August 8, 2007

From No Real Story To A Bit Of Understated Irony (4128 24th)

4128 24th Street

After almost a month on the market the list price on 4128 24th Street has been reduced $500,000 (14.3%). Yes, this was the former home of Droubi Real Estate. Yes, it’s a Droubi Team listing. And yes, we’re biting our tongues.

∙ Listing: 4128 24th Street (4/2) - $2,995,000 [droubiteam]
The Droubi Noe Valley Victorian (4128 24th): Coming Soon [SocketSite]
As Promised: From Coming Soon To On The Market (4128 24th Street) [SocketSite]

First Published: August 8, 2007 3:00 AM

Comments from "Plugged In" Readers

Well, I won't bite my tongue. It really cannot be denied that this is compelling evidence of a deep downturn. This is a high-quality house in a great location. And one would think that these sellers, local real estate honchos, would know how to price a place. While a sample of 1 does not lead to the conclusion that market prices are 14% lower than in the recent past, with demand (those able or willing to buy) falling off a cliff, and loads of mortgages re-setting in upcoming months, my guess is prices at the end of 2007 will be at least that much lower than at the end of 2006.

Posted by: anon at August 8, 2007 6:43 AM

Isn't a "Natural Spring Fed Pond" as much as a liability as a benefit?

Posted by: Paul E. Ester at August 8, 2007 7:25 AM

I disagree with the "great location" comment by Anon. Not *every* house in Noe Valley is a great location. This house is right next to a Barney's (Burgers, not clothes -- think cooking smells) behind a church, on a sloped street, on the main drag (street parking challenging). The photo does a good job of cropping all this out.

Posted by: G at August 8, 2007 7:51 AM

so would it be to much of a pun to call this home 'a lemon'?

Posted by: badlydrawnbear at August 8, 2007 8:14 AM

This house was way overpriced. 1200 a foot. The bedrooms are microscopic. Is there even a master bedroom? I can't tell from the pix. And only two bathrooms? Please... You can still get a home in Cow Hollow for 3.5. There are several similarly priced homes on the MLS that will see reductions before long. 1580 Masonic, 2212 Castro, etc...

Posted by: Sleepiguy at August 8, 2007 8:15 AM

“There are several similarly priced homes on the MLS that will see reductions before long.”

In every one of those cases they’ll blame an unrealistic seller for setting the price too high and despite their expert realtor’s advice and knowledge of the local market. Kind of hard to point the finger on this one. Market?

Posted by: Michael at August 8, 2007 8:55 AM

3 million is a big nut no matter how you slice it. Not that many people have it, or can, or want to, borrow it.

Posted by: fred at August 8, 2007 9:29 AM

I think it's a combination. There are still greedy sellers and agents with questionable motives out there. There always have been. Just look at the MLS. At the same time there are still several homes in better areas that were well priced and sold above asking. The market downturn will absolutely have an effect on prices... but right now I think we're sort of in a holding pattern. I think things will be a bit more clear this fall when more and more homes come on the market. Properties like this one on 24th seem like last ditch efforts to cash in.

Posted by: Sleepiguy at August 8, 2007 9:48 AM

someone on craigslist dug this up as the purchase price ...

03/31/2006
$2,300,000

can anyone confirm?

Posted by: badlydrawnbear at August 8, 2007 10:29 AM

^ huh! That's what it says on property shark... Weirdness.. PS isn't always reliable though. Still...

Posted by: Sleepiguy at August 8, 2007 10:33 AM

What is surprising to me is not the reduction, but it's size. Instead of knocking 4.3% off the price, they knocked 14.3% off the price. That extra 10% could say a lot.

Was it tacit recognition that, given the current mortgage market, things have, at least initially, taken a 10% dive, or at least asking prices need to take a 10% dive to generate sufficient interest among the dwindling supply of remaining qualified buyers?

It also tells me they don't expect anything to get any better any time soon: they are dropping the price significantly to get rid of it before things get any worse. If they thought it was a temporary blip, they'd pull it from the market or hold their price until things recovered. They did neither.

Posted by: tipster at August 8, 2007 11:39 AM

I think the weird part is not the drop in price, but (assuming that Property Shark number is correct) the initial choice to price the property more than 50% higher than it sold for a little over a year ago. Huh?

Posted by: Brutus at August 8, 2007 11:45 AM

This seems like a simple case of lack of objectivity, IMHO. This is why sellers should always use an objective third-party to price and market their homes. I agree that $1,200/ft in Noe is a bit insane for a house that is less than perfect. I think this is an example of poor pricing, rather than ex post facto evidence of a market decline.

That said, I bought a house in LPH in this price range about a year ago, and I stretched to make it happen. I couldn't get the same loan today, let alone the interest rate I have. As a result, it seems to me that the tougher mortgage market will eliminate at least some more marginal buyers. This will necessarily have an effect on prices, but I disagree that this property is a direct causal example.

Posted by: AJ at August 8, 2007 11:52 AM

The sale of the house in 2006 appeared to be a transaction between family members, so the price was not necessarily a market price. That being said, 2.3 million does not appear to be that far off of a realistic market price.

Posted by: fred at August 8, 2007 12:04 PM

$3.0M? For that location? No thanks. Even at $2.3M, I can get a similar sized SFH in the Sea Cliff for the same price.

Posted by: anon at August 8, 2007 12:13 PM

2.3 sounds about right. It's a little bit less than the Victorian on Pine mentioned on this site.

But really, the realtors did not arrive at a price reduction based on perceived market decline. A few houses around the same price sold for 10+% over initial asking during the last month. I don't think anyone would argue that those sales indicate the market is up 10%.

Posted by: Sleepiguy at August 8, 2007 12:22 PM

"2.3 million does not appear to be that far off of a realistic market price."

but the question remains, is $3 Million market price 15 months later?

Did this property appreciate at $50k a month?

Posted by: badlydrawnbear at August 8, 2007 12:22 PM

Seven homes in Noe Valley sold last month for an average of 940 psf. (There were other sales, but I don't know the sf) All seven sold over asking.* Initial sale price? I have no idea. Of those seven, none sold at 1200 psf. This is simply a property priced out of line with available comps in the neighborhood.

Posted by: Sleepiguy at August 8, 2007 12:31 PM

As fred noted the 2006 transaction might have been between family and friends around the time the brokerage changed hands. Perhaps not true market value to begin with.

Posted by: Michael at August 8, 2007 12:37 PM

I'd be curious if any of the seven NV sales last month had parking. Apples to apples, and all that.

Posted by: EH at August 8, 2007 1:18 PM

The seven sales I mentioned all have a garage or attached garage.

Posted by: Sleepiguy at August 8, 2007 3:47 PM

How many of them were on an extra deep, extra wide lot? We've seen plenty of places here go for an extra 200-300K psf for having a particularly large lot. In Noe that's probably worth a significant premium.

Posted by: Anon at August 8, 2007 8:07 PM

A lot has changed in the last month (indeed, in the last few days), so whatever sold in Noe a month or two ago might not be a valid comp right now. Droubi's timing is terrible. Rates on jumbo loans, which lenders are unable to sell as they are over Fannie Mae's limits and other mortgage buyers are spooked, have spiked up. They have become disconnected from bond yields (which are falling). Anyone who takes one of these loans now while things are turned upside down is crazy, and people who buy in these price ranges tend not to be crazy. Who knows how long until things settle down but it is a bad time to be a seller.

Posted by: anon at August 8, 2007 8:53 PM

Forgive me for introducing some facts into this deteriorating discussion

The previous transaction was definitely off the market, so it's safe to ignore.

The initial price seems to me more like a bait, maybe someone will swallow.

I can't imagine the mortgage fiasco has anything to do with this property. People who buy 2.5M-3M homes take mortgage for tax purposes, not because they need one.

The reasons the place didn't sell are
1) Location is good but problematic - you want to be near 24th st and not ON it.
2) House is dated - renovation is circa late 90s.
3) Not enough bathrooms
4) Price/sqft too high
5) Summer - July/Aug not a great time to sell

There was only two properties in the past year exceeding 3M in Noe (68 fair oaks & 121 liberty), but there were plenty of 2.7M-2.95M cases earlier this spring. All of them newly redone few blocks away from 25th st.

The building is historic, on a doublish lot so you can spin it as comp to fair oaks and liberty, but the noisy location, the size and age just couldn't make it work.

2212 Castro is also aggressively priced, location is a bit far, which doesn't help.

318 27th (2.3M) in contract less than a week.

728 Duncan and 836 alvardo (2.5M-ish) took some time to sell but are in contract too. (both are a bit away from the center).

Overall some weakness, but didn't see the kind of properties that were selling in the spring this summer yet to make a claim. Let's wait for the September inventory.

Posted by: Someone at August 8, 2007 10:00 PM

"In every one of those cases they’ll blame an unrealistic seller for setting the price too high and despite their expert realtor’s advice and knowledge of the local market. Kind of hard to point the finger on this one. Market?"

I believe this house is owned by one San Francisco's top Realtors, so I would guess the seller knows exactly what she is doing.

M.R.

Posted by: MysteryRealtor at August 9, 2007 7:54 AM

think they'll take 1.5mm if i make the offer sight unseen?

;)

Posted by: james at August 9, 2007 8:16 AM

Ah, that's the one his nibs was talking about. I wasn't that interested in hearing about a Noe Valley listing and it seemed a tad pricey, but his nibs insisted, "Listen to this! 'Natural spring-fed pond'! Suppose it comes with a sump pump?"

Posted by: Sal at August 9, 2007 10:41 AM

Since when is summer not a great time to sell ?

Posted by: Anon1999 at August 9, 2007 2:41 PM

Since every listing agent you'd speak with will tell you to wait till after labor day.

Because everyone is out of town, I drove home from mountain view at 5PM in less than 50 minutes

Posted by: someone at August 9, 2007 11:14 PM

I'd like to see some real numbers on days-on-market in summer vs. any other time. So much conventional wisdom in the real estate world has been disproved in recent years, and I suspect that "summer is a bad time to sell" is yet another myth (one plausible theory: put forth by RE agents so they can go on summer vacation).

Posted by: anon at August 10, 2007 6:01 AM

I'm not a realtor, and your question is a very valid one.

However you can't argue with the fact the more people are out of town, hence lower demand. In addition, conventional wisdom has a self fulfilling prophecy nature, which will bias the sample.
i.e. most of the summer listings are made by people that are more anxious to sell.

My data is anecdotal from one zipcode over 5 years of market observation

Posted by: Someone at August 10, 2007 9:00 AM

I'm of the mind now that this home was never intended to sell at 3.5 million. I think the $500k drop was likely planned initially. Look! The market has crashed! Get %14 off Noe Valley home! 2.9 is still too high though.

Posted by: Sleepiguy at August 10, 2007 11:31 AM

I believe agents will tell you August is a bad month and most will go on vacation. As for the whole summer..I don't know about that.

Posted by: anon at August 11, 2007 6:36 PM

Real estate agents that say to wait until after Labor Day are insane. Yup, tons of agents with kids take off - but the alternative is to wait for all the new listings to hit after Labor Day and be in with the 'pack'.

I think August is a great time to sell - the market will validate that for any property priced correctly.

Posted by: Summer great time to sell at August 13, 2007 3:17 PM

I think August is the best to buy. Less competition for the properties. Best time to sell? Not if you want the highest price.

Posted by: anon at August 14, 2007 12:25 PM

Terrible location, noisy, all commercial. who wants to live right on 24th st anyway?

The sellers are just greedy realtors anyway..

funny how they went from BJ Droubie Realtors to Droubie Realtors to now Droubie team...

what's up with that?

Posted by: noearch at September 28, 2007 5:25 PM

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