The list price for 3324 Octavia #4 was reduced for the second time yesterday and the sellers of the “[f]abulous one bedroom condo located in the highly desirable marina district” are now asking $749,000 (which is $50,000 less than the original list price of 48 days ago).
And yes, $749,000 is $1,000 less than what the sellers paid for the condo three and one-half years ago (7/16/2004).
∙ Listing: 3324 Octavia Street #4 (1/1) – $749,000 [MLS]
Ahh, the joys of homedebtorship in the magical market of SF. Of course, the loss will be greater after commission – someone should run the numbers with that cool spreadsheet that is floating around.
I guess the cheerleaders will just say that this owner “overpaid” in 2004, and I can’t really disagree with that. But think about it. At any given time, some people are getting deals, others are sort of paying “market”, and others are “overpaying”. In hindsight this becomes apparent, because of how neighborhood and pricing trends have developed. At the time of purchase, though, really all purchases are at “market”, by definition.
The statistics distort what is going on. A few years down the road, it is the house that appreciated (again, probably largely because of exogenous factors) that sells, and it looks like there has been strong appreciation. Unless the buyer absolutely has to dump the place, the one that has gone down is pulled off the market, and never gets into the statistics. Around where I am living (St Francis/Monterey Heights/Balboa Terrace/Mt. Davidson Manor), about 25-40% of the houses fail to sell and are pulled off the market. That’s what happened to 1495 Monterey and 135 Fernwood (both featured on Socketsite). that also happened to 1260 Monterey. There are numerous others but I won’t bore you all with them. But take a look at 135 San Benito, literally on one of the nicest blocks in St. Francis (right in the heart of it). That was a situation where the owner really was motivated to sell, and was only able to get around $50K more than what he paid in 2004.
Anyway, my only point really is that because of the uniqueness of real estate assets and adverse “deselection” and survivorship biases, the stats typically used to describe appreciation in SF are woefully inadequate. SS is right to look at these “apples-to-apples” comparisons!
Maybe this really reflects the top range that someone is willing to pay for a one bedroom that is only 750 square feet with tandem parking. I don’t care if it IS in a prime location. Finally- there is some sanity among the buyers!
You can rent this for far cheaper and finally buyers are figuring that out.
$1,000 per foot with no view and somewhat undistinguished architecture. My rental is looking better and better.
CW has always held that demand for 1BR condos can be uneven…that prices perform relatively poorly in a weak market. It will be interesting given the strength of the “starter” market over the past several years.
Personally, I believe there’s a lot to be said for living in a well-designed small space. But I don’t think the market is with me on that one.
“someone should run the numbers with that cool spreadsheet that is floating around. ”
Your wish is my command:
http://spreadsheets.google.com/pub?key=pM4Gw0s2zSeCXIvKktNGLbg
Assuming it sells at the asking price, the owner lost about $3500 a month in cold hard cash (total $143k), and $6700 a month (total $276,357)when lost opportunity is factored in.
And that’s making the very generous assesment that the starting rent on this place was $2100/month in 2004.
I say generous, because the closest comps I could find today (in the overheated rental market of 2007) were both $2100:
http://www.craigslist.com/sfc/apa/497796193.html
http://www.craigslist.com/sfc/apa/498624677.html
But it’s a good thing the owner didn’t rent, because he would have been paying rent in *after tax* income and that would have just been throwing money away! Right? uh… right? er… um,… hrmm.
I’m waiting to see how fluj spins this one to show that the purchase was, in fact, a good decision and the owner actually saved money over renting.
@missionite
I still hear arguments that renting is a mistake because all you end up with is “a pile of worthless cancelled checks”. Spreadsheets like yours are a great tool for people who understand the concepts. It won’t make any difference for the financially illiterate who don’t understand opportunity cost.
Pretty expensive pied a terre…and removed from the core Chesnut St. retail. I argue that this isn’t “prime” Marina.
This is now the 4th cheapest (listed) property in the Marina!
I’m interested in Apples to Apples out in the outer sunset. Prices are all over the place. Similar places on market with wildly different prices. Plenty of palces selling within priced Tens or even hunderds of thousands differntly. Places that were purchased in the last 2 – 3 years that are priced within $20 – $30 of last purchase. And then there is this gem:
http://www.redfin.com/stingray/do/printable-listing?listing-id=1112302
Bought six months ago for $905,000. Now on the market for $619,000. That ought to be a very interesting story.
and the circle tightens again …
“RE never goes down”
“Prices won’t fall in CA, everyone wants to live here”
“Prices won’t fall in the Bay Area, to many high paid IT workers and everyone wants to live here”
“Prices wont’ fall in SF proper, to many high paid IT workers and everyone wants to live here”
“Prices won’t fall in prime neighborhoods like Pacific heights and the Marina, to many wealthy who won’t ‘need’ to sell”
“Prices won’t fall on the Prime streets of the prime neighborhoods.”
BadBear– You forgot the final refuge of the terminal optimist:
“Prices won’t fall for my house/condo because I’ll never have to sell for any reason.”
Ok there has to be some kind of scoop on that listing by BRCGranny … who turns around and sells a property for a 286k loss in 6 months???
“Bought six months ago for $905,000. Now on the market for $619,000. That ought to be a very interesting story. ”
That particular property is a TIC. I am guessing the 905K paid six months ago was for the whole property.
But, I agree with you. Sunset is interesting. Some remodeled properties asked for 1.2M to 1.5M from flippers, and they do close (or withdrawn?). There is even one asking for 1.7M now.
Oh, you silly gloomers with your anecdotal evidence.
Don’t you know, prices are still going up everywhere? It’s a great time to buy!
BRCGranny,
I don’t have anything to add with regard to that specific property, but with respect to prices being all over the place in the Outer Sunset, there are a few reasons I can think of. First, the housing stock is very varied, with widely differing levels of remodels and upgrades, etc. Second, there are a lot of recent immigrant purchases, which IMHO are being made without a lot of “historical” analysis or any real sense of pricing trends over time in SF. And last, don’t discount the widespread cash back fraud, which while less common today than a year or so ago, is still being done (or at least attempted).
Sorry to continue the tangent, but I pay pretty close attention to Sunset/Parkside myself. That Kirkham property (which, coincidentally, is very nice IMO) is a TIC which was previously Ellis-acted. Not a lawyer, but I’ve heard this means it will never go condo, so it’s probably not a good comp or market indicator.
However, prices are indeed coming down out there. Check out:
1466 23rd. Currently on the market for $750K, last sold in 9/05 for $900K. A $150K loss in 2 years.
2658 38th. Currently on the market for $749, last sold in 8/06, also for $900K. Another $150K loss in just over a year.
I could go on, but res ipsa loquitor.
yes, I was going ask about the implications of the fact that the property was ellis acted as well. but I didn’t want to drag the thread more off topic.
1466 23rd is a probate sale. 2658 38th is trust sale. FYI.
Quit ruining the fun John. Damn it!!!!!!
I have a friend who lives two doors down on Octavia and has an equally sized 1 bdroom. He pays $1650 for rent with parking. He is rent controlled, but he only 1st moved in last December. I guess he jsut got a good deal.
I sent him this link and he feels pretty good about renting, to say the least. Also, the irony is that he is a mortgage broker.
from another post
“I argue that this isn’t “prime” Marina.” Yes, “prime” Marina is still going up 20% per year and will forever
“1466 23rd is a probate sale. 2658 38th is trust sale. FYI.”
So what? Why aren’t they selling for over $900K?
“So what? Why aren’t they selling for over $900K?”
Did I say anything about the price? You don’t understand what “FYI” means?
It is just some information, dude, relax. There is no need to be testy. You make your own judgement on whether they are a factor, or irrelevant at all.
If I was a mortgage broker right now, I would be more worried about my job than the deal I am getting on rent.
i find it sad that there are so many of these 4 unit type buildings that really should be a single family home. that being said, this place ain’t worth more than 550k in this market. that’s what a brand new one is going for that you don’t have to share with 3 strangers and no ammenities over here in my hood. maybe this is worth less than that then?
i’ll be happy to see the prices on these things come down to a point where someone comes in and buys all 4 and converts it back into what it should be, a really nice single family home.
^That’s impossible. Planning won’t allow that…
No more SFRs for you San Francisco!!
@ john – sorry if my comment sounded testy, that was not my intention. I was simply implying that market value is independent of what type of sale a property goes through (normal, probate, short sale, etc.). Trust/probate sales are carried out with less emotion than normal course sales and will sell for what they need to sell for – which is why they’re better for determining market value IMO.
“Bought six months ago for $905,000. Now on the market for $619,000. That ought to be a very interesting story. ”
The $619K is the price for one one of the units.
I noticed a for sale sign long time ago and it seemed the original owner (before the current flip) had been trying to sell this unit for a very long time (like a year or so), with tenants inside. Then it seems they spent that year evicting the tenants and finally after Ellis act they sold it for $905k.
After purchasing that building, the flippers spent about 3 months renovating it, and tried to sell the whole thing at $1,198k ($569k lower, $629K upper) in Sept this year (for a gross profit of $293k). It sat on the market for a while, no takers, so they dropped the price to $1,168k ($549k lower, $619k upper, -2.5%). They seemed to have sold the lower unit (it was in contract for a while and it’s gone from MLS), but the upper unit is still available.
Assuming they sold the upper unit at current price, the gross profit would be $269k. On the cost side, assuming 5% commission ($58K), and $100K of renovation cost for the building (it’s a basic remodel), and a $5K carry cost/month from May to Dec 07 (7% interest only, non-owner occupied, $35k total), the net profit comes out to be about $76k, for 3 months of work…
All in all, they didn’t make a lot of $ on this, but I don’t think they lost their shirts, either.
I am just surprised that it could go for that much for a building that looks so ugly (who picked the exterior and the kitchen colours?) and has no parking… but with each unit at 2300sqft, some people may think it’s a good deal.
Dude, the problem is the condition of the property. Normally, in probate/trust sales, the property is neglected after the previous owner died.
There may be also some additional costs in court ordered probate sales. I am not expert on that, but I have looked at a probate sale before and there was notes that seller had to pay 10% on top of the sales price.
However, they may still be good deals for some buyers.
Sometimes in probate sales, properties are intentially priced below market. Once there is one acceptable offer, there is an overbid process, where the property can be auctioned off for a price at or above this offer. This, and the sale being subject to court confirmation, are reasons for probate sales’ initial low prices:
http://www.wwlaw.com/probatez.htm
I was hoping not to belabor this tangent, but you’re both correct (John and Dan) that the properties may not be in great shape and are often priced low to incite buyers.
However, the probate/trust properties I’ve seen before have NEVER been discounted $150K or 17% below last sale, which ocurred just a year ago. So I stick by my comment that prices are falling in Sunset/Parkside.
If the probate/trust sale doesn’t need to be court approved, it is just a regular sale.
However, if it requires court approve, it gets complicated.
Now I can remember the probate sale I looked at last year….It was listed for 710K, but then when you read the notes, it says “offer must be at least 10% higher than the list price, etc”. I was like “what the heck is that?” Add the 10%, it was not much cheaper than a regular listing (and it was in a bad condition).
I am just saying, when something seems to be too good to be true, it usually is, especially when the two deals you found both have this common traits.
Oh, of course feel free to call up the listing agents, get the details, and come back and say “Hey, there is no catch, you really can get them for 750K!”
“I am just saying, when something seems to be too good to be true, it usually is”
Like buying a single family home in the Castro for $100K less than in 2005?
https://socketsite.com/archives/2007/12/singlefamily_apples_to_apples_and_pluggedin_readers_per_1.html
I think at $749,000, this unit is pretty good value at $1,010/sqft. I think now b/c this unit has been posted on this blog, it’ll likely get a lot of attention and subsequent offes.
Getting into The Marina for only $749,000 for a condo close to Fort Mason Park is cheap.
The mistake goes to the agent, who probably promised the seller the moon to get the listing. It’s always better to price low, and elicit a bidding war than go the other way around.
Flashback to July 2004: “Getting into The Marina for only $750,000 for a condo close to Fort Mason Park is cheap.” Whoops.
Fast forward to 2010: “This foreclosure is a really nice property and it’s being offered at a 20% discount to its last sale price!”
So many haters here, it’s hilarious. Guess that’s what happens when only 14% of the population can afford.
“So many haters here”
I’m confused, “haters” of what? Imagine this were a used car site, and some not only debated whether the vehicle was a good car, but also whether it would be better to lease or buy the used car. Is it so HORRIBLE to talk about which payment plan (Because that is what it is!) is more to your financial advantage.
“Haters” indeed.
The only way you’ll be okay is if you bought a long time ago. My husband’s mom and her dad bought our house in ’76 for $52,000. We took out a first to remodel 6 years ago. So basically if it drops 30% we still have equity. But I wouldn’t want to be trying to play this market right now.
“Like buying a single family home in the Castro for $100K less than in 2005?”
Look at percentage difference, that’s about 7% from the top, which I think it is possible at this moment. (Meanwhile, it is possible to find properties at 5% higher than the last couple of years)
And I will even say by late 2009 and early 2010 (I predict that’s the bottom), it is even possible to find properties which is 15% to 20% from the top (last sale in 2005 or 2006).
However, at this moment, in SF,north of the freeways, if you see something 20% below the top, I will say there is a catch. (Like the two properties Dude found).
“Getting into The Marina for only $750,000 for a condo close to Fort Mason Park is cheap.” Does nobody look at the Geological Survey maps? We did before we bought in 2004 and decided that we would rather spend close to a million in the part of Cow Hollow which is not built on fill than spend on an equivalent place in the Marina which is ready to shake again. And yes we got a 3-bed 3-bath and deeded garden for that. So wazzup with the Marina love-fest?
All of you “whyners”! My wife and I will be mortgage free in about 20 years and in our retirement age will not have to worry about having to constantly work in order to pay rent, which by the way, will be WAY more expensive by then than it is now. We will also have a nice “asset” that we can sell – just in case……..
or give to your kids….
😉