December 21, 2007
While One Marina Data Point Closes Escrow, Another Is Withdrawn
1774 Beach Street closed escrow yesterday with a reported contract price of $1,410,000. Having last changed hands for $1,345,000 on 10/31/2006, and without any major improvements since the last transaction (as far as we know), the sale suggests annual appreciation of 4.2% over the past 13 months. (Obviously the seller must have underpaid in 2006...)
On a related note, the listing for 3324 Octavia #4 which was last asking for $1,000 less than what the sellers had paid in 2004 has been withdrawn from the market after a little under two months.
∙ Listing: 1774 Beach Street (2/2) – $1,345,000 (sold) [1774beach.com]
∙ When Good Comps Go Bad (Down In The Marina) [SocketSite]
∙ Another Apples To Apples Comp In The Making (In The Marina) [SocketSite]
First Published: December 21, 2007 8:40 AM
Comments from "Plugged In" Readers
First, thanks sigh, for giving me a well deserved wake up call the other day, over how bloviating and condescending I'd become. Apologies once again to all from the gentler bear Satchel! I would ask another chance.
Now, I think this is really an instructive post for what I've been talking about. "a reported contract price of $1,410,000. Having last changed hands for $1,345,000 on 10/31/2006"
So, after commission, the seller only lost a little I guess. Although we do not know exactly all the tax assumptions, etc., I would throw a rough estimate of an after-tax opportunity cost of money of between 6% and 8% for most purchasers (which includes an estimate of property taxes and HOA - very rough). So, I guess we can say that the seller efectively "rented" the property for somewhere between $6.7K and 8.9K per month. Good deal or not, I really can't say, perhaps it was for this buyer, but it seems like you could have gotten some nice rental property for that price.
For the Octavia property, well, that is becoming pretty expensive now, but perhaps the price will come back.
These two properties also illustrate what I was talking about, the selection bias in the data. The good (or reasonable deals) sell, and the sales data gets into the stats; the bad deals don't, so the owner withdraws the listing because he is unwilling to "take a loss", although of course in real terms he has already absorbed the loss. That sale doesn't get into the data series, but its absence is perhaps hinted at in the lower volume figures?
Now I'll shut up :)
Posted by: Satchel at December 21, 2007 9:30 AM
4.2% appreciation in the first year of purchase is not bad, especially in a year that was supposed to be catastrophic for 2006 buyers.
Posted by: sanfrantim at December 21, 2007 9:34 AM
"Obviously the seller must have underpaid in 2006."
I do not understand this part of the post. Was this meant to be factual or sarcastic? Sorry, my intonation meter is not active this morning.
Posted by: enonymous at December 21, 2007 9:42 AM
Seriously, why are there so many resales of million dollar homes and condos that were purchased less than two years ago? Don't people put some longer term thought into these purchases?
It seems crazy to buy and sell properties priced this high under 24 months and yet you see it happening time and time again (often with the same property) in the marina and similar areas.
Posted by: HighEndFlippers at December 21, 2007 9:43 AM
This is also a great example of the change in the mix. The "really done up" home sells, the "needs some work" home doesn't. The median skews upwards.
Posted by: tipster at December 21, 2007 11:17 AM
"Was this meant to be factual or sarcastic? Sorry, my intonation meter is not active this morning."
My experience is that most statements followed by the "..." in message boards and blogs are sarcastic or 'snarky'.
Posted by: Rillion at December 21, 2007 2:10 PM
"Seriously, why are there so many resales of million dollar homes and condos that were purchased less than two years ago? Don't people put some longer term thought into these purchases?"
My guess is that they buyer may have been hoping for a 15-25% annual appreciation which would have made such a short term hold quite profitable.
Or they intended to hold about five years but are now seeing a darker outlook and have decided to cut their losses.
Probably a smart move to sell now.
Posted by: The Milkshake of Despair at December 21, 2007 3:32 PM
They are pretty lucky to get out unscathed and do breakeven...proof that you have to depend on a good location when selling. There are two overpriced lower flats on Alhambra now but not much else down there.
Posted by: gh at December 21, 2007 4:10 PM
Buying and selling a place like this in a 13-month window seems very odd. Maybe it was a job transfer. But given all of the brain-damage and stress involved in any housing purchase and sale, in factoring in the "gain" or "loss" I think I would also include the loss of personal time, the stress coming and going, etc.
At least day-traders during the internet boom could stay at home in their pajamas and didn't have to deal with movers, contractors, etc.
Posted by: wonkster at December 22, 2007 12:22 PM