Plugged-in people knew the cuts were coming. And as one reports, they’re here. Prices at Symphony Towers (750 Van Ness) have been reduced by up to 30% or $136,000. A few examples:
∙ 750 Van Ness #T-405 (1/1) – $399,000 (was $535,000)
∙ 750 Van Ness #T-601 (1/1) – $459,000 (was $577,000)
∙ 750 Van Ness #T-602 (1/1) – $449,000 (was $565,000)
∙ 750 Van Ness #T-804 (0/1) – $295,000 (was $420,000)
∙ 750 Van Ness #T-806 (0/1) – $319,000 (was $455,000)
∙ 750 Van Ness #T-907 (0/1) – $419,000 (was $515,000)
Once again, currently around 55% sold. And with The Hayes cutting prices by up to 21%, the race for buyers in San Francisco is on. And it’s plugged-in people that will win.
Symphony Towers (750 Van Ness): Announcing Additional Cuts [SocketSite]
Symphony Towers Update: Buying Love (But Dropping Prices Too) [SocketSite]
New Development “Closeout” Sales: The Potrero And 170 Off Third [SocketSite]

Recent Articles

Comments from “Plugged-In” Readers

  1. Posted by Jimmy (Bitter Renter)

    Are these units undesireable in some way that necessitates these price cuts?
    What about the 55% of original buyers … who have now “lost” 30% of their investment. Will they demand lower pricing or just walk away?
    Notwithstanding, even at these prices, the units don’t pencil out in any kind of buy-to-rent investor scenario.
    This kind of thing never happens in San Francisco.

  2. Posted by sf

    Real estate should not be seen as an investment, but instead, in the words of George Carlin, as “a place to put your stuff.”

  3. Posted by dub dub

    I hear dominoes falling, currently just out of earshot from “the real SF” :)

  4. Posted by bernielomax

    if i was a buyer in escrow at a higher price i would either ask for lower price or walk (lose the deposit) and come back in. 3% you’ll lose (deposit) is nothing compared to the 30% and instant loss you would accrue.

  5. Posted by Loss Aversion

    A smart developer wouldn’t let the hapless early buyers off the hook.
    As a group, those buyers are not too savvy. A five year old could have seen this coming. They didn’t, ergo they’re not too swift.
    Those kinds of people should be susceptible to the argument that only the “lesser” and “undesirable” properties are being discounted – certainly not the desirable properties that they wisely “snapped up”. A few might not fall for it and will walk, but again as a group they’re not very savvy.
    People who aren’t very savvy think a loss is not a loss until it is “locked in”. Many if not most of them will absorb the 27% loss to “equity” rather than lose the 3% real $$.

  6. Posted by Delancey

    Won’t the early buyers still have to get financing before they close? Good luck with the comps on that loan…

  7. Posted by SocketSite

    Let’s get the facts straight people, Symphony Towers first opened for occupancy eight months ago with the vast majority (if not all) of that 55% having already closed escrow.

  8. Posted by perplexed

    I think this is a case of the developer seeing what is happening out in the market and deciding to move inventory and get out with what they can.
    Sure, this property has elements that people may or may not like. Some people will argue that the location is great since its central, others will say that its too close to the TL. Some people will not like the high HOA fees but others may now discount that due to the lowered prices.
    I don’t know if prices will fall further or not next year but this puts this property more in line with the comps in the area (like opera plaza). I never agreed with the concept that new developments needed to be significantly higher in price simply because it is new – the market (i.e. the buyers) should be determining the prices and it looks like that is starting to happen.

  9. Posted by condoshopper

    at this rate, even the BMR buyers (15% of all units?)in the building will be soon underwater.

  10. Posted by Po Hill Jeff

    I’m struggling to restrain my schadenfreude, but I feel compelled now to share this anecdote:
    When I was looking at condos in the 2006-early 2007 timeframe I spoke to an agent who was holding an open house. She expressed a great deal of optimism about the market. I asked her if she had bought, and she said she hadn’t yet, but planned to be one of the first owners at Symphony Towers, where through some strings or connections she would be one of the first people, and would be able to snap up a studio in this hot development. With this toehold in the RE market she intended to upgrade in a few years.
    She seemed nice… I hope it won’t be a total catastrophe for her.

  11. Posted by NewBuyer

    It’s funny that this was always viewed as a bargain from day one.
    $850k for a 2BR in the middle of the Tenderloin (and, yes, it IS the Tenderloin) is simply ridiculous. Laminate floors… come on!
    I know that people think they hear the dominoes a-coming, but when the flood waters rise, people take their checkbooks and run for higher ground. Ground like Nob Hill, Pac Heights, and Russian Hill…

  12. Posted by spencer

    newbuyer,
    you must not heard of a guy named Noah.
    in the new version, he takes all the renters in sf and puts them on his Ark as the homeowners get washed under.
    RH, PH and NH as not immune

  13. Posted by NewBuyer

    Spencer,
    The great thing about being a homeowner is that the real estate I just purchased can be that Ark for some prudent renter.
    Renting it out will cover my mortgage + HOA and tax.

  14. Posted by WillBuyin2009

    This is likely to have a cause a domino effect on prices of other new and existing condo prices in these neighbour.

  15. Posted by waiting2nest

    “Renting it out will cover my mortgage + HOA and tax.”
    Rise in unemployemnt will cause rents to drop.

  16. Posted by dkzody

    i’m waiting for those rents to drop. actually, I’m counting on it.

  17. Posted by jessep

    Wow, those early buyers are really getting screwed.
    Is that area the Tenderloin? I thought it was considered Civic Center.

  18. Posted by NewBuyer

    Civic Center = Tenderloin.
    One of the most disgraceful things about our city is how our potentially-beautiful Civic Center area (amazing city hall, worldclass opera/symphony, great museums) are polluted by piss-filled stairways, broken glass everywhere, and lots and lots of crack addicts.
    “But it’s their home! Who are we to tell them to leave?”
    The tragedy is that Symphony Towers was actually a step towards gentrification, but that whole process has now been delayed five years.

  19. Posted by NoeValleyJim

    Rise in unemployemnt will cause rents to drop.
    That’s not what they are predicting at Beacon Economics:
    Rent growth is expected to fall to just 1 percent over the next year, although over a five-year horizon it should average a more moderate 3.5 percent in the region,” according to the forecast.
    But individual renters will get no such relief as the region’s relative economic strength and desirable lifestyle draws job seekers and shrinks the vacancy rate which, at about 4.3 percent, is among the lowest in the state. “Over the last two years, average asking rents have continued to rise,” noted the report, which expects the landlords’ market to continue for now.
    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/21/BU4513L2LH.DTL

  20. Posted by San FronziScheme

    But individual renters will get no such relief as the region’s relative economic strength and desirable lifestyle draws job seekers and shrinks the vacancy rate
    Yeah, yeah, yeah, we know, SF is different, SF is unique. I saw friends of friend lose jobs a few months ago. Today, I see wives of friends losing jobs and people around me having their pay raises frozen.
    SF is not immune.

  21. Posted by anon

    ^^^Loss of jobs doesn’t always equal lower rents.

  22. Posted by San FronziScheme

    Loss of jobs can lead to loss of lease. Empty rentals often lead to lower prices. I’m still a landlord and I am keeping my last 2 rents steady this year. I would love the 2-3% increase, but I love the steady income even more. I saw a decrease in rents in the mid-90s under similar circumstances in another market. Big RE declines accompanied with low occupancy from failed flips means 2 things:
    1 – Speculators stuck with a losing investment don’t want to ad the insult to the injury. They need cash flow. A few will walk, but many more will keep their places with the hope the turnaround is just a year away and suck up the loss.
    2 – Buyers of low-priced property can accept lower rent to secure a steady income. That’s how I got an almost 0% turnover in my rentals from 94 up to today. Charge 20% under market and you have NO turnover whatsoever. The places were purchased 50-70% under 1991 peak anyway.
    I’ll be happy to charge lower rent when I will get back into the buyer’s seat. But we’re not there yet and we still have a lot of room to fall to get where buying to rent becomes attractive again (sorry ester).
    This is a brand new territory there. Nobody knows where we will be in 6 months. Heck I’m a bear on the “tech bubble 2.0/SF RE market” and I did not think the house of cards would be collapsing so fast 6 months ago. This is unprecedented.
    The tech world is reeling from the current layoffs. I saw friends all giddy for more than a year with tech mergers and buy outs (ORCL, GOOG, MSFT). Today, it’s all about who got canned or what project is canceled. Things are happening fast.

  23. Posted by dub dub

    SFS: the tech layoffs are just getting warmed up! The entire startup funding and exit mechanisms (along with support jobs) are being destroyed before our eyes (directly and indirectly).
    Even unlevered big tech will take this opportunity to RIF 20%. The good news is tech will be stronger on the other side — as I’ve said earlier, microsoft, oracle, genentech, and apple were started in the 70’s, a decade not generally remembered for tech innovation (or high real estate prices, BTW).
    The “southpark startup ecosystem” is going to get hammered.
    But who knows? Maybe the government will start taking equity positions in startups! Facebook is too big to fail :)

  24. Posted by NoeValleyJim

    How long have you been predicting imminent doom and gloom SFS? Two years? Three years?
    And yes, San Francisco really is different, as you can see just by looking at the DataQuick price chart for the region. It amazes me that you can stare the facts in the face month over month and insist on the opposite of reality.
    Good luck on your market timing though, it might work out for you, we still don’t know.

  25. Posted by waiting2nest

    “individual renters will get no such relief as the region’s relative economic strength and desirable lifestyle draws job seekers and shrinks the vacancy rate”
    Yes, SF is indeed a desirable area and “everybody wants to live here.” However,the overall economy is starting to falter, and San Francisco is not immune.
    “Over the last two years, average asking rents have continued to rise,”
    The last two years was a completely different scenario. There was still relative properity two years ago. Things are very different today and many predict it will only get worse.
    “the (Beacon Economic) report…expects the landlords’ market to continue for now.”
    For NOW is the operative word here. It will be interesting to see what happens in 6 months or a year.

  26. Posted by SFS checker

    SFS –
    In this situation, SF is different in a very important way – rent control. Just as rent control softens the impact on rising rents to renters during boom times, rent control softens the impact on landlords during sluggish times because of the shortage or rental units created (among other things).
    Now, things could get different if we start running into massive inflation, but that isn’t the case yet.

  27. Posted by amused_in_SOMA

    SFS checker,
    Rent control is *already* built into rents. If there’s a shortage, then rents of available units will be higher.
    Thus, a downturn in the ability or renters to pay will affect market rate units. True, if you are making money at below market rents today, you are much better off in a downturn (just as if Ford would be in great shape today if it made money selling cars at below market rates before the recession), but we don’t care, because any buy/rent decision has to be made on today’s prices and rents.
    No one knows what will happen, but if the ability of people to pay their rent is impaired, rents will drop. It will be fun to watch the buy/rent ratio change over the coming years.

  28. Posted by Katy Dinner

    I wish we had a better way to track new construction prices. We won’t really see the effects of what is happening until we can view the tax records and analyze.
    All I can go on is press, word of mouth/internet and experience… and new construction is where a lot of SUPER deals are being made.

  29. Posted by SFS checker

    amused_in_SOMA,
    I don’t disagree with anything you’ve said. SFS was saying that vacancy rates will go up here – and I was saying that the shortage caused by rent control helps mitigate this. Rents will fall some, sure, but vacancy rates will fall at a slower rate than they will in SJ, for example.

  30. Posted by unearthly

    That’s not what they are predicting at Beacon Economics
    Thornberg (Beacon) has a history of significantly underestimating the housing bust and it’s impact on the greater economy.
    Thornberg in 2006: Leveling off seen for housing appreciation

  31. Posted by dub dub

    Most published predictions, reports, and earnings released now do not consider what has happened since about Oct 1 (this precanned stuff takes awhile to “get to market”, tho some of it will get a “patina” a current events to seem relevant).
    We’ve had irreversible institutional destruction in October, and it’s still happening. This is not “a slowdown”, any more than an amputated leg is a sprained ankle. I think ex-SF said recently it’s impossible to predict anything, and he’s right. The airbags failed to go off, and it’s a mess.
    I’m still pinching myself over Greenspan’s “My Bad” testimony on Thursday — did anyone here think that was possible?

  32. Posted by Wrobbie

    I have zero experience with developments like Symphony Towers so this may just be ignorant on my part … but I’d think that with a collapsing market & collapsing prices they’d be a bit more “user friendly” to window shoppers on the Web.
    After reading the coverage on SocketSite, I went to their site. It basically demands all of your contact detail (home address, phone number, email, etc. etc. – amazed they didn’t try to extort my mom’s maiden name & SSN). Then once you put this all in, it redirects you to a blank page. May as well have been a picture of their CEO hoisting an extended finger.
    Seriously – is requiring that interested parties open themselves up to sleazy dinnertime phone calls a smart way to market distressed inventory in a down market? I was faintly interested in learning more about this development, but no way did I input my actual information, and no way am I going to do that as a precondition to learning the first thing about what they’re offering. I’m sure they’re embarrassed and all – but wouldn’t they rather do some selling than hide under their desks?
    Oh – and on the topic of tech layoffs, and whether they’re real, and whether they can possibly impact the utterly bullet-proof and impervious SF real estate market, checkout the “layoff tracker” on TechCrunch. They count 19,683 tech layoffs since mid-September. Not all are Bay Area, to be sure, but that’s merely the sound of Silicon Valley’s HR departments clearing their collective throats. This is going to be very, very long, and very deep.
    And for anyone who thinks SF, its fancier neighborhoods, and its rental market is immune to this; you may find the comment section of the original SocketSite post about Symphony Towers opening back in July of ’07 to be an interesting historical document. Many of the same sentiments were expressed there about the obvious immunity of this now-troubled property to any market forces…

  33. Posted by jessep

    I know a lot of people in my neighborhood who bought in cash, and don’t really want to sell…and *gasp* actually enjoy living here.
    Is that unusual for San Francisco? Sometimes reading this blog makes me feel like I live in a 3rd world country.

  34. Posted by waiting2nest

    “I know a lot of people in my neighborhood who bought in cash…Is that unusual for San Francisco?”
    Yes. There is a lot of new wealth in SF (dot com millionaires, etc.), but you and your neighbors are still in the minority. Like I mentioned before, most people, even high income earners do not have extra $$$millions to pay for a house outright in cash. My husband and I have a HH income of almost $400K (we are poverty-stricken by your standards), and while we managed to sock away a few hundred thousand dollars (not including retirement money), it is still not enough to pay cash for the house in San Francisco.
    “(we who paid cash for our homes) *gasp* actually enjoy living here.”
    And so do the 60-70% of the SF residents who rent as well as owners how have mortgages. So what’s your point?
    “Sometimes reading this blog makes me feel like I live in a 3rd world country.”
    Then perhaps you should move to Monaco where you’ll feel more akin to everyone around you.

  35. Posted by dub dub

    @jessep: Third-world countries have rich folks who can buy all kinds of things with cash.
    However, I’m pretty sure third-world blogs have a mechanism to prevent double-posting, so on that basis alone, you know you are not living in one ;)

  36. Posted by Myrbel

    @jessep – as a now 12-year renter in SF, I *gasp* actually enjoy living here as well, as do more or less all of my *gasp* renter friends.
    That must be kind of like finding out that lowly auto workers drink the same imported beer you prefer, eh?

  37. Posted by ester

    I am getting less and less motived to post on SS these days, as I feel that the debate about the RE price in 6-12 months is going to be endless, when really nobody knows for sure. So, what is the point??
    I would be more interested in topics on specific projects, condo converion etc, where facts are facts.

  38. Posted by anna

    Myrbel:
    I rent too- going on 11 years. I wrote awhile back in response to a poster who indicated that renters, are as a group, less educated than those who own. I think Jessep is one such thinker. Of course, the logic is nil, since people who bought Symphony Towers units for cash just got a 30% screw. The educated ones are those waiting for the best deal, at the best price. In the meantime, this latter group enjoys rent control and the joys of living in the city.

  39. Posted by ester

    I don’t agree to say that renter are less smarter, instead, I just think that they look at things differently.
    when I was studying for my broker license, however, there are stats around that people who rent more than 7 years are much less likely to buy, for mulitiple reasons.
    For those of you who rented 11, 12 14 years etc, honestly, did you even think that had you purchased back then, your mortgage is likely lower than today’s rent?

  40. Posted by jessep

    Why are people on this blog so nasty and judgmental to any homeowner who is positive on anything?
    I am just saying with my comment that not everyone is leveraged up their eyeballs and some people think that they paid what their property was worth.
    All I hear on Socketsite is how bad San Francisco is, and I’m just trying to share my experience.
    I don’t care if you rent, but stop judging people who buy. anna, you completely mischaracterized my statement. What I’m saying is that the extreme negativism about San Francisco present on Socketsite is not fair; some people (and I would not call myself wealthy by any stretch) like living here and felt they bought their property at a reasonable price.
    Oh and by the way, you’re wrong. Whether or not a deal is “good” depends purely on the substitutability of the units. A unit at symphony towers may have trouble moving, but that is not the exact same story everywhere.
    FYI: My entire floor is sold out and everyone paid in cash. I was immediately in a multiple bid situation even in this downturn. The only reason I even got the property is that I agreed to give the developer a 2 year lease on a parking spot so he could sublease it and sell a 1 bedroom with no parking. [Aka, I was outbid.]
    Look, all I’m saying is, if you find a property YOU LOVE, and you think it’s at a good price, it could be smart to buy it. I am not judging you, I never said renters could not enjoy this city. But stop bashing homeowners who do not agree with you and make a choice to buy. I don’t think renters are any more or less educated than homeowners. I didn’t think that 20 years ago (when it may, according to your logic, have been smarter to buy) and I don’t think that today.
    [To quote Warren Buffett, "If you keep waiting for spring, the robbins will be gone."]

  41. Posted by Amen Corner

    Went to see this place on Saturday and was very underwhelmed by the units – they’re just very “ordinary” and uninspiring. Don’t share the negativity on the location though. Yes, Turk and Van Ness can be considered the very edge of the Tenderloin, but there are plusses in terms of proximity to Symphony Hall, the Opera House etc. As to prices, the list I was given notes the reductions for studios and one bedrooms. No noted reductions for two bedrooms but sales agent said their prices were “very negotiable”.

  42. Posted by San FronziScheme

    NVJ said:
    How long have you been predicting imminent doom and gloom SFS? Two years? Three years?
    Not doom and gloom. Just a normal (and sizable) market correction. I stopped buying rentals in 2003 and started selling in 2005 until late 2006. When things look too good to be true, they probably are. I high-five my wife every now and then for having followed my gut feeling. Good thing I didn’t put it into stocks too…
    BTW, check your calendar. I have been on SS only since April or so. But I am sure these past 6 months have felt like years to you, NVJ! So much new reality to digest, I’d be confused too.
    SFS checker,
    Rent control has an impact on newcomers, of course. They’re the ones paying the big bucks for rentals in this town. But rent control also distorts the buyer pool. Someone paying less than half current market price has NO financial incentive to buy at a high price even if their salary would allow it. Only when sale prices will make sense compared to rents will people jump from being renters to homeowners. Until that day, they’ll stay in their golden cages.
    ester,
    For those of you who rented 11, 12 14 years etc, honestly, did you even think that had you purchased back then, your mortgage is likely lower than today’s rent?
    Someone who rented for 11-14 years is very very likely to be paying close to less than 1/2 today’s market price for his rental. The only thing they lost is appreciation, which would be huge. Obviously they chose the safe road and who can blame them. If they stashed the saved cash into safe investments, they’ll be more than OK for future bargains.

  43. Posted by SFS checker

    SFS – that was precisely my point. You were saying that it was only a matter of time before vacancy rates shot up here an rents started falling. I merely said that it is different here because of rent control – it’s not a case of people saying that “San Francisco is different” – in this case it is absolutely different in very real and meaningful ways, which will soften the blow for landlords compared to those in other cities in the area.

  44. Posted by G-man

    Rents just starting to free fall.
    Sure, you still have some dillusional landlords with asking rents way too high (they might be “lucky” landlords if they can lock in a lease very soon before this all falls apart).
    Here is a Marina flat for $5750 (the “dillusional” landlord).
    http://sfbay.craigslist.org/sfc/apa/894313802.html
    And here’s another, very similar place, for $3600.
    http://sfbay.craigslist.org/sfc/apa/889083465.html
    We all know these marina flats are all similar layouts. The cheaper one actually has a gourmet kitchen and a roofdeck (one less parking spot though). I can’t imagine that the first one is worth $2150 more per month. (It’s not).
    Hint: all of these place are all going to be $3000-$3500 soon…or less. Soon. Rent control, sment control.
    People are losing jobs like crazy. I went out to drinks with 8 people last week. Only 2 of us had jobs. The rest…Harvard Business School, Stanford business school, Berkeley undergrad, USC undergrad. These are very employable people.

  45. Posted by fluj's intrepid e-assistant

    By reading the comments of people who post on this site it is impossible to tell where rents are really at. One guy has insisted upon his sub 2000$ Pac Heights 2BR for a while, actually. Even though everyone subsequently used craigslist to prove him wrong. Mass layoffs have in simple point of fact NOT OCURRED in the Bay, yet. Beware. There is a poster on here who claimed he owned rental units in Europe or something. Yet the guy knows nothing, absolutely nothing, about real estate and continually posts searching questions in an attempt to learn.

  46. Posted by paco

    sorry g-man but i gotta quibble a bit.
    living on the steep downslope of the freeway (franklin) is not that similar to living across from parks and the bay. 2 bathrooms are much better than 1 bathroom and a toilet room.
    and allowing pets will garner alot more rent as well.
    what kind of jobs are your friends looking for btw?

  47. Posted by paco

    also g-man, i think the word you are trying to use is ‘delusional’
    ;-)

  48. Posted by PresidioHtsRenter

    ester wrote:
    > I am getting less and less motivated to post on SS these
    > days…
    We will miss your story that is always changing…
    > when I was studying for my broker license, however,
    > there are stats around that people who rent more than
    > 7 years are much less likely to buy, for multiple reasons.
    That is a valid statistic for most of US history when PITI after a 20% down payment was less than rent.
    I paid just over $40K for my 2001 C4 Cabrio in 2005 since I was only making about $170 a month on the cash in a money market and it costs more than $170 a DAY to rent a 911.
    The condo I rent in Presidio Heights would probably sell for about $1.5mm and if I could buy it (or one like it) for less than my rent I would do it.

  49. Posted by PresidioHtsRenter

    G-man wrote:
    > People are losing jobs like crazy. I went out to drinks with
    > 8 people last week. Only 2 of us had jobs. The rest…
    > Harvard Business School, Stanford business school, Berkeley
    > undergrad, USC undergrad. These are very employable people.
    I’m wondering if G-man sells trees at Fort mason around Christmas since last year when I bought a tree a Cal guy helped me find one, a HBS guy pulled it up to the front and a Kauffman Fellow from Wharton took my money…

  50. Posted by paco

    wow phrenter,
    that is a CLASSIC. in a low interest rate environment you spend your savings on rent and a high end car.
    is this a good example of uneconomic substitution or what???

  51. Posted by Myrbel

    PresidioHtsRenter –
    Yes, but those guys would have been members of the Guardsman, a service organization of the generally well-to-do who sell & load trees at Ft. Mason every year to make $ for good works of some sort. There are plenty of targets for your schadenfreude in this economy, but Christmas volunteers with fancy degrees aren’t among them :-)

  52. Posted by condoshopper

    sounds like an opening line for a joke:
    “A Harvard Business School grad, Stanford business school grad, and a Berkeley undergrad were having drinks at a bar…”

  53. Posted by vox

    @PresidioHtsRenter
    “I’m wondering if G-man sells trees at Fort mason around Christmas since last year when I bought a tree a Cal guy helped me find one, a HBS guy pulled it up to the front and a Kauffman Fellow from Wharton took my money…”
    Could G-man be a Guardsman? He’s so crypto-Christmas!
    The trees on the Marina Middle School lot are much less pricey.

  54. Posted by San FronziScheme

    Wow, fluj is gone but his (bitter) spirit is pretty much alive and well.

  55. Posted by The Bunk

    As someone in the tech industry (at a consulting firm), and has been for 13 years, our pipeline for ’09 is starting to feel very much like it did in 2000/2001, and for all of those around here, that was a disaster. What is scarier is that tech is not leading this downturn as before, just being effected by a much larger systemic meltdown, so I have a lot less hope of a quick or smooth recovery.
    Bottom line is this, we are going to see lay offs in tech and sales/projects canceled or pushed out significantly. I am already seeing this on a trajectory that even I have been shocked by, and I am not predisposed to think we will have a V shaped recovery to this financial crisis.
    When I look around me and see the people who made the kind of money it takes to sustain (not just buy at an artificially low point of entry like most did) owning these high priced SF homes, they are all the first ones affected (those in finance, those in sales who have weak pipelines now, and those in real estate related industries). Now I am just not sure where the sustained high income earners are going to come from that can continue these price points going forward. I think any legitimate modeling would show that they can’t be sustained.
    As someone who was looking at rentals for the past year, I also concur that although it is still expensive, and there is still competition for good places, the rental market has indeed softened quite a bit.

  56. Posted by G-man

    Paco. Yes, that’s a fair quibble…different places…but $2150 different? I guess that was my point. There was another place a week or 2 ago on Scott and Northpoint. 2BR/2Bath with sunroom, 2 parking spaces that rented at $3750. So, that is a pretty pretty close comp for $2000/mo difference.
    P.S. Thanks…the grammar part of my brain was being delusional. :)

  57. Posted by pica1986

    “Bottom line is this, we are going to see layoffs in tech and sales/projects canceled or pushed out significantly. I am already seeing this on a trajectory that even I have been shocked by, and I am not predisposed to think we will have a V shaped recovery to this financial crisis.”
    I’ll second that. The 2008 tech projects are funded through the end of the year, but 2009 is looking really sparse. I think that the 4th quarter layoffs will brutal and widespread. It’s already hitting in some of the Big 5 firms (or is it Big 4 now?) like Accenture who had large consulting contracts with financial institutions. The operations which derive a large part of their revenue from advertising and sales will also be hard hit.
    The Bunk is right, this time this downturn is not originating from tech, but from industries that tech is dependent on. Who knows what is going to happen in the next 6 months and beyond, but given the complexity and potential depth of this financial mess we’re in I think it would be foolish to think San Francisco is somehow immune.
    I visited these units last April and they aren’t much better than most remodeled or new rental units I’ve seen. Not bad, just nothing special. If they aren’t able to unload the remaining stock, can they rent the units out?

  58. Posted by ester

    If those units that were reduced by 30% are on the VN side, it is NOT unreasonable at all.
    Just imagine how busy/noisy VN is.

  59. Posted by Po Hill Jeff

    I’ll second the above comments regarding the economy. Also, I’m in tech, and everything I’m hearing at work and from my friends is pretty bleak.
    That said, my takeaway from the other day’s positive apple challenge, and other comments on this site is as follows:
    1) RE in general is reverting to mean for the asset class, by which I mean the price/rent and price/income ratios are declining.
    2) Well-chosen properties may nevertheless do OK, or at least not as badly, particularly in good areas. In short, the “real SF” phenomenon is real. Of course this may only mean that a Pac Heights house declines 10% when everything else is down 20%.
    Personally I think I’m incapable of detecting the category #2 cases, so I’ll keep renting until #1 no longer appears to be true.

  60. Posted by ester

    I found SS about 3-4 monts, and spent quite some time reading and posting.
    Now, all these looks like wasted time and efforts to me.
    So, fare well. This is my last visit.

  61. Posted by Po Hill Jeff

    I’m sorry to hear you’re leaving, ester. We need to have multiple perspectives on here to get at the (complex) truth.

  62. Posted by Craftee

    I’d be more distraught about your departure, Ester, if you showed greater signs of literacy.
    Oh – and intelligence. If you find this page unbearable, I’m sorry for you. I think that the general level of analysis, wit, and thoughtfulness is extremely high compared to almost any other page of comments that you’d find appended to a blog. Ditto the level of literacy (save for you comment), and of courtesy (save for mine!). So sorry it’s sailing over your head.

  63. Posted by spencer

    “By reading the comments of people who post on this site it is impossible to tell where rents are really at. One guy has insisted upon his sub 2000$ Pac Heights 2BR for a while, actually. Even though everyone subsequently used craigslist to prove him wrong. ”
    am assuming this is ponted towards me.
    I do have a 2bdr 2ba apt with parking in Pac Hts for $2150/mo. I rented it in Apr 2006 and my landlord has never raised the rent. No one proved me wrong. I can show you the lease agreement.
    I did, however, think this was average or slightly below. On further review, it looks like the majority of 2bdr apts in Pac Heights are around $3K per month, so i definitely have a good deal.
    This is still well below the average selling price of $1M for a 2bd condo in pac hts

  64. Posted by spencer

    Oct 28 – $3000 / 2br – Very Nice Top Floor Corner Flat – (pacific heights) pic
    Oct 28 – $2495 / 2br – 2br 1ba in great location w/ parking – (pacific heights)
    Oct 28 – $2895 / 2br – Elegant and LARGE 2-bed/2-bath in Pacific Heights – (pacific heights) img
    Oct 27 – $2795 / 2br – Classic 1900’s Edwardian Apartment – (pacific heights) pic
    Oct 27 – $2550 / 2br – On Pacific Avenue with parking space – (pacific heights)
    Oct 27 – $2850 / 2br – Classic and Contemporary 2br/1ba {photos} 415-370-6659 – (pacific heights) img
    Oct 26 – $2995 / 3br – RARE PAC HEIGHT APT FOR RENT – (pacific heights)
    Oct 26 – $2625 / 2br – 2 BR 2199 Pacific Avenue Apartments ( Pacific Heights) (map) – (pacific heights)
    Oct 25 – $2700 / 2br – Elegant Pacific Heights Edwardian – steps to Fillmore – (pacific heights) pic
    Oct 25 – $2850 / 2br – Quiet 2BR on beautiful block – (pacific heights) pic
    Oct 24 – $2850 / 2br – Tasteful Classic Remodel OPEN SATURDAY 3pm-4pm – (pacific heights)
    Oct 23 – $2995 / 3br – RARE PAC HEIGHTS APT FOR RENT – (pacific heights)
    Oct 23 – $2550 / 2br – On Pacific Avenue with parking space – (pacific heights)
    Oct 23 – $2995 / 2br – 5 Walk-in Closets. Central Pacific Heights. – (pacific heights)
    Oct 22 – $2850 / 2br – Quiet 2BR on beautiful block – (pacific heights) pic
    Oct 21 – $2600 / 2br – 2Br 2 baCondo with garage – (pacific heights) pic

  65. Posted by San FronziScheme

    spencer, great research work.
    Let’s run the cost-of-ownership numbers on a 1M condo:
    Assuming 20% down, a low-low 7.2% Jumbo mortgage. Monthly payment = $5430 of which $4800 is interest.
    Tax benefit will be in the range of $1000-1500/month.
    Property taxes in the range of $1100/month
    HOA for this range is what? 500? 700?
    Provision for repairs/maintenance.
    Cost of owning = 5530 to 6230 + repairs. You are building $630 of equity through principal payment. The true cost is therefore 4900 to 5600.
    Other costs: fees and commissions associated with the sale
    Opportunity cost on the 200K down
    Homeowner’s insurance
    As opposed to $3000 or (gasp) $3500 for the same condo rental for which there are zero-zilch HOAs and property taxes, and very low renter’s insurance (low 100s a year).
    The only way to make it work is through appreciation.

  66. Posted by Tax Expert

    The monthly tax benefit will likely be a little higher than 1000-1500 for most filers, although nowhere near the 40-45% benefit that most people tout on the basis of marginal rates.
    Because property tax and the interest are deductible, the all in monthly benefit is likely to be more like 1500-2000 for most filers. AMT could be an issue in relation to the property tax (not deductible under AMT regime as it’s a preference item).
    Still looks about twice as much to buy (at least) as to rent. And because the condo market in SF will continue to weaken, the $630 per month “building” of equity is really just replacing the down payment $$ you would lose to commissions or to market depreciation if you were to sell at any time in the next few years (at least).

  67. Posted by anna

    Ester/Jessup, et all: Aside from the fact that my home might be worth less now if I’d purchased a decade ago, why assume I could have purchased then at all? Sure my payments would be lower than my rent if I’d bought instead of rented 11 years ago; but I was 21 years old 11 years ago, in college. Spent the next 6 years getting a Masters. I lived off peanut butter (the sale brand, whatever it was). I’m finally, finally SORT OF in a place to buy ….and, crap, look at the market! It’s very wise to take stock and be careful right now. Isn’t that something we can all agree on?

  68. Posted by spencer

    Anna, ROI for education is much greater than any RE investment. wise choice. have been doing much the same myself.
    do what you love, do it well and the money will follow.

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