April 1, 2008
A Tripling Of Sales! (After Effectively Reducing Prices By A Third)
Over the past thirteen months only twenty (20) of the 157 condos in the new Eight Orchids development in Oakland have sold. But on Sunday that number tripled in a matter of hours as 41 units "successfully" went to auction.
One of the early single-bedroom condos sold for $316,000, up from a starting bid of $245,000 but well below the original $435,888 asking price. The auction for a three-bedroom, three-bathroom town home started at $475,000, stalled around $528,000 and then quickly ran up to $534,000….That was nearly 34 percent off the list price of $805,888.
The big question, will the extra 41 units now in contract create the momentum needed to move the remaining 96 units at prices closer to list (you know, what those early twenty buyers paid), or has it simply exposed the "new new" market price for all of the units in the building (and perhaps even beyond)?
∙ Luxury condos in Oakland sell at a discount [SFGate]
∙ JustQuotes: Might It Draw Demand From Way Over In San Francisco? [SocketSite]
First Published: April 1, 2008 7:41 AM
Comments from "Plugged In" Readers
"Will the extra 41 units now in contract create the momentum needed to move the remaining 96 units at prices closer to list?"
Is this a real question or an April Fool's Joke??
Of course prices will not move back to "list"; the question is whether the next sale will even be at the auction price after such an unsuccessful auction (which moved so few of the units even at "bargain" prices). SocketSite, the questions you pose usually are thought-provoking, but this one is a bit baffling . . .
Posted by: Robert at April 1, 2008 8:14 AM
Didn't the chron story say that all the units offered sold? As I recall, the developer wasn't trying to clear all the unsold units in the building, but had picked out 41 to generate cash and interest. Sounds like it worked, although it also sounds like they were putting a brave face on it, saying that proceeds were within 5% of what they expected.
Posted by: curmudgeon at April 1, 2008 8:31 AM
This is one of the worst products ever to be put on the market. Period. Its situation is not indicative of the market in the Bay Area...only indicative of the bottom of the barrel in downtown Oakland. And if it hadn't pathetically named itself 88 to pander to the most supersitious of chinese buyers it would be in an even worse situation.
Posted by: grrr at April 1, 2008 8:49 AM
Auctions, auctions, auctions...I love hearing them creep closer to SF. There are several unfinished developments here that I would love to wave a bid card at.
Posted by: Fools Day at April 1, 2008 8:58 AM
As a potential buyer, I would not consider these as comps, and would instead be happy to pay $150K more tomorrow for the same unit next door to twenty of them that sold for $150K less, and if I choose to pay it, a bank should lend to me without worry of an excessive risk of loss, because for this auction, the seller was "overly motivated", auctions are unusual, the auction transaction was not at arms length, blah, blah, blah.
Do the above arguments sound ridiculous? They do to me. Can you believe that some people think they make sense?:-P
Posted by: tipster at April 1, 2008 9:24 AM
looks like the statements that SF/Bay Area housing needs to/will fall 30% before we find a bottom were correct.
Gotta love "mark to market"
Posted by: badlydrawnbear at April 1, 2008 9:45 AM
The answer to the "big question" is in the article
Ken Stevens, chief executive officer of the West Coast division of Accelerated Marketing, said the auction would be used to establish the price for remaining homes at Eight Orchids.
Posted by: badlydrawnbear at April 1, 2008 10:04 AM
So now that those original 20 buyers are at least 100-200k underwater, where's the incentive to even stay in their units? It will be years, if not a decade before they appreciate back to their purchase price (if those auction prices are the new comps).
I would say the risk of those folks walking away and going into foreclosure just increased 5 fold.
Posted by: missionbayres at April 1, 2008 10:47 AM
"Gruendl acknowledged there is a gap between what early buyers paid and the amounts agreed to at the auction. "But not enough that existing homeowners should lose sleep," he said."
Are you kidding? What a completely cavalier statement by the developer.
We're entering a new era in which many buyers are going to learn the hard way that developers are only worried about their bottom lines and not those of their customers.
Posted by: Michael at April 1, 2008 11:04 AM
What percent drop in value should cause a buyer to loose sleep? Is there a point of oversensitivity to home value (I know, oh no, not here!)
Posted by: fred at April 1, 2008 1:01 PM
i think once you buy a house in this market, its time to stop reading blogs and online realty sites.
Posted by: mrbogue at April 1, 2008 1:59 PM
If you are a homeowner or currently looking, I think this as well as other sites should serve more for entertainment, than for actual information or advice. Most postings and comments on here are negative and argumentative towards property in San Francisco and prices in general.
Posted by: movingback at April 1, 2008 2:07 PM
"We're entering a new era in which many buyers are going to learn the hard way that developers are only worried about their bottom lines and not those of their customers."
I had no idea buyers thought the developers were working for them, is that like how a real estate agent only has my best interest at heart and doesn't care about commission ?
Posted by: Snafu at April 1, 2008 3:06 PM
"Most postings and comments on here are negative and argumentative towards property in San Francisco and prices in general."
That's right and we all know that prices in San Francisco can only go up, sales volume isn't falling and nobody is having trouble selling or cutting prices. Click your realtor heels together three times movingback and repeat after me...there's no time like 2005, there's no time like 2005, there's no time like 2005...
Posted by: Michael at April 1, 2008 3:26 PM