January 15, 2008

Homes On Esprit Park: The Foreshadowing Comes To Fruition

Esprit Park Floor Plan: S102

Two months ago we noticed (and plugged you in to) a subtle change on the Homes on Esprit Park website: The "Anticipated Price Range" for 1 bedroom/1.5 bath homes was changed to start from the “Low $600,000’s” versus the original “Upper $600,000’s.” And at the time, we also called your attention to the introduction of “price guarantees” against future price reductions.

And while the Esprit Park website continues to read from the “Low $600,000’s,” it could technically be changed again to read from the "High High $500,000’s” as the list price for 888 Minnesota #S102 was reduced again late last week, this time from $626,240 to $594,928 (a reduction of 5.0%). And the list price for 888 Minnesota #S115 was also reduced from $635,420 to $603,649 (a 5.0% cut as well).

No word, however, on any movement (either in terms of sales or reductions) for the two and three bedroom units. Or whether of not the offering of price guarantees will be extended (originally for condos placed into contract through December 15, 2007).

A Price Guarantee From (And Proof Of Price Reductions At) Esprit Park [SocketSite]
∙ Listing: 888 Minnesota Street #S102 (1/1.5) - $594,928 [MLS]
∙ Listing: 888 Minnesota Street #S115 (1/1.5) - $603,649 [MLS]

First Published: January 15, 2008 5:00 AM

Comments from "Plugged In" Readers

Wow, a $100,000 drop in two months. At this rate, they'll be giving them away in a year.

I guess an economy that relied on foreigners to hand money to people who never paid anything back that they didn't have to, after wall street, realtors, mortgage brokers, etc. took their cuts, wasn't sustainable. Who knew?

Too bad, those places on Esprit park were really nice.

Posted by: tipster at January 15, 2008 7:46 AM

although predictions are hard to make on specific properties in any market, this one was actually very predictable.

Posted by: spencer at January 15, 2008 8:37 AM

Good to see there are some affordable new housing stock available to the residents of SF in a decent area. Finally!

Posted by: logan at January 15, 2008 8:47 AM

logan, this will be even more affordable in a few months.

Posted by: spencer at January 15, 2008 8:48 AM

I gotta give kudos to the developers for recognizing the pricing issue and aggressively moving down instead of hanging on. Can we officially say yet that district 9 is looking weak for new and recently opened condos?

Posted by: mktwatcher at January 15, 2008 8:58 AM

Regarding: "...was reduced again, this time from $626,240 to $594,928 (a reduction of 5.0%)....was also officially reduced from $635,420 to $603,649 (another 5.0% cut)."

Does anyone care to comment on the use of such exact numbers in a list price? $594,925 rather than $595,000? $603,649 rather than $600,000 or $605,000? It always seems to me to be strange and as a potential buyer, off-putting.

Do buyers ever put in bids in such precise dollar terms? E.g., $594,928 and not a dollar more! It all seems silly.

Posted by: Mark D. at January 15, 2008 9:12 AM

"I guess an economy that relied on foreigners to hand money to people who never paid anything back that they didn't have to, after wall street, realtors, mortgage brokers, etc. took their cuts, wasn't sustainable. Who knew? "

Huh? Foreigners to hand money to people who never paid anything. There's a whole lot more to this than macro gloom and doom. This neighborhood is still transitioning, for one thing. Clerly you don't even know what you're saying in the first place while employing a bit of bombast

Posted by: tipster's dad at January 15, 2008 9:21 AM

Mark, regarding the use of actual numbers, rather than rounding up or down was the subject of a recent study. It showed (slightly) stronger sales when prices were given in actual numbers rather than rounded ones, even when the numbers were rounded DOWN. I think folks at Esprit must have seen that bit of news and are testing it out.

Posted by: Oceangoer at January 15, 2008 10:01 AM

This one was so easy to predict, it's almost comical. These 1 bedrooms (which are quite nice), will probably end up in the mid to low 500's...

So with Esprit's price guarantees, does this mean earlier contracts have been re-priced lower?

Posted by: missionbayres at January 15, 2008 10:17 AM

"Does anyone care to comment on the use of such exact numbers in a list price? $594,925 rather than $595,000?"

$594,925 is exactly 5% less than $626,240. $603,649 is exactly 5% less than $635,420.

I bet the sales office plugged 5% cuts into their pricing spreadsheet and left it at that.

Posted by: Michael at January 15, 2008 10:49 AM

I'm not really sure how much the reductions can be attributed to the downturn. I live pretty close by and am a HUGE advocate of Mission Bay/Dogpatch but those units that are being reduced were originally priced too high regardless of whether there turned out to be a downturn or not. We were talking upwards of 800+/sqft.

In my mind, the reductions are a combination of weaker markets and being overpriced in the first place. In other words, even without the weakening of RE, I think they would have had to lower the prices a bit to sell all the units. I am aware of some units in the area that have recently sold for MORE than they sold for a year ago. So I personally think the area is doing just fine. I'm biased though.

Posted by: luvinmissionbay at January 15, 2008 11:07 AM

I was also curious about the customer-unfriendly prices.

Oceangoier, any links to that study?

I would think $599,000 would be more user-friendly.

Posted by: pwb at January 15, 2008 1:46 PM

The study was mentioned in the latest issue of the Atlantic. It's by some Cornell researchers. Here's a link to the abstract:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1011232

Posted by: tes at January 15, 2008 3:33 PM

". . .the reductions are a combination of weaker markets and being overpriced in the first place."
Exactly luvinmissionbay
And I'd have to agree with mktwatcher on:
"give kudos to the developers for recognizing the pricing issue and aggressively moving down . . . ." (well possibly with the exception of the "aggressively" choice).
But what I don't get is with so much at stake with the price guarantee, how they managed to so widely overprice to begin with.

I do however really appreciate the extra half-bath and would therefore caution those comparing 1BRs on a strictly cost per square basis. These units will definitely be worth more than 1/1 plans over time.

Note to Editor:
Can we see some debate on here as to how much extra folks think the extra half-bath is worth? More of these 1/1.5 plans are getting built - finally! In a perfect future world, could it be that 1BR/1BA plans become viewed as functionaly obsolete? That only Studios and Jr. 1BRs would have 1 bath; virtually all 1BR plans have 1.5 or 2 baths?

Posted by: GoodBuyBadTimes at January 15, 2008 6:28 PM

an extra half bath is a negative thing for me. i would rather ahve the sq footage in the bedroom or living area and not wasted in the bathroom.

for equivalet sq footage, i would pay 30,000 less to have an extra half bath squeezed in.

Posted by: spencer at January 15, 2008 7:17 PM

I agree spencer. The extra half-bath is pointless in a one-bedroom and I'd rather not have to clean it too. It would lower the value for me.

Posted by: diemos at January 15, 2008 8:21 PM

The extra 1/2 bath is valuable for couples sharing a 1 bedroom (for those times when both need to use the bathroom), and for those who don't want guests in the master bath.

For one person living alone, it's not worth the cost.

Posted by: Dan at January 15, 2008 8:45 PM

Dan,
Thanks for your most rational and succinct response. My point almost exactly, but since I've not had a chance to reply previously, here's how I had planned to respond to Spencer:

Most people have lives that sometimes include a spouse, significant other, or at least guests, maybe multiple guests at times -- on occasion or with some frequency. These are human beings. And we find that like us, they poop and pee. When nature calls, we're confident that these guests far prefer rooms with actual plumbing fixtures in which to relieve themselves over a few extra square feet in the corner of the "living area".

Posted by: GoodBuyBadTimes at January 17, 2008 6:58 PM

One thing to note...it is mostly the new construction units they have lowered in price. And they were told they were high to begin with. The bottom price for the lofts in the conversion buildings remains at 799K for just over 1100 sq. ft. High for the area, but the finishes are quite nice. You don't have to pay extra, or "negotiate" for your high end range and fridge. Absorption rate is roughly 3 a month...standard for SF New Dev...and this out in Dogpatch. THOUGHTS?

Posted by: yo yo potrero at January 18, 2008 3:15 AM

"The extra 1/2 bath"

I like it! I like to take my time and be able to finish reading that article.

Posted by: Mike at January 23, 2008 8:39 AM

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