1580 Masonic: Master Bedroom (Image Source: 1580masonic.com
As both readers and tipsters alike note, the list price on 1580 Masonic has once again been reduced (this time by $400,000 or 11.8%). And it’s now listed for $704,000 (19.0%) below its original asking price and $505,000 (14.4%) less than what the sellers paid twenty (20) months ago ($3,500,000).
Could “Priced Right” In Ashbury Heights Be Less Than What Was Paid? [SocketSite]
∙ Listing: 1580 Masonic (3/2.5 and 1/1) – $2,995,000 [1580masonic.com]
Sometimes It’s Simply The Small Things: 1580 Masonic [SocketSite]

32 thoughts on “Do You Think They Thought They Paid Too Much For It At The Time?”
  1. Oops…timed that one wrong!
    Bloodbath!
    I know someone will post here that they’re rich and they have money to burn on this…but a million dollar loss is a million dollar loss.

  2. The use of Flash or Shockwave or whatever it is for that site is awful. Over my modest connection it took ages for the thing to load a bunch of pictures that I would have skipped if I had thumbnails. The bald guy art over the mantle is a bizarre distraction and staging error!

    This building seems like it has too much character, so it needs just the right buyer to come along. The design and all those angles seem a bit odd. The laundry area is smaller than what most postwar tract homes offer and the kitchen is so dark … well, I don’t know, it’s just really, really dark. Maybe my big laundry area and bright kitchen tastes are completely old school at this point.

  3. Prices are not dropping. This is just a bait-and-switch tactic that will inevitably spark a bidding war. This house will sell for $4mil next week with 20 competing offers. Just watch!

  4. And, I would have to agree with the prior posters on the subject of losing tons of money. A half-million dollar loss is still a half-million bucks (after taxes and good luck deducting that long term capital loss at $3000/year for the next 180 years). If you asked the owners a question like “Would you rather have his/hers new Ferraris or take a half-million dollar loss on your house?” I bet they’d opt for the sports cars…

  5. If I recollect, loss in real-estate is not tax deductible. Its an usable asset. Its like losing money in car. If you sell your car in 2 years and lose 5K, you cannot deduct that in tax.
    Please clarify…

  6. “Please clarify…”
    Correct, unless it’s a rental property. But odds on Congress changing this to help bail out such loss-making homeowners in the near future?

  7. SF Bay Real Estate will lose another 40% from current levels. Current prices are now turning roughly back to 2005 pricing. Should take at least 24 months, and more like 36 months, to get the final bottom. Some properties may only lose 30%. Some will lose 60%. What sellers still fail to grasp is that the situation we face is not merely about price. It’s about credit. The pool of buyers 1 year from now, 2 years, from now, and 3 years from now will be small. Credit during the housing bubble was provided by foreigners. This will seem like a bizarre concept to the average American. But it’s true. Anyway, that’s all over now until it starts back up again. Like I said, about 3+ years from now. Minimum.

  8. I disagree with SurveyKid – I don’t think this house will decline 40% from what was paid for it a few years ago. I think the beginning price was ridiculously high given the location – now that it has been adjusted, I think they are on right track for finding target buyer. Pricing is the key right now – especially in neighborhoods that have seen a real slowdown in interest and activity – you can’t price something based on what it would have listed for 2 years ago, not even what it would have listed for 6 months ago. I think there is still a lot of denial with sellers as well as agents in the area when it comes to this.

  9. In SF, the bubble peak looks like it was about May ’06. But John makes a good point that places selling today at ’05 prices — now down about 5% from the ’06 peak — are still at bubble levels, albeit no longer at the highest peak. Still quite a bit of a decline still ahead of us before market prices reach a level that one can reasonably define as in line with fundamentals from the standpoint of rents, incomes, and history.

  10. In prime San Francisco, the peak didn’t occur until early this year / late 2006. Look at the numbers…
    San Diego/Orange County peaked around 2005…

  11. SurveyKid has got this exactly right. The only thing that will stop large nominal price drops would be high inflation. Under these conditions, however, I think it would be hard to maintain even nominal prices in the face of declining credit availability and an inevitable spike in yields. In any event, large real price drops lie ahead, and anyone counting their home in SF as an “investment asset” will be sorely disappointed.

  12. Isn’t this about when an agent comes in and says that this is a deal at $___ (something slightly below the asking price)?

  13. Agreed with Satchel … the problem isn’t about price any more it’s about credit, the lack of it is what is driving down prices, and many fear it is just going to get worse …

  14. I think there’s a fair bit of denial on all sides. Buyers because there are still no great deals, sellers because they won’t adjust prices, and agents for any number of reasons. Who isn’t in denial is the mortgage broker.

  15. Maybe potential buyer sentiment is souring (after seeing a few people *actually* lose money in Bay Area real estate– how embarassing is that??). Credit is still theoretically available for those who can afford the house and if you can’t afford it, what are you doing trying to buy it in the first place????

  16. Large loans are available, and buyers in this price range should have no problem. Drop in prices is not driven by credit availability. I think its simple supply and demand. This house will go (and may have already) for 2.7 – 2.8.

  17. “Credit is still theoretically available for those who can afford the house”
    But how many people CAN? Let’s be honest, the income bracket for someone who can reasonably afford this house is enormously high – like $600k/yr! How large is that pool of buyers now that you can’t simply SAY you make that much and get the mortgage?

  18. The gloom and doom taking over these comments is impressive. And no, I’m not a real estate agent, I’m just a humble Bay Area homeowner who happens to know the value of my property is still 35% higher than when I bought it a few years ago…. I have new comps in my building every month to prove that point.

  19. Tharpo, that’s what it’s all about – the enjoyment of owning your own home, rather than paying someone else’s mortgage. I am sure you will quickly get comments from the doom and gloom squad that will snicker and giggle as they tell you that your 35% will soon be wiped out, or even worse, as is their prediction for all of the housing in every district and neighborhood in San Francisco. Overall, you will find much more pessimistic outlook on this blog than others. But it’s entertaining to read, nonetheless.

  20. Movingback, you’re right. I gave up. There’s no competing with all the uber-definitive language that gets tossed around on here.

  21. “enjoyment of owning your own home rather than paying someone else’s mortgage”
    But yet you guys so easily dismiss the fact that, for most San Franciscans, their rent is a fraction of what a comparable mortgage on same property would be.
    More to the point, forget about doom & gloom or pride of ownership for a second. Ask yourselves this: if you were a first-time buyer TODAY, and were not rolling tons of equity into a property, would you jump into the market right now?

  22. Gloom and doom is a really funny term. Seriously. There’s no such thing if you’re buying a home to own the house in which you live based on reasonable financial principles. If it’s for investment and you’re counting on that whatever % increase, then you have a problem.
    All we need is a good 6.5 M earthquake to scare a few of the migrants off (and offset an impending “big one”) and I might actually be able to afford a hovel in this town. Bring on the doom and gloom.

  23. I don’t know about that nowadays. Rent in desirable areas is pretty steep. I just looked at craigslist. $4000 a month for a 2br flat with parking in Marina/Cow Hollow seemed to be about average.
    So here are the perameters. 200K down on a $1M flat. Factor in the interest deducted. At 6.5 and 30 years, how does buying not make sense there? You’re deducting roughly the same amount you would otherwise be paying in rent.

  24. The problem, fluj, is affordability. A $4000 monthly payment finances $630K, not $800K. Ignoring taxes (both income and property), HOA, commissions, and all of that stuff, you’d need that flat to sell for $830K rather than a million to make it close to break even. Assuming somebody had $200K to put down.

  25. It isn’t a 4K payment. It’s more. But 4K of it will be tax deductible. Also, 6.5% is kind of high for 20 percent down. But yes. The problem is affordability. Not everyone has 200K lying around.

  26. If they only deduction they get is the interest then their mortgage interest payment (i/o loan) would be about 4,333. So their tax savings would likely be $1473 (25% Federal AMT and 9% CA income tax). Property taxes would be about $1k am month and should at least be deductable on state income taxes so that saves $90 (if not subject to AMT then you can deduct those from the Feds and save more).
    For the AMT’er they would pay $4,000 in rent a month or to own would pay $5,333 + HOA but they could have $1483 less withheld from their monthly pay in taxes. So if the HOA isn’t too expensive then the payments are similar.
    This is just an breakdown on the tax consequences of the payment. The owner is still going to have more monthly costs then the renter and is going to have to come up with $200k + closing costs as compared to $8k to move in.

  27. Don’t forget the transaction costs when you sell– 5% realtor’s commission. Without at least a 5.3% nominal price increase during the period you own the property, you will incur a net loss on your RE transaction.
    There’s no mathematical way to persuade anyone with even basic math skills that a $1M condo purchase is cheaper than $4k/month in rent. Its just not possible under any circumstances. Even if you paid for the condo all in cash, you’d lose out on “opportunity cost” of around 5%/year… in addition to all the other ownership costs.
    The same condo priced at $650k– different story.
    When average rents are $6500/mo, then we’ll talk about rent-vs-own. Until then, rent wins every time.

  28. Who said anything about selling the property? We assume the people want to live there longterm. They usually do!
    But it is not unreasonable to think that you might enjoy a 5 percent gain during the time you own a property, as we have seen illustrated countless times on here. You might not. But you very well might do better than that. And like somebody said earlier, factor in how nice it is or isn’t. Rentals can take a real beating.
    It isn’t such a stark difference for this model. You might even get a sub 6 APR in the coming months. Yes it is more expensive. It still makes sense to some, though.

  29. Also, guess what? Go on Craigslist and punch in 2 br Cow Hollow/Marina. Pare it down to places that have parking. I just did. Four thousand is sort of toward the lower end in this market, isn’t it?

  30. I am hoping that prices do drop in our beloved city because we are quietly sitting on the sidelines…but…
    As a Pacific Heights renter, I have seen a few For Sale signs in my neighborhood recently add SOLD stickers to them…so, expensive homes are moving.
    As far as 1580 is concerned: BEAUTIFUL BUT overpriced! The owners paid $500,000-$1,000,000 too much!!!!!!

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