Purchased for $1,900,000 in December 2000, the 1,369 square foot 88 King Street #1222 resold for $1,450,000 this past April. Not readily evident in what would appear to be a 24 percent decline in value, an investment of roughly $500,000 into the condo over the past ten years according to a plugged-in tipster.
88 King Street #1220 also sold this past April for $1,150,000 or 13 percent under its year 2005 sale for $1,320,000 (not including any upgrades). Correctly noted by our tipster, the buyer of both #1222 and #1220 is one and the same with an eye on combing the two.

25 thoughts on “Apples To (Improved) Apples At 88 King”
  1. Property tax valuation corresponds to that price. If it sold for over $1000 psft today, it must really be something.

  2. Wow. Assuming all this is true . . . this person lost all their down payment of $380,000, spent $500,000 in improvements, and may have wrote a check at the sale.
    Plus, the cost of ownership was much more than renting a comparable unit. I calculate a monthly cost of ownership of $11,387 (assuming 7.5% interest rate and $772 HOA). They had to have overpaid at least a couple hundred thousand during the decade.
    When all is said and done this person easily paid over a million dollars extra to own this condo in San Francisco during the aughts.

  3. Investment Banker at a Palo Alto firm. I’m sure he would have rather sold it for a profit, but IBanking isn’t what it was, so I’m sure he feels he got his money’s worth out of it and he’s glad to unload it for whatever he could.
    I’m sure he fixed it up extravagantly, in a manner he couldn’t have rented. I’ve never agreed with that sort of thing, I don’t think it’s that good for business to justify the price, but some people do and some probably just do it for their egos, spouse’s ego, or whatever. At the time he bought it, house prices were only going up, so he probably figured it wasn’t really going to cost him anything. Was he ever wrong!
    In any event, the world is downshifting from such things, and the new buyer gets two condos for about the price paid by the seller for one, ten years ago. Sarcasm: Where are those idiots claiming 50 percent haircuts!

  4. “…but IBanking isn’t what it was…”
    Yes, the Investment Banking industry virtually evaporated in the Bay Area during the dot com bust. The Four Horsemen (Robertson, Montgomery, Hambrecht & Alex Brown) made many people rich during the height of the tech boom. Downtown is no longer the same.

  5. “I’m sure he fixed it up extravagantly, in a manner he couldn’t have rented.”
    I’m sure all the fancy decorating is unique and expensive. But it doesn’t mean one can’t put a price on what the fair market rental is. It makes it more difficult to determine but not impossible.
    And what improvements could this guy have made that he wouldn’t be able to find in a rental? A real Tahitian Tiki bar complete with Tahitian models? Does Mick Schmidt personally tend bar on game nights?
    Maybe the $500,000 would have simply gone to renting a better unit rather than buying one and putting money into it–so maybe this guys losses aren’t quite as high as it appears. The $500,000 improvements makes it more difficult to calculate his total losses–but it’s certainly close to a million.

  6. i’m pretty sure this guy rented the unit out for 6k/mo furnished most of the time he owned it. maybe he needed the losses?

  7. Aha. Thanks TowersHostage. That’s two tips. Who knows the truth of these tips but let’s run the numbers.
    In addition to the $380,000 down payment, the $500,000 improvements, this person also bled $5,387. Assuming the place was rented 8 out of the 10 years he would have lost another $517,152.
    That’s approximately $1.4 million down the tubes.
    Ouch.

  8. That’s bleeding $5,387 a month because the cost of ownership was probably around $11,387/month and rent was only $6,000/month.

  9. If one spent $1400/SF in 2000 on a new condo (presumably with the high end fixtures of one’s choice at that price at that time), then spent an additional $500k (could some of this have been on furniture/art that could be removed?), that would be conspicuous consumption, not an investment. That’s MC Hammer style spending. If one spent $11,000 per month on hookers and cocaine, what’s the point of saying it was a bad investment?

  10. I started crawling the building on the SF Recorder’s site. Here’s what I’ve come up with so far:
    Unit 1309 (1,090 sq.ft.) – NOD on Feb. 18, 2010. A $938k first and a $72k second, both courtesy of Wells Fargo. If you’re a shareholder, I don’t think you need to worry as it appears to have been securitized (WFMBS 2006-AR2); it’s some town in Norway’s problem now. Originally sold for $1.35 million in 2005.
    Unit 613 (1,302 sq.ft.) – NOTS filed on April 20, 2010. Sold for $900k in Sept. 2004 with an original mortgage of $700k with WaMu. Looks like they went to the well for an additional $260k in 2006 (National City).
    Unit 1022 (1,369 sq.ft) – NOD filed on May 14, 2010. Originally sold for $1.65million (!) in November of 2000. It has a $1,072,500 first and a $165k second, both from World Savings. There looks to be a subsequent refinancing with World Savings in Sept. 2007.
    I also noticed several older vintage (circa 2005) WaMu and Countrywide refies in the building. It will be interesting to keep an eye on them.

  11. Whoa, here’s another one on track to lose around $500K after transaction costs, on a two bedroom condo. And he did everything right: bought just as things were heating up, long hold, bargained down his purchase price so he thought he got a “deal”.
    All to no avail: half a million dollars down the tubes. Geez, most people will never save that much for retirement and this owner just blew it on a 2 bedroom condo. Wow!
    http://www.redfin.com/CA/San-Francisco/88-King-St-94107/unit-1319/home/12397362
    Countrywide home loan 5 years ago likely means this is an option arm loan that has recasted, he can’t refinance, and doesn’t feel it’s worth the higher payments. Get ready for these to start hitting in the next leg down.

  12. Did everything right? He paid 1100 psqft for a 2BR at 88 King. For every one person who made a buy like this 50 others didn’t. You’d like to have this site think that you’re among that number, in fact.

  13. The “owner” of 88 King #1319 that tipster linked to has been chasing the market down since 2007. Now they’re even cross-posting on multiple MLSs in the hope of snagging someone from the North Bay. This listing is pathetic with its lack of pictures, so I’m wondering if they’re already in default and just trying to make a show for the bank.

  14. SFR,
    Frankly, I don’t blame the owner. Face it, sellers are desperate right now. The market is collapsing faster than they can lower prices. 86 sales last week to 78 new listings means only a net 6 homes in reduction in inventory from sales.
    There is an inventory of about 1500 homes currently on the market, not including the hundreds of homes withdrawn that will hit this winter. At the net rate of 6 homes per week, you can expect it to take 250 weeks (1500/6), about 5 years, on average, for a home currently priced at the market to sell. To beat that number, you have to drop below the market price.
    Who can afford to keep paying property taxes, HOA, and the mortgage payment, for 5 years before you can sell your home? If your payments, hoa and property taxes are $5K per month, it means you will be making ($5K x 250 weeks) $1.250M in payments on a property you don’t even want before you can sell. If you can’t under-price the market, you’d be better off walking away.

  15. tipster, you switched from months to weeks in the middle of your calculation! The number would still be over $300,000 and the ultimate point is the same — continuing to pay these mortgage/tax/hoa payments at a big loss every passing month is a recipe for financial disaster. That’s why the ’00s phenomenon of SF buyers paying more than comparable rent to “own” is absurd and will unwind.

  16. Looks like we are about to get our first true 50% off apple in central SF. The bayview blew past that a while ago, but now the opera area looks like it’s going to be the “winner” of the 50% off in central SF contest.
    601 Van Ness #421 was purchased in 2006 for $565K, got foreclosed, and listed for 325K, a little above its 2003 price. After several reductions, it was listed for $309K, and now just got dropped by $14K to $295K. If it sells for 4% under the current ask, it’s 50% off.
    And from here, it will spread…
    http://www.redfin.com/CA/San-Francisco/601-Van-Ness-Ave-94102/unit-421/home/1127304

  17. Is this the often talked about and long awaited arm tsunami?
    Option ARMaggedon, as foretold in the Book of Zelman. We’re hitting this second hump in the chart. Those who can, refi. As for the others, they shall be recast into the lake of underwater homeowners.

  18. 601 Van Ness # 421 in terms of $psqft is the most expensive 1/1 condo ever sold in Opera Plaza, a building that’s certainly no star itself. Only two others ever made it into the 560s and they’re both larger and five and six floors up. Will the future, if it doesn’t contain more jobs, bring more people who away from cosmically ill-conceived buys? I don’t doubt it.

  19. I’m sure 601 #421 was that inside job, with cash back at the sale to the developer who was also the buyer of this unit to continue drive up the prices & comps in this place. 🙂
    Hard to believe that this would have sold in 2006 for 565k in 2006 when in 2007 you could get a 3/2 TIC in Noe for 750k. Whatever, people obviously did dumb things and now they must pay the dumb tax. Glad the lenders are taking the hit on these things.
    But this is a good comp for the market. I wonder what ever happened to those cubix places that we’re listed at this price for a storage center / abode.

  20. Here’s another below 2000 price at the same complex.
    It’s a really nice complex, with great bay views, but the market is collapsing and you have to sell at whatever the market will bear.
    #707 Sold in 2000 for $850K, sold today for $827K.
    And it went pending before the big runup in interest rates. They lost at least 10% when they got the keys. That, plus the 6% in transaction costs they’ll pay likely puts just about all of their down payment in money heaven from the very first day!
    Thanks for your contribution to the Bankers Bonus Fund, suckers!

  21. Looks like the exterior renovation and window replacement project is well under way at 88 King St. Be interesting to see how many units come on the market when all the work is complete.

  22. @Matt Fuller – the window replacement, painting, and landscape replacement is on track to finish by the end of summer, all paid for by the settlement with the developer and architect, not any HOA special assessments or fees. You can be sure a number of 88 King owners have been waiting for the construction to wrap up before putting their units on the market. The few low-ball sales during the past year have certainly priced in the construction hassles.

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