September 21, 2007
Not Exactly A Flip, But Possibly A Push, Over At One Rincon Hill
According to a plugged-in tipster, a coveted “02” series two-bedroom/two-bath condo at One Rincon Hill is quietly being shopped by a contract holder.
The 1,300+ square foot unit is reported to have been secured with a non-refundable deposit of $65,000 and at a contract price of $1,595,000. And apparently the contract can be amended to reflect a new buyer prior to close (which we haven’t confirmed).
The asking price? $1,595,000. Or more accurately $65,000 to make the contract holder whole on his deposit. It's a bit different story than a reader reported fourteen months ago, but it's also but a single data point. (And we're at least waiting until after the first wave of closings before drawing too many conclusions on the health of the hill.)
And at the same time, we have been hearing rumors of a rather significant waiting list of buyers willing to pay big money for penthouse units that should happen to fall out of contract prior to closing. Again, unconfirmed (but no real reason to be doubted).
UPDATE: There’s a reason we originally filed this one under “Interesting Opportunities.” If you believe in the building, and like the floor plan, then it is (and as a plugged-in person, you now have the number to call). And if not, at the very least it's another interesting opportunity for some unique insight (into One Rincon Hill) and discussion (about the market).
∙ A Quick Flip At One Rincon Hill? [SocketSite]
∙ What Happens When It’s Time To Fund? We’ll Have To Wait And See [SocketSite]
∙ One Rincon Hill: An Unofficial Update On The Timing Of The Two Towers [SocketSite]
First Published: September 21, 2007 4:00 AM
Comments from "Plugged In" Readers
Boy, very smart and creative. This buyer is ahead of the curve in deciding now that it will make no sense to close at a price that is above market. But instead of just walking away from his deposit (a smart but painful move) he's going to first see if he can get someone to buy his "option." By acting now rather than waiting until it is painfully obvious that his option is worthless, he just might get some of his money back. I'm a bit stunned that the contract would permit this since it puts those with deposits in competition with the developer.
One question--why is he "quietly" shopping this around? I would think he would want to advertise this "opportunity" to a broad audience. It would be interesting to see if a sort of open market for these options develops--that would certainly give us a better picture of price trends.
Posted by: Trip at September 21, 2007 6:05 AM
"At the same time, we have heard rumors of a rather significant waiting list of buyers willing to pay big money for any penthouse units that should happen to fall out of contract prior to closing. Again, unconfirmed."
Waiting list? Sure, there's a (very old) waiting list from the summer of 06. Heck, I'm on that waiting list and OneRincon has probably called me half a dozen times since June, 06 asking if I'm interested in their remaining condos or townhomes.
It'll be interesting to see how many folks on the "waiting list" are still eager to buy given all the controversy and negatives that has come out on that complex since last year.
If I was an active buyer, I'd probably look at Infinity's 2nd tower or Millenium before looking at OneRincon...
Posted by: missionbayres at September 21, 2007 7:08 AM
The developer won't care. If this guy sells it, the developer ends up with $1.595M. If not, the developer takes it back, and assuming they can sell it for just 5% less, they lose $80K, pay another commission to resell it (probably around $60K if they have to pay a buyer's agent) and pocket the original 65K deposit. So the developer comes out behind.
So the developer could care less if people are out the trying to unload these things. And I suspect this will be true even if the buyer is contractually prohibited from selling for a year. Better the original buyer than the developer.
Posted by: Tipster at September 21, 2007 7:18 AM
Why do they say type 2 units are so coveted? That gets you the bridge view I suppose--especially if its over the bridge. But what about views of the golden gate. I forget which # that is but wouldnt a view of the golden gate be more valuable? Altho more prone to being blocked I suppose. Would have to be above floor 45 I guess.
Posted by: Rick at September 21, 2007 9:11 AM
"Waiting list? Sure, there's a (very old) waiting list from the summer of 06."
Where did you get this information? Just make it up?
I called this summer for a particuler unit style above a certain floor and they put me on the waiting list. Guess there is one that is more recent than summer of 06.
Posted by: anon at September 21, 2007 9:25 AM
SFO is starting to look like Miami. With most of the financing falling out, or the lenders doing the financing going out of business it's not a surprise to see people trying to get out early to save their shrits. When it actually comes time to close that's when it will be really bad. Ain't seen nothing yet.
Posted by: Larry at September 21, 2007 9:57 AM
"Where did you get this information? Just make it up?"
From the sales office. When I went in last June (06), they had a 2 page waiting list. They still call me and I'm only on that list from June. Where else would they get my name and number?
Anyways, they haven't called in a few months, but they used to call me about once a month seeing if I'm interested in any particular unit and/or floor. Maybe there's new list, who knows?? But if the sales office is smart, they would keep that old list in case there's more fall out...
Posted by: missionbay res at September 21, 2007 10:06 AM
"From the sales office. When I went in last June (06), they had a 2 page waiting list."
They probably have waiting lists for certain stacks and floors while they still try and call the old lists for units that aren't that desired. I still get calls from Infinity from when I was on the list last summer but the units are not that great or too expensive.
Posted by: anon at September 21, 2007 10:13 AM
This is typically called selling on assignment, very commmon elsewhere. Almost normal anywhere outside of San Francisco.
Posted by: Observer at September 21, 2007 10:36 AM
"When it actually comes time to close that's when it will be really bad. Ain't seen nothing yet. "
Anyone know when all of these close (1 Rincon, Infinity, etc.)?
Posted by: phatty at September 21, 2007 10:59 AM
I am the actual "contract holder" of this premium view unit on the 47th floor. This is a "golden opportunity" for someone to pick up a highly coveted "02" floorplan in this remarkable building. If you weren't there the very first day these units were released last summer - you missed out, because the entire "02" stack sold out entirely on the very first day of release.
At $1,595,000 this "contract" is hardly worthless. This is one of the finest view units in the entire city with spectacular floor to ceiling Bay bridge & water views from every room in the house. This is a "cutting edge" highly desirable building. The market has spoken: These units were "snapped up" within a matter of days at an unprecedented rate that this city has never seen before. The "interior" of these units are equally impressive. The ONLY reason that I am looking to assign/sell my unit is that MY OWN CIRCUMSTANCES & PLANS HAVE CHANGED since last summer. I am not looking to get out of my contract because I think that the unit is now over priced. In fact, I believe that this unit is UNDERPRICED. (And I'm a licensed real estate broker). Look around to see what other units are currently being listed for at nearby comparable buildings.
I just started "quietly" putting the word out there the other day that I am interested in assigning my contract - and I have already received several serious inquiries. I don't expect this unit to last long.
Posted by: Darren Miller at September 21, 2007 11:02 AM
I can be reached at (415) 939-3003 if anyone is interested in this "unique opportunity".
Posted by: Darren Miller at September 21, 2007 11:09 AM
" The market has spoken: These units were "snapped up" within a matter of days at an unprecedented rate that this city has never seen before."
That was last year's market. there's a completely different market now. Good luck with your sale
Posted by: Spencer at September 21, 2007 11:13 AM
I'm sure Darren will jump back in here but I think Spencer is not correct. There is still a very strong market for this type of property. I hope Darren will update us on what happens.
Posted by: anono at September 21, 2007 11:20 AM
Imagine that? A realtor stating that a property he is selling is underpriced and isn't expected to last long.
I thought those who bought on the first days were supposed to be something like 10-20% under what later units sold for. If so, Wow! If it sells at all, it means everything that sold after the first few days is now 20% underwater.
Posted by: tipster at September 21, 2007 11:23 AM
I can't help but think that maybe your "OWN CIRCUMSTANCES" have something to do with the fact that the market is collapsing, and as a real estate broker the next couple of years aren't going to be fun ones for you. But I don't think you'll have a problem getting out of this - you're smart in that you're doing it early before the other speculators wise-up get out, and you're not shooting for a profit. Basically, I think you're the winner of the walk-away-from-rincon race, and your reward will be your deposit. Congratz.
Posted by: smarty at September 21, 2007 11:24 AM
Stop drinking the Hatoraid. Flame me all you want, but this is an excellent deal for anyone willing to step up to the plate.
Hater Nation be damned! Bring the flames!
Posted by: Paul Hwang at September 21, 2007 11:33 AM
"Stop drinking the Hatoraid. Flame me all you want, but this is an excellent deal for anyone willing to step up to the plate.
Hater Nation be damned! Bring the flames!"
haha! I can't be believe you wrote that. Almost made me drop my drink. Yep, people have to get off that Hatoraide!
Posted by: Ryan at September 21, 2007 11:42 AM
Darren - that unit is priced well (in fact, probably underpriced) and you should have no problem finding interested parties at that price. My question is, Will the developer allow this? and if so, how?
Posted by: rincon at September 21, 2007 11:59 AM
"I can't help but think that maybe your "OWN CIRCUMSTANCES" have something to do with the fact that the market is collapsing, and as a real estate broker the next couple of years aren't going to be fun ones for you."
Give the guy a break. Does it make you feel better to make the prediction that this guy is lying and is having financial issues rather than just trying to assign his contract without losing money? Haters will always be losers.
Posted by: anon at September 21, 2007 12:07 PM
I thought the first day blowout represented great deals--instant equity! But now, a year later, it's the same price? What gives?
When I visited ORH I wasn't, frankly, all that impressed by the finishes and everything was an upgrade. And if we're talking about value, for 1.6 million the floor plan isn't that great. The balcony off the kitchen? No eat in kitchen? Not much closet space, smallish master bedroom.
Posted by: Mike at September 21, 2007 12:13 PM
"Stop drinking the Hatoraid. Flame me all you want, but this is an excellent deal for anyone willing to step up to the plate."
On the phone with my lender.........
Posted by: anon at September 21, 2007 12:19 PM
No doubt it's a spectacular unit, but 1,595,000 for a 1300sqft unit = ~$1223/sqft.
The market has changed since last year and it'll be very interesting to see if someone ponies up for a unit with nice views, but no deeded parking.
I personally hope someone does take it. A buddy of mine reserved a corner unit at Infinity above the 32nd floor with water and bridge views for $1000/sqft. He'll be very happy if someone buys it...
Posted by: missionbay res at September 21, 2007 12:24 PM
Most real estate "experts" predict that SF real estate prices will soften by 5-10% over the forseable future. (That's probably realistic - and not that big of a deal in the grand scheme of things). Most people buy real estate for the long-term. Considering that these units were significantly "underpriced" to begin with (how else can you explain the fact that the ENTIRE 60 STORY building sold out within a matter of days)-even if prices do soften, if a unit is "underpriced" to begin with, you ought to be in good shape over the long haul. The key is not to overpay to begin with.
The SF Bay Area has one of the strongest economies in the entire nation. High paying technology jobs at the likes of Google, Oracle, Apple, and Genentech etc. will mean that there WILL be buyers seeking desirable new condos - especially ones with great freeway access to the South Bay & Silicon Valley.
I'm seeking to assign/sell my "purchase contract" at this time because the unit is still upgradable with design center options for the new buyer, but only until Oct. 11. (i.e. a very good thing!).
Lower floor units are expected to be ready for occupancy beginning in January 2008. Upper floor units, will be in phase 2, and are expected to be complete in the Spring/Summer of 2008.
Posted by: Darren Miller at September 21, 2007 12:26 PM
I am loving the hater-hating.
Posted by: will_h at September 21, 2007 12:31 PM
I have a purchase contract for a 20ish floor 2-2 unit at ORH (06 stack) but I'm not a flipper. I've got a 5-7 year horizon and was able to buy at $995K.
Even so, there's no way I would have reserved my unit (even with what I knew back in June 2006), with an expectation of being able to successfully flip (even if I was on the 47th floor and in the 02 stack, which I agree is phenom).
I tell ya, Darren's got some b*lls.
Posted by: RinconHill_Res at September 21, 2007 12:37 PM
Darren (or Paul Hwang), just curious -
Infinity gives at least one deeded parking space per unit. To give up the space, lowers the purchase price 75k.
OneRincon has no deeded space, or even a self parking option. Does this make OneRincon units 75k overpriced when compared to Infinity's pricing (i.e. 2 comparable units at both complexes should have a 75k difference)?
Thanks in advance for your opinion...
Posted by: missionbay res at September 21, 2007 12:38 PM
Mission bay res
It's hard to believe someone got a unit on the 32nd floor of Infinity at 1000 psf. Even at the beginning, those units were priced much higher, and now they are 1500+ psf. Care to provide any specifics? If they did, then they got a great deal - period.
Posted by: nathan at September 21, 2007 12:38 PM
It's smart to try to sell or try to pass off the contract now? Pfffft! Smart is to have foreseen this a year ago, before plopping down that nonrefundable deposit. The "change in circumstances" is that the real estate market is still going to hell at lightning speed for the next few years. Why else would the feds try to intervene by lowering rates without flat out bailing out the suckers of the creative financing of the past few years.
Posted by: S&S at September 21, 2007 12:39 PM
I don't hate you, your profession, the loom of One Rincon, nor the prospective assignment of your contract, but your use of quotes for emphasis *is* raising my hackles.
Unless our kindly host mentions a private email confirmation of your identity, I'll think we're being trolled.
[Editor’s Note: We appreciate the skepticism, but we can confirm that Darren is not a troll.]
Posted by: delancey at September 21, 2007 12:43 PM
It's not necessarily the 32nd floor (it's in the 30's). I'm just preserving the privacy of the buyer :-)
If you got in the first 2-3 days, there were units above the 30th floor going for $1000-1100/sqft. Those units sold out the first week and pricing went straight up. Comparable units at Infinity are selling for $1200-1400/sqft if there are any left...
Posted by: missionbay res at September 21, 2007 12:46 PM
"Does it make you feel better to make the prediction that this guy is lying and is having financial issues"
Yes, yes it does. Why? Because hatemongering and the spread of panic and fear helps fuel a crash and drive prices down faster so people like me who couldn't afford to live in an SF paytoilet may finally be able to afford something. :)
Posted by: smarty at September 21, 2007 12:47 PM
"Why else would the feds try to intervene by lowering rates without flat out bailing out the suckers of the creative financing of the past few years."
S&S, the fed didn't intervene to bail anyone out - they lowered rates so the housing "correction" (ie bust or crash) doesn't bring down the rest of the economy with it. The fed realizes these people, and the housing market, are screwed and beyond help.
Posted by: phatty at September 21, 2007 12:54 PM
I'm with delancey...somebody is trying to stir things up on a quiet Friday afternoon....
Posted by: Dude at September 21, 2007 1:11 PM
What is it about 1Rincon that creates such strong emotions? I can't think of any condo tower that has so much negative and positive publicity in this city.
Posted by: anon at September 21, 2007 1:20 PM
This reminds me of some investment advice I received as a child. I'm not even sure if it's applicable, but I thought I would share to lighten the mood.
"When things are good, buy stocks. When things are not so good, buy houses. When things are worse, buy gold. And when things get really bad, the best thing to buy is a gun."
Thank God its Friday.
Posted by: tbone at September 21, 2007 1:26 PM
"What is it about 1Rincon that creates such strong emotions? I can't think of any condo tower that has so much negative and positive publicity in this city."
I heard it was built on an old ancient Indian burial ground... and now the ghosts from that grave will forever haunt all of San Fran....
Posted by: smarty at September 21, 2007 1:34 PM
Wiseass award of the day goes to Smarty!
[Editor’s Note: We’ll agree. And now back to the point of our post…]
Posted by: Observer at September 21, 2007 1:49 PM
Folks, there’s a reason we originally filed this one under “Interesting Opportunities.” If you believe in the building, and like the floor plan, then it is (and as a plugged-in person you now have the number to call). And if not, at the very least it's another interesting opportunity for some unique insight (into One Rincon Hill) and discussion (about the market).
And we'll confirm: Darren is not a troll (and we don't think we're being taken for a ride).
Posted by: SocketSite at September 21, 2007 1:56 PM
The market is falling at lightning speed. Really? Yes. (Insert redfin link to Excelsior, Bayview, or outmoded SOMA loft property here)
Posted by: fluj at September 21, 2007 2:21 PM
What's wrong with people? One guy wants to sell his unit. What's the big deal with that? How many units are in Infinity and One Rincon? Among those dozens(hundreds?) of households, you don't think there is a possibility that someone would really have something going on in their lives so they want to get out of the contract?
Not everything is about the market, you know.
For example, 1300 sqft is not that big. If the couple is now expecting a baby, you don't think they would re-consider their decision?
No, I don't know Darren. I don't even care about any of the Soma high-rise developments (since I like big SFR). I just cannot help it when people get mean.
Posted by: John at September 21, 2007 2:25 PM
I'm sure you're right John and this is an isolated incidence; and we won't see a flood of people running from their deposits by the time close rolls around.
And no fluj, clearly the SF market is not falling, nor will it. It's completely immune. After all, the whole rest of the country may crash, but I'd still prefer a $700k windowless efficiency in the heart of Nob Hill over a $300k Berkeley mansion that's 10 minutes away via Bart. I mean...we're talking Oakland here people - they couldn't pay me to live on that side of the Bay.
Posted by: Smarty at September 21, 2007 2:39 PM
Oh, I think Darren has a pretty good chance of finding a greater fool to unload this contract on and his downside is only 65K.
When I really want to indulge in schadenfreude I check out http://flippersintrouble.blogspot.com/ , a list of MLS entries in the sacramento area that are currently for sale for less than what was paid a couple of years ago. Todays first listing on the site is for sale for 799K, bought in february for 1.25M
Posted by: diemos at September 21, 2007 2:44 PM
I'm not saying it's immune. The rest of the country, eh? No. There are numerous regions and cities that are still going pretty strong. It has to do with, I don't know, supply and demand? But feel free to insert formerly overpriced now 10-15% down Silver Terrace property as proof if you like. You can't get a mansion in Berkeley for 300K, either.
Posted by: fluj at September 21, 2007 3:10 PM
I certainly don't fault anyone for selling their unit before they get into any financial trouble. Those people are the smart ones, instead of the people who stick their heads in the sand and then wonder what happened when their lenders foreclose.
However, I could do without the overtly sales-speak from the seller/realtor about this unit. A little less schmaltz would go a long way.
Posted by: Lori at September 21, 2007 3:17 PM
Yes, it does have to do with supply and demand. When the supply in one region becomes significantly cheaper than a region with high demand, demand is guaranteed to adjust. Don't misinterpret the lag as some sort of golden immunity. Sales in SF are down 30% and the prices do continue, for the most part, to stubbornly hold unlike most everywhere else. Nowhere since the invention of the bartering system has a scenario like this not ended with an eventual price decline. And the more sellers continue to allow inventory growth by not lowering prices enough to unload, the harder hit they all will be.
Of course, any SF real estate broker or person with vested interests will tell you otherwise - and they are probably real good sources to put faith into on the subject matter.
Posted by: smarty at September 21, 2007 3:26 PM
If you read my initial post, I reacted to the guy who said prices are declining at lightning speed. That just plain ole is not happening.
Sales are down. But are they down in central, desirable areas? I don't see it yet. (See the market research I did on the second lede of this blog. The guy was trying to assert that there's a languishing trend for big ticket SFRs -- not true.) http://www.socketsite.com/archives/2007/09/speaking_of_aia_recognized_homes_281_chestnut_hits_the.html#comments
So yeah, it's stubbornly still holding strong here. Not to say it won't decline ... but two years into "the bubble is about to burst" later, is it fair to still reserve the right to say "I told you so." It's not. And it's especially lame when it hasn't even happened yet.
Posted by: fluj at September 21, 2007 3:36 PM
I also dispute that outlying areas have dropped in price or demand. Not the more desirable parts of Alameda, Marin, Santa Clara, or San Mateo counties. They're holding strong too. Sonoma, Napa, and CoCo have dropped in price and demand tho, that's true.
Posted by: fluj at September 21, 2007 4:02 PM
hmmm.... well if you really think that nowhere around here has dropped in price or demand, then I can only conclude that you must either be a broker or [Removed by Editor]. I won't argue that the high demand places are still getting grabbed quickly at high prices, but everything aside from those are struggling. Go look on the mls at all the 'reduced price'. Even places in the heart of SF are effected - I believe Socketsite has an article about 733 Front. That place is prime - and the last time I walked by, they were begging like the homeless for an offer. In the market of '05, the building would have sold out 4 months ago.
Posted by: smarty at September 21, 2007 4:43 PM
That's my point. The high demand areas are still going for big money, and fast. If that is a sign of a rapidly falling market I'll be a monkey's nephew.
I never said anything else. And some of those areas are not in SF, either. Desirable outlying areas are still getting snatched up. Yes, condos, and small homes that need work -- even in desirable areas -- these can linger in this market.
I'm a realtor bro. Never said I wasn't. i think it's fairly obvious from the information I've posted that I am one. But I could care less about trying to sell anonymous people on something. It simply bothers me when people try to pass off falsehoods as, at this point GIVEN, truths. Like it's a given we're tanking? Seemingly 50% of the folks on here believe that to be true for some reason.
Posted by: fluj at September 21, 2007 4:58 PM
Admittedly not anybody's business, but it might curb conjecture if Darren could share the reason that he'd like to get out of this "underpriced" contract?
Posted by: Dude at September 21, 2007 5:21 PM
"When I visited ORH I wasn't, frankly, all that impressed by the finishes and everything was an upgrade. And if we're talking about value, for 1.6 million the floor plan isn't that great. The balcony off the kitchen? No eat in kitchen? Not much closet space, smallish master bedroom."
Looking closer at this unit, I tend to agree. There's little closet space and if I put the dining set next to the kitchen near the window then access to the balcony will be blocked.
It's an odd location to place the balcony door.
And for 1.6M, the plan is rather cookie-cutter...
Posted by: missionbay res at September 21, 2007 5:26 PM
This might be a bit off the subject also, but looking at the floorplan, what is the point of a balcony if it is as tiny as the one off the kitchen? I agree with Missionbay that I would rather have an eat in kitchen.
Posted by: anonoldtimer at September 21, 2007 6:01 PM
A little off topic, but did anyone get the sense that Darren doesn't fully understand the usage of quotes? Some of the words he put in quotes signify sarcasm... I had a hard time telling if he was being serious or not in some of the sentences!
Posted by: Scott at September 21, 2007 6:02 PM
If I lived on the 47th floor, the last thing I would want would be a balcony. Yikes!
Posted by: bgelldawg at September 21, 2007 6:30 PM
Can someone explain why the 2 series is better then the ones with the golden gate view? Seems like it'd be good to wait for those if you can get a high floor.
Posted by: Larry at September 21, 2007 7:33 PM
Everything else aside, Plan 2 has been the most sought after 2bd floor plan at 1Rincon. The 02 corner stack units in the second tower will face the hill and not have any water/bridge view. This floor plan doesn’t exhibit a dramatic or unique layout, but it is a floor plan that works and for some probably works well. This unit is more than fairly priced in comparison to what you can buy elsewhere with $1.6m.
Comparable units in the teen floors at the Brannan are still asking anywhere from $1.6 to $2mil. One of the last 3bd (1628sq.ft) units in the 30’s at the Infinity just went into contract at $2150 psf ($3.5mil). This was not the most expensive unit sold.
Remember most of these higher price units at the Infinity sold as prices were being raised many times after all the news of mortgage and credit tightening came out. I was reading a thread in the archive here from last summer when these developments just started selling. Some people thought they were so overpriced, especially the Infinity. People were randomly “predicting” that by summer 2007 these condos would sell 10-20% below first release prices. Numbers are out, prices are not down but up more than 20% since first release, at least so at the Infinity. Nothing has been closed yet, all we know is that people kept putting down non-refundable deposits in the rising trend of prices in these new developments given all the negativity around. So why not wait 4-6 months and see if either this “collapse” finally comes, or perhaps it’s really like a normal market in this particular housing segment. If you are still using extreme terms such as "collapse" or "skyrocketing" to forecast what's gonna happen in the reasonably near future, whatever information you are exposed to is probably media based and very limited.
Posted by: blahhh at September 21, 2007 8:16 PM
I am the "purchase contract holder". My offer to sell/assign my interest in this unit is real, and everything you've read from me is accurate and correct, except that the amount of my deposit is $67,091 not $65,000. (This is an interest bearing escrow account that continues to accrue interest).
I've had MANY phone calls and legitimate inquiries from both Realtors and prospective home buyers directly, today alone, as a result of this posting. (Again, this indicates how attractive and appealing these units are in the marketplace).
One homeowner out of 370+ makes a decision to sell (a year after getting into contract) and the whole world is coming to an end? Hardly. Real estate prices aren't going to zero. Everyone take a "deep breath". People come & go, change jobs, people move, get married, have children etc.
The "logistics" of assigning this contract are really quite simple. The developer IS allowing current contract holders to amend the original purchase contract to add a co-buyer(s). The co-buyer(s) must have formal loan approval from 1 of the 3 developer approved lenders before this is allowed. The new buyer(s) then gives me a check for the amount of my escrow deposit. I then authorize the title company to add the co-buyer to the escrow account. We close escrow together, and then I immediately grant deed off of title. I "recapture" my initial deposit, a new buyer procures the unit at a very attractive price, and the developer gets his money right on schedule and as originally planned. It's a WIN/WIN/WIN scenario!
Keep the calls coming. I can be reached at (415) 939-3003. I WILL assign/sell my interest to the first party to step forward and offer me $67,091. This IS a unique & rare opportunity to acquire one of the premium "02" units in all of One Rincon Hill, at a remarkable price of only $1,595,000. Broker participation is welcome.
Posted by: Darren Miller at September 21, 2007 8:33 PM
Folks don't quite get what is happening with our economy.
The middle class is trashed; middle class housing will drop like a stone, and we'll all give up and go crawl under a rock.
High end housing will hold its value.
This is the era of globalization and if you ain't a winner you a loser, big time.
It just so happens that in SF there are a lot of winners.
They don't live in Excelsior, Silver Terrace, or Bay View, though. Those places will see severe declines.
Now you know!
Posted by: dissent at September 21, 2007 8:58 PM
The funny thing is, if this happens during up market, the bears will scream "this is a damn flip. this price is 10% underpriced to attract bids! Damn flippers, he will make 10% without the unit changing hands."
Well, I still have the feeling Darren will pocket some profit (meaning it will go over asking).
According to the bears, nobody should ever sell. If you sell during a "down" market, that proves it is going down. If you sell during an up market, you are too greedy.
And meanwhile, we are doing a great marketing for Darren.
Posted by: John at September 21, 2007 9:29 PM
great clarification darren. i wonder how many other realtors are the buyers at ORH? i have to imagine there were lots of you sitting on lots of cash after having made so much money during this bubble.
Posted by: james at September 21, 2007 9:53 PM
fluj – the market isn’t rapidly falling but you might be a monkey’s cousin. you write that prices are up in desirable neighborhoods but you haven’t provided any proof other than the pace of sales. high demand places might be going for big money but that doesn’t mean they wouldn’t have gone for even bigger money last year.
Posted by: julf at September 22, 2007 9:54 AM
I could show you dollars per square foot comparisons if you like. Area 7, in particular, is going bananas. Large condos in areas 7 are at an all time high. I don't care if you don't believe me. It's Saturday and I don't feel like doing research.
But I think perhaps spring '06 was the zenith. Comparing to that time to now (a time when lot of people were erroneously hollering bubble) is not what I tried to do. I did two things. One, I refuted the point that the market is falling with lightning speed. Two, I refuted the point that high priced properties are languishing. That's it. In my personal opinion, the market is going to take a small hit next quarter. We aren't there yet, tho.
On the other hand, maybe it won't. The person who hinted that central San Francisco might well exclusively become an enclave for the rich is probably on to something. It's halfway there already. Too bad culture rarely springs from the minds of the well-off.
Posted by: fluj at September 22, 2007 10:26 AM
Darren says that he will transfer his interest to the first party to offer him $67,091. I'm sure he will. But let's face it, if he doesn't transfer his option, he loses the entire deposit. If anyone is actually interested in buying this option which is already deep under water, I suggest that you offer a miniscule fraction of the asking price. Darren will take it (although, he will certainly deny that publicly, as he should since he is trying to get the highest price). He's smart (as is evidenced by his getting out in front on trying to dump this now-worthless contract) and he will take something rather than being left with $0 once the decision date to close or walk away comes.
There is no way the market price for this 1300 sf condo is $1.6M. Darren gambled on a rising market but the market turned. He knows that -- that's why he is selling.
Posted by: Trip at September 22, 2007 1:37 PM
Darren, will you come back and tell us what ultimately happens? Thanks!
Posted by: fluj at September 22, 2007 3:27 PM
I think it is telling that Darren as a professional "realtor" is not asking for "more" then the "original" price. As a "professional" surely he would "maximize" the value of his "unique opportunity" if he "could". Instead he is simply "trying" to not lose his "deposit". I doubt he is doing this out of "charity" and "compassion" for underpriveledged opportunity seeking "professionals". I think the more likely scenario is that Darren has "determined" he is unlikely to get "more" out of this "market".
Honestly, annoying quotes aside, I wonder if it wouldn't have been a better strategy to either raise his price and try to foster the illusion that the property has increased in value and hope to find a greater fool, or lower his price and acknowledge that the value has dipped and hope that a couple buyers will bite trying to take advantage of someone in panic and hopefully bid it up enpugh to make him whole. Just leaving the price as it is is the poker equivalent of checking into a raise. In the context of the
current market it is communicating weakness: he is clearly just trying to get his money back. That's not consistent with a confident or motivated/desperate seller. That is consistent with a dissapointed investor (If I can just get my money back I swear I'll never gamble again). The fact that he is a realtor and is in a position to gauge the value of his investment only bolsters this viewpoint.
Sorry for the speculation about your deal Darren, as I do hope things go well for you, but your decision to market your property here did open it up for discussion. If I were you I would go into ignore mode and stop posting here, as it is telegraphing an undue amount of interest if the property is as valuable as you claim. Good luck!
Posted by: missionite at September 22, 2007 5:07 PM
It's a fair price for an exceptional property. It doesn't matter if 1,000 people think it is too expensive. All that matters is one buyer is willing to step up. And I am pretty sure that will happen. Prices are set by people that throw down cash, not those who wait on the sidelines. And so far prices for nice properties in SF are pretty much at all time highs. Each day, the bottom of the market approaches, and we are one day closer to rising prices again. This window of supposed discounted pricing is shrinking by the second.
Posted by: anon at September 22, 2007 7:36 PM
The unit seems really nice, but the living area seems a bit small with the big column right there and fire in opposition to water in the kitchen is poor feng shui.
Posted by: Mole Man at September 22, 2007 7:43 PM
Um, prices are actually set by people sitting on the sidelines.
Posted by: Unowho at September 22, 2007 9:15 PM
"It doesn't matter if 1,000 people think it is too expensive."
"Prices are set by people that throw down cash, not those who wait on the sidelines."
Anon, I couldn't disagree with you more... It SOOO does matter if the majority of people think something is overpriced, and prices are SOOO affected by people believe they become too high and step onto the sidelines.... I think the people that are still buying in the more expensive sectors believe they are immune to these things right now because they are somehow privleged. Unfortunately for them, all real estate is connected - and a drop in the low end will ultimately pull the high end down as well.
Furthermore, I will go on to speculate that since the high end has remained somewhat uneffected and has a delayed correlation with the low end, when the "bottom" does arrive, it will arrive first for the low end, and the high end will continue to drop in the same delayed pattern.
It is possible that medium house prices can crumble while upper house prices climb, but that correlates directly with the gap between the middle and upper class. That gap isn't spreading at an unusual rate - so it's ridiculous to think that house prices can crash for one without hurting the other.
But again, I'm sure you are a realtor and do this professionally - and even though you clearly have monetary interests in the subject matter, you remain completely unbiased. I just analyze this for the fun of it, and I have no $ tied to the housing market.
Posted by: smarty at September 22, 2007 10:24 PM
Do we really know that Darren is the only option holder at 1 Rincon to be shopping around his ware?
We do know that the world is being divided into Richistan and the rest of the world, a linked set of Green Zones, Garden Districts, set amidst a sea of Red Zones, Lower Ninth Wards.
SOMA Condos are largely marketed to residents of Richistan and wannabes while the outer boroughs of SF are tenuously held onto by smaller fry.
The public policy question here, of course, is why is SF entitling the construction of these monstrosities while housing need is underserved citywide?
If we stipulate, for the purposes of argument, as the granular numbers of income distribution are not readily accesssible, that a whopping 13% of San Franciscans can afford to purchase the median priced home, then we can fess up to the fact that fewer than 1% can afford to purchase the median priced home in Rincon 1.
The "rise" in median income is questionable as well. How much is due to SF becoming the hipster bedroom community for Silicon Valley? How much is because of displacement of folks with lower incomes? How much is due to people moving to SF with jobs in SF? How much is due to (hah!) a general rise in incomes?
The well established in Richistan will fare quite well in the aggregate, diversified investment portfolios, etc. Those who are servants to the wealthy, of income and means marginally able to keep a toehold in the Green Zones due to their position in the economy (in the RE industry, for example) will find themselves unable to keep up with the wealthy.
The bottom will fall out of the real estate market as a whole, and the bottom will fall out of the high end market as well, but those above the bottom in that market are situated as to weather the storm, if they can even discern that there is a storm going on at all.
Posted by: marc at September 24, 2007 7:56 AM
Perhaps 13% of San Franciscans have the income where they can afford to purchase a home with 35% of their income, but can they get a loan?
This is too rich:
Frustrated New Yorkers Grapple With Loan Rates
By CHRISTINE HAUGHNEY
Published: September 23, 2007
A MONTH after the mortgage markets started to crumble, mortgage brokers and lawyers say that New Yorkers are finding it harder than ever to get mortgages and are increasingly backing out of deals. This lending slowdown has seemed to affect a broader segment of New York City apartment hunters, many of whom are now waiting to see if prices drop because of the mortgage crisis before they commit to buying.
Apple Mortgage Corporation, helped one client, Freda Gimpel, pay out less monthly than she had originally expected. But he stressed that the bargain occurred because she financed the deal with a conforming mortgage, a loan that falls under guidelines set by Fannie Mae and Freddie Mac. The ceiling on these loans is now set at $417,000, and the rates they carry overall have been dropping. Larger loans are considered jumbo or super-jumbo in industry parlance.
Mr. Barenblatt pointed out that many buyers need to borrow far more than $417,000 — especially in Manhattan, where the average price for an apartment in June was $1.3 million.
“She came out ahead,” Mr. Barenblatt said of Ms. Gimpel. “But it’s rare.”
Adam Leitman Bailey, the head of a real estate law firm, said that in the last three weeks, five buyers represented by his firm had backed out of deals for apartments — ranging from $595,000 to $4.5 million — in Manhattan and Brooklyn.
“It’s not only the financing,” Mr. Bailey said. “It’s the fear. They fear that prices are going to go down or we’re going to have a recession.”
Other buyers have backed out of deals because they can’t afford their higher mortgage payments and they think prices may drop later this year.
Posted by: marc at September 24, 2007 8:15 AM
I've seen a lot of places on the SF MLS go from in contract to back on active in recent weeks. I can only assume that SF buyers are also unable to line up financing (or they are just backing out for other reasons).
There was another relevant article in the NY Times on Sunday -- this one those who bought at the peak now being reluctance to sell at the inevitable loss, with the result being they cannot sell at all.
See "A Reality Check for Home Sellers" at nytimes.com. An excerpt, noting a study of the Boston condo market in the '90s downturn:
From 1989 to 1992, prices in Boston fell sharply, with condominium prices dropping as much as 40 percent. For a great many of those who bought condominiums during that period, selling could be done only at a significant loss. And, basically, many people refused to sell.
Their study, “Loss Aversion and Seller Behavior: Evidence From the Housing Market,” appeared in The Quarterly Journal of Economics in November 2001. The professors gathered data on almost 6,000 Boston condominium listings from 1991 to 1997 and showed that for essentially identical condominiums, people who had bought at the peak and were facing a loss generally listed their properties for significantly more than those who had bought at a time when prices were lower.
Properties listed above the market price just sat there. In the Boston market over all, sellers listed their properties for an average of 35 percent above the expected sale price, and less than 30 percent of the properties sold in fewer than 180 days. In other words, much of the market went into a deep freeze as many people held out for market prices that no one would reasonably pay.
. . .
What is to be done? Well, if you are holding out for an above-market price to recoup your losses, perhaps you would do well to hear the advice that Professor Mayer gives his own family members.
“If you want to sell your house then you list it at the market price and you sell it,” he said. “If you don’t really want to sell then don’t put it on the market. But don’t say you want to sell and then set the price so high that you spend the year cleaning up every morning, having people walk through your living room and look in your medicine cabinets and reject you. That’s just painful — and expensive.”
And looks an awful lot like SF 2007 . . .
Posted by: Trip at September 24, 2007 8:52 AM
Living in sf is a priviledge, not a right (or a birthright). If you can't afford it, sell to someone else and move to somewhere you can afford. Alternatively, acquire better skills and increase your productivity and one day you will be able to afford it. But please stop whining.
Posted by: jojo at September 24, 2007 9:12 AM
I see a lot of movement, tho, Trip. Don't you?
Posted by: fluj at September 24, 2007 9:36 AM
If you all don't want to live in a city where burgers run for $20, where you have to drive to Hayward to get your car fixed, where the people who change the bedsheets at the hotels have to drive from the central valley each day, then keep on promoting the fiction that a city should only be accessible to those who can afford it.
High labor costs due to commutes for low paid workers would drive up the cost for all products and services that depend on those workers. Further, it is jobs not housing that pays the taxes which provide services. Higher labor costs will quite probably result in fewer workers doing more work and an aggregate reduction in payrolls hence lower tax takes.
If you think that the MUNI, SFPD, DPW and DPH are underfunded now, then just wait until we live in luxury condolandia.
Posted by: marc at September 24, 2007 9:41 AM
Please stop with your fear-mongering. People don't have to OWN to live here. Almost 70% of the population rents. A very, very large portion of those rental units can NEVER be converted to condos. Wake up to the reality that it is CHEAPER for many people to live in SF than it is to live on the peninsula or the South Bay.
Posted by: marc checker at September 24, 2007 9:52 AM
Fluj -- the areas and properties that I've been keeping an eye on are not moving at all. I do not even pretend to claim I am familiar with what is going on city-wide, but I've been watching places in Noe Valley, Cole Valley, the Haight, the Castro, and Hayes Valley, and I see properties at every price level just sitting there. The exception seems to be condos in the $400K - $650K range -- those seem to be moving okay, at least in these areas. Again, all this is based on nothing more than the small segments I've had my eye on. It will be interesting to see some official stats on sales volumes since the mortgage blow-up -- what I seem to be seeing is that it is hard to sell places when buyers can't get financing.
Posted by: Trip at September 24, 2007 9:58 AM
San Francisco residents pay a smaller fraction of household income in rent than do Seattle residents-- 34% of San Franciscans (vs. 38% of Seattle residents) pay >35% of their household income in rent.
Posted by: Dan at September 24, 2007 10:15 AM
I don't know. I wrote an offer for clients on 755 Sanchez street, a small home on a great Liberty Heights block with expansion possibilities, listed at $1.084M. We wrote 11% over. Apparently somebody came in 10 percent higher than that.
But that's just an anecdote.
For a better dataset, I just did a search for those areas. 163 properties are in contract, pending or have sold since August 10. 144 for are on the market. That seems sort of normal? But I could be wrong.
In general, it seems like houses up to 1.6M or so in those areas will fly off the shelf. If they cost more, they better be pretty doggone nice in order to sell quickly.
For condos, 78 condos in those areas have sold since 8/10. I feel like stuff will go fast as long as the sellers aren't too greedy?
Posted by: fluj at September 24, 2007 10:29 AM
I disagree with a point you make. richistan or not, it is essential IMO to keep building in SF.
what better way to have affordable housing, then to increase housing supply?
A thought experiment:
Build 1,000,000 new luxury units in SOMA.
if we did this, there would be enough condo supply in SOMA for every resident of SF.
Sure, you'd get migration of rich immigrants and other people from elsewhere... but eventually housing prices overall would begin to fall...
basic supply and demand.
for a real life example of this look at San Diego and Miami. both "overbuilt" and now you're seeing a lot of those homes go into foreclosure and selling for hundreds of thousands of $$$ less than previously.
current homeowners there are upset because they gambled on eternal 20% appreciation, but "overbuilding" stopped that quickly.
same thing can happen with SF. build more units (in a planned way) and housing prices will come down.
the real problem: homeowners in SF won't let more building occur, causing a FAKE "shortage of land". but SF is not that dense, and could easily accomodate more people/square mile.
Posted by: ex SF-er at September 24, 2007 10:37 AM
Dan: "San Francisco residents pay a smaller fraction of household income in rent than do Seattle residents-- 34% of San Franciscans (vs. 38% of Seattle residents) pay >35% of their household income in rent.
Thank you, Harry Britt, for rent control!
Ex-SF-er: "what better way to have affordable housing, then to increase housing supply?"
Let's see, since 2000, the population of SF has dropped by tens of thousands, more than 50K at its peak, we've built 15,000 or so new units and the median price of a unit has almost tripled from $275K to $780K or so.
How much housing would need to be built to see downward pressures on price? How long would that keep prices down and how far would price fall?
What would the city look like after that kind of building boom?
1m new units? Where are you going to come by the infrastructure, sewers, water, electricity, transportation, services, to accomodate that kind of growth. Note: current infrastructure is decrepit under current circumstances.
Posted by: marc at September 24, 2007 10:42 AM
Some of you should really talk to some low income developers around town. One friend of mine is currently stalled from bringing 30 low income units into existence because of a neighbor. She is a longtime subsidized housing person herself who doesn't want "poor people" living near her.
It's stuff like that, and the city council, that really stops things from being built. Stop blaming homeowners. Homeowners usually just don't want their views blocked, and views aren't sacred here ....
Posted by: fluj at September 24, 2007 10:43 AM
uhh... SF is not that dense? Normally I only like to side with the doom & gloomers (cause they are currently right), but I'm gonna have to step in on that comment - I think besides Monte Carlo and Vatican City, SF is just about the most dense city in the world. It's 7 x 7.... I grew up next to a ranch larger than that.
Posted by: smarty at September 24, 2007 10:46 AM
SF is the second densest city in America. Look it up.
Posted by: fluj at September 24, 2007 10:53 AM
do your homework.
SF is only dense by American standards.
Almost every major WORLD city is significantly more dense than SF.
In fact, many Europeans are suprised by the LACK of density of SF.
I'll use Paris (because I've lived there).
Density: (as of 1999 census, the latest):
63,321 people PER square mile.
SF is 49 square miles. 750,000/49= 15,306 people/sq mile.
London, Manhattan, Rome, and countless other European cities are way more dense than SF.
Almost every major asian city is even more dense (Shanhai, Hong Kong, Tokyo, etc)
For a "world class" city, SF is pretty sparsely populated.
SF's "density" and "lack of land" is only a myth of people who don't understand what "world class" cities are really like.
Posted by: ex SF-er at September 24, 2007 10:54 AM
Look at these lists, and remind me again how "there's no room to build" in SF.
I'm not saying SF isn't dense, only that it could easily be denser.
It woudn't even have to destroy the feel of the city... you could restrict high growth to some areas (like SOMA) which have traditionally been a pit.
Make SOMA/Rincon Hill/Downtown like Vancouver... 40 story towers for the whole neighborhood. This would largely unaffect the rest of the city, and allow all the other neighborhoods to remain unique and "historic" . (it would obstruct the view of Oakland for some... I'm sure that would cause fighting)
But Manhattan being manhattan hasn't ruined the Upper West side. Greenwich village is still as quirky as ever.
you could do a similar model for SF.
Or alternatively, you could be more like the Europeans, and have the 5 story building model... no skyscrapers, but much more dense housing. (think of what Paris or Madrid or London look like). this can pack
I know it will never happen. San Franciscans can't think outside of the box, and are too busy thinking of themselves as "so European"
Posted by: ex SF-er at September 24, 2007 11:04 AM
did you see the silver terrace condos' come up recently? high 200's. that has to be affordable for some folks around here.
Posted by: james at September 24, 2007 11:08 AM
I agree with ex-Sf-er on the density issue. Look up:
SF is pretty dense by US standards, but nothing by Asian or European standards. I think the difference has to do with the preponderance of single family homes in SF rather than apartment buildings elsewhere.
That being said, I think it is the medium density of the city that is one of its enticing features. Dense enough to make walking around and public transport viable (if done right), but open enough to not feel overly crowded. Add in the high percentage of parkland (about 20% of its area... one of the highest in the US), and it does feel that the city density is just right.
Posted by: waiting at September 24, 2007 11:09 AM
I am a homeowner and don't oppose affordable project, am helping figure out how to fund AH to scale to the need.
Earlier this month, we stayed at a friend's closet on W. 20th between 8th and 7th in Manhattan. Chelsea is built out to around 50', generally below, rarely exceeding except along 5th Ave and on some corner lots.
The difference there is that there are subways in 8th, 7th, 6th, Broadway and 14th which provide an intensity of transit service that mitigates the needs for an auto.
If SF had that kind of infrastructure, then one barrier to increased residential densities would be removed. But we don't. And if we entitle more and more Rincon I towers, absent that infrastructure, then the new residents will be auto bound and not supportive of new transit investment.
Even if we were to find the $10b+ needed to bring MUNI up to spec, then odds are that once auto bound, always auto bound.
SOMA is not a pit, its our neighborhood and we like it.
Posted by: marc at September 24, 2007 11:14 AM
marc, my comments weren't meant to disparage the residents of SOMA.
Indeed, much of SOMA has become very liveable and very "cool". It has a great location, and would be PERFECT in my opinion to tear down a lot of those warehouses and build instead 4-5 story continuous flats. (optimizing space)
Instead, it was more to discuss how SOMA (or any other neighborhood in SF) could be changed INTELLIGENTLY. this could increase density there, and also create a more neighborhood like feeling.
It wouldn't have to be SOMA. It could be Bayview, it could be Rincon Hill, it could be Seacliff or Pacific Heights.
However, no matter where you propose growth, SF residents in general shoot it down for various reasons.
SF has started some of this growth prospects. As example: the extension of MUNI along King and a lot of the large units going down that area. also the new Rincon Hill developments.
further south could be altered, such as the "state" streets (Texas, Connecticut, Kansas Streets, etc).
In (my) perfect world, we would take some of the transitional neighborhoods, and rezone them so that all buildings were 5 stories tall, with the 1st story being businesses. It woudn't hurt if some of the buildings were 3 and 4 BR units, as that could support families. Every few blocks you could have a 1 sq block park so that you have "green" space.
Thus, you woudln't have the sun-stealing skyscrapers to deal with.
Sure, it would take investment in Public works to make it happen. but some of this can be paid for by taxes of new units as example. And what better time to put in needed infrastructure than BEFORE it is "needed"?
it would also take time. but good city planning takes time to see results.
Posted by: ex SF-er at September 24, 2007 11:39 AM
So where are you going to get your cars fixed if the price of a warehouse building rises to the level of the highest sticks construction?
Where are the businesses that serve the downtown core going to be located if the low value added spaces they use in SOMA are competing with luxury condos?
San Francisco does not have the infrastructure in place to service existing densities. We did have it, but over the past 25 years the culture of fiscal conservativism has led to a depreciation of those assets and their deterioration.
The East Side of San Francisco is shellshocked by the technocratic dicta of the "professional" planners. Most all resistance to development plans is fueled by resentment to this culture.
The culture of Planning, as evidenced by the CEQA group, is full tilt growth. There is friction between the CEQA group and the Board of Supervisors which has overturned many important EIRs over the past few years. What the BofS has not scuttled, the courts have.
The Western SOMA Citizens Planning Task Force is a democratic appointed group that is fashioning an urban plan in sunshine. Compare this to the Eastern Neighborhoods plans which are trying to force market rate luxury housing on us.
If you want people to support something, then convince them that you are correct, don't rely on technocrats to force them. That only engenders resentment.
Please, tell me how we're going to fund the $10b needed to 1) bring MUNI up to spec for its current load and 2) enhance it to the levels that the densities you propose require. Much of the problem is that fed $ for transit don't arrive until first ridership can be guaranteed at a certain level. SF is proposing building out now and then asking for $ to build transit. It don't work that way.
Posted by: marc at September 24, 2007 12:00 PM
I agree with all that you say. You actually prove my point. (except I never said anything about building "luxury" condos... I said to build a million condos... big difference)
All neighborhoods say "not here!" I'm not saying that they don't have the right to say "not here!", nor that I wouldn't also say "not here!" if I lived in those neighborhoods. I also don't blame the various neighborhoods for saying "not here"
The older established neighborhoods, especially those with wealth, have been most successful at stopping any sort of growth (and change). the historic neighborhoods as well.
the newer neighborhoods or those that were previously less affluent are thus the focus of the growth. But most fight it.
and even though they are losing the battle, it is an EXPENSIVE battle for developers and everyone involved, driving up the cost of housing.
and we have huge fighting between local neighborhoods and city/county "planners". It is precisely this yin and yang that makes development in SF so expensive... not the lack of land.
which goes to my original point... if SF wants affordable housing, then they have but to build more housing.
but in the end, SF isn't willing to really make the (very huge) sacrifices needed in order to create affordable housing. (or perhaps more correctly worded: most people want OTHER neighborhoods to make the needed sacrifices).
for my part, the northeast part of the city makes the most amount of sense to develop due to its proximity to downtown as well as BART/Muni lines. it also makes sense to build up along the CalTrain line... if you could do that, many people could live there, and then either walk to work or take CalTrain.
However, I'm perfectly happy with them tearing down every place in Noe Valley or Potrero Hill or Pacific Heights or Sea Cliff (or pick any neighborhood in the city) and replacing it with 5 story European style condos, filled with 2-5 bedroom condos... with the first floors being devoted to businesses...
in this scenario, you would have an INCREASE in business square footage, as well as an INCREASE in living space for people.
but like I said, the affluent areas are more successful at blocking growth, so I'll never see it in my lifetime.
In fact, the ONLY place I don't want to see my growth plan instituted is on my block! (that's a joke)
Posted by: ex SF-er at September 24, 2007 12:23 PM
i would be comfortable with SOMA being completely razed and rebuil;t oii the 4 or five floor condo style as mentioned abve. Right now, especially Western SOMA, is a total dumping ground with trash, homeless, and ugley seedy warehouses.
At elase Eastern SOMA is making improvements in housing and commercial space. Western SOMA as well as the adjacent Tenderloin needs change.
Right now, no families would consider living in this area.
Posted by: Jummy at September 24, 2007 1:30 PM
look at the thread for 1501 Greenwich.
That is the type of high density housing I feel is doable (with signifcant difficulty no doubt) throughout SOMA, Rincon, Bayview, etc. that could still retain the "san francisco" in san francisco.
I feel that if we cleared the hurdles for these types of developments, but made them TRULY entry level and medium level, then we could add affordable housing in San Francisco. maybe even for families to come back?
(example: not making every unit brazilian hardwood and granite counter tops and sub zero fridges)
Posted by: ex SF-er at September 24, 2007 2:15 PM
Sorry to change gears, but has Darren sold his contract for over $100K yet? For as white-hot as the local market apparently is, I'm curious what the overbid was for this in-the-money option.
Posted by: Dude at September 24, 2007 2:37 PM
I think, and a lot of people think, that four to five story condo/apartments along Fulton and Lincoln, on either side of the Park, is the best and potentially the most idea for increasing density. This would be handled with a transit line created on or under one of these corridors. People need to stop voting obstructionist, whoops, I mean progressive tho ...
Posted by: fluj at September 24, 2007 2:41 PM
Funny how this thread got hijacked into a "hate the rich" affordable housing discussion. Everyone should read the SFBG this week to see how truly out to lunch the SF regressive movement is (think no more market rate housing, period).
There's a simple reason housing prices are too high, they aren't building enough housing!
Posted by: Mike at September 24, 2007 2:44 PM
"Sorry to change gears, but has Darren sold his contract for over $100K yet?"
To Tipster's request please do update as to how this plays out! I'd be very wary of committing to 1.6M on this much maligned building. At that price point, a unit has to score all A's across the board and this unit clearly does not. While not all encompassing, my scorecard on the key elements of this unit(relative to similarly priced condos) would read as follows:
Building - C
Location - C
Floor Plan - B+
View - A
Parking - F
Overall - C
That's a big price tag for a C rated space...
Posted by: Willow at September 24, 2007 5:17 PM
"over the past 25 years the culture of fiscal conservativism"
That's the most ludicrous statement I've heard in a very long time. How can you say that with a straight face when our annual operating budget for the City and County of San Francisco is now $6.1 BILLION -- for a city of less than a million residents!
It's more like "culture of fiscal misappropriation" if not outright fraud and theft of our tax money.
I think your blame for underfunding MUNI is woefully displaced. With all the money given to non-profits, like, say, the THC, maybe we should be asking characters like Randy Shaw to fund MUNI.
Posted by: Usually Named at September 24, 2007 6:16 PM
I wouldn't pay too much attention to what marc says. marc is a person who bought a market-rate condo (which was converted from a rent-controlled apartment) and has said many times that all of his investments are tied up in real estate - meaning he has an INCREDIBLE vested interest in stopping all construction of new units - in order to prop up the value of his own and continue to see appreciation. He is all smoke and mirrors.
marc, am I wrong?
Posted by: Bernard at September 24, 2007 7:40 PM
"I'd be very wary of committing to 1.6M on this much maligned building. "
That's funny - where do you come up with this stuff? Much maligned by who? certain socketsite posters?
This building sold out in record time, so it's certainly not maligned in the market. Rincon is an iconic building and Darren's unit represents a premium condo at a good price.
I'll wager a pint of your favorite brewski to any of the Rincon "hater nation" that Darren finds a taker within the next month or two.
Posted by: rincon at September 24, 2007 9:00 PM
OneRincon may be well known given it's prominent location, but it's far from "iconic".
For a residential tower, the architecture blows. It reminds me of the Oracle building in Redwood Shores, stacked up 3 times over. At the very least the designer could been a little more original than copy some office tower and send it off to the city planners.
I do think though, 1.6M is a fair price for a 47th floor water view unit. But at that price, I rather see if I could snag a water view unit at Infinity before committing to OneRincon...
Building design: D+ (a little effort by the designer could've made this a real special building)
Location: C- (any building next to an bridge onramp and 5 lane freeway has to be rated below average)
Floor Plan: B (safe design, bad location for balcony door)
Parking: F (no deeded or self parking? Inexcusable...)
Overall: C- (wonderful views, but not much beyond that)
Posted by: missionbayres at September 24, 2007 9:42 PM
Housing prices are so high because demand is insatiable.
Nobody can present even a thumbnail sketch of an economic model which shows that if we "build out" more housing, how much it would take to see a drop in prices and for how long that supply would depress price.
This is all religious speculation based on the "iron law of supply and demand." Marx had iron laws of history and economics too, "iron laws" which turned out to be false.
Our home was owner-occupied when the owner died at age 98. The probate sale went to serial TIC -> condo converters. We bought the condo after being evicted by the city to build a drug treatment center.
We are in our home for the duration unless you all continue to wreck the city with speculative greed, rendering it unlivable, in which case we'll pull up stakes and move to Portland, OR, purchase a home free and clear with our profit and live a simple life, never to work hard again.
Those warehouses in SOMA are where the culture that made SF an attractive place used to be housed. We on WSOMA intend to do all we can to preserve this unique building typology for the future of incubating arts and culture in SF.
And if you all were to trump WSOMA and zone for 85' in the SUD, then where would San Franciscans who have that 1:1 parking go to get their cars fixed? Hayward? San Carlos? Where would the hotels have their laundries and ancillary services located? Oakland or Brisbane?
No, the city needs a mix of districts and WSOMA is the only one left of its type. We've already taken on 3,000 live work over the past 10 years, doing more than our part. We already have 8th, 9th and 10th streets serving as freeway traffic sewers.
Rezone the Sunset, Pacific Heights or Seacliff for residential high rises and get back to us.
The city is fiscally conservative because it has not passed a new tax, save the transportation authority 1/4c sales tax for more than two decades. In that time, since Fienstein, the city has allowed its infrastructure to crumble. Fiscal conservatives do not allow their capital stock to depreciate to the point of crisis. Fiscal conservatives conserve, maintain their capital resources.
Fiscal liberals like Fienstein and Jordan suck dry capital resources like Reagan did. Note that government has grown under conservative mayors while the quality of service has stagnated.
Posted by: marc at September 25, 2007 7:34 AM
Correction, that should have read "fiscal conservatives like Fienstein and Jordan..."
The main goal of controlling city government is that you get to allocate contracts to your friends, not to actually get anything substantive accomplished.
Posted by: marc at September 25, 2007 8:47 AM
I wouldn't pay too much attention to what marc says. marc is a person who bought a market-rate condo (which was converted from a rent-controlled apartment) and has said many times that all of his investments are tied up in real estate - meaning he has an INCREDIBLE vested interest in stopping all construction of new units - in order to prop up the value of his own and continue to see appreciation. He is all smoke and mirrors.
marc, am I wrong?
Posted by: Bernard at September 25, 2007 10:10 AM
More taxes aren't needed. Revised priorities are. When you have 6.1B to throw around for such a small city with crumbling infrastructure, you know a lot of that money is going into many pockets and not into MUNI and DPW.
Feinstein and Jordan haven't been in power for a very long time here. The blame sqaurely falls on the people in power today. Blaming people who haven't been around for a while is scapegoating at best and being entirely disingenuous.
Non-profits, SEIU -- line them up. They're all pigs feasting at the trough
Posted by: Usually Named at September 25, 2007 10:10 AM
marc, what this city needs most is more fiscal conservatism. Money is spent willy nilly on BS projects all over town with no accountability.
I hate to burst your bubble but Western Soma is the detritus of SOMA and needs to be cleaned and scrubbed. I'm all for leaving some warehouses,and some mixed use buildings, but for the most part there are a lot of seedy clubs and seedy establisments, including the pot clinics, that need to be dealt with for this city to bring in more business and economy and jobs. I don't feel the need for my mechanic or parts dealer, or leather chaps dealer, to be located in SOMA. There are other less prime regions that are further from the city's center where they can locate. This is a prime location and should be cleaned up and look like a prime location. this city is tiny. Driving to Daly City to get my car fixed is not really an issue.
However, i do agree that we need more infrastructure. If we can build more housing, which lowers cost of living, and brings in more jobs, maybe we can get enough tax revenue for better public transit.
I can also rant forever about the need or lack of need for below rate market housing. below rate housing helps to drive up the market rate housing as well.
I'm sure nobody feels to bad for them, but what about the single male or female, or couple who make %80-$130K peryear without an inheritance or proper nest egg? They are screwed in this housing market. Only two ways to get housing in SF, be rich or be poor. Unless we building more market rate only housing and drive the supply side up which will then make housing affordable for middle class.
The demand here is not insatiable. That's just egocentric. people in other areas felt the same way and are finding out a different story now.
proactively deal with the homeless population
Deal with the street drug problem
Build more market rate housing
tear down buildign taht need to be tore down
(why do we even have a preseervation society? London, Paris even New york, I understand, but this city is not old enough for that. everything is new. Some things are just new and run down (e.g. Western SOMA)
Posted by: Spencer at September 25, 2007 10:35 AM
All my savings are tied up in my share of my home. I am now a real estate mogul whose well being is predicated on my real estate portfolio.
It takes decades to draw down capital infrastructure to the point where we are today.
Dianne Fienstien still controls a great deal of federal dollars that do not come to San Francisco for infrastructure.
We are now paying the SFPD $500,000,000 per year--one half of a billion dollars--to not do their job.
Control of those bonds = tax increases is the crown jewel of SF corruption. Check the abuses at the library, rec and park, city college and the like and we'll save some serious coin.
Posted by: marc at September 25, 2007 10:39 AM
This city is 200 years old, Spencer.
I posit that demand is insatiable. We have case studies of augmenting supply, diminishing demand and tripling of price.
Either offer up an economic model that demonstrates how building market rate housing can depress price over the long term or you're just talking quackery.
This city is too important to sacrifice it on the twin altars of economic religion and your desire to profit through social engineering.
Western SOMA is San Francisco. The community process has enough buy-in from a diverse enough set of perspectives that it will be very tough for the real estate lobby to stop our plan.
But not to worry, your own greed has caused credit to dry up, temporarily alleviating the otherwise inexorable pressures on price and land use.
Thanks for being so self centered.
Posted by: marc at September 25, 2007 11:26 AM
Marc wrote: "Let's see, since 2000, the population of SF has dropped by tens of thousands, more than 50K at its peak, we've built 15,000 or so new units and the median price of a unit has almost tripled from $275K to $780K or so."
You can see correlates of the population drop earlier this decade in average condo price and in average rents.
The average price of a condo in SF went down, from $652k in 2000 to $613k in 2003, as the dot com economy crashed, and as thousands of jobs and people left SF. Then, as people and jobs returned to SF, the average condo price increased, to $841k in 2006.
(According to California Dept of Finance estimates, the population of SF reached a new high this year, of 808k, after dropping substantially earlier in the decade.)
The effect of the SF's population drop on rents earlier this decade was even more dramatic. Rents dropped greatly earlier this decade as vacancy rates soared, but now rents are rising again, as people return to the City (and as some who might have bought are choosing to rent). There is a clear correlation between changes in rents in newly rented apts and changes in vacancy rates.
Marc tries to make the case that supply and demand are irrelevant to the cost of housing in SF (and therefore we should stop building market rate housing), but in fact, supply and demand do affect housing costs in SF.
Posted by: Dan at September 25, 2007 11:30 AM
Yes, in addition to my real estate portfolio, I was pointing out to our friends that my other assets are comprised of a small gold portfolio, in the form of an 18kt ring, purchased when the dollar was seeing happier days, just after South Africa became free, which I carry with me at all times.
I also have a ten pound note that I got when the pound was at $1.40 to the dollar going for me.
Posted by: marc at September 25, 2007 11:38 AM
"Either offer up an economic model that demonstrates how building market rate housing can depress price over the long term or you're just talking quackery."
Have you ever drawn a supply and demand curve? You shoud try it. Most people don't consider it to be quackery.
"Western SOMA is San Francisco. The community process has enough buy-in from a diverse enough set of perspectives that it will be very tough for the real estate lobby to stop our plan."
Don't understand the 1st statement. Are you sayign that Westen SOMA si the heart of SF? I think many would disagree. More egotism on your part
However, i am against the real estate lobby as much as you are. I just hate seeing such a centered part of the city as Western SOMA look liek total crap. i ahve to drive through it everyday and it is depressing. If it is self centered to want my city to be more beautifula nd livable, tehn I am self centered. IMHO, Western SOMA is the detritus of SOMA. i ahve no vested interest in the RE, just in the beauty, culture and livability of the city. Western SOMA is holding us all back.
"Thanks for being so self centered."
You must be joking.
Posted by: Spencer at September 25, 2007 11:39 AM
Marc wrote: "We on WSOMA..."
Marc, you wrote that your condo was in the Mission when we were discussing market rate housing in the Mission. Now your condo is in West SOMA?
Which is it?
Posted by: Dan at September 25, 2007 11:40 AM
Posted by: Spencer at September 25, 2007 11:40 AM
Hey, the Board of Supervisors appointed 26 of us to the WSOMA Task Force, a diverse group of people with multiple interests in WSOMA. That's a significant degree of legitimation of the composition of the TF.
My seat is the bicycle advocate seat and I co-chair the transportation focus group. Not all of us live in WSOMA, but have varying interests in the district. Mine are for safety, others have different interests.
Can you draw me a supply and demand curve for housing in SF that demonstrates where supply causes price to fall given insatiable demand?
Can you draw me a linear set of supply and demand curves that demonstrate to what extent, over time, we will need to augment supply in order to see a sustained drop in price, given insatiable demand?
If driving through WSOMA is a chore for you, then we'll do our best to reconfigure the streets to save you the pain and anguish.
WSOMA is as much San Francisco as Pac Heights, the Mission, the Haight or Fisherman's Wharf. WSOMA is where LGBT leather began, home to the Filipino community and a font of creativity until real estate speculation cleansed the neighborhood following that damned supply and demand curve with a dollop of official corruption.
Section 101.1 of the planning code applies citywide.
Posted by: marc at September 25, 2007 11:49 AM
WSOMA is also an art deco historic district.
Now, what are the climate change implications of closing down all auto service facilities in WSOMA and forcing hundreds of thousands of San Franciscans to drive to the suburbs for car repair?
So sad to see more pathetic moderates resorting to ad hominem arguments when confronted with the unsustainability of their political positions, but the facade of even the most erstwhile of the liberals cracks when that first dollar comes into question.
Posted by: marc at September 25, 2007 11:59 AM
There is no such thing as insatiable demand. What planet are you from? Have you ever studied economics?
"WSOMA is where LGBT leather began"
Who gives a crap? What are the LGBT leather shops adding to the local economy? The Mission used to be an Irish neigborhood. Things change.
"Hey, the Board of Supervisors appointed 26 of us to the WSOMA Task Force, a diverse group of people with multiple interests in WSOMA. That's a significant degree of legitimation of the composition of the TF."
Thanks for pointing this out. The problem starts with the corrupted Board of Supervisors.
"Now, what are the climate change implications of closing down all auto service facilities in WSOMA and forcing hundreds of thousands of San Franciscans to drive to the suburbs for car repair?"
Give me a break. I would venture to say that most people who live in SF already get their cars repaired outside of SF because that's where msot dealerships are and also the shops outside of SF are cheaper. driving 8 miles to daly city is no big deal.
"If driving through WSOMA is a chore for you, then we'll do our best to reconfigure the streets to save you the pain and anguish.
Driving is not a problem. The homeless, drug use, prostitution, and run down buildings are the problem. Most other sane people consider these to be problems too.
Posted by: Spencer at September 25, 2007 12:18 PM
"So sad to see more pathetic moderates resorting to ad hominem arguments when confronted with the unsustainability of their political positions, but the facade of even the most erstwhile of the liberals cracks when that first dollar comes into question."
PS this makes no sense
Posted by: Spencer at September 25, 2007 12:21 PM
What does not make sense here is for Spencer to put forth the notion that increased supply will force down price in San Francisco.
Make with the curves Spencer, longitudinal analysis as well that proves that we need to wreck our city in order to save it.
When confronted with this request for supporting arguments, some posters here prefer to attack me instead of my arguments. That is ad hominem.
Many in SF call themselves liberals, but that facade cracks as soon as it might cost them $1 to see those liberal "ideals" through to completion.
Such is life in a one-party town.
Posted by: marc at September 25, 2007 12:25 PM
We'll never see enough housing to reduce demand (and thus price) because the city government is beholden to every well-intentioned but ultimately crackpot interest group.
Besides, cities change. That's what great about them. Trying to make SF into Mayberry by the Bay is a fools errand. Marc is half right, that no matter how much housing is built, SF housing prices will not fall to a level that someone that makes, say 20K a year can afford. But, really, who said everyone has a god-given right to own in SF?
Posted by: Mike at September 25, 2007 12:43 PM
"Dianne Fienstien still controls a great deal of federal dollars that do not come to San Francisco for infrastructure."
That's nonsense. Federal dollars are used to match our investment here. And if we don't have our **** together locally, the federal government isn't going to do squat.
And by the way, we're spending transportation money on a useless Central Subway between VV and Chinatown.
The more you complain about Feinstein, the more I think you don't know what you're talking about.
Think about it. $6.1 BILLION. That's a lot of dough going to BS services and bloated payroll in our city and county government. Now that I know you're part of the establishment (WSOMA task force?), your credibility on allocation of our tax dollars drops even further.
And if anyone is a Econ 101-denier, someone needs to take remedial classes in Supply and Demand. More supply does lower prices. Look at what's happening to SOMA condos right now.
Posted by: Usually Named at September 25, 2007 12:44 PM
marc i am interested in the great good of the city as a whole and you are interested in preserving your shitpile.
You are arguing with simple economics. You are the one who is out to lunch.
Posted by: Spencer at September 25, 2007 12:52 PM
"And if anyone is a Econ 101-denier, someone needs to take remedial classes in Supply and Demand. More supply does lower prices. Look at what's happening to SOMA condos right now."
Then show us supply and demand curves that demonstrate how econ 101 applies to housing in San Francisco. Make with the curves.
Either you can or you can't. Circular logic of asserting "supply and demand" or "econ 101" don't cut it.
How many units would we need per year to see a 25% reduction in unit price?
How long would that supply sate demand and keep price down?
Gavin Newsom and Willie Brown before him present the budget to the BofS. The BofS tinkers around the edges. Ask the same people who entitled live work lofts and luxury high rises why they budget $6.1b per year for San Francisco.
A significant portion > 50% of the SF Budget is comprised of state and federal dollars.
Posted by: marc at September 25, 2007 12:56 PM
I find it funny that marc thinks political boundaries are sooooo important. What we need more than anything is more cooperation regionally - I could care less if auto repair shops are in Daly City or laundry places for hotel chains are in Brisbane. In MANY cities those areas would be within our city limits. Just because something is five miles from downtown instead of four miles from downtown shouldn't make it worthless or a huge deal for people (employees and customers) to travel there.
SF hasn't been a standalone city for more than 50 years. Trying to treat it as such is absurd.
Posted by: marc checker at September 25, 2007 1:02 PM
Re: "That's the most ludicrous statement I've heard in a very long time. How can you say that with a straight face when our annual operating budget for the City and County of San Francisco is now $6.1 BILLION -- for a city of less than a million residents!"
The City of Chicago proposes a FY2006 budget of $5.2 billion. (population 2.8 million)
One of several reasons why we reluctantly left SF.
Posted by: Cary at September 25, 2007 1:08 PM
It scares me that people like this are the ones working for our city.
no wonder the private industry makes better and more efficient decisions.
Posted by: Spencer at September 25, 2007 1:08 PM
darren has about as much chance of getting out of his contract at net as the coke dealer chic place in bernal has of fetching a 2.3mm buyer
wish them both the best of luck though, of course
Posted by: james at September 25, 2007 1:09 PM
"Then show us supply and demand curves that demonstrate how econ 101 applies to housing in San Francisco. Make with the curves."
Nyah nyah. How about you show me how they don't? What a inane request. We might have to call you Mr. Red Herring.
Let's go something more simple -- if we flooded the market with 10,000 3 bed/2 batch condos in the city, what do you think will happen? And, no, i'm not talking about BS affordable housing either.
As for the 6.1B -- yes, I do blame our government in its entirety. Greasehair and The Hat have as much blame as the in-the-pocket-of-non-profits-and-SEIU Board of Supervisors.
But wait -- we are the idiots who voted them in.
So it's our fault for how crappy our city is. You'd think in spending $6.1B this year we would get a better return on our investment.
CCSF doesn't need more money -- it needs to spend it better.
Posted by: Usually Named at September 25, 2007 1:11 PM
Although I agree with some of Marc's comments and can definitely appreciate the energy he's brought to the board...I have to agree with Usually Named and Spencer that the economic reasoning is flawed. In fact, it almost reminds me of Chris Daly...
Posted by: Dude at September 25, 2007 1:32 PM
Although I agree with some of Marc's comments and can definitely appreciate the energy he's brought to the board
"The best lack all conviction, while the worst
Are full of passionate intensity. "
Sorry, couldn't resist.
Posted by: anon at September 25, 2007 2:00 PM
As I posted above (with reference link to data), SF condo prices and apt rents have gone up when population and jobs increased, and have gone down when population and jobs decreased.
There is clear evidence that supply and demand does affect prices in SF.
That doesn't mean that we can build our way into making SF homeownership affordable to all. The cost of new construction is too high. SF does have a large stock of affordable housing, however-- rent-controlled apts. Because of the large stock of rent-controlled apts, many people are paying rents that are well below market rates. Rent an apt now in a pre-1979 building, and eventually you will also pay below-market rent, since rent increases are set at 60% of CPI.
Building new housing (on lots without housing now) does not threaten SF's stock of affordable housing, and in fact, adds to it with the 15-20% below market requirement.
The biggest threat on the horizon is a statewide proposition on eminent domain that includes a provision to lift rent control (which would happen only as current tenants leave).
Posted by: Dan at September 25, 2007 2:09 PM
I don't have a set of charts to provide, but the issue seems to be that prices here have shot up even while supply was increasing. Why?
1) Other big cities, such as Chicago, have been slowly and continuously adding housing stock for decades, which has kept housing relatively affordable. San Francisco refused to grow up for a long time, resulting in suppressed demand. When supply finally came on line people were lined up to buy it, driving prices up. The demand of the late 1990s is only now being answered. Proof that protectionism and regressive politics are a failure.
2) Many contend there's been a housing bubble in this country for a while (you may have seen it in the paper). During the past 5 years, even cities like Phoenix and Vegas, which have NO supply constraints, saw huge appreciation despite adding thousands of homes. So the run-up was partly driven by speculation and loose lending rather than by fundamentals. Yes, even here in luxury millionaire San Francisco.
So my theory is you're all right - the city does need to build thousands of more units to make housing affordable, which will take decades and require a substantial infrastructure investment. We're a decade behind already - we're not going to catch up overnight (or by declaring every outhouse and birdhouse a national landmark). But blocking market-rate development is just plain stupid - it's a surefire way to ensure that nothing gets built and puts us well on our way to becoming America's Monaco.
Posted by: Dude at September 25, 2007 2:18 PM
it would also be nice to see prop 13 reversed so people actually pay taxes on the value of their properties. i think this would eventually help to make the market more affordable
Posted by: Spencer at September 25, 2007 2:18 PM
Economics is a science. Science by definition is is the art of generating reproducible results from systems. Either you can make your case that adding supply will drop price, and for how long, or you resort to the waving of the hands and ad hominem.
Chicago is a city. Cook is a county. San Francisco is a city and a county. In the US, counties administer state function. Cities administer local function. Chicago offers fewer services than San Francisco, but adding in Cook county's portion of Chicago's state function narrows that gap significantly.
Please, anyone who worships at the altar of supply and demand as the unmitigated, deterministic forces that determine price, demonstrate a scenario where augmented supply diminishes what appears to be insatiable demand.
We've already lowered demand as measured by population and price has skyrocketed. We'd increased supply somewhat during that same period and prices almost tripled.
There is clear evidence that insatiable demand effects price in SF. Now demonstrate that supply can check that kind of demand with a model that supports assertions.
Posted by: marc at September 25, 2007 2:23 PM
you state that economics is a science and science is the art of generating reproducible results. Then you go on to talk about ONE time period in SF during which a HUGE credit bubble was blowing up, causing ALL regions of the US to see price gains. Also - the claim that population has decreased is CLEARLY disputed by different government agencies. Please show us some reproducible results to back your claim.
Posted by: marc checker at September 25, 2007 2:34 PM
Marc - take a trip to Miami. Or Hong Kong. Great cities, everyone wants to live there, bla bla bla. For years there was "instatiable demand" for waterfront and downtown condos. Know what happened? They kept building them and prices kept rising. What a conundrum! So they built more. And more. And prices skyrocketed! Then one day prices started falling. Hong Kong is starting to recover, but Miami has thousands in the pipeline with no buyers. Which way are priced headed?
Yes, it can happen here. Imagine razing half the "suboptimal" areas in SF and doing the same. Line Golden Gate Park with highrises like the ones along Central Park. Add 3 stories to every building in the Richmond and put a subway under Geary.
San Francisco never has been and never will be affordable for lower income folks. No argument there - just a fact of life. But you can't pander to those at the bottom at the expense of an entire city's well-being. Unless your goal is to turn it into some type of Orwellian dystopia.
Posted by: Dude at September 25, 2007 2:36 PM
I did not say that 1999-2006 was the be all and end all of economic modelling of housing in SF.
But housing has appreciated in SF over time at a rate greater than in the rest of the US and in other comparable urban cores, at least since the 1980s.
I am told repeatedly here that augmenting supply will sate tremendous demand.
It is one thing for you to point out the shortcomings in my analysis, and there are shortcomings.
But it is quite another thing to make assertions absent substantiation.
My arguments might lack here or there, but at least they are substantiated with historical evidence.
All I'm hearing from the other side is an appeal to the economics professor, an instructor who would probably issue a big fat 'F' to any of you all who could not show your work.
Posted by: marc at September 25, 2007 2:40 PM
"We've already lowered demand as measured by population and price has skyrocketed. We'd increased supply somewhat during that same period and prices almost tripled.
There is clear evidence that insatiable demand effects price in SF. Now demonstrate that supply can check that kind of demand with a model that supports assertions."
There is not one true statement in this tirade. We do not have to prove the results of supply and demand . it has been proven over and over. Youa re the one who has to prove that SF does not follow S & D. You are the one speaking ad hominem.
the loose credit market helped to boost SF in the past 6 years jsut like in all other hot areas of the country. Demand increased as mortgages were easier to get and monthly payments were cheaper. This is a short term blip. In addition, the population ahs actually increased, while there has been little in the way of new housing.
So, demand has been up, and supply held tight. that's why the prices have skyrocketed.
Demand is now down due to liquidity crisis, supply is slowly increasing, and we will see drops.
But if we really want to see housing come more into line, then we have to stop all these neighborhood zealots who hate progress and change and really start to build housing, get rid of rent control and reverse prop 13. Then we will see prices come into reality.
Posted by: Spencer at September 25, 2007 2:43 PM
not all regions in the u.s. saw gains over the last three four years. that's patently false. The Midwest and portions of the Great Lakes and completely South missed the bubble boat.
If you want to buy, buy and hold for 10 years. When it comes time to move on in your life, sell. You'll have a nice chunk of change to begin the next chapter.
Posted by: fluj at September 25, 2007 2:43 PM
"But if we really want to see housing come more into line, then we have to stop all these neighborhood zealots who hate progress and change and really start to build housing, get rid of rent control and reverse prop 13. Then we will see prices come into reality."
Absolutely right - let the market do the talking and stop treating this city like colonnial Williamsburg. Of course, any politician that tried something like this would likely be recalled by "progressives".....
Posted by: Dude at September 25, 2007 2:47 PM
Dude supplied several cases to back our argument - we're still waiting on yours. Or just more waving of the hands?
Posted by: marc checker at September 25, 2007 2:47 PM
Look, we have a set of current conditions. Take them and run them through your supply and demand models and give us some guidance as to what level of construction would be required on the supply side in order to meet demand and bring price down.
This is where theory leaves the classroom and gets applied with real numbers, real people and real units.
SF housing prices rose before interest rates plummeted, with a slight dip during the recession of the late 80s, early 90s.
Spencer, how many units per year would need to be brought online in order to see price sensitivity?
For how many years would we need to produce that many units?
Please crank your best guess at current conditions through the model of your choice to offer policy guidance which would substantiate your claims.
Otherwise you are asking us to make significant policy decisions absent any supporting data. I don't do that when writing code--I always test my theories before committing to an implementation strategy--and I don't do that in public policy because the stakes are just too high to wing it.
Posted by: marc at September 25, 2007 2:51 PM
"Absolutely right - let the market do the talking and stop treating this city like colonnial Williamsburg. Of course, any politician that tried something like this would likely be recalled by "progressives"....."
Yeah they are progressively against change and improvement, and they are progressively getting dumber.
Posted by: Spencer at September 25, 2007 2:55 PM
You are asking us to make SIGNIFICANT policy decisions absent any supporting data - you're asking us to stop all building because we've seen appreciation over most years of the past few decades! How is that NOT a policy decision?
And I'll repeat again - SF is not a standalone city. Think of SF as a neighborhood within the greater Bay Area and things begin to make a bit more sense.
Posted by: marc checker at September 25, 2007 2:57 PM
Status quo is to not build. Zoning changes require substantive findings.
You want us to change zoning. Give us substantive findings.
Progressives bad. Bad progressives.
Posted by: marc at September 25, 2007 3:02 PM
Marc - First off, we're already seeing price sensitivity. Sales down, foreclosures up, pricing falling in the outer bay and teetering in the city. The credit bubble is deflating - wait until the new supply in Soma comes on the market in '08 and I'll be shocked if the trend isn't self-evident by then. To even the most ardent bulls.
Coincidentally, how does your model explain the central valley? No limits on supply, thousands of new homes added, and prices still shot up like a rocket. Just like here. So the law of supply and demand was CLEARLY wrong. Until 2006. Now what are prices doing? They're not falling in the city yet, and won't fall as dramatically, because dogmatic politicians and washed-out hippies have constrained the city's supply for 20+ years. But prices here are detached from fundamentals and will experience a correction.
I'm not a developer or an architect. But as a start, let's turn SoMA into Manhattan west. An Infinity or One Rincon (or even a Soma Grand) on EVERY BLOCK. City government could use this as a crucible to see which side of the argument is correct. Stuff 30 more towers into Soma, 20+ stories each, and we'll see if prices come down or go up, ceteris paribus.
Posted by: Dude at September 25, 2007 3:12 PM
"You want us to change zoning. Give us substantive findings."
Marc, you have proposed changing zoning to greatly reduce the construction of market rate housing:
Where is your evidence that this won't make existing housing even more expensive?
Posted by: Dan at September 25, 2007 3:15 PM
You know, it's kind of pointless to try to reason with Marc, it's religious thing with him, reason doesn't enter into it.
Posted by: anon at September 25, 2007 3:20 PM
Where is your evidence that this won't make existing housing even more expensive?
Oh, he knows it will. He's looking to make a buck off of his condo-conversion. You know, like the ones he now is vehemently against. Curious too that he claimed on another site that he was displaced by a greedy developer, yet on this site was displaced by the city - either of which was the reason for his need to remove a valuable rent-controlled apartment from the city's stock.
Posted by: Bernard at September 25, 2007 3:25 PM
We are proposing legislation that would have to go to the Planning Commission for review as well as undergo CEQA review unless we take it to the ballot first and let the people decide.
That is where the case is made on the merits. The waving of the hands, asserting the iron laws of supply and demand can see enough supply produced so as to elicit the desired results will not suffice.
Other desirable jurisdictions followed your prescription, overbuilt and ended up with a serious crash. Do you all want a real estate crash so that we're left with an overbuilt ghost town and no tax revenues? Do we want to count on a global credit crunch as the major tool of an affordable housing policy? How does City Hall call in one of those when required?
Prop M ensured that greed for office space would not be the determinant of what got entitled and built, and it has served the City well, softening the dot.com bust.
Dan, housing will get more expensive no matter what we do.
"The average price of a condo in SF went down, from $652k in 2000 to $613k in 2003, as the dot com economy crashed, and as thousands of jobs and people left SF. Then, as people and jobs returned to SF, the average condo price increased, to $841k in 2006.
Average is not the same thing as median.
When we bought in 2002, the median was like $550K. We watched prices rise from $275K to $390K for a 2br in the Mission/SOMA from 99 to 02.
We were able to finance three times based on appreciation driving up our equity during the 03-04 period, once to get the loan, once to lose the second and thrice to get a 30 year fixed.
If the average price tracked median price, then we would not have seen appreciation and not been able to refinance during that time. Clearly those data are not consistent with observed phenomenon.
Kaufman's numbers suggest that the high end saw some depression as the economy faltered, driving down the average, but the median price continued to rise.
Posted by: marc at September 25, 2007 3:33 PM
Other desirable jurisdictions followed your prescription, overbuilt and ended up with a serious crash. Do you all want a real estate crash so that we're left with an overbuilt ghost town and no tax revenues?
But we have an insatiable demand, so there's chance of that happening. Did I get that right?
Posted by: anon at September 25, 2007 3:41 PM
I'm looking to make sure that the greedy speculators don't raise the drawbridge that many queers, artists and cultural freaks use to find refuge in places like San Francisco as I did 18 years ago.
It turns out that much of the best culture America has produced in recent decades has been in the inner cities. I happen to like culture.
If I'd wanted to be wealthy, that is not outside my capacities. However growing up in a wealthy inner city suburb in Texas, I saw more wealth than I'd ever imagined and saw how it impoverished the humanity of the wealthy.
Posted by: marc at September 25, 2007 3:43 PM
I don't want to overbuild because I care about the city's character. Some of you all want to build the city out for speculative reasons.
Again, we're talking about a global credit crunch at the precise time we're talking about significant upzoning.
We can have insatiable demand with a credit crunch which prevents people from perfecting that demand.
When the credit crunch evaporates, so do the impediments to perfecting that desire.
Posted by: marc at September 25, 2007 3:47 PM
I don't want to overbuild because I care about the city's character. Some of you all want to build the city out for speculative reasons.
I want to see city like Vancouver, where there are lots of parks, and shops, and restaurants, and families, and, yes, even lots of high rises for people to live. It can be done, but it takes some imagination, cooperation, and less ideologically-driven solutions. Marc and George Bush are 2 good examples of how rigid ideological thinking gets us nowhere.
Posted by: Mike at September 25, 2007 3:57 PM
Is the rest of Vancouver built out at the densities of San Francisco?
The tax realities in Canada on housing versus the US combined with Vancouver's lack of density make these kind of comparisons useless.
Posted by: marc at September 25, 2007 4:00 PM
Is the rest of Vancouver built out at the densities of San Francisco?
Do you have any facts to back this up? I'm talking about downtown Vancouver, have you ever been there?
"The clearest evidence of the changing realities of city building is the fact that downtown Vancouver has recently eclipsed Manhattan as North America’s highest density residential area. "
Posted by: Mike at September 25, 2007 4:10 PM
I consider myself very liberal..and a fan of culture. But Marc's attitude reinforces the old saying, "Liberals hate to see anyone with wealth unless it's them."
You want affordable housing but refuse to let San Francisco grow up. Sorry - can't have your cake and eat it, too. How do you propose to make housing more affordable without prices falling? Is Chris Daly going to give us all $100K annual raises, like the one he took before he bought his condo?
Basically, you're now ADMITTING that allowing thousands of units to be built in the city, as we propose, would reduce prices. So you just contradicted your previous diatribe.
But again, this is true San Francisco "progressivism" - protectionism and dogmatic fundamentalism veiled as open-minded ideals. No wonder the Chronicle labeled it "The Clown Show."
Posted by: Dude at September 25, 2007 4:20 PM
I would like to get back to One Rincon please.
I would like to get one of those 02 stack units on ANY floor below 20 if I can. The sales office has been very nice but none have come up. My price limit is $1.25 mill.
If we are on the edge of a real estate meltdown, or every other building is better, why can't I get my hands on one? I am not going to flip it or try to make six figures in a year. I just want to live there and have a brand new place with cool view of the bay and the bridge and parking for my friends when they come over.
Some things are just what they appear to be.
Posted by: Bostonian at September 25, 2007 4:20 PM
"If we are on the edge of a real estate meltdown, or every other building is better, why can't I get my hands on one? I am not going to flip it or try to make six figures in a year. I just want to live there and have a brand new place with cool view of the bay and the bridge and parking for my friends when they come over."
Because most of the units were sold last year and the tower sold out the spring of this year - Long before the mortgage mess and subsequent downturn.
I'm sure there are many buyers under contract that are nervous about their investment and quietly wish they could back out and get their 3-5% deposit back. Since most won't get their deposit back, they have no choice but sit back and wait till it's time to close and hope the market improves (its a no lose situation to wait if you can't get your deposit back anyways).
If the market doesn't improve, then we could see folks back out since their option will be worthless... We probably see the same situation around the city (SomaGrand, Alterra, Radiance, etc).
So Bostonian, I would simply wait and see what happens. If the market recovers and there's very little fallout, you could always look at the 2nd Rincon tower(if it gets built) or Infinity's 2nd tower(which goes on sale next spring)...
Posted by: missionbay res at September 25, 2007 5:35 PM
"I don't want to overbuild because I care about the city's character. Some of you all want to build the city out for speculative reasons."
I want to raze much of western soma because i also care about the city's character. homelessness, prostitution, run down buildings, crime and street drugs should be removed. this has nothing to do with speculation. msot of the people genuinely want to make the city better. You seem to want to keep the same ole problems.
Posted by: Spencer at September 25, 2007 5:36 PM
(light bulb goes on)
I'm not sure if this counts as an "out" (I guess I'll find out soon enough if this message is gone) given that marc has supplied a lot of info on himself (bicycle advocacy and WSOMA are dead giveaways), but if this "marc" is infamous Marc Salomon, then that explains all these non sequitors and contradictions.
Maybe want to check out his wonderful diatribes. Just Google him.
Posted by: Usually Named at September 25, 2007 6:04 PM
It would take hundreds of thousands of units built over move prices down to a level where they would be affordable.
The key to solving this is to build out slowly and leverage the greed of developers and real estate agents to generate funds for affordable housing.
In addition we could limit heights unless developers let the city buy in 1/2 at construction time to be kept affordable in perpetuity.
Prop M told us that left to their own devices, developers and real estate agents will run the city into the ground. Our communities need more protections from these incredibly powerful forces if they are to remain livable.
Posted by: marc at September 25, 2007 6:13 PM
(light bulb goes on)
I'm not sure if this counts as an "out" (I guess "I'll find out soon enough if this message is gone) given that marc has supplied a lot of info on himself (bicycle advocacy and WSOMA are dead giveaways), but if this "marc" is infamous Marc Salomon, then that explains all these non sequitors and contractions.
Maybe want to check out his wonderful diatribes. Just Google him."
Thanks, i'll stop commenting to the looney bin.
Posted by: Spencer at September 25, 2007 6:31 PM
Hey Spencer...how many units would we need to build each year to see sensitivity on the price side?
For how long would we need to be building those units?
What would San Francisco look like after that process?
What would we do then?
Perpetual growth is the ideology of the cancer cell.
Ad hominem can't cover your inability to defend your assertions.
Posted by: marc at September 25, 2007 6:36 PM
I can help u Bostonian, I have represented 16 Buyers at One Rincon Hill including 5402, 5102, 5002, 3702 etc. Send me an email.
Posted by: Paul Hwang at September 25, 2007 7:13 PM
In regards to the second towers of infinity and orh, does anyone know if the developers were required to post a completion bond for those?
Posted by: diemos at September 25, 2007 7:18 PM
Seems like Darren isn't the only one trying to get out of their contract....
Posted by: Dude at September 26, 2007 10:19 AM
Dude, it's a fluke! That's all. ORH is worth 20% more than it was a year ago - and will continue to grow 20% each year until the end of time. Don't question it!
Posted by: smarty at September 26, 2007 10:49 AM
good find dude. i was looking for more just yesterday. how do you know that's not darren?
Posted by: james at September 26, 2007 10:49 AM
I actually know the character who currently bought this deal... I know he would never buy something that wouldn't appreciate in value lets say like a really expensive car or motorcycle.. but in real estate he's pretty much on the mark.
Good luck I am sure it will sell.... Maybe you should advertise to the Hollywood crowd down here I am sure some young exec. would love to pick up this gem...
Posted by: Brenley at September 26, 2007 12:37 PM
I just bought a condo by the Great Wall - on the good side!
Posted by: Econ_Phd at September 26, 2007 1:22 PM
Flug, Can't place how to translate "CoCo", as in "Sonoma, Napa, and CoCo". Please help. Where is CoCo?? Thx.
[Editor's Note: Not to put words in Fluj's mouth, but we're assuming 'Contra Costa.']
Posted by: Julie at September 26, 2007 8:13 PM
How about Contra Costa County=CoCo
Posted by: helper at September 27, 2007 1:25 AM