February 18, 2009
Apples To Apples (If You Ignore The New Bath): 2203 Broderick
Purchased for $2,000,000 in June of 2004, 2203 Broderick in the heart of Pacific Heights returned to the market with a remodeled bath in October of 2008 asking $2,395,000. Reduced to $2,195,000 in November, and now asking $1,975,000 as of nine days ago.
A sale at asking would represent zero appreciation over the past four and one-half years. But do avoid the temptation to see that as "prices in Pacific Heights have been holding steady since 2004" versus having risen and are now falling since.
∙ Listing: 2203 Broderick (3/2) - $1,975,000 [MLS]
First Published: February 18, 2009 8:00 AM
Comments from "Plugged In" Readers
yes, "priced like a condo". a condo that hasn't sold yet. fugly bathroom remodels and it sounds like a good deal of the (undisclosed) square footage is on the garage level. seems to be getting close to decent value for a SFH in this 'hood though.
Posted by: resp at February 18, 2009 8:56 AM
The prices are falling... and we are not hearing about "good seat" theories anymore. (Hi paco!)
Rewind to 1997 prices + inflation doesn't seem so outlandish to me anymore... although it did, I must admit, when LMRiM first made that prediction or something close to it.
Posted by: chuckie at February 18, 2009 9:20 AM
"Rewind to 1997 prices + inflation doesn't seem so outlandish to me anymore... although it did,"
Why not? There's quite a big difference between 10 percent and 50 percent.
Posted by: anonn at February 18, 2009 9:30 AM
I'm seeing a ~$2M floor for PH SFH's. A place on Clay just went into contract that was inferior to this place IMO although the location was ever so slightly better. I suspect this will sell soon at around this price.
Posted by: eddy at February 18, 2009 9:37 AM
maybe "condo pricing" but it is also a condo type house, with a garden.
i dont think the $2.0 MIL price floor will hold up for these sfh properties in Pac Hgts.
Which also means that nice full floor flats in PH will drop below $ 1.5 MIL.
Both of which levels are back to 2003 or earlier.
which considering what is going on is really not so bad from an owner point of view. Back to 2003 is NOT the scary scenario.
Posted by: Louis at February 18, 2009 9:58 AM
The listing says "Plans for 3rd/4th floor expansion" and again "expansion potential". No mention of if the plans are approved, so it's probably a good idea to assume that they are not.
Good luck getting a construction loan in the current economic situation. And aren't your new high-powered, huffy neighbors in Pacific Heights going to have a lot to say about you adding a new floor, blocking the light to their gardens?
Didn't Carol Lloyd make a career writing about traps like what the buyer of this place is about to walk into?
Posted by: Brahma (incensed renter) at February 18, 2009 10:46 AM
This is exactly the kind of property I would like to buy. SFH, great location, big enough for a couple and two kids, 2 car parking. My partner and I are both professionals, total household income $500K. We have minimal debt ($30K low interest student loans), good cash reserves ($250K), excellent FICO, and we still can't afford this home.
With tax writeoffs, we can afford the monthly payment. The kicker is the downpayment. This place, at 20% down, requies $400K up front. If the price dropped to 1.25 mil, and the downpayment to 250K, we would likely buy it, and enjoy all the great Pac Heights location has to offer (close access to Presidio, Crissy Field, GGP, Marin, shops).
In reality, we will buy in the East Bay in a good school district with SF views and foot access to extensive natural parktrails, for 700K-900K. We will work less hours and have more time for eachother, our kids, extended families, and friends. If, however, prices of places such as this drop to 1.3-1.5 mil over the next 2-3 years, I might be forced to reconsider.
Long time lurker, first time poster here, hoping y'all will indulge my perspective. Keep up the great work socketsite and all contributors -- thanks to you I did NOT buy a SOMA condo 1.5 years ago. The best financial (non)decision I have ever made.
Posted by: HillsPlazaRenter at February 18, 2009 11:02 AM
$500K income with only $250K of savings + student loans + willing to put 100% of that savings towards a downpayment??
i guess there's more correction still coming.
Posted by: resp at February 18, 2009 11:11 AM
easy to see why this place hasn't sold. Just 2 bathrooms, both small and ugly. Kitchen is so-so at best. Someone able to spend $2M in this market can get so much more for their money...
Posted by: sunnyvalesteve at February 18, 2009 11:19 AM
I appreciate the perspective, resp. In reality, we will be renting for at least another year, (adding $100K to cash reserves and paying off $30K loans), which would make a $250K downpayment much more palatable.
My point with the post above is that we are not going to drop our hard earned cash on just any property. No SOMA condo here. Pac Heights SFH we could live in for the next 20 years? Now we might be talking....
Posted by: HillsPlazaRenter at February 18, 2009 11:20 AM
So according to the above, people should spend, 2 1/2 years salary on a home. I'm sure this place will drop to $1.25M and still no one will want it or be able to afford it.
P.S. I guarantee that I could buy this place, get a construction loan, and add another story. So, if it gets to $1.26M, I'll beat HillsPlaza to the punch.
Posted by: sparky-C at February 18, 2009 11:25 AM
sparky-C, thanks for the input. I always thought the rule of thumb was to buy a home costing less than three times yearly income? And I dig that homes like this will likely be purchased by speculator/investors prior to reaching my price point. Fortunately, there are great East Bay homes that are bigger, have better views, excellent school districts, and as good access to outdoor recreation. And good luck with those permits!
Posted by: HillsPlazaRenter at February 18, 2009 11:37 AM
"So according to the above, people should spend, 2 1/2 years salary on a home."
Try reading HPR's comment again sparky:
"With tax writeoffs, we can afford the monthly payment. The kicker is the downpayment. This place, at 20% down, requies $400K up front. If the price dropped to 1.25 mil, and the downpayment to 250K, we would likely buy it, and enjoy all the great Pac Heights location has to offer (close access to Presidio, Crissy Field, GGP, Marin, shops)."
The downpayment issue is a game changer for San Francisco real estate.
Posted by: Michael at February 18, 2009 11:51 AM
Oh I read it. It says we make $500K a year so we can afford a $1.25M house, because we have saved $250K. And that is 20% so therefore it is the metric. Which is fine for him/her but not for this house because someone will buy it for more money. News flash; people have more money than that, and save more money than that. I have saved more money than that since 2004 when I bought my house.
Also, the house to income for SF hasn't been below 4 at all from the charts I've seen which go back to the 80's.
Posted by: sparky-C at February 18, 2009 12:00 PM
I agree with sparky that this town has a good number of residents with "more money than that." But that's beside the point -- real estate, like everything else, cannot simply be priced at whatever level prospective purchasers can afford. The market sets the price based on supply and demand. And right now there is lots of supply, which is growing, and little demand above the $1M level regardless of how many could afford to buy there.
This place may go for more than $1.25M. But in the not-so-distant future, similar places will be available in that range.
Posted by: Trip at February 18, 2009 12:11 PM
sparky. my personal rule is 3.5 x income is the highest I would ever pay, but that is assuming that rents are comparable (which they are not)
right now, that would put me into a $710K condo. However, i can rent a $710K condo for $2K per month, so doesn't make sense.
eihter prices come down 50% and rents stay the same or rents go up 30 and prices come down 30.
Once one of those 2 scenarios happen, then i am a buyer. I don't see it anytime soon as RE prices will prob fall 20% over next year while rents fall 10%. That doesn't get me out of a rental.
Posted by: spencer at February 18, 2009 12:19 PM
sparky-C, I think you and Michael are actually saying similar things. You indicate that there are people with more cash on hand that will buy this house at a price greater than 1.25 mil (say 1.5 million). I, too, would think about purchasing this for 1.5 million (and I can afford it on an income basis), but Because I Can't Make The Downpayment, I am forced to the sidelines until asking price drops to 1.25 mil(and growing monthly...)
Thus downpayments are a "game changer" as Michael states. They certainly changed my game... right to the bench. If, as you state, "house to income for SF hasn't been below 4," then our $500K salary should be able to afford a 2 million dollar home, (or maybe a 1.5 mil Pac Heights Victotian). But we can't! No downpayment.
Sparky-C, given your prior statement "I guarantee that I could buy this place, get a construction loan, and add another story," what is the highest price you would be willing to pay for this home?
Posted by: HillsPlazaRenter at February 18, 2009 12:23 PM
This is on one of the best streets in one of the best parts of the best neighborhoods in Pac Heights. It doesn't get any more "real SF" than this. Peak pricing held firm until October of 2008.
And now, 6 months later, we're back BELOW 2004 pricing with a redone bath? In 6 months, we've erased 4 years of appreciation!
How many people on this forum stated that homes in areas like this were somehow "different" and would hold up better? It looks to me that they are falling *faster*.
If this location, location, location isn't safe, there is nowhere safe from what's coming.
Posted by: tipster at February 18, 2009 1:03 PM
The East Bay is not the same as PacHts, and never will be, but it is and always was a better choice for many people. I doubt that we will be seeing a SFH for sale at $1.3 in western PacHts ever again. A condo but not an independent building. If one could buy this house as is for $1.75, that would be very good value for money, even in a recession. What is the existing square footage?
Posted by: Conifer at February 18, 2009 1:04 PM
The last 5 places I sold the buyer put over $1M down. None of them were in Pac Hgts. That's where I'm coming from.
As far as this place, it is not what I would typically buy so it would be hard to say. Why pay more for someone's bad finishes that need to come out for structural/new layout/stair reasons anyway. I would rather buy a total fixer with a yard and some views over this. I don't like to compete on purchases with the move right in homeowner. It costs too much. Someone will be very happy with a $1.5M purchase.
Posted by: sparky-C at February 18, 2009 1:09 PM
Were those 5 sales pre-meltdown (Oct 2008) or post meltdown? Different world for your buyers today.
@Conifer: "I doubt that we will be seeing a SFH for sale at $1.3 in western PacHts ever again."
I'll bet you dollars to doughnuts that we'll see it before 2010 is done.
Posted by: tipster at February 18, 2009 1:53 PM
One comment about HPR's point that the difficulty in buying at this price level is coming up with the 20% down. From what I've heard (others may have first-hand knowledge), 30% down is now generally required for a jumbo loan in SF -- $600,000 cash for a place like this. A prospective buyer should reasonably have far more than that on hand so as not to tie up every penny in a single asset -- pretty strictly limits the buyer pool and largely explains why we're seeing essentially no sales at these price levels.
Posted by: Trip at February 18, 2009 2:34 PM
the location isn't that great. it's neither close to union or fillmore.
what's the point of living in the city if you can't just step outside and have restaurants, shopping, public transportation within 2-3 minutes of walk.
Posted by: dotcomer at February 18, 2009 2:45 PM
@Conifer: "I doubt that we will be seeing a SFH for sale at $1.3 in western PacHts ever again."
I'll bet you dollars to doughnuts that we'll see it before 2010 is done.
Okay, tipster, it is a bet, $100 against 100 donuts. If I win, we will share the 100 donuts with other members of the list. To win the $100, you have to find a single family house (no fires or acts of God) that closed for $1.3m or less (delivered vacant free of tenants) in western Pac Hts, defined as north of Clay, south of Green, west of Fillmore, east of Presidio. If you do not find one, you have to deliver 100 donuts to my house, where all other members of the list will celebrate on New Year's Eve day, Dec 31, 2010, at 11 am.
Posted by: Conifer at February 18, 2009 2:56 PM
[dotcomer] - it's 1 block from Divisadero, which has plenty of bars, restaurants and shops. Check the map.
Posted by: Fishchum at February 18, 2009 3:04 PM
Sparky: Sounds like you know other markets better than Pacific Heights. If there's so much money floating around why are home prices falling? Because demand for houses was inflated with buyers who can no longer qualify for loans. There will always be buyers with million dollar downpayments but their competition who only had $200K but could still qualify for a loan is gone.
Dotcomer: Get a clue. This house is three blocks away from restaurants and bars on Divisadero/buses on California, 5 minutes from shopping on Sacramento and 10 minutes from Fillmore.
Posted by: Michael at February 18, 2009 3:27 PM
Conifer, It's a bet.
Michael, don't forget about the move up buyers taking their equity from people who bought the buyer's former home with nothing down, and using that equity as the down payment on the move up home. Those nothing down buyers are gone and so the move up buyers don't have nearly the equity, if they can sell their homes at all.
And that problem is getting worse as housing prices continue to sink.
Posted by: tipster at February 18, 2009 4:15 PM
Hmmm...Conifer has specified such a tiny area (0.24 square miles of non-park space by my calculations, or 1/200th of San Francisco) that who wins the bet may come down to a large degree of luck (given that there will not be that many sales inside such a small perimeter over a period of 22 months).
That said, Conifer has already come within half a block of losing the bet, assuming this place doesn't go for over asking:
Posted by: anonm at February 18, 2009 4:36 PM
What happens if tipster finds a sub $1.3 house in that polygon before 31-Dec-10 ? Do we have to wait until the end of 2010 for the grease and sugar fix ?
PS : I prefer the cake donut with pink icing and multicolored jimmies. a.k.a the Homer donut.
Posted by: The Milkshake of Despair at February 18, 2009 4:37 PM
That particular half block or block makes all the difference in the world over there.
Posted by: anonn at February 18, 2009 5:02 PM
Tipster: thanks for the bet.
Anonm: I specified the area that is western Pac Hts under the old definition. I deliberately left out the area south below Clay because there are a few very small Victorian places, from when PacHts was still the Western Addition, such as the one you mention.
Milkshake: if tipster finds a house that qualifies, I will pay him the hundred bucks immediately. If he doesn't find it, we will have our donut brunch.
Posted by: Conifer at February 18, 2009 5:17 PM
Tipster is basically betting that prices will fall to 2000/2001 levels, at which point a property like this would come in under 1.3 million:
It's not a bad bet at a fundamental level, but I suspect he may still have small sample problems because only the small SFHs will come in under 1.3m, even at 2000/2001 levels, and the geographic area in question is, again, very small.
A bet that would rely more on fundamentals and less on chance would be something like "No (non-wrecked) SFH will in that polygon will sell at 600 psf or less between now and Dec 31, 2010." A minimum psf sale at that value would effectively take us back to around 2000 prices, but would be less subject to small sample issues.
Posted by: anonm at February 18, 2009 5:43 PM
Do avoid the temptation to consider editorial bias is not coloring every single article on this website. How much is one remodelled bath worth, editor? On average? 5000 dollars? Was 2004 not the year in which the largest spike occurrred?
The inclusion of that information -- less the leading language you chose --might have seemed a bit less stridently one sided. Just a thought. And how much are you paying to license these MLS photos for profit, btw? How are the property owners feeling about photos they own of their property being displayed in a forum subject to disparaging comments? Comments set up with leading editorial remarks, by a third party? Again, for profit? Times are changing pal. Web 3.0 won't be so grabby. Wake up.
Posted by: anonn at February 18, 2009 7:34 PM
fluj, bone up a little bit on copyright law and fair use before you start spouting ridiculous tripe like this.
And are you seriously suggesting that SF prices saw no substantial run-up after June 2004? You know that is absolutely false -- a little pot calling the kettle black here with your assertions of SS misleading statements.
Posted by: Trip at February 18, 2009 7:41 PM
Sorry flanonn, even if you got everyone to join hands, close their eyes and hum kumbaya it wouldn't be enough to levitate this market.
Shouting down the naysayers isn't going to work. The forces at work are far larger than one website.
Posted by: diemos at February 18, 2009 7:50 PM
tipster I was working and missed your post but 1 was post OCt '08, 2 were mid '08 and Michael I mentioned they were not in Pac Heights for the exact reason you point out "there will always be buyers with million dollar down payments...". Agreed and I think a large percentage would covet PH.
Posted by: sparky-C at February 18, 2009 8:26 PM
The terms of the bet are set and agreed by both parties, me and Tipster. The geographic area, small or not, is the portion of traditional Pac Hts west of Fillmore. It is not a square foot price, but a single family house, on its own independent lot. It must be habitable at the time of close, with no tenants, and must not have suffered fire or acts of God such as earthquakes or floods.
I expect to win this bet; those of you who think I am right should put down "donut brunch" in your diaries or iphones for Friday, December 31, 2010, at 11 am. Address within the neighborhood described.
I am certain that Tipster will keep us informed if single family houses start to come close to $1.3.
Posted by: Conifer at February 18, 2009 9:00 PM
When the appointed day comes, you will tell us where to meet you right Conifer?
Posted by: NoeValleyJim at February 18, 2009 9:23 PM
Yes, NoeValleyJim. It will be at our house within the neighborhood described. My wife and I will provide the coffee and tea, in a suitably celebratory environment. Tipster will provide 100 donuts. As the date comes closer, socketsite posters will post the type of donuts they want Tipster to bring. We will be celebrating the end of the recession and the survival of PacHts real estate prices.
Posted by: Conifer at February 18, 2009 9:38 PM
"Sorry flanonn, even if you got everyone to join hands, close their eyes and hum kumbaya it wouldn't be enough to levitate this market."
The above had something to do with what I said, apparently, to your way of thinking. OK? I guess? At this point I actually sort of hope the market tanks like YOU want it to, Diemos. It never will. But that would be great for my bottom line. I know some realtors in the East Bay and Sacramento who are KILLING it. And my own property costs me very little because I rent out two+ flats and it is 100% financed.
"fluj, bone up a little bit on copyright law and fair use before you start spouting ridiculous tripe like this.
And are you seriously suggesting that SF prices saw no substantial run-up after June 2004? You know that is absolutely false -- a little pot calling the kettle black here with your assertions of SS misleading statements."
Oh really, Trip? Blogs are such well worn corridors of law and all. Nothing to talk about there. noooooooooooo.
Did I say there was no run up after 2004?
It's a 1.25% dip after a bath was remodelled. The editor saw fit to set it up the way he did, and I don't like it one bit. He gets his content for free, he profits off it, he comments on it, and his comments can hypothetically affect people monetarily. He's setting himself up for a bad one. Or 20.
Posted by: anonn at February 18, 2009 10:15 PM
This place need some serious updating. Someone needs to stage this place better. It just looks so sad. The outside looks so clean and one expect inside to match outside. Sadly inside stayed in the last century....
Posted by: Juju at February 19, 2009 12:03 AM
"like YOU want it to"
Again with the wanting. Just because I predict that the sun will rise in the east this morning does not imply that I want it to. It does not imply that my wanting it to rise in the west will have any effect. There is an external reality that goes about it's business regardless of what you or I might want.
Posted by: diemos at February 19, 2009 5:34 AM
fluj, who ever said there was nothing to talk about regarding IP issues surrounding the web? There are, of course -- copyright, fair use, 1st Amendment, DMCA -- I litigate these issues all the time. All I said was that based on your comments to the editor your understanding of these issues is terribly lacking. Study up. You'll learn a lot, and I imagine then you will have something worthwhile to add to such a discussion like you do in the areas you do know well.
Posted by: Trip at February 19, 2009 7:26 AM
Wow, I feel really poor reading some of your posts/ incomes.
I'm curious what some of you do for a living? I'd like to have a plan after I quit being an Architect.
Posted by: poor boy at February 19, 2009 10:54 PM
Posted by: eddy at April 25, 2009 11:07 AM