August 15, 2008
When Being “Priced Out Of The Market” Is A Blessing In Disguise
A first-time buyer across the bay picks up a “three-bedroom, two-bath house in East Oakland, for $199,500. The previous owner had paid $475,000.”
Perhaps being “priced out of the market” was a blessing in disguise. The previous owner? Not so blessed.
UPDATE: And simply speaking of the East Bay (but not this neighborhood in specific):
I live in Maxwell park, West of 580 between Foothill and High and have great feelings for the neighborhood, which sees a lot less violet crime than the Laurel. (many house break-ins when school is out, though). It's a great deal considering proximity to BART, hiking, organic grocery stores and GINORMOUS lots (which the laurel does not have). Around 150K less than the laurel, 200K less than the Dimond. Great winding streets, too...
∙ Doors open for first-time home buyers [Business Times]
∙ For A Select Few First-Time Buyers Willing To Cross The Bay [SocketSite]
First Published: August 15, 2008 10:30 AM
Comments from "Plugged In" Readers
How is Albany and El Cerrito doing?
I'd like to move out of SF eventually. This is no place for kids
Posted by: Zig at August 15, 2008 10:45 AM
I assume this house was purchased via auction. Where does a person go to learn of these upcoming auctions?
Posted by: Jeff at August 15, 2008 10:46 AM
perfect timing, we talked about homes in the east bay $190K or less yesterday too. It's nice to see buyers actually buying!
Posted by: garrett at August 15, 2008 10:48 AM
That house is gross
Posted by: McBravio at August 15, 2008 10:54 AM
It's 199K?! What do you expect? Not everyone can live in the 6 bedroom 7 bath house in Pac Heights that you live in.
I think it's actually kind a nice little house (though the neighborhood is probably dodgy)
Posted by: anon at August 15, 2008 10:58 AM
Not much curb appeal but it looks 10x nicer inside than half the places I've seen in San Francisco for 5x the price!
Posted by: Anna at August 15, 2008 10:59 AM
Eh, it's a fine place for kids, depending on your neighborhood and if you manage to get good school placements (or can swing a good private school - not as hard as it seems, most have generous scholarship programs aimed at middle class parents). There's a lot of activities and support and it's possibly easier to keep the older kids occupied and out of trouble than in the suburbs. And when they reach the older teen years, there's so many opportunties to explore career and academic interests.
What its not so great for, frankly, is growing older. There comes a time when you just want a quiet walk around the block unmarred by yuppies and hipsters and hobos. And there's no porches here to sit and knit on. I like raising kids here but will probably retire somewhere else once the last one is of high school.
Posted by: kthnxybe at August 15, 2008 11:00 AM
Perhaps being “priced out of the market” was ... a blessing in disguise. But only across the bay of course…
When I first moved to SF everyone I met told be to go ahead and buy, that I would be "amazed" at how easy it was to get a mortgage and how much I could qualify for. My emotional side wanted to buy but my rational side told me it would be a mistake that the bubble was on the verge of bursting and that I would, at best, be trapped with a mortgage that was more then the home was worth and I wouldn't be able to sell without taking a big hit. I waited and I am so so so happy I did.
I know now when I do buy it will be at much lower price, with a traditional mortgage that won't keep me up at night worrying about how I am going to pay it.
Posted by: badlydrawnbear at August 15, 2008 11:01 AM
If I didn't have to cross the bay bridge to get to work I'd have no problem living in Oakland. There are tons of affordable places there.
Posted by: Michael at August 15, 2008 11:11 AM
I don't see the price mentioned anywhere.
And, if it was indeed sold as an auction, doesn't he have to pay the $199K outright? If that's the case, he wasn't "priced out of the market". He was smart waiting.
Oh, by the way, with the mortgage rate right now, if you were really "priced out of market", you are now "mortgaged out of market". Price may be lower in SF and other good south bay neighborhoods, but mortgage is higher. With the 20% (even 25%) down payment requirements, even fewer people can afford to buy now.
Cash is the king. That's what the difference is. If you had cash and was willing to wait, you can certainly get some good deals right now.
Posted by: John at August 15, 2008 11:14 AM
East oakland is street-to-street at best, kind of like bayview, where there are deals too! The article blurb is (understandably) not too specific about the address.
But the inside looks charming (probably much nicer than comp rentals in the area), and if *forced*, I'd probably buy this than pay almost 50% more for a watercloset at cubix.
Hope it works out well for him!
Posted by: dub dub at August 15, 2008 11:43 AM
Zig - Albany is doing pretty well and still a good value, IMO. Smaller lots and homes that in Berkeley, but good schools and close to all the things that make Berkeley a nice place to live. El Cerrito is going down in value, and their school system is not so good. Kensington is a pretty good bet if you want to live over there and care about schools, but by middle school the system merges with El Cerrito's school district and that is not so good.
Posted by: The Bunk at August 15, 2008 11:51 AM
"Cash is the king. That's what the difference is. If you had cash and was willing to wait, you can certainly get some good deals right now."
Well said, John. We seem to be agreeing on more and more things these days. The deals will only get better for those with substantial cash holdings. That's the beautiful smell of deflation.... To paraphrase the great Patton (from the movie, who knows if he actually said it?) upon surveying the destruction and stench of the battle's aftermath, "I love it. God help me. I do love it so."
On the total opposite side of the scale from this modest east bay property. We went to a large Tiburon new construction home (5000 square feet) - friends of mine know the builder well. It's failed to sell at $4.5M all the way down to $3.7M. Builder absolutely can't go any lower (paid $1.25M for the lot 3 years ago). He just rented it for $7500/mo, which just ain't going to cut it. the builder's got 2 other spec properties... I bet we get some real firesales in a year or two...
Posted by: Satchel at August 15, 2008 12:00 PM
SF, I am sure, is a decent place to raise children (my brother was raised here as were many cousins) but the public high schools and the lack of other children and the weather in the family hoods and some of the other ills make me leery
I kind of like the idea of places in the inner East Bay like Albany because they have many of the same benefits of the City (and access) with fewer ills.
The Bunk-I am not concerned with schools having to be top rated. I am not a big believer that it matters much in the end. I would want my kids simply to attend a safe school with decent instructors and few disruptions. I'll take care of the rest. Not that I know enough about El Cerrito school to decide if they meet my requirements
I'm not even married yet so this is all premature but I certainly already have my eye on the East Bay
Posted by: Zig at August 15, 2008 12:12 PM
My wife and I are raising our kids here in the city and frankly haven't had any problems except for the rare rainy day. I am not sure what it is that makes people feel like this is a bad place to have kids. There are tons of parks, it's walkable, there are tons of libraries, world class museums, movie theaters, beaches to go to, short trips to just about anything you could want (including 6 flags!) basically they like to do all the things that adults live here to do also. I DO wonder at the large number of studio and one bedroom apartments out there how people CAN have kids, however we have been fortunate enough to have gotten into a very underpriced large (2k sq foot) rental when the rental market was low around 4 years ago right between the neighborhood we started raising them in behind Mission street and where we are now behind Guerrero street. I have twins, which means they always have a playmate. They go to a public elementary school and the class sizes are small the kids are all great and so far like I said the only loss they have is not being able to go ride bikes around the cul-de-sac. They are city kids through and through. They love it when we drive to Petaluma (the country they call it) and they love it when we BART down to Moscone playground.
My concern if any will be middle school.
Posted by: High Rise Harry at August 15, 2008 12:49 PM
Jeff at August 15, 2008 10:46 AM
It's very unlikely it was purchased at auction. Almost all the properties are either being purchased via short sale or bank REO. If there is no equity, it will go back to the bank. REO is usually the quicker & easier route.
From foreclosureradar's July California foreclosure report: Sales increased to a total of 28,795 properties with a combined loan balance of $12.55 Billion. Of those, 27,817 received no bid higher than the lender’s opening bid and became bank owned (REO).
I'm seeing deals like these all day long in certain parts of Marin, and its only getting better (if your a buyer!).
Posted by: ozzie at August 15, 2008 12:55 PM
High Rise Harry wait until high school
It isn't white boy day at SF public schools. Are you white?
Posted by: Zig at August 15, 2008 1:24 PM
The actual houses in Maxwell Park are generally larger than Laurel and Dimond. However the reason for the 150-200K price differential is that Maxwell Park is located below the 580. With maybe the exception of a couple of small neigborhoods, housing in Oakland below the 580 can be well...lets just say interesting. Anyone who has driven along High Street in MP can clearly see that it's pretty intimaditing for the average Joe. Sure the street where you home is may be fine but if you have to pass through that every day when going to work, or grocery shopping, I'd say thanks but no thanks. (Upper) Laurel in particular is more walkable and tends to attract first home buyers with no kids since a significant chunk of the housing stock are 2/1 with less than 1000 square feet. MP has gentrified over the past 10 years but I would rather live in a smaller space in a "nicer" Oakland neigborhood.
Posted by: Willow at August 15, 2008 1:26 PM
Oakland, Berkeley and Alameda island, which was once a streetcar city, are all good urban areas with good amounts of nice pre-war architecture very close to the bridge and BART. But they also have rough patches. I keep thinking one day Oakland will happen but I guess in its way it already is.
Posted by: Timosha at August 15, 2008 2:17 PM
That place is beautiful, and all the little details make daily living that much nicer. That area is dominated by working classes which makes it pretty nice in lots of indirect ways such as networking with people in the trades to make upgrades.
The East Bay is full of treasures, but the best are still overpriced. Albany is grand, like Berkeley with adult management, but even recent sales have been stratospheric, at least in relative terms. Alameda is the same, though beware that the north end of the island is apart from downtown and gets less walkable and nice.
Posted by: Mole Man at August 15, 2008 2:41 PM
Paying $199,500 after the previous sale was $475,000 is 58% off! Mother of Mercy, the real estate agents must be starving, and some of them may already be lined up outside Glide Memorial Church, waiting for their grub. (Better eat now, or be starved out forever!)
By the way, that was a great comment, Satchel. +5!
The only downside to this news item is that this, ahem, 51-year-old receptionist, who seems like a perfectly nice guy, may just well find out in the long run that he still paid too much--by about $150,000. And if he paid around $200,000, isn't that still a lofty 5 or 6 times [a receptionist's] income?
Remember, a house was listed and sold this month in the city of Detroit for ONE DOLLAR. (Its previous sale price, if I recall correctly, was $65,000.)
Posted by: Anonymous at August 15, 2008 3:42 PM
Why are we discussing B&T homes?
Whatever happens in Oakland has minimal impact on us here in the city. Let the price drop in E. Oakland. You get what you paid for.
Posted by: LIberty at August 15, 2008 4:04 PM
Anonymous - sou you're predicting that 3/2s in this neighborhood will drop to $50K ? I'll gladly wager that this won't happen.
LIberty - Anything within quick commute distance to SF downtown is relevant to the SF RE market. I'll bet you can get to downtown quicker from this neighborhood than from many outer Sunset or Park Merced homes. Some people might focus on the prestige of a SF address. Others could care less and will look to equivalent properties within commute range. Not that this E Oakland neighborhood is equivalent to Sunset but perhaps parts of Excelsior.
Posted by: The Milkshake of Despair at August 15, 2008 4:50 PM
Posted by: sanfrantim at August 15, 2008 4:56 PM
Yeah, the secret to expanding home-ownership is NOT creative financing or RE Ponzi Schemes. It is affordable homes. A home shouldn't be a speculation instrument.
Posted by: San FronziScheme at August 15, 2008 5:08 PM
My partner and I just bought a 4 bedroom, 2 bath house with a large lot (about 4800) in southeast Richmond, close to East Richmond Heights, for $105,000 under what they were originally asking. It's in a great neighborhood with a good vibe and close to the freeway. We've been renting in SF for 15 years and knew this was the best time to buy, and that we would never be able to buy in SF.
Posted by: Paul at August 15, 2008 5:22 PM
Creative financing worked fine at increasing home ownership solidly until the whole system broke down. The idea with subprime was that there would be more oversight with the loans, not less. As long as people have good jobs and a good chunk of change for a down payment plus reserves. The system went kerblooey because there was a huge bubble and subprime went from rarified air to sewer drain. Once lending gets back to normal we will again see clever plans that lower the down payment in exchange for higher interest and all that.
Posted by: Mole Man at August 15, 2008 5:25 PM
What would the rent be on a house like this in that neighborhood be? Why couln't this drop another 50K? Could the Bay Area become like Paris where the "prime" areas are extremely expensive, and the outer non-prime areas become worth almost nothing?
Posted by: Morgan at August 15, 2008 5:32 PM
"What would the rent be on a house like this in that neighborhood be? Why couln't this drop another 50K? Could the Bay Area become like Paris where the "prime" areas are extremely expensive, and the outer non-prime areas become worth almost nothing?"
It's hard to tell from the interior shots but comparable places are around $2500 a month on Craigslist. Long term, the value from that price should go up, not down.
You're forgetting that that part of the inner East Bay just across the bridge has many "prime" areas with old money (and new money)--Claremont, virtually the whole Berkeley Hills, Piedmont, Alameda's Gold Coast, Rockridge, and so forth--that are very close to San Francisco's FIDI, by BART or car. These areas are already and have long since been extremely expensive.
This article in the NYTimes sort of touches on the phenomenon about which you speculate, but it's happening in distant places like Antioch:
Posted by: Timosha at August 15, 2008 6:34 PM
Maxwell Park is a wonderful little community of cute homes. The neighborhood is quiet and walkable. I say this because I'm there almost daily with my clients who find that neighborhood very desireable. And it isn't the only "East Oakland" (besides Laurel) neighborhood that would surprise people who think that East Oakland is dangerous or run down. That's just fine for the buyers who take advantage of lower prices that result from less demand. $199,000 is very low even for Maxwell Park, the home looks very nice but it might be on the south side that can be less expensive that the side closer to 580 and the hills.
So you prefer to live in SF, that's fine. I completely understand since I love living in Grand Lake. What I don't understand is putting someone down because they would like to purchase a home and they either can't afford to purchase in San Francisco or they prefer to live somewhere else.
btw, when I worked in SF, my commute was 20 minutes from Grand Lake (Oakland). When I lived in Noe Valley, it was about 30 minutes and freaking annoying with all of the kids on Muni.
Posted by: Farrah at August 15, 2008 8:46 PM
we cant all live in san francisco. I think some people need to realize that owning a home is still a privillage and a dream that many cannot afford. look at this guy he's "still pinching himself" how can you not be happy for him? who cares if its Oakland. he's a homeowner now. lets be happy for him. there are other places to call home other than SF proper. might not be my cup of tea nor your's but hey congrats.
Posted by: Ryan at August 16, 2008 10:37 AM
Nothing quite says "hey, i'm a humongous d****e that's not from around here" faster than dropping "B&T" in the Bay. We don't even have a tunnel.
Posted by: beast ay at August 16, 2008 5:10 PM
We don't even have a tunnel.
Sure we do and Walnut Creek to SF involves one. But I sort of agree with you.
Posted by: fluj at August 16, 2008 5:47 PM
The Waldo Tunnel isn't a tunnel?
Posted by: anon at August 16, 2008 10:42 PM
No Tunnel? Um, you know that dark part of the BART ride?
Posted by: gategourmet at August 17, 2008 11:30 AM
"The tube was constructed on land, transported to the site then submerged and fastened to the bottom (mostly by packing the sides with sand and gravel). This is in contrast to tunneling, where earth is removed to leave a passage, the method of underground mines, and, for example, the Channel Tunnel between France and England."
Posted by: beast ay at August 17, 2008 3:35 PM
^^^You still go through actual tunnel on either side of the tube.
Posted by: anon at August 17, 2008 5:45 PM
Nobody has mentioned the only real long tunnel in the Bay, the Posey Tube between Alameda and Oakland.
It's the second-oldest underwater vehicular tunnel in the US, preceded only by the Holland Tunnel.
Check it out in George Lucas's THX 1138 or The Matrix.
Posted by: Yaku at August 17, 2008 6:10 PM
Great long term investment. If a lot of other people thought this way we may not have as many foreclosures...
Posted by: Michael L. at August 18, 2008 8:35 AM
So do people who live on the other side of Broadway count as B&T too? How silly...
Posted by: Foolio at August 18, 2008 3:42 PM
Bay Bridge = bridge
BART = tunnel
This isn't that hard to understand.
Posted by: Anon at August 18, 2008 4:17 PM
Golden Gate Bridge + Waldo Tunnel also = B+T
Posted by: anon at August 18, 2008 4:22 PM
So if you have to travel through a bridge and tunnel, you're somehow unworthy of all SF has to offer? Maybe I should start taking the ferry. Or I guess I could drive via San Jose. Are the folks on the peninsula worthy of entering SF? They can get there without tunnels or bridges. Uh oh, what about the freeway overcrossings! They're "bridges" too. Damn, now I have to plan my route using only surface streets. This is getting complicated....
Hmmm, maybe I should move to SF. But where? According to the posters on Socket Site, if I live in the Marina, I'm not allowed in the Mission. If I live in the Castro, I'm not allowed to be straight. If I live in Northbeach, I'll need a permit from the Telegraph Hill folks before I can pick out a color for my toilet paper dispenser. If I move to ORH, I'll need to learn to hate the Infinity (and vice versa).
Should I rent or buy? Is the market going up or down? Should I find a rent-controlled apartment, or step up and rent a place not subject to rent control?
Posted by: likesemtall at August 18, 2008 5:06 PM
Re: quote from Maxwell Park resident
Yeah, I like Maxwell Park too. Here's a post I wrote on Maxwell Park last year:
Posted by: Alison at September 7, 2008 6:36 PM