Purchased for $589,000 in September 2006 but then bought back by the bank in June 2009, the banked-owned re-sale of The Palms (555 4th Street) #602 closed escrow on 9/28/09 with a reported contract price of $400,000. Call it a 32% drop in value for the 670 square foot one-bedroom end-unit with deck (but leased parking) since 2006.
Fronds To Fronds For A Few One-Bedrooms At The Palms (555 4th) [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by Trip

    For the first time (that I recall) with a post like this showing a big price drop, I actually think the new buyer will not lose more money over the next few years than the last buyer/bank did. I’m confident this place will be worth less than $400,000 three years from now, but I don’t think it will drop another $189,000. The Palms appears to be a real disaster though. So if foreclosures really pick up there, and the HOA falls apart, I could be proven to be too optimistic.

  2. Posted by condoshopper

    does anyone how much staff the Palms employ? when i was there for open house, there were 3 people at the lobby – two were front desk/concierge types and one was security type. i could only wonder how much HOA fees goes toward ‘servicing’ the building.

  3. Posted by sf jack

    “I’m confident this place will be worth less than $400,000 three years from now, but I don’t think it will drop another $189,000.”
    *****
    Maybe not…
    Perhaps it will take six years to reach $211,000.

  4. Posted by anonm

    Weren’t we having a conversation a couple weeks ago about how a Palms condo could “never” fall below the cost of renting, because that would just be silly?
    Using the formulas that people were throwing around back then (which I don’t entirely agree with), the ownership cost looks like:
    $400,000*0.80*0.75*0.05 + $400,000*0.01*0.75 + $400*12 = $19,800/yr or $1,650/mo.
    Does this mean you can rent for $1650/mo in the Palms? Lowest I see on Craigslist is $2300, but those are presumably “wishing” rents…

  5. Posted by J

    What’s with all the fuzzy math?
    It’s nearly $1000/month for HOA+parking+property taxes alone. Adding on a $400k mortgage brings it over $3k/month. Then the tax deduction might save $600/month…(subtracting standard deduction)
    I agree that it should be cheaper to own, but that doesn’t seem to be the case if this place really got $400k.

  6. Posted by RSVP

    The Palms looks like a dated Las Vegas hotel experiment that went bad. I’m glad that the colored up lit palm trees idea didn’t catch on. It looks like Tacky R Us.
    I also think that The Palms has the longest hallways I’ve ever seen in newer construction. The first time I was showing property there I thought that there was a a mirror at the end of the hall. Unfortunately there wasn’t any reflection. It’s actually kind of scary. I saw no one on any of the floors.
    A big drawback (and deal killer for my client) is that there is no real outdoor space designated to encourage homeowners to congregate, mix, mingle (aka “meet each other”) and entertain.
    Poorly planned. Originally highly overpriced. See nothing but disaster for re-sales indefinitely.

  7. Posted by OneEyedMan

    I think the majority of us agree that this is a marginal building in a marginal location. Even so, this distress sale price is $597 / SF without parking.

  8. Posted by tipsy

    It’s crazy how the developer was able to sell these units for top $$$ in 2007. Timing is great, isn’t it? Same thing for the Beacon. I do agree that this building is marginal and in a marginal location.
    Speaking of new developments and their pricing, I recently stumbled upon the closing prices over at SF Blu and shocked at the prices. Some buyers paid $600k+ for a low floor unit looking directly into an open office. For that price, someone could have gotten a 2 bedroom courtyard view at Infinity, or a resale at Met for a little more.
    I guess there’s a sucker for every seat.
    Grrr, it’s getting cold over there.

  9. Posted by AnonJustThisOnce

    Is anyone “plugged in” who can comment on the status of the HOA at Met, Bridgeview, Portside? I live at 246 2nd and was pleasantly surprised to learn at this week’s board meeting that the building has no HOA dues delinquencies.

  10. Posted by bk

    My guess is that those who paid $600K+ for the units in Blu did so with only 3.5% down and that they wouldn’t be able to get FHA financing for Infinity or the Met. It’ll be interesting to see what happens when spot approvals rules are changed (tomorrow). My bet is that places like the Palms will continue to fall, while places like Blu that have FHA will hold pretty steady (

  11. Posted by OneEyedMan

    bk -
    What changes in spot approval rules? Wouldn’t buildings like Beacon and Palms already be on the approved list ilo requiring spot approval? Once a building is on the list how long does it stay on? Just curious about at what point the FHA discovers that increases in % of renters or % of HOA dues delinquincies has disqualified a purchase.

  12. Posted by bk

    I have attached a link that details the spot approval changes.
    http://activerain.com/blogsview/1235541/new-fha-approval-process-delayed-to-november-2-2009
    The Beacon and the Palms were never on the approved list, if they managed to get a spot approval, they will now have to undergo more stringent guidelines.
    IMHO, the DELRAP option will probably be the main driver going forward as HRAP will be too slow/backlogged.
    “all prior approvals will be invalid unless approved on or after October 1, 2008.”
    Not sure which complexes in SF that this would eliminate, but most are probably trying to reapply (some will undoubtedly fail)
    Concerning your other question:
    Complexes must renew FHA every 2 years now.
    Hope this helps.

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