating beyond $900 per SqFt, especially with all the other midrises developments along SOMA/Mission Bay.
Posted by: missionbay res at August 23, 2007 2:59 PM
"It was in planning for over 5 years and the city only agreed to it when the builder promised to build a new 56 unit building at the corner of Gilbert and Brannon, and donate it to the City."
And yet some still claim that there is no connection between higher homes prices and the exactions we take from developers
The above is truly ridiculous
Posted by: zig at August 23, 2007 3:05 PM
I looked at a 2BR as a rental. I thought it was very nice but at $3500 a month we elected to go with a less expensive place in the Mission. I would consider buying in that area some day. I dont understand why someone would buy these just to rent them out unless they think that prices are going way up soon.
Posted by: SFrenter at August 23, 2007 3:20 PM
Missionbay. Sorry, just don't agree with you at all...
The traffic on 4th is around for about 30 minutes on the drive time home. And because the Palms is actually 3 blocks (or more) from any on-ramp, getting out is wayyyyyy easier than ANY other condo in SOMA, esp. those on townsend or Mission Bay. It's just not an issue at all. Believe me, we compared. It's freakishly convenient -- both to walk to catch MUNI or to hit 280 to target at colma or go to the east bay (bryant).
Homeless? no more than any other area of Soma, and less than most. And only before Giants games do most of them show up (hawking stolen/fake tickets and free parking spaces for a fee/tip). there's always one ilegally panhandling at starbucks (naturally) and some at the Caltrain station but, really, the bridge and tunnel giants fans bother me more.
views? we have a great one of the skyline, from Twin Peaks to the Infinity, One rincon Hill and the bay Bridge. And the "industrial buildings" in front of us/below look like art and (thank god) block our view of just the marriot Jukebox.
Posted by: grrr at August 23, 2007 3:36 PM
Ok grrr, you have some valid points. Let's just call it even :-)
"the Infinity looks like a murky fish tank that needs cleaning"
They haven't cleaned the windows once since installing the curtain wall (I really wish they would though since the windows are pretty dirty and 'murky'). I would hold judgement until they give the whole complex a good, deep cleansing after construction is complete.
One thing that does give the Infinity an advantage over other developments is the proximity to the Embarcadero waterfront, walkways and Ferry buiding. I have to admit, nothing like a nice stroll along the bay during the evening or Sunday afternoons.
Posted by: missionbay res at August 23, 2007 3:52 PM
Hate to be negative but I dont like the Palms at all. I'm a bit surprised there's only 8 remaining. When I was in the market, I checked out the Palms but decided to pass. I was offered a 1 bedroom facing North for roughly $535k w/ the lower rates. I'm sure they would have gave me a deeded parking if I pushed for it. I could have broke even if I put a 15% down and rent it out at today's market.
To say the least, The Palms is NOT a beautiful building. What were the developer's thinking. No wonder why the retail at the bottom is still vacant. I tried to get it out of the sales team on which restaurant will move in and he didn't know. Looks like the potential ones went over to the new Mint Plaza.
4th is a bad location. Berry is a better location but w/ all those condos on that block it's miserable over there.
If I had to buy an unit, I'd consider a resale at 200 Brannan, 88 Townsend, The Brannan, 301 Bryant or even YBL.
For new developments, the Infinity wins hands down! I bet a lot of people didn't know they could buy a 1 bedroom at the Infinity for $700k. A little higher than the Palms but bigger and better!
Posted by: um at August 23, 2007 3:58 PM
i don't think any of these products compare to mine, 88 king st, across from the ball park and south beach yacht club. we are still the only building in this hood with usable amenities at what has become standard hoa fees.
Posted by: james at August 23, 2007 5:08 PM
I was very interested in 88 King when I was looking, but the fact that it had no assigned parking was a deal killer for me. If I have to pay close to $1 mil for a 2 bedroom unit, I would not want to hunt down a parking spot every time I go home.
Posted by: steve at August 23, 2007 11:50 PM
Much like Palms, 88 King isn't a luxury complex. It used to be apartments before converting to condos a few years ago.
Some units may have been individually upgraded, but the complex itself has a cheap feel to it. Similiar to the Beacon and certainly not in the Brannan/Met class.
Posted by: [missionbay res] at August 24, 2007 7:22 AM
I actually like the look of the palms (something different) but would probably rather live in a full amenity building like The Brannan. Anything taller than the brannan (e.g. infinity or ORH), I cannot imagine the waits for the elevators (especially during the first year when everyone is moving in). Elevator wait time is especially important to me since I have a dog and go up and down a ton every day. Plus with all those residents in the very tall buildings, the pool and gym is always going to be busy....
Posted by: AC at August 24, 2007 8:51 AM
I'm another Palms resident who loves the building. Moved in mid June, and really enjoy the neighborhood restaurants, bars, markets, etc. There simply isn't a homeless issue here - sometimes a few, but usually during Giants games. I don't know what dark alleys the other posters are walking... I've seen the finishes/units for the Infinity, Soma Grand, and Altera, and the Palms is at least on par with these. I run my own Interior Design firm, and can tell you that the standard Studio Becker cabinetry, Calacatta marble bathroom counters, cambria kitchen counters, and other finishes are excellent. Add a standard Sub Zero fridge and all Bosch appliances, and the Palms wins. I work in multi-million dollar homes, and have specified some of the same finishes and appliances for my clients. Whether or not it's a great investment remains to be seen, but it's a great building, and we love living here.
Posted by: palms fan at August 24, 2007 10:08 AM
yes, 88 king like the beacon was originally built as apartments but the second developer put enough into it after buying it to make it competitive with the brannan. besides, our pool is usable since it's blocked from the wind. quick trivia, the original developer was the same as ORH. the lack of deeded parking could have been an issue but we hired valet parkers during swing shift and it has been a non-issue ever since. lots of folks just use these units on weekends only or as a place to hang when they watch the giants games, go sailing (across the street) or whatever. our location is top notch, on the water and you just can't beat that, imo.
Posted by: james at August 24, 2007 10:33 AM
wow 88 king doesn't have deeded parking? that's just horrible!
Posted by: um at August 24, 2007 10:40 AM
Why does the ORH developer not give deeded parking to any of their developments? 88 Kings sold several years ago before the city had mandated parking restrictions in downtown. You would think the developer could have given one deeded space per unit back then.
Posted by: missionbay res at August 24, 2007 2:05 PM
There is simply no enough parking for every unit at ORH and 88 King, so they have to use this valet parking model, which I think is the biggest pain in the neck. Imagine having to park just for a few minutes to pick up something at your place, you have to wait for someone to park your car and wait for someone to get your car back. No thanks.
Posted by: steve at August 25, 2007 12:10 AM
we have 151 parking spaces for 233 units but it's quite rare that we run over on any given day, 5 or so extra cars needing to be valet'd eventhough the building is sold out so it's no big deal.
Posted by: james at August 25, 2007 8:06 PM
Is parking included or not? The sales office told me this weekend that it was an extra $60 to $70,000 but told my client it was included and according to your price list and the listings on MLS it looks like it is included. Any insight?
Posted by: Katy Dinner at August 29, 2007 2:10 PM