January 13, 2009
It’s Double Entendre Time For 46 Tingley Once Again: Go Bears!
Purchased for $620,000 in September of 2004, 46 Tingely returned to the market in December of 2007 as a potential short sale asking $599,000. In September of 2008 the single-family home in Mission Terrace was bought back by the bank for $442,717. And yesterday it returned to the market asking $472,500.
Be sure not to miss those year-old but still quite relevant (some might even say prescient) plugged-in readers' comments, especially missionite’s worksheet (just don’t forget to update those assumptions with regard to purchase price and appreciation).
∙ Listing: 46 Tingley (4/2) - $472,500 [MLS]
∙ Another Chance To Be A Hero (Or Show Your Support For The Bears) [SocketSite]
First Published: January 13, 2009 7:30 AM
Comments from "Plugged In" Readers
About 25% off from peak prices. About what one would expect for that neighborhood at this point.
Posted by: diemos at January 13, 2009 7:47 AM
I'm not sure what the "peak" actually was for this property, but I'm pretty sure it happened after its $620K sale in 2004.
Prop shark shows that the owners cash-out refi'd in 2005 to the tune of $659,950. So, at least some foolish bank (Greenpoint, which has since gone kablooey) thought it was worth that. I hope the owners enjoyed living La Vida HELOC.
Interesting data point: this house (again according to prop shark) sold in 1989 for $258K. If it sells here at $472K, that would be a 3% increase per year, slightly under inflation for that period, or a gross return of 83%. The S&P returned about 4.3% per year, excluding dividends (maybe 6.5-7% per year, including dividends) for a gross return of 131%, or 180-200% with dividends (depending on reinvestment convention). I guess we can say for sure that this part of SF was not primo California!
Posted by: LMRiM at January 13, 2009 8:12 AM
Hmm...I think we'll hit bottom when even the bears remember that you can't live in a S&P portfolio.
Posted by: Rillion at January 13, 2009 8:19 AM
Posted by: tipster at January 13, 2009 8:26 AM
Rillion: but you may be able to rent from its dividends :)
Posted by: dub dub at January 13, 2009 8:31 AM
wow, who would have thought that crappy places in daly city (or wherever this place is) would come down in price??? i mean WOW!
Posted by: paco at January 13, 2009 8:43 AM
Or use the dividends to buy a place, see that's while we will be at the bottom, rent vs buy will be about equal and people will no longer be looking at their house as an investment but as a place to live.
We are getting closer to that at the low end (ie some of the foreclosed properties).
Really looking at this place it is only going to cost around $3k a month to buy this place and it isn't too hard to rent out a bedroom in SF for $800 a month.
I just looked at a place near mine that is a 1BD/1BA with a deeded parking spot, ~$300 HOA, for 299,000 but can likely be had for less (the bank has owned it for a while now). My quick estimate on monthly cost was $1,400 which isn't to far for what it might rent for (if you could rent it which you can't because of HOA and city rules). Biggest draw back is it is really dated and needs updating. Biggest upside is that if you make less than $80k a year you might be able to get the city to give you an interest free loan for the downpayment (although they will share in a % of any appreciation).
So it seems to me that at the lower end, in the places where the "average SS reader" wouldn't ever live, that the rent vs own equation is starting to equalize.
Posted by: Rillion at January 13, 2009 8:46 AM
from john mauldin, http://www.2000wave.com/article.asp?id=mwo011009
"The buy and hold for the long run mantra is wearing thin. In inflation-adjusted terms, the stock market is about where it was in 1973! If you reinvested dividends, that gets you to 1991 (again, inflation-adjusted). It takes a lot of buying to make a bull market. It only takes an absence of buying to make a bear market."
last i checked, primo california real estate is still primo.
Posted by: paco at January 13, 2009 8:50 AM
" people will no longer be looking at their house as an investment but as a place to live."
houses are BOTH. and the govt. gives you tax incentives to own.
Posted by: paco at January 13, 2009 8:54 AM
This listing isn't far from Silver Ave. This area isn't all that bad, though it is a bit rough at the edges. There is not much comparison to Daly City or even South City. The freeway is kind of close, but depending on tastes this might be more agreeable than most of the Mission proper.
Posted by: Mole Man at January 13, 2009 8:55 AM
"wow, who would have thought that crappy places in daly city (or wherever this place is) would come down in price???"
I did. Ever since 2004.
"last i checked, primo california real estate is still primo."
primo california real estate will always be primo california real estate. Even if it eventually costs half of what it did in 2007.
Posted by: diemos at January 13, 2009 8:56 AM
I know how a flipper could sell this POS for $700K: Paint it Cardinal & white.
Posted by: Debtpocalypse at January 13, 2009 8:57 AM
" This area isn't all that bad"
sounds like way way too much money for a place that is 'not that bad'. and clearly, buying on the fringe of the fringe is risky if the prices there have jumped so dramatically.
Posted by: paco at January 13, 2009 9:01 AM
paco -- RE is also "uncallable leverage", which is deadly when you abuse it (especially now!), but which result in outsized gains under "buy and hold" (for sufficiently large values of hold).
The long-term comparisons to index returns almost never account for that leverage (which isn't free, of course, but still).
But if we are really at the secular end of a two-decade credit bubble, the time frames will be very different, and I can't see myself wanting to live in this place (or a 1/1 house or condo) "forever".
Posted by: dub dub at January 13, 2009 9:09 AM
gold star for you diemos. did you make lots of money with your prescience?
btw, " primo california real estate will always be primo california real estate. Even if it eventually costs half of what it did in 2007."
ooookaaay, and when primo california is selling for half off you tell me what everything else will be selling for. you permabears are missing the forest for the trees. as a store of value choice california real estate will hold up (as it has and continues to).
Posted by: paco at January 13, 2009 9:09 AM
"We are getting closer to that at the low end (ie some of the foreclosed properties).
Really looking at this place it is only going to cost around $3k a month to buy this place and it isn't too hard to rent out a bedroom in SF for $800 a month. "
Well, maybe. The problem is that rents are starting to take a bit of a hit as the overall job market hurts. Looking at Craigslist, there are currently 49 rooms for $800 or less in the Outer Mission, and 814 city wide. And most of those are priced under $700 (37/523).
Another thing is that this place is really a 2/1 with an in-law. so it would be rented out as a two seperate units. With that in mind, there are lots of 2 bedroom places in the outer mission for around $2,500 (42) most of which are flats or major portions of houses. City wide, there are 379 2 or 3 bedroom units priced between 2000 - 2,500 (to weed out crappy in-laws)
I'm one of those realists that believes housing prices will bottom out when they are at rental parity. However, the housing market is chasing rental prices down. Still a way to go to the bottom.
On a side note, I'm still betting on a median price between $320,000 and $500,000 for the bottom. Sometime in 2011.
Posted by: BRCGranny at January 13, 2009 9:14 AM
"did you make lots of money with your prescience?"
Sadly, I have philosophical objections to profiting from other's misfortunes. I don't trade, which I consider ethically no better than picking the pockets of the rubes. (I'm sure LMRiM will take me to task for that.)
I only used my prescience to insure that instead of standing below the avalanche that I was off to one side, sitting in a lawn chair with a bowl of popcorn and a cold drink. (munch, munch, munch)
Posted by: diemos at January 13, 2009 9:23 AM
BRCGranny, I agree, still a ways to go but it is getting closer. Now as rents fall that is obviously going to prolong the time until we reach parity. Just noticing that it is getting much closer at the lower end then it is at the high end.
SF is different in that so much of the city is rental property and during the boom a lot of rental units got converted into owner occupied units, I suspect that at the bottom a lot of the lower end units will be converted back into rentals.
Posted by: Rillion at January 13, 2009 9:24 AM
gold star for you diemos. did you make lots of money with your prescience?
I would hazard a guess that right now most people shouldn't be worried about making lots of money. they should be worried about keeping the money they have.
FWIW, yes I did make a killing with my prescience. But I don't see how that has any bearing on anything...
and although people keep bringing up the "stocks vs Real Estate" argument, I think that if you speak to most of the intelligent bears we've been telling you all to get out of BOTH of them. The recent stock market meltdown was just as foreseeable as was the RE downturn.
I stayed long stocks a little longer than I should have (Dec 2007/Jan 2008) because I got greedy and I actually believed Ben Bernanke's words for a few months. but I posted vociferously even here on SocketSite that people should escape stocks ASAP even before I got out myself.
I personally don't think it's a good argument to say RE isn't so bad so long as you compare it to another crappy investment vehicle (stocks). especially when you fail to recognize the holding costs of those vehicles. (Paco routinely ignores the holding costs of RE in his/her analysis).
No need to beat the dead horse, but I've posted before about the difficulty of comparing stocks vs RE, especially since too often people only use purchase and selling price of RE when calculating its return (clearly very wrong).
Posted by: ex SF-er at January 13, 2009 10:02 AM
This place is no more than a 10 minute walk to Glen Park village, and it's probably 5 minutes to Glen Park BART.
Fair value today = $300K, + or - 10%. That price would balance out the potential risk/reward. I hope no one gets in the way of its fall towards that price!
Posted by: LMRiM at January 13, 2009 10:05 AM
as for the house:
I honestly don't know why they don't just paint the darn thing. I'm not saying it'll sell for sure if it's painted, but it at least has a chance of selling.
of course, what's really happening is that this is owned by a bank that is probably overrun with foreclosures and has no staff to deal with them. It also likely doesn't even know the house is fluorescent blue. thus the house will just sit and turn to blight.
luckily, the SF planning boards seem to enjoy blight. so they can call it "historic Cal Color house" or whatever and protect it.
Posted by: ex SF-er at January 13, 2009 10:08 AM
Glen Park BART and Glen Park Village are a five minute walk from one another? They are one block apart, or maybe two. But it's interesting to me to note that walkability to Glen Park Village has as much marketing clout as it does. I do see that language all the time for Mission Terrace, St. Mary's Park, and College Terrace, Sunnyside, etc. This was not really the case four or five years ago. Bear or bull, I think we can all admit that Glen Park has really gentrified in the last several years. Maybe more than any other neighborhood.
Posted by: fluj at January 13, 2009 10:16 AM
"we've been telling you all to get out of BOTH of them. The recent stock market meltdown was just as foreseeable as was the RE downturn."
Yup. One more leg down in the stockmarket after the Obama relief rally and then it will be time to start accumulating solid dividend paying stocks. Preferably in industries that will be strengthened after the coming currency collapse.
Posted by: diemos at January 13, 2009 10:20 AM
"Yup. One more leg down in the stockmarket after the Obama relief rally and then it will be time to start accumulating solid dividend paying stocks. Preferably in industries that will be strengthened after the coming currency collapse."
Obama relief rally may already have begun its rollover. Sure is gonna get ugly when Treasury starts issuing mountains of debt to steam-you-late the debtconomy. Imminently.
Posted by: Debtpocalypse at January 13, 2009 10:46 AM
"Fair value today = $300K, + or - 10%."
Did you take a crash appraisal course between yesterday and today?
Posted by: fluj at January 13, 2009 10:49 AM
This place was antistaged. I particularly like the randomly strewn junk on photo #7
Posted by: The Milkshake of Despair at January 13, 2009 10:54 AM
So anyone want to start a "Debt Pool" for 2009?
1. How high will this year's deficit be?
2. When does inflation (due to devaluation of the dollar) overtake deflation (due to demand destruction)?
Everyone can put in $20 and the winner takes all!
Posted by: Jimmy (No Longer Bitter) at January 13, 2009 11:02 AM
I know the area well and it's definitely not a 5 minute walk to either GP BART or GP Village. More like 15 mins. Anything below San Jose is certainly a different hood and this house is below Alemany Blvd. Still, falling prices in nearby areas do have an impact.
Posted by: Willow at January 13, 2009 11:15 AM
"There is not much comparison to Daly City or even South City"
Not sure how to read this comment.
Much of Daly City and South City (but not all) is even more suburban and actually much nicer than a lot of Mission Terrace. Other parts of Daly City in particular are almost exactly the same in terms of architecture and being mostly immigrant and working class in make-up.
My Dad grew up in Mission Terrace. Defiantly a block to block sort of area. I wouldn't really want to live there. Crap weather too
Posted by: Zig at January 13, 2009 11:22 AM
below Alemany Blvd is the Excelsior isn't it?
This house in my mind's map is above Alemany. That's pretty much what defines the tiny Mission Terrace
Posted by: Zig at January 13, 2009 11:29 AM
Who says there's no Ikea in the city?
Posted by: JayDawg at January 13, 2009 11:36 AM
Zig - Just rechecked the map and this property is below Alemany but above Mission St. Still considered Mission Terrace...
Posted by: Willow at January 13, 2009 12:32 PM
I wouldn't buy this place with Satchel's money
Posted by: spencer at January 13, 2009 1:02 PM
It's only 9/10 of a mile to Canyon Market, but one of the ugliest and least pedestrian-friendly 9/10 of a mile in the city.
Posted by: JKD at January 13, 2009 1:15 PM
JKD? As in J.K.Dineen?
Posted by: chuckie at January 13, 2009 1:22 PM
Willow-you're right east to Mission St is still Mission Terrace
My grandparents lived on the San Jose Ave side
Not the best area IMO where this house is
Posted by: Zig at January 13, 2009 1:33 PM
It shocks me that a 700+ SF hovel in a bad area of town could still be listed for so much. I say it goes for something in the mid to low 300's.
Posted by: Jake at January 13, 2009 1:38 PM
It's worth about $75,000 in any real sense. Plus the extra $5,000 to repaint the damn thing.
Posted by: bk at January 13, 2009 2:02 PM
Nothing says, "Do your due diligence" like a photo with a closed shower curtain...
[cue theme from Psycho]
Posted by: BobN at January 13, 2009 2:23 PM
Embarrassed that an ancient version of my spreadsheet is featured.
Posted by: missionite at January 13, 2009 3:01 PM
I *Love* the fact that this is a Sothebys listing.
The market must be tougher than I thought!
Posted by: tipster at January 13, 2009 3:30 PM
Yeah, it is quite the trophy property that Sotheby's is handling here.
I wonder if the tenant is still there, they left voluntarily or if this is one of those places where the tenant was illegally driven out after the foreclosure?
Posted by: Rillion at January 13, 2009 3:51 PM
LOL. Either that, or you folks bought into the Sotheby's mystique myth in the first place. It's just a realtor shop with good branding. Sotheby's lists average and worse properties all over this country.
Posted by: fluj at January 13, 2009 4:11 PM
Paco, you're a trip! I almost think you're a sophisticated troll...
Most people would consider things like cash/CDs/bonds or gold to be a "store of value". Saying that real estate has fallen less than other overpriced assets isn't really a vote of confidence.
I'd really like to know at what percentage of homes underwater you'd consider "choice California real estate" to be a poor asset choice.
Posted by: amused_in_soma at January 13, 2009 8:22 PM
so, what are you trying to ask?
i think my answer is; crappy stuff in the fringe (like the above listing) was not desirable at half the price. that 2/1 on buchanan on the other hand still indicates a very expensive piece of condo property. even if it sells for $800k it went up dramatically in the last 10 years and its unlikely to give everything back. and i agree w/r u kidding re only one bathroom for that kind of $$ is lame-o
Posted by: paco at January 13, 2009 10:23 PM
"... went up dramatically in the last 10 years and its unlikely to give everything back."
You are absolutely right. All properties in SF are simply going to revert to their inflation and wage growth support price which is 30-40% less, in real terms, then prices at the peak.
So through a combination of drops in the nominal price, wage growth, and inflation you will see the real price for all properties in SF drop somewhere 30-40% peak to trough.
Posted by: badlydrawnbear at January 14, 2009 5:37 AM
"real price for all properties in SF drop somewhere 30-40% peak to trough"
doubt that will happen in d5,6,7,8. 20% yes. double that, no.
Posted by: paco at January 14, 2009 8:15 AM
paco, you've gone out of your way to proclaim that primo Cali property is the best investment anyone could make. "Store of value" and all that. Now you're predicting a price fall of 20%?
Personally, I agree that 20% seems more realistic than 40% for those areas. But I can't reconcile how the "best investment" is one that loses 20% while CDs are still paying 4%, which is a) risk-free and b) a pretty good return considering real rates are negative and we're in a deflationary environment. Why would any rational person buy even primo property in this market?
Posted by: Dude at January 14, 2009 10:01 AM
WOW. Sotheby's has this listing? Times are tough I guess. This one didn't make it to the agents website next to the 7MM place in Sea Cliff she sold I see... (-:
Posted by: Ryan at January 14, 2009 10:09 AM
Because every property is unique, that's one reason. Especially around D7. Because you cannot live in a CD would be another. Time horizons need to be factored in would be a third. What if someone gets something for 10 % less than 2007 values, and plans to stay for 10 years, and can afford it? Indeed, it makes fiscal sense? (We have seen tax savings for the relatively well off who own plainly illustrated very recently in this forum.) And you say irrational? No. You have determined that it is irrational, for you.
Posted by: fluj at January 14, 2009 10:12 AM
Well, fluj, I believe I was addressing paco, but in any case...
I can't live in a CD, but I can live in an apartment for much less than owning, even with the tax savings.
Certain neighborhoods do indeed feature very unique homes. But I don't like D7, and have even lost interest in SFRs generally. I'm only interested in highrise Soma condos at this point. Fairly homogenous market, even between buildings.
I guess a fair compromise would be to say that if you only want to live on certain blocks of specific neighborhoods, and plan to stay there for the rest of your life, it may make sense to jump on your unique dream house if it comes on the market. Especially if you can do it without crippling yourself financially.
For the rest of us, there really isn't much incentive to dump our life savings into one asset in a clearly declining market. May also be time to stop beating the "prime property" drum now that CDs are outperforming real estate in even the best areas, and rents are falling.
Posted by: Dude at January 14, 2009 10:28 AM
There's banging the drum. And then there's reacting to the specific implications of someone throwing out the word "irrational" in a hypothetical question. Even though they're speaking a very specific and personal bias. But you're right. You were not speaking to me. Lord knows I catch enough of that myself.
Posted by: fluj at January 14, 2009 10:39 AM
My question was basically "how many owners in neighborhoods you think are choice need to owe more than their house is worth for you to consider primo RE to be a bad bet?". For me, going negative on an asset (something non-margin stocks can't do!) is a horrible outcome, even if I am still actively using the asset. I suspect it's the ultimate horror story for most Americans: having to sell your house while it's underwater.
But fluj is right, it's all a matter of what you can afford and how much you want to live there. However, appreciating home prices were an inducement for many buyers, so declining prices should serve as a disincentive. Buyers who never cared about resale values (how many are there???) are indeed acting rationally *and consistently) if they buy now.
Posted by: amused_in_soma at January 14, 2009 8:43 PM
amused and duude,
i advocate buying what you can afford and staying put
(at least until a favorable trade-up opportunity arises).
i advocate taking advantage of ultra low long rates and using my house as a store of equity (and collateral for tax subsidized financing). i bet a good piece of california is a better bet than 4% cd rates.
as buffett says-fearful when everyone's greedy and greedy when everyone's fearful. there's no rush, but luck favors the prepared.
i don't blame spencer for staying put in his terrific rental situation, but i would be saving like mad to be ready to buy when the good stuff comes down in price.
Posted by: paco at January 14, 2009 9:24 PM