“The number of Americans signing contracts to buy previously owned homes declined more than forecast in February, indicating no sign of a bottom in the U.S. real-estate recession that is entering its third year.
The National Association of Realtors’ index of signed purchase agreements decreased 1.9 percent to 84.6, the lowest reading since records began in 2001, the group said today. The drop follows a revised 0.3 percent increase in January.”
“Pending resales dropped in three of four regions, led by a 9.8 percent decline in the West. Purchases fell 5.5 percent in the South and 3.7 percent in the Midwest. Pending sales increased 3.2 percent in the Northeast.”
U.S. Economy: Pending Home Resales Fell More Than Forecast [Bloomberg]

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Comments from “Plugged-In” Readers

  1. Posted by cooper

    I wonder how closings and sales are doing at ORH and Infinity. Socket site has not covered this in a while. I need my ORH and Infinity closing update fix. No better canary in the coal mine that these.

  2. Posted by Foolio

    It’s a great time to buy a home!

  3. Posted by fluj

    There are currently 472 properties pending in the SFARMLS for regions 1-10: 177 SFRs, 227 condos & TICs, 51 2-4 units, and 17 5+. It would be nice to do a yoy on that but we can’t for a number of reasons. Four hundred seventy two certainly isn’t a number that appears scary, especially the condos tally.

  4. Posted by Robert

    San Francisco house prices will fall by 10-15% during the next 12 months.

  5. Posted by Dude

    “It would be nice to do a yoy on that but we can’t for a number of reasons.”
    Oh, but we can! At least we can come close. Check Trulia’s general market stats.
    # of sales in Q1 2003: 1,433.
    # of sales in Q1 2007: 1,351.
    # of sales in Q1 2008: 801.
    Looks to be about a 40% drop in sales YOY if their numbers are correct.
    http://www.trulia.com/real_estate/San_Francisco-California/

  6. Posted by San FronziScheme

    San Francisco is great
    San Francisco is desirable
    San Francisco is rich
    But…
    1 – San Francisco is overvalued.
    I rent a 1.5 Million house for 3000/month in Noe since mid-last year. This place would cost me 10K+/month including mortgage, repairs (always provision 2% of the value of the house a year), opportunity costs (the huge downpayment needed is locked and could get 3.5% in a CD). Of course, there is appreciation to pay for this. But counting on price increases to pay for the basic stuff is so 2005.
    2 – San Francisco is not insulated from the real world.
    I see it like a sand castle on the beach. The waves go after the outside wals but the tower stays intact. Until the foundations are undermined and the whole thing collapses.
    3 – The world has too much borrowed cash.
    Some people have been running around with millions in their pockets. Google money, real estate money, tech money. Some of this cash is “hope” cash. Like $700/share Google in “hope” Google becomes a Trillion-dollar company. Now gravity takes over and hope slowly fades away. This overstock of cash will have to be burned to re-balance the financial universe.
    What better place to burn it than in the SF real estate?

  7. Posted by fluj

    The MLs shows 950 sales for the first quarter ’08. There will be another group that’s uncounted also, the truly unlisted peer to peer FSBO sold(s). So who knows. But I’d wager Trulia is off by about 300 sales or so, minimum.

  8. Posted by 99paa

    fluj, why wouldn’t trulia’s past numbers be off by the same amount? If it’s off by 300 this year, wouldn’t it have been off by at least 300 (since past years had higher volume) in the prior years?
    Is there a reason why we can’t rely on its numbers as at least indicative of an overall approximately 40% decline in volume? thanks.

  9. Posted by mrbogue

    I’m actively looking in nice areas of the east bay, but i’ve noticed that the open houses seem to be packed with folks like sardines. Several houses that have caught my eye have been swiped up within a week. I’ve read so much about the impending housing glut, we’re in a recession, depression eminent, etc. but what i’m actually seeing is contrasts against what i’m reading in the news/blogs.
    Whats up? The days of the Ninja Loans are over right? Credit Crunch is upon us right? but it appears folks have no problem overbidding on homes still, ugh.

  10. Posted by Dude

    As 99paa states, the unlisted FSBO factor would be a constant throughout the past few years and is irrelevant (same then as now).
    But if the Q1 sales number is 950, or even 1,000, sales are still down by 20%+ YOY, are they not? And what about inventory? Listed MLS inventory is also up significantly, is it not?

  11. Posted by fluj

    99paa, I guess it would be logical to assume that Trulia was off in the same way last year as this year. Sure. The MLS had 1386 sales for Q1 07. That would be a 40% decline in volume. But why is Trulia so wrong?
    Incredibly, the MLS also showed 2406 sales in ’00 and 1388 in ’01. That’s a 42.3% falloff yoy Q1. A precipitous volume falloff directly preceding the biggest value runup ever!
    In my opinion you need to put finer points on all of this stuff. What’s selling? Who is in the marketplace? What’s for sale? Where? etc.

  12. Posted by fluj

    Off the top of my head, what did ’00 and ’08 have in common? That’s right. They are/were both hotly contested presidential election years. That’s just one factor that is happening right now. Dismiss it if you want, but it’s real. People tend to not make enormous purchases when they don’t know which way the wind is blowing.

  13. Posted by Dude

    Umm…fluj, you do realize that the dot-com bubble popped in 2001, right? Small wonder sales fell from 2000 to 2001. And wasn’t ’04 also an election year? I believe presidents are still elected for 4 and not 8 year terms.
    “A precipitous volume falloff directly preceding the biggest value runup ever!”
    C’mon, fluj, that almost sounds like Prime. And you’re better than that. Either you’re actively cheerleading here and making an association you know to be wrong, just to refute gloomy numbers and spite the bears…..or you honestly believe the current volume falloff will be followed by an equally large value runup. Million dollar Tenderloin studios in 2012?
    You can argue specific properties, presidents, hemlines, and superbowl winner effects all day long. But from a city-wide perspective, 1) sales are down and 2) inventory is up. Tough to argue with that.

  14. Posted by Foolio

    “Incredibly, the MLS also showed 2406 sales in ’00 and 1388 in ’01. That’s a 42.3% falloff yoy Q1. A precipitous volume falloff directly preceding the biggest value runup ever!”
    Fluj, what did prices do during the 2000/2001 volume falloff you cite?

  15. Posted by tipster

    @Foolio
    Prices barely budged in 2000. Volume dropoffs *precede* price declines.
    But before the price declines started in earnest, Alan Greenspan set up a situation in which investors, starved for yield, threw money at “can’t lose” housing, pumping prices right back up and then some before the volume dropoffs had any effect.
    But today, banks like Washington Mutual are writing off *billions* in bad loans, cutting their dividend, shutting down their wholesale lending and closing separate lending branches. They had to if they wanted outside money to come in to keep them afloat with all of the existing bad loans.
    This tells me there is going to be much less money to keep the housing bubble pumped up as high as it’s been, let along pump it higher, like we did in 2000.
    The volume declines coupled with a dearth of capital will ensure that prices continue to fall.
    If the capital returns, we have minor declines. If the capital stays away, the price declines will be significant.
    But don’t count wall street out yet: there’s too much money to be made by Wall Street in housing. Or at least there was.

  16. Posted by Dude

    Apologies, completely off topic. But the Center for Economic and Policy Research recently released a paper comparing renting vs. owning in 20 major US cities (SF included). There’s been much discussion here on SocketSite about how disconnected prices are with rents, or how we’re still cheaper than New York. This is a short but decent report which compares rent vs. buy, across the cities. By their metrics, we’re definitely in a large bubble. Owning vs. renting here is a worse trade-off than in New York, but better than LA. The projected equity of homeowners after 4 years is the really interesting part…..the report can be found here:
    http://www.cepr.net/index.php/publications/reports/the-cost-of-maintaining-ownership-in-the-current-crisis/

  17. Posted by fluj

    Dude,
    Stop. I did not extend any trends. I mentioned something that happened. I’ll leave the prognosticating to others. I just pointed out that the last time we saw a VOLUME shift like this YoY it was also in an open election year. 2004 had an incumbent.
    As to the point about the dot com burst, sure, I’ll agree that also contributed to a blip on the radar. But for the most part history has shown us that that effected rents more than anything. The race was not off, but on, after the greatest capital reversal since the waning days of the Gold Rush.
    Here’s my point. Why is it logical to assume that this steep of a volume shift will directly precede a steep value falloff? The last one did not.
    You can make a case for why it would. But you would merely be making an assumption. And most of us probably assumed RE would tumble after the dot com boom. I did.
    Don’t discredit open elections. Wall Street doesn’t. Crazy stuff happens with new presidents, such as oil prices getting manipulated. Granted, last time around China and India didn’t consume as much.

  18. Posted by akrosdabay

    “Here’s my point. Why is it logical to assume that this steep of a volume shift will directly precede a steep value falloff? The last one did not.”
    The last one did not because of the reasons for the current run up. Greedy lenders and investors that are being skewered right now.
    Unless there is another bubble to offset the deflation of the current one. Which is very slim to none possibility.
    I doubt any bubble could get common folk who just lost a tonne of money in home values to pony up cash to inflate it.
    The main reason this bubble is so large and devastating is too many average j6ps got in thinking they can make it big.

  19. Posted by tipster

    The two effects that were here in 2000 and now were and are the outflow of capital that can be used to buy houses, normally from incomes, boosted until 2000 from the dot com boom showering money from investors into locals who bought houses, which dried up in 2000, and then until 2008 from mortgage investors, which is drying up.
    However, the uncertainty of an election is a much better excuse if you are a realtor, because that reason is short term, and bound to end no matter who wins, leading everyone to believe that a turnaround is 7 months away no matter what, and so you should buy *now*, or be priced out forever.
    I’d say Fluj wins this argument! He found the perfect excuse to get people to BUY NOW, in spite of an obvious precurser to lower prices – lower volumes… by 40%! For that, he has my respect.

  20. Posted by Dude

    I think fluj knows full well what drove the last run-up, he just likes to argue. But the fact that San Francisco prices are demonstrably falling now doesn’t help his position (and I make that comment based on Case-Shiller numbers and DataQuick/NAR medians, which are down from their respective peaks).
    But, as always, let’s let the market tell its own story. 2008 will be an interesting year. San Francisco real estate has NEVER been so overpriced relative to incomes or rents. Lending standards were NEVER as loose as they were in ’02 through ’06. Foreclosures have NEVER been this high. We really are in uncharted territory. And in the context of the current macroeconomic environment, I highly doubt these price levels are sustainable, just stickier than the east bay or central valley. But we’ll see what happens.

  21. Posted by fluj

    Yeah but I’ve never told anybody to buy or sell on here, Tipster.
    You guys are just bubblists in the end. It’s only a theory.

  22. Posted by fluj

    And again, the MLS is the only database that matters to me, and I have continually shown price remaining static … sometimes a bit higher, sometimes lesser. You guys like to seize on condos. I prefer SFRs as indicator. It’s a bit of a broken record really. Condos are taking a hit. That’s because there are a lot of them.

  23. Posted by akrosdabay

    “You guys are just bubblists in the end. It’s only a theory.”
    You are a Realtor in the end. Your paycheck depends on it.

  24. Posted by Gavin

    fluj, I am curious why you believe that changes in the price of condos and SFRs are not related.
    They need not be related “one for one” but if condo prices fall say 30% will SFRs
    1. Not fall or rise
    2. Fall between 0 and 30%
    3. Fall more than 30%

  25. Posted by the real question

    where has satchel been lately? this thread seems made for him…

  26. Posted by Dude

    “You guys are just bubblists in the end.”
    Actually, we prefer the term “bubble sitters,” since most of us plan to buy once it makes financial sense again. People with your views are usually labeled “bubble deniers.”
    However, I think “bubble atheists” is a better term: you actually realize there is a bubble, but refuse to publicly acknowledge its existence presented no incentive to do so. In any case, it’s that difference of opinion that keeps SocketSite interesting.
    Out of curiosity, how are April sales coming along? Because spring officially started on March 20th. We’re now nearly a month into the “spring bounce,” and I’m curious to see the effects.

  27. Posted by akrosdabay

    “And again, the MLS is the only database that matters to me, and I have continually shown price remaining static … sometimes a bit higher, sometimes lesser. You guys like to seize on condos. I prefer SFRs as indicator. It’s a bit of a broken record really. Condos are taking a hit. That’s because there are a lot of them.”
    A little too frog in a well, no?

  28. Posted by luvinmissionbay

    I probably didn’t read the article above “http://www.cepr.net/index.php/publications/reports/the-cost-of-maintaining-ownership-in-the-current-crisis/” closely enough but it seems very flawed.
    Dude, I agree that it is cheaper to rent than purchase in SF but I think that difference is MUCH more minimal than the article suggests. I wanna know what home in SF for which the mortgage would be $4000/mo that you could rent for $1500. That’s a complete joke. The current home I own in which my monthly expenses are in the $5000/mo range would very easily rent for at least $3500/mo and possibly closer to $4000/mo. Take away the tax deduction for the property taxes and interest and my monthly outflow is less than it would be to rent. Now you figure in the opportunity cost of my equity being tied up and I TOTALLY agree that I’m better off renting but it’s a MUCH closer call than this article suggests. It really calls into question the integrity of the article when it’s SO far off on that particular point.

  29. Posted by Lance

    @ Dude:
    I also like Trulia, but those numbers don’t make sense. According to Dataquick, sales for Jan and Feb alone were 724 (down only 60 or so from LY). Remember last month that sales in SF were actually UP by 15%. March sales volume was 640 units last year, so unless sales dropped off 80% in March, these numbers just don’t add up.
    I suspect Trulia’s March 2008 numbers haven’t been updated yet. We should know more when Dataquick releases in a few days, but I wouldn’t count a 40% drop in volume for the quarter.

  30. Posted by tipster

    “where has satchel been lately? this thread seems made for him…”
    Someone called him an as*hole in a thread in which he hadn’t even posted. He hasn’t posted since. If that was the cause and not a coincidence, I suppose made the person who did that very happy.
    I really wish the personal attacks would stop. Geez attack me personally all you want if you feel it will help, I dish it out so I can certainly take it, but perhaps not everyone else. Attack our ideas with facts night and day. But calling someone names because he makes out a very logical case for a housing downturn is really unwarranted.
    The Realtors are going to make lots of money on the way down just like the way up. It’s when the expectations of the buyers and the sellers are out of alignment that things get tough for Realtors. Someone like Satchel was really helping, not hurting, your cause.

  31. Posted by view lover

    the opportunity costs seem less of an issue with interest rates as low as they are and the general performance of other stock and the economy. There is alot of risk with “opportunity” costs as well, we always assume that the money will grow at a certain rate, but thats only if you invest in bonds. I’d opt to live in a nice house than worry about opportunity costs at this point.

  32. Posted by Dude

    @ luvinmissionbay:
    The methodology they used in the report was described in their appendix, and I agree some of their numbers are questionable. But I’ll try to recreate the analysis with numbers we can all verify.
    First, take the median home price in the market ($736K here in SF per the latest dataquick numbers) and multiply it by 75%. This assumes the average rental unit is not as nice as the median home sold, a valid assumption. This gives you a price of $552K. For financing, they assumed a 30-year fixed mortgage at 6,7, and 8%. Now, you need at least 10% down these days, right? So a $552K purchase with 10% down at 7% over 30 years is a mortgage payment of $3,300 per month. That’s Part A of the analysis. Part B: what would a comparable property rent for? If you look at the MLS, there are several homes for sale in the city for around $550K. Most are in Bayview and Visitacion Valley. From looking at craigslist, seems these places usually rent for around $2,000 per month, +/- $300 depending on how nice they are. Now, dividing $3,300 by $2,000 gives you 165%, which is still well over the 50% comfort level they mention, although not as high as the 260% multiple their analysis implies. So in essence, we’re in agreement that their numbers are exaggerated although their point/conclusion seems to hold.
    @ Lance:
    Yeah, those latest reported DQ sales numbers were questionable at best. As I recall, they didn’t jibe with the local MLS or any other published stats – they were much higher, to the extent that even our esteemed editor(s) were dubious:
    http://www.socketsite.com/archives/2008/03/san_francisco_reported_sales_activity_in_february_up_14.html
    The Q1 YOY drop may not be 40%. Maybe it’s 20%. We’ll see. Regardless, sales are still down, inventories are still up, and prices are still disconnected from current economic reality.

  33. Posted by fluj

    OK then, @ “Bubble Atheists”
    First off, “frog in a well” akrosdabay? That’s a new one on me!
    Secondly, if I am not mistaken here is the bubble methodology in temporal order (for San Francisco anyway):
    a. Dot com liquidity caused the beginnings of a large market shift
    b. In RE terms, the Dot com bubble was supplanted by another bubble, the Fed/mortgage industry bubble.
    c. Fed mortgage bubble expanded for at least five years (2001 -2006)in San Francisco
    d. The mortgage shakeup in September 2007 marked the Fed/mortgage bubble deathwatch (not really explaining why many were screaming “death knell” for nine months of 2007, but I digress …
    e. The SF market has been sustained since by another, smaller bubble. This “bubble” is tech/Web 2.0 and its subsidiaries. Its liquidity is finite, therefore the “death knell” cries circa Q1 2008
    So that’s it, right? I understand where you guys are coming from. I mean, I think it’s bullshit, but I get where you guys are coming from.
    My chief criticism of the theory is this. The Bank of Mom and Dad, a k a Baby Boomer Union, has had a whole lot to do with liquidity at every step of your various bubbles imploding and/or being supplanted by other “bubbles.” I just witnessed it firsthand again, selling a ~3M property that is pending. It was almost all Baby Boomer money. (anecdotal, of course. But it’s still happening and it is an unmeasurable liquidity resource.)

  34. Posted by San FronziScheme

    Whatever the statistics, volumes are way down. Only the delusional and people with tons of play money are there. And despite the pep talk, Realtors are hurting. Less make deals. And the ones that do them get less volume.
    But prices are sticky in this town.
    For us the little guys, our only power is not to buy when prices are too high. But we’re running against a very potent stream:
    Everyone in the RE business is paid on how much they CHARGE you, not how much they make you SAVE.
    Now if I could meet ONE Realtor that would get his commission based on his negociating power, that would be the day.
    Say I want a 3-BR condo. One is for sale at 800K.
    My agent goes there and his commission breakdown would be:
    12K fixed
    PLUS:
    15K if the final price is 91% asking
    12K if the final price is 93% asking
    9Kif the final price is 95% asking
    6K if the final price is 97% asking
    3K if the final price is 100% asking
    0K if the final price is > asking
    Now, THAT would push Realtors to fight for their client’s interest, not this blatant conflict of interest we have now.
    In the mean time, I’ll keep my Mils and enjoy the hissing sound.

  35. Posted by fluj

    San FronziScheme,
    You can indeed cut deals with realtors. Your hypothetical deal seems fair. I would add in an hourly wage for time spent in the advent of a 6K or less payday.
    It seems like some of you buyers should look into small outfits. Brokers who can set their own rules and are comfortable doing so. Caveat, that is not me.

  36. Posted by san FronziScheme

    An excellent graph about all the NAR spin.
    http://bp0.blogger.com/_SfxDExxUukY/R-he5fB56aI/AAAAAAAAASk/JiIYUiK914o/s1600-h/nar_rid6.JPG
    Are they just plain stupid or do they have an agenda?

  37. Posted by San FronziScheme

    Fluj,
    I agree small outfits might be the ones who will profit from this situation. In deperate times, the craftier sometimes win.
    The best deals I had as a buyer came from no-limits sales people. We’re talking about European mid-90s desperation with 60% declines in some depressed areas. Sales guys litterally needed to put bread on the table and some sellers were desperate too. The ones who couldn’t wait (life happens) sold at a huge discount, and the slump lasted 6+ years.
    Today, a lot of the Realtors still standing are pretty wealthy (if they didn’t themselves buy into the 2000s RE Ponzi Scheme like many did in Florida) and can afford to wait. But can their clients do the same?

  38. Posted by akrosdabay

    “So that’s it, right? I understand where you guys are coming from. I mean, I think it’s bullshit, but I get where you guys are coming from.”
    I understand where you are coming from, with the same sentiment, fluj.

  39. Posted by tipster

    “So that’s it, right? I understand where you guys are coming from. I mean, I think it’s bullshit, but I get where you guys are coming from.”
    The bank of mom and dad has been around during the entire time. What was ALSO around during that time was money flooding in, either from dot com IPOs or from zero-lending-standards mortgages.
    Will the bank of mom and dad survive? Absolutely. It’s been around and it will continue to be around. But that wasn’t 100% of the market. A good chunk of the market has disappeared.
    What has disappeared is the unlimited funds for anyone with a pulse. What has also disappeared was funds provided with no risk premium, making them cheaper than other options. Your payment with a Neg Am zero down loan was WAY lower than your rent payment. Those are gone.
    Nice to hear you “think” it’s bullshit, but until you replace the money with another source, or make homes cheaper, your volumes of buyers will stay low.
    How that affects prices will depend on the volume of sellers. If the economy doesn’t drop like it seems it is dropping, the effect on prices could be minor. If the economy drops, the effect on prices will be much more pronounced, because people will want to move to chase other opportunities.
    Have you seen the farming and oil belts lately? That’s where the opportunities are for people looking around these days.

  40. Posted by fluj

    Other critiques: you also completely discount any and all notions of SF undervaluation. You seem to think that nowadays the entirety of Bay Area liquidity is comprised of tech and web. You also for the most part discount gentrification. .

  41. Posted by Dude

    fluj, some of your comments are so non sequitur I almost laugh out loud reading them. Forget Google millionaires and rich foreign investors. Now boomer parents are propping up San Francisco with their “unmeasurable” liquidity. Thank you for that one, seriously.
    But I accept your anecdote. Here’s one of my own: I just called my mom to ask for half a million dollars to spend on a condo the size of my childhood bedroom. She said no, thought I was crazy. So I said, “But mom! You can sell it to somebody else’s parents in a few years for a million bucks!” She didn’t buy it. Looks like a draw in the battle of the anecdotes. Got any other good theories?

  42. Posted by fluj

    Dude, scoff if you want. The boomer parents helping to finance homes is real, ongoing, and everybody in real estate acknowledges this as fact. And surely you only should have asked your mom for a hundred thousand for a tiny condo?

  43. Posted by tipster

    “you also completely discount any and all notions of SF undervaluation. You seem to think that nowadays the entirety of Bay Area liquidity is comprised of tech and web. You also for the most part discount gentrification.”
    No, I understand that there are other sources of income, but those other sources have been around too. What I look at is what sources are drying up, and whether they are being replaced by any other sources. When IPOs dried up, things briefly dipped, but then that money was replaced by easy mortgages.
    But now the easy mortgages have dried up, and tech is certainly slowing down and I’m missing what is going to replace them. Bank of mom and dad? No that just keeps the old BOM&D figure constant. Might it go up? Yup, by a few percent even. But Alt A mortgages were 70 percent of the market. Now some of those people will switch to other sources of funds, but not all of them and not even most of them. Unless you replace that source of money, demand falls and supply stays the same. That’s a recipe for lower prices however you slice it.
    And undervalued SF? It was a bubble. B U B B L E.
    Nothing was undervalued in a bubble.
    What you have been spouting sounds more like NAR BS than the flujisms we’ve heard in the past months. Bank of mom and dad isn’t going to increase by as much as free and easy loans decrease. Got any other theories?

  44. Posted by Foolio

    New lazy RE indicator…number of fluj posts per diary.
    Methinks he doth protest too much…and have too much time on his hands for a healthy market…

  45. Posted by fluj

    So Tipster your answer to my query about undervaluation was placing the word “bubble” in all caps?
    Um, OK. I know you believe in that theory. BIG TIME.
    And Foolio, I am in front of a computer and on the phone with four screens open at least half of the day, every day. Point taken about posting too much tho. I’m going to slow down. Frog in the well and all that.

  46. Posted by San FronziScheme

    Sign that things are really really quiet on the SF RE side:
    This TIC has been up for sale for ever:
    http://www.redfin.com/stingray/do/printable-listing?listing-id=361417
    This is not destnied to be a live-in TIC, mainly a rental unit.
    In theory, this should be a sweet deal. You can get 1200 to 1400 with this rental market, even for awfully located ground floor studios.
    But you cannot fool the real landlords.
    Adding the cost of owning, rent taxes, rent-control constraints (provision the locking of the rental price vs. cost of owning increases), and the mortgage/opportunity cost, owning this place to rent doesn’t make sense at more than 80K period. Which is why this has been sitting for 441 days.
    Get back to owning your home when the landlords get back into the market (and I’m not talking about wanna be ORH flippers stuck with their overpaid condos). They’re the canary in the coal mine and so far the canary is enjoying a Mojito waiting for the dust to settle.

  47. Posted by FSBO

    San FronziScheme – I agree with your conclusion that it is all but impossible to get positive cash flow from a rental unit. Most properties are priced 2-4X too high by this criterion. In your TIC example, I might go a bit higher than your $80K (maybe to $140K) – but nowhere near the asking price of $250K. Don’t know the size of this property – but cash flow positivity probably requires a selling price of no more than $180 per square foot. We’re told that minimum building costs in the city are $200 psf (exc land). How does that gap ever get closed? How can anyone build rental units in San Francisco (not that many are trying)?

  48. Posted by Rillion

    “This is not destnied to be a live-in TIC, mainly a rental unit.”
    Kind of hard for it to be a rental unit since it was Ellis’d and can not be rented out for over a year still.

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