December 28, 2009

214 Arguello: Two Years Later And Asking Twenty-Five Percent Less

214 Arguello: Empty Room

No, we weren’t kidding when we noted "coming soon" for 214 Arguello. Once again, last sold for $1,600,000 in December 2007, unable to find a buyer at an "unbelievable" $1,395,000 in 2008, and taken back by the bank three weeks ago with no bidders on the courthouse steps at $1,259,306.

Now listed and asking $1,200,000 at the end of 2009.

∙ Listing: 214 Arguello (3/2.5) - $1,200,000 [MLS]
An Absolutely Unbelievable Foreclosure As Well? (And Coming Soon) [SocketSite]
Perhaps It’s The Market That’s More Unbelievable To Some... [SocketSite]

First Published: December 28, 2009 6:00 AM

Comments from "Plugged In" Readers

Not a good sign for the high end market.

Posted by: diemos at December 28, 2009 6:02 AM

I have always said we are about 2 years behind so cal in terms of downside. So cal beach now down at least 30% (some areas 40%) which I have no reason to believe will not be SF result. This, in my view, is a sign of many more price drops, failed courthouse auctions to come.

Posted by: calhousingbear at December 28, 2009 8:44 AM

I don't know if this is bell weather unit. It is right next to an ugly apartment building, and also a few lots away from a gas station. I looked at the upper unit a few years ago. The ceiling had water stains, and overall, the unit was not that impressive. (notice the cheap upper addition.)

Posted by: J.P. at December 28, 2009 8:57 AM

^ and this is different from Nov 2007 how, exactly?

Posted by: diemos at December 28, 2009 9:05 AM

I think JP's point is that a lot of people were blinded to the defects of some properties since everything was hot and now it is shaking out as to what properties had good value or not.

Posted by: fred at December 28, 2009 9:16 AM

Just wondering how this ultimately impacts the high 6 figures housing market in SF. Especially "less desirable" areas like Midtown Terrace, Miraloma Park, areas around Lowell High School.

These "less desirable" areas of SF did not see the huge run-ups in price in the bubble that you saw in Noe Valley, Glen Park, Bernal Heights, and Portrero Hill saw.

I put less desirable in quotes as the housing stock itself in these areas is usually better than in the boom neighborhoods. More space, bigger units, larger yards with fair sized front yards the norm.

Up to now the price declines in these areas, as far as I understand, have been less than those in most other parts of SF. I assumed that was partly because there had not been the huge price run-up in these areas during the bubble. For instance, you could get a detached home in Midtown Terrace with a canyon view for 600K - 700K in 2007 at the height of the boom.

In any case, it seems these across the board decline in the above 1 mil market will inevitably push prices down further in areas like the 3 I mentioned where prices have held fairly well up to this point.

Posted by: Gil at December 28, 2009 9:54 AM

What's the big deal? We just need conforming FHA loans to go up to $2 million, plus lower the down payment requirements to 0.25% or so. Then we can all sit around going, "Garsh! Look how resilient our market is!" with feigned surprise.

Posted by: Legacy Dude at December 28, 2009 9:55 AM

It's so sad to see this place this way. Empty and cold, to reflect a family's finances destroyed by a property they owned for such a short time. The photo of a few days ago is so much more cheerful. It would be tough for me to even visit this place knowing what I know about what happened to the former owners.

Hard to imagine that any potential buyer of this place, offered at $600psft, wouldn't notice the unit above, offered at $566 psft for several months, and refuse to may more than $550 psft.

Posted by: tipster at December 28, 2009 10:12 AM

^"may more" = "pay more"

Need more coffee.

Posted by: tipster at December 28, 2009 10:13 AM

I would expect that the $1m + condo market would have been hit especially hard. This is a nice neighborhood for sure, but for $1.2m these days i should think one could buy a pretty decent SFH in a pretty decent neighborhood.

And, to those who would taunt those who do not share the SS group-think, keep in mind that it is not a level playing field here; SS gets to pick the datapoints that get discussed.

Posted by: sanfrantim at December 28, 2009 10:16 AM

Location. Location. Uhh what's that other word?

Posted by: kahleen at December 28, 2009 10:52 AM

1.2 million is still over a million. I am still amazed at SF prices. There must be lots of people out there with lots of money.

Posted by: dkzody at December 28, 2009 11:01 AM

These condos are seeing a quicker reversion to rental prices, highlighted by the SS post recently where the condo was secured at a close to B/E on rent/buy. Supply / Demand here in SF will probably never result in a true equilibrium but it's a good proxy. For $1k/psf you should expect some land or high end finishes, or both. $500-700psf in a condo is very supportable in SF, IMO. Asuming this home is not in major disrepair, it doesn't seem such a bad value. I also discount big sq/ft places on a single level as it is usually poorly configured.

Posted by: eddy at December 28, 2009 11:14 AM

the website says it's located at polk village
hah.realtor speak

Posted by: iluv polk at December 28, 2009 11:28 AM

sanfrantim wrote:

> And, to those who would taunt those who do not share the SS
> group-think, keep in mind that it is not a level playing field here;
> SS gets to pick the datapoints that get discussed.

Feel free to post a list of recent condo sales in 94118 (or any other zip code) that are selling for more than they sold for in 2006-2007. The reason almost all the people on this site think prices are going down is that almost all the “apples” that sold in the city last year are selling for less than bubble prices

Posted by: FormerAptBroker at December 28, 2009 12:47 PM

They also want to talk about condos and SFRs interchangeably.

Posted by: anonn at December 28, 2009 1:37 PM

Do people use loans to buy SFRs?
Do people use loans to buy condos?

If yes to both questions then one could reasonably expect a change in the general availability and terms of loans to have a similar impact on both types of dwellings.

Posted by: diemos at December 28, 2009 1:55 PM

Were SFRs built en masse in this market over the course of the past five to seven years?

Posted by: anonn at December 28, 2009 2:35 PM

@FAB - In line with this topic, I think you mean to invite a post of "recent condo sales selling for more than 25% less than their 2007 price." I'll decline your invitation for several reasons. 1) I don't want to do the work, but be my guest and let us know what you find. 2) I don't follow the condo market much 3) I don't want to hijack this thread with discussion of the apples I might want SS to feature. As a general rule, SS editors get to do the picking; it's their blog. Just don't expect all of us to blindly accept that a SS-favored data point is representative of the market.
Happy holidays!

Posted by: sanfrantim at December 28, 2009 3:10 PM

No annon, they weren't. So one can reasonably expect a higher ratio of bad loans and underwater properties in the condo markets. Therefore it's reasonable to expect the declines to manifest first in the condo market before the SFR market follows.

Posted by: diemos at December 28, 2009 3:18 PM

Cal bear- if u think SF prices are going to decline like LA, -30 to 40%, you're smoking crack. This is bottom for SF, -10 to 25%, depending.

Posted by: 45yo hipster at December 28, 2009 5:09 PM

Hee hee. 45YOH, you can't be serious. That was pretty funny.

Posted by: anon at December 28, 2009 6:11 PM

^^^^^^^
after selling a "unique" upstate lakefront NY property for a relator based 60% loss; the3 bay area has not seen the bottom yet

Posted by: leedless at December 28, 2009 6:46 PM

Damn serious.

Posted by: 45yo hipster at December 28, 2009 8:57 PM

How many of you experts have seen this condo? This site cracks me up -- so many economists and financial wizards out there in Socketsite land. I know this property well -- it's gorgeous, has been incredibly remodeled and would make a great home.

Couple purchased the unit - couple got divorced. Far less an indication of the sky falling and far more a bad situation for a couple going through a hard time. Hate to break it to ya - but at 1.2M, this is a nice investment which will, in 5-7 years, garner a nice return.

Posted by: Greg at December 28, 2009 9:40 PM

Greg, thanks for the input. I think your views are right in line with most of those on this thread. This does look like an extremely nice place in one of the most desirable parts of the city. And yet the price is down 25% in just two years. That is an unprecedented steep decline in SF. What factors do you have in mind that you think will not only stem that decline but reverse it and result in nice appreciation over the next 5-7 years? Will you be bidding on it to secure that nice investment return?

Posted by: anon at December 29, 2009 5:31 AM

How much to undo what's been done to all the wood?

Posted by: Stu at December 29, 2009 6:44 AM

"This is bottom for SF, -10 to 25%, depending."

Depends on how you define bottom I guess. If bottom = nominal price, maybe. If bottom = real price, probably not. But I suspect that if loan rates go up, even nominal prices will drop again fairly quickly. We don't seem to be removing other severe stimuli from the market (e.g. ridiculous FHA loans, jumbo-conforming, etc.).

Posted by: sfrenegade at December 29, 2009 8:56 AM

^ rates won't go up for some time, and when they do there will most likely be economic growth as an offset.

"depending" was meant for location. Normalizing data (ignoring outliers), D10 and soma down 20-25%, homes north of $1.2 mil in D5 & 7 down 15-20%, sub $800k tics and condos in D5 and the mish/bernal down 10-15%.

I believe that's bottom and 2010 prices will muddle along in roughly the same range as 2009. Not sure about 2011, wrt sustained economic growth, interest rates and of course inflation.

But as Greg states above, I concurr that in 5-7 years those who brought now will be pleased with their investment. Hell, I'm even making money now on a 3 unit renovation project I snapped up late 2005. As anonn famously said (and much derided by the SS doom and gloom brigade), "it's all micro bro." touché!

Posted by: 45yo hipster at December 29, 2009 9:15 AM

If you think Barney Frank and crew are going to pull Jumbo Conforming any time soon you're either kidding yourself or trying to kid others. Nobody denies that a big rate spike plus the removal of jumbo conforming plus a continued cruddy job market could rapidly shift a market. It's more likely that they'll quietly slip legislation speaking to another extension or permanence along with a concession to the GOP.

Posted by: anonn at December 29, 2009 9:47 AM

Yep, there is nothing as permanent as a temporary government subsidy. The Great Depression pretty much gave us permanent farm subsidies, I wonder if this recession will give us additional permanent housing subsidies.

Posted by: Rillion at December 29, 2009 11:59 AM

"rates won't go up for some time, and when they do there will most likely be economic growth as an offset"

We'll find out if the Fed and Treasury MBS programs end. These two programs are what's keeping rates below/around 5%. Spreads should be higher if based on risk/reward.

Posted by: anon at December 29, 2009 1:18 PM

@45yo hipster: as your boy fluj/anonn also famously said mid-2008:

"It's over. Sorry. Scare tactics are dead. San Francisco never really took a price hit and it won't, either."

whoops.

wonder what greg was telling people in 2007...san francisco won't ever take a price hit? buy now or be priced out forever? buy, sell, repeat, retire?

Posted by: nonanon at December 29, 2009 1:28 PM

Context, "nonanon," context.

Posted by: anonn at December 29, 2009 1:50 PM

nonanon - ya know what I was telling people in 2007 -- be smart with your money -- invest in a home you can live in for the years to come and don't look at a real estate investment like a penny stock.

The problem with sites like this is people like you who hide behind stupid little nicknames and make assumptive claims you have no basis for proving. Do you know me? Do you know any of my clients? Didn't think so.

The San Fran market is resilient. Certainly this economic turn is far worse than post '89 quake or the "dot-com" bust. That said, the job market appears to be on the rebound and unless I'm out of my mind - not much new construction will occur in Presidio Ht's -- in particular - not many 3 bed, 2000sqft units steps to the Presidio and Laurel Village are going to pop up. Purchased at 1.1M - 1.2M and held for 5-7 years -- or here is an idea -- maybe more because this unit is big enough to house a family of 4 for YEARS - this will be a great place to call home.

Of course what do I know -- i'm not nearly as intelligent as nonanon who is clearly one of the smartest financial minds of our time.

Posted by: Greg at December 30, 2009 9:48 AM

Gee nonanon, I live off my SF RE's rental income. So yes it has been a great investment and continues to be so as I ride out this serious recession. It's great not having a real job. Met with contractor today to review final deets on a 3 unit renov, and now having a leisurely lunch at heaven's dog (good shrimp wanton soup!). So yes it's a good investment strategy if you know what you're doing and manage risk prudently.

Posted by: 45yo hipster at December 30, 2009 2:26 PM

It seems that it is a non warrantable condo. What exactly does it mean? Can I resell it in couple years?

Posted by: newbie at January 5, 2010 11:09 PM

If it's non-warrantable, you may not be able to get a mortgage on it presently.

Posted by: anon at January 6, 2010 9:48 AM

If I buy it in cash, is that a smart investment?
Will it become easier to get mortgage loans for these type condos in the future? will I be stcuk with it?

Posted by: newbie at January 6, 2010 10:30 AM

The sale of 214 Arguello closed escrow today with a reported contract price of $1,137,000. Once again, sold for $1,600,000 in December 2007.

Posted by: SocketSite at February 26, 2010 1:34 PM

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