February 25, 2009
Up From 2004 (But Down From 2005): 3004 Ortega Closes Escrow
The sale of 3004 Ortega in the Outer Sunset (real estate District 2-C) closed escrow yesterday (2/24/09) with a reported contract price of $604,000.
To recap: purchased for $550,000 in June of 2004; flipped eight and one-half months later for $680,000; sold for $750,000 in November of 2006; bought back by the bank this past September for $535,075; and listed for $589,900 last month.
UPDATE: We missed what appears to be an off the MLS sale in November of 2006 for $750,000 (since added to our recap above), but a plugged-in reader did not. And another offers some "sales stats for 2bd/1ba single-family homes in districts 2-B and 2-C":
Jan-Feb 2007: Sold: 9 Range: 690K-825K Median: 749K
Jan-Feb 2008: Sold: 9 Range: 560K-750K Median: 630K
2009 (so far): Sold: 7 Range: 550K-622K Median: 598K
Damn those "fantastical" apples (and cheers).
First Published: February 25, 2009 9:30 AM
Comments from "Plugged In" Readers
Knifecatchers are clearly still out there in the market.
Perhaps someone could shed some light on this. Property shark shows that this house was sold on 11/09/06 for $750K, 100% financing with 2 loans from WAMU:
"11/9/2006 Grant Deed Resale Lagrada, Lorena C Cedo, Emelinda M & Fe C "
Because of the different names, it doesn't look like a refi, but rather a transfer sale.
Can anyone see any more info on this place? If the prop shark data is right, that would establish a 2006 price of $750K, meaning a 20% decline from what I estimate would have roughly been the peak time period out there.
Posted by: LMRiM at February 25, 2009 9:49 AM
I drove by this property a while ago - it's a bit atypical for the Sunset as it is a smaller than typical lot on the corner which backs directly to another house and only has a narrow side yard which abuts to another house (to the left of the house in the picture). The location on a busy corner across from the entrance to the school across the street is also a bit sub par too. Anyway, the point being, marginal houses (sub par locations, below average condition, etc.) are going to see more of their value come off if they have to sell in this market while they increase in value faster in a stronger market.
Posted by: Miles at February 25, 2009 10:13 AM
I hope the new owners plant street trees.
Posted by: flaneur at February 25, 2009 10:30 AM
From the perspective of a condo owner with side-by-side parking, that garage looks mighty delicious.
Congrats to the buyer, even on the low end!
Posted by: depressed_house_hunter at February 25, 2009 10:49 AM
Aren't we generalizing a tad here? This specific house may have been a pretty solid deal. As I have said before, all RE deals are unique. Maybe this price, for this type of property will represent the bottom. It's myopic to just generalize that anyone buying now in SF is a knifecatcher, without analyzing the specifics of that transaction.
Also, if indeed there are so many 'knifecatchers' out there, by definition they will help soften the downward price trend and the SF RE market will turn around faster due to them.
Just trying to balance out the argument.
Posted by: 45yo hipster at February 25, 2009 11:01 AM
Also, if indeed there are so many 'knifecatchers' out there, by definition they will help soften the downward price trend
It works both ways. 1 - They do cushion/slow down the fall. 2 - They are eliminating themselves from the buyer pool for a while if they are actually catching a falling knife.
Posted by: San FronziScheme at February 25, 2009 11:33 AM
So, does anyone out there have info about the 2006 $750K sale? Anonn, you have full access to the MLS. Did this property fall 20% or not?
All apples data points are useful in estimating how far we've fallen so far and in trying to estimate how far we'll go.
Posted by: LMRiM at February 25, 2009 11:42 AM
It appears to me that it last sold for 680K around this time (Feb) back in 2005. That was 19K under asking. So no, it seems to have fallen about 11 percent. The new sale apparently got four offers.
Posted by: anonn at February 25, 2009 11:47 AM
Looks like there was an "arms-length" transaction for $750K in Nov. 2006 between the 2005 buyers and those that were recently foreclosed. Of course it was 100% financed. It's funny, the various lenders from 2005 onward are like a who's who of this sh*tstorm - 2005: New Century, 2006: WAMU, and it 2009 it belongs to Long Beach Financial.
Posted by: rabbits at February 25, 2009 11:54 AM
Just saw anonn's response - is it possible that properties that are sold without being listed never make it into the MLS records? I'm looking at the grant deed from 2006, so there was definitely a transaction, but maybe it was never listed? When considered in this light, the 2006 sale looks a bit fishy...
Posted by: rabbits at February 25, 2009 11:59 AM
Duh, I should have just checked the tax assessor (I of all posters should be ashamed :) ).
Tax assessed value = $765K, which is exactly the 2006 $750K value + the 2% increase (the tax assessed values lag calendar years because i think they are reassessed in June). This supports the view that it was sold for $750K, and in consistent with the property shark data. I'm surprised anonn that the MLS apparently doesn't have this past sale.
So, it looks like it's down 19.5%, a little less than halfway to where I estimate places like this will ultimately fall.
Posted by: LMRiM at February 25, 2009 12:02 PM
So what was the 11/06 transaction? It sure looks like a resale (rather than a refi) for $750k (at least -- I'm assuming $0 down). 1st and 2nd parties are different. Transaction type states "resale". 1st loan at $600k, 2nd at $150k. And the property tax assessment is listed at $765k. If a sale were made but not through the MLS, would it not show on the MLS?
Posted by: Trip at February 25, 2009 12:07 PM
Maybe this price, for this type of property will represent the bottom.
Technically anything is possible. But come on, let's be serious. Really.
Posted by: anonm at February 25, 2009 12:09 PM
Without looking up the information and using one of my credits at a title company's executive service, I think it was a re-fi. Right after the 680K sale, like four months later, there was a marketing period for 830K in which it did not sell. That period was probably preceeded by the re-fi. The note probably changed banks at some point and you're calling it a sale.
From what I can see the open market never valued it more than 680K. This one does look sort of fishy to me too. Look at that lot, the size, location, etc. Looks like somebody financed it, cashed out, tried to sell it for more and cash out again, couldn't, and then walked.
Posted by: anonn at February 25, 2009 12:19 PM
Or the 750K sale wasn't a bank at all but instead a private individual who does what banks sometimes did. There were speculators buying numerous properties in financial distress during the upward market. A lot of times they aren't even in state.
Posted by: anonn at February 25, 2009 12:24 PM
But a refi would not change the tax base.
Regardless, re the knife-catching point, the FDIC's bank "stress test" criteria have been posted.
Projecting 10-city CS declines of 14% in '09 and another 4% in '10 as a "baseline" with a more "adverse alternative" of 22% and 7%. The other stress assumptions appear to be on the optimistic side to me (as does this one). But even the rosy "baseline" predicts another ~18% housing price decline. I don't see how SF could do better than the composite, and the trend indicates it will not.
Posted by: Trip at February 25, 2009 12:25 PM
anonn, I admire your faith in the honesty of these people, but this is more likely an instance of buyer and seller cooperating in mortgage fraud. The grant deed dated Oct 2006 clearly states Lagrada/Jaranilla granting to Cedo/Cedo the property in full. $70K to split in some fashion between them after all is said and done, and the bank takes it on the chin.
Posted by: rabbits at February 25, 2009 12:32 PM
Somehow you read my comment that "this one looks sort of fishy to me" as faith in the honesty of these people?
Trip, you are confusing tax due at time of transaction with tax base. Tax base is figured out under a confluence of Prop 13, which limits the increase to 2% per annum from base year, Prop 8 which offers up some exceptions to that, and some other exemptions for non arms length, etc. If it was determined that the 750K was a non arms length transaction the city would have been remiss not to assign a new base. Basically, if the city smells a rat, like how this one might have appeared, they're gonna raise the tax on that rat. Because of the quick re-fi and cash out it might have appeared to be an artificially low pricepoint. Cue tax base increase.
But again, now that I think about it this one looks like somebody didn't do their homework and bought something from the -- supposedly --distressed seller while it was in default. Then they in turn also walked.
I could be wrong, tho.
Posted by: anonn at February 25, 2009 12:48 PM
"Because of the quick re-fi and cash out it might have appeared to be an artificially low pricepoint."
anonn, your musings on this are appreciated, but I think you are mixing up your time scales here. The property sold for $680K in February 2005, and then the $750K financing took place in November 2006 - twenty-one months later. It really wasn't too quick (at least in the context of SF real estate, I guess).
It could have been a phony non-arms length sale arranged with a straw buyer in order to cash out some $$ from WAMU, but we really have no info to assume it wasn't a real sale, except I guess for the absence of MLS data. In any event, an appraiser had to sign off on the $750K number, and it really wouldn't have been too surprising that the price went up a bit from 2005 to 2006, making a $750K a plausible "market" value. I estimate that 2006 was the peak for a number of the western nabes that I was familiar with.
In cases of apparent mortgage fraud that I am familiar with (e.g., 261 San Fernando or 414 Foerster), the "sales" prices were clearly way out of whack, and $70K really wasn't. It's a small place, but the downstairs has at least 2 bedrooms and 1 or 2 baths (unwarranted).
Posted by: LMRiM at February 25, 2009 1:06 PM
If the $750k transaction were a refi instead of a sale, it would not have resulted in the tax assessment being based on a $750k purchase price (it would have been lower). The tax assessment was increased -- so this 11/06 transaction appears to be a sale and not a refi. That's all I'm saying. There may be some fraud, etc. But from what we can glean, it looks like we're seeing a 19% apples-to-apples drop from 11/06. About what one would expect from the broader data.
Posted by: Trip at February 25, 2009 1:38 PM
OH Ok. My bad.
Posted by: anonn at February 25, 2009 1:40 PM
It is extremely curious that the 2006 "sale" does not appear in the MLS database -- means it was not transacted off the MLS, I presume. Another indicator of fishiness . . .
Posted by: Trip at February 25, 2009 1:49 PM
fishiness is next to crookedness...
Posted by: San FronziScheme at February 25, 2009 1:56 PM
You can seize upon this one and extrapolate outwardly if you like. you all love to do that. But don't forget that a bank got involved here. Because the sales data per foot YoY says more like a 5% or 6% drop, 10/29-8 - today's date vs. 10/29/7 to 2/25/08 for areas 2B and 2c, and it's like 37 sales last year to 30 this year.
Posted by: anonn at February 25, 2009 1:56 PM
Silly me. The kind of mortgage fraud I was referring to had to do with buyer credits at closing (w/o lender knowledge) and lying on no-doc loan applications. I guess those offenses were so commonplace in those days that they were/are hardly considered illegal :)
Posted by: rabbits at February 25, 2009 2:25 PM
my issue is, alot of you tend to take a specific apple-to apple transaction and extrapolate it to the entire SF market. if it makes you feel better, fine.
rincon hill #2307 is a great one. from $849 down to $649, a 31% reduction. great! so all SF should be down 31%, and anyone buying anything today is a knifecatcher.
this is dilusional, and ridiculous thinking. sure, if someone overpaid for a specific property 2 yrs ago, they may be down 20% on it today. but there are also other apple scenarious where the difference is 5-10%.
additionally, if someone today hammers out a great price (distressed sale, seller negotiates down alot in eecrow, property w/a problem u can handle, etc.) then they may have a good deal on their hands. you cannot say de facto that it's impossible to get a good deal today, unless you think that things will go down 40-50% in SF. if you think that, fine. time will tell. i think that's wishful thinking. and a few juicy apples are anedotal, and can actually be deceptive/false market indicators.
[Editor’s Note: Please keep in mind that while the pricing history for 425 1st Street #2307 demonstrates a change in expectations, it was never characterized as an "apple" (or at least not by us).]
Posted by: 45yo hipster at February 25, 2009 3:25 PM
As others have noted, I didn't see anything in MLS about a listing or sale in 2006. There is a listing for $830K that expired on 12/20/05. It is possible to have records deleted from MLS - but it's probably unlikely in this case.
Posted by: FSBO at February 25, 2009 3:39 PM
45yo hipster, nobody would argue with the point that one or two "apples" does not provide a definite picture of the entire San Francisco market. But these apples to apples examples are far better than the alternatives. Point to medians or dollars/sf, which are both way down, and someone yells that the mix has changed. point to Case Shiller, and somebody yells that this is not "just San Francisco." Both are valid,even if they don't provide anything about what IS going on in San Francisco. I don't see anything better than these apples to get a good picture. Any suggested alternative market indicator that is better?
Posted by: anon at February 25, 2009 3:45 PM
Agreed that an apple does not make a market. But a steady collection of apples can help having an idea about the trend.
Agreed too that individual deals can go both ways: someone overpayed during the crazy overbids of 3-5 years ago, or a seller throws the towel today at whatever one sole buyer has offered. These can distort apple-to-apple comparisons.
Having said that, we are seeing a very distressed market, at least in terms of volume. Prices are following on the way down in many districts. What remains to be seen is when/if the best of breeds districts are following.
Last year we were getting a lot of data points proving prices were holding up and most bears took note.
The current tune we are getting now is that individual data points should be dismissed for reason A or reason B.
What I see in these comments is rationalization at a reality: the SF market is decreasing overall in prices and volumes. Local disparities do exist, but they are minor compared to the main trend: This puppy ain't going anywhere up anytime soon.
Posted by: San FronziScheme at February 25, 2009 3:49 PM
Percent down, Schmercent down, this 2/1 deep out on Ortega still got over $600K.
Posted by: sparky-C at February 25, 2009 4:12 PM
600 is the new 700.
Posted by: San FronziScheme at February 25, 2009 4:18 PM
How is it mix when it's the same micro area, and a sampleset of 30 or more? Like I said above YoY it's actually down 5 or 6 % in price for 2-B and 2-C (the outer Sunset.) That's for the three months post September's shift.
Also, it has to be said, the same cast of characters were hollering "The Sunset is tanking" last year.
Posted by: anonn at February 25, 2009 4:19 PM
Percent down, Schmercent down, this 2/1 deep out on Ortega still got over $600K.
In other words, it's likely to fall even more.
Posted by: anonm at February 25, 2009 4:21 PM
More like 600 is the new 635, or something.
Posted by: anonn at February 25, 2009 4:23 PM
I stand corrected.
604 is the new 750.
Posted by: San FronziScheme at February 25, 2009 4:27 PM
Unless you think that things will go down 40-50% in SF. if you think that, fine. time will tell. i think that's wishful thinking.
I used to think 40-50% was the absolute max things could fall. Now I'm beginning to think it's the minimum that they could fall.
Think about it. 40-50% from peak takes us back to circa 2000 pricing. In other words, you are saying that it is "wishful thinking" that prices during the worst recession since the Great Depression (with a local jobs picture that looks worse than during the dot-bomb) might fall to the levels seen during the peak of the biggest post-War boom the Bay Area ever had. If anything, that might be wishful thinking in the opposite of the direction you were thinking!
Posted by: anonm at February 25, 2009 4:27 PM
"YoY it's actually down 5 or 6 % in price for 2-B and 2-C"
A useful data point, but not particularly so. You're just looking at $/sf for a pretty small sample size. The mix certainly could have varied tremendously. As an extreme illustration, could have been 30 complete dumps last year and 30 remodeled beauties this year (or vice-versa). So the 5-6% change dramatically understates (or overstates) the real shift. And this only looks at completed sales -- just half the equation as you and I have discussed many times. Again, useful, but not as good as apples to apples data points.
This trend line per Redfin is also pretty useful:
Posted by: Trip at February 25, 2009 4:30 PM
anon/san fronzi- yes, i agree with your qualified interpretations of apples/apples. and i also agree that any dataset/indicators can be disputed (i.e. case-shiller, medians, etc.)
that's why it's important to take a balanced perspective on datasets, and to try and assimiliate them to assertain trends.
i don't think anyone disputes that since 9/08 SF has started to trend downwards. volume has been down for quite some time as well. i do think that apples/apples are valuable, especially when we look at them across the board. meaning: don't just look at the 'fantastical'stuff- the ones that make for fun blog reading and feel good sarcasm.
i submitted to the editor a 2/1 condo in the mish (hasen't sold yet, so not true aple/apple yet) but i'd to see where it ends up, as my gut says the price loss will be in the 7-10% range. this is just one example i am interested in tracking.
i think it would be great if SS can make an effort to find a variety of apple/apples. i.e. we have seen some definite negative sales, some fantastical. i'm sure there are others, perhaps less exciting, that would paint a more balanced picture (i.e. not everyone that brought in the last 2-5 years who sells today is going to loose 20+%.) i imagine that it takes some sleuthing and effort to find legit apple/apples, so a priori, i appreciate what SS has been able to find thus far...just keep in mind my comments as more are discovered, and the apple/apple dataset becomes more prevelant in our discussions and analyses.
finally, the use of a blog, where we are all annonymous, leads to interesting behavior...freud would have a field day with the bulls/bears on SS, if he were around. i know it's great for venting and flaming, especially for most people who are stuck with real jobs dealing with real people, and are unable to go off like they can online. yet ironically it allows people to be brutally honest with their investment information and specifics, especially wrt wealth, property ownerships, stock positions, etc.-something most people would not feel comfortable doing in a group gathering. there are some really good posters on SS, who do have interesting info and details to share, and who are respectful of other POV's as well. in my mind, that's a great group of people, and hopefully we can all learn from each other, if not take and give the occasional joke/ironic observarion.
[Editor’s Note: It’s a common misperception that we go looking for "fantastical" apples or "cherry pick" as some like to say (you know, fruit to fruit and all). We do not. We could care less about being sensationalistic but we do care about keeping the data clean.]
Posted by: 45yo hipster at February 25, 2009 4:35 PM
What trip said.
My key take-away from this data is that the direction is down. $680k in 05 to $604K today. (we don't need to bother with the purported refi/sale to know that the direction is down.)
I doubt that one can even define a general price for a neighborhood in SF to better than +/- 5% given the data we have to work with. So I'm not going to get worked up about exactly how much it's down.
(And yes, I would be delighted to include in my analysis examples from anywhere in the city of things bought in 05-08 and selling for more today. Edumacate me.)
Posted by: diemos at February 25, 2009 4:45 PM
Trip, don't patronize me. That was silly.
According to you, my comparison of 30 sales to 37 sales in the Outer Sunset only YoY doesn't stand up to scrutiny.
"But from what we can glean, it looks like we're seeing a 19% apples-to-apples drop from 11/06. About what one would expect from the broader data."
An extrapolation of a REO sale, is totally on the money?
I guess I should appreciate your attempted patronization. But wow. Way to contradict yourself.
And again, you are among those who were hollering "The Sunset is tanking" at this time last year. When it wasn't. The Redfin chart you linked to proves that. The chart pretty much shows fluctuation between about 550 and 600, my five to six points is oh so off! Also, the Inner Sunset will have retained values better.
I like my data better. Outer Sunset, purely.
Posted by: anonn at February 25, 2009 4:47 PM
"yet ironically it allows people to be brutally honest with their investment information and specifics,"
Like the tag-line of the old real world show: See what happens when people stop being polite ... and start being real.
"there are some really good posters on SS, who do have interesting info and details to share, and who are respectful of other POV's as well."
I've come to think of SS as an endless thanksgiving dinner with my beloved but dysfunctional family.
Posted by: diemos at February 25, 2009 4:55 PM
Fluj, touche on my comment about the 19% drop in this place, but I was not using this single example to extrapolate anything. I just noted that this example is pretty close to in line with the broader data. Look at one example of the broader data in the Redfin link. Peak to current is right about at 15-20% for the sunset in terms of $/sf -- SFRs are faring a little better than that and condos (small sample) a little worse. And again, we nothing of the mix nor do you suggest otherwise.
So 19% (or even 10%) in about 18 months is not "tanking." If you say so.
Posted by: Trip at February 25, 2009 4:59 PM
Dollars per square foot info is useful for Soma condos, but pretty much useless when you get out to the Sunset, where nearly every house has unwarranted square footage which is never properly reported. So comparing $/sf last year and this year tells us virtually nothing. You really do have to look at apples out here.
This was an area I followed meticulously back when we were in the market for an SFR. I've pretty much lost interest in SFRs, and of where things are out here, though. Whether they're down 10% or 20%, they're definitely down. And heading lower.
Anyway, this thread reminded me of a previous discussion on the Sunset:
Back in late '07, it was a big deal if you saw a Sunset house priced around $600K. So much so that SocketSite caught notice of a fixer priced at $599K. That place sold in 2 months for $695K. Today, this finished house, move-in condition, 3 blocks away sells for $604K. Make of it what you will.
Posted by: Dude at February 25, 2009 5:10 PM
Exactly, Dude, they all have the unwarranted footage. Some grabbed it and made it legal. Some did not. This year and last year both.
Trip, now who is allowing mix to affect things? Was April 2007 really so different than July 2007 in the Sunset district? Or did, say, two really nice houses sell in July? I'd bet the farm on latter.
Posted by: anonn at February 25, 2009 5:13 PM
Interpret how you want, fluj. We were actively looking in this very area from late '05 into early '06, at which point we decided to sit the bubble out. I'm sure you remember what the market looked like then. You could buy literally nothing for under $700K in Sunset, even when you went far out. NOTHING. Unless maybe it was a train wreck and needed $100K+ to make livable. Any turn-key property without years of deferred maintenance was going for at least $750K, and most of those weren't even that nice, honestly.
Much different market today. Whether or not the '06 sale here was real, I bet this place could have gotten close to $750K in '06. Lots of similar places did.
Posted by: Dude at February 25, 2009 5:28 PM
Some sales stats for 2bd/1ba single-family homes in districts 2-B and 2-C:
2009 (so far): Sold: 7 Range: 550K-622K Median: 598K
Jan-Feb 2008: Sold: 9 Range: 560K-750K Median: 630K
Jan-Feb 2007: Sold: 9 Range: 690K-825K Median: 749K
Posted by: anonanon at February 25, 2009 6:18 PM
Great data, anonanon.
Two things that jump out at me: 1) no real volume collapse over the period 2007-09 for this short sample time period (only two months of each year); and 2) the lowest data point for 2007 is higher than the highest data point for 2009.
Just eyeballing them, the data seem to be consistent that the area has declined roughly 20% from early 2007 through early 2009, which agrees perfectly with 3004 Ortega's sales history (down 19% from very late 2006).
Only about another 25% to go IMO, the bulk of which I'll guess will be in by end 2010.
Posted by: LMRiM at February 25, 2009 6:30 PM
Oh, so 20 percent down from your rememberings = 600. That is totally awesome science, Dude.
You guys are hilarious. If I said something like that no less than 20 people would crucify me.
For the record, the MLS shows 66 2 br 1 ba homes sold in 2B and 2C for under 700K in 2005-2006.
Posted by: anonn at February 25, 2009 6:34 PM
I guess I'll never understand why a sad little place like this is worth any more than about 200k.
Posted by: gate at February 25, 2009 10:52 PM
^ because San francisco is special. Very special.
Posted by: 45yo hipster at February 26, 2009 6:12 AM
Gosh, these arguments are getting to be almost comical: "one data point doesn't make the market". Then it turns out that the one data point which is argued against tracked the market precisely.
Posted by: tipster at February 26, 2009 7:25 AM
"Gosh, these arguments are getting to be almost comical: "one data point doesn't make the market". Then it turns out that the one data point which is argued against tracked the market precisely."
And then Tipster comes in, he starts to spin ...
Posted by: anonn at February 26, 2009 8:02 AM