July 26, 2010
Still Not "Cheap" But Now Five Percent Even Cheaper
The list price for the first listed foreclosure at One Rincon Hill has just been reduced by $33,000 to $662,000 ($877 per square foot). Once again, 425 1st Street #3908 had been purchased from the sales office for $855,000 in June 2008 ($1,132 per square).
As plugged-in people know, the sales office sale of 425 1st Street #4408 closed escrow last month with a reported contract price of $690,000 ($914 per square) while the sale of 425 1st Street #4308 closed escrow last week with a reported contract price of $687,000 ($910 per square).
∙ Listing: 425 1st Street #3908 (1/1) 755 sqft - $662,000 [MLS]
∙ The First Listed Foreclosure At 425 First (One Rincon Hill) [SocketSite]
∙ Additional '08 Stack (And Year) Perspective From One Rincon Hill [SocketSite]
∙ Additional One Rincon Hill '08 Stack (And Year) Perspective Redux [SocketSite]
First Published: July 26, 2010 4:00 PM
Comments from "Plugged In" Readers
I see a few problems for ORH
1) before it was built it was billed as "luxury". However, in the end it is just another condo building. True, it is a tall condo building, and it is done nicely, but it's just a condo building. Thus, not sure it'll be able to snag luxury pricing anymore.
2) there are a lot of renters in that building, and the rents are much lower than holding cost to buy. Any prospective buyer has to look at rents and say "hmm.... I can rent the EXACT SAME thing for $1,000-2,000/month cheaper".
3) a lot of the early buyers bought based on the future plan for what would happen on Rincon Hill and they had an unrealistic timeline for that development. RH will eventually come into its own, but it may take 5-25 years to happen... current buyers aren't as interested in waiting... thus that wait time means that they'll decrease the amount they'll offer for the units.
overall it's a great building and I like it, positives and negatives and all.
but in the end the sellers need to realize that 750 sq ft 1 BR units are starter housing (although well appointed starter housing) and not "luxury" housing, and thus the price will need to accomodate that. This doesn't mean they should offer it for $100,000... this is SF after all... but the $/sq ft should reflect well appointed STARTER housing costs.
Posted by: ex SF-er at July 27, 2010 10:41 AM
Good points ex SF-er. I would also add that the large # of renters in this building will have a negative impact on financing options for future buyers.
Speaking hypothetically, if you're one of those high floor one bedroom bubble buyers that say purchased a unit for over 800K with less than 10% down I think you'd have to walk away. (Assuming you can even afford your payments.) It's hard to stomach an almost $200,000 decline in value in a little over two years.
Anyway I hope T2 gets built soon! (However unlikely...)
Posted by: Willow at July 27, 2010 5:51 PM
You make a lot of good points, ex sf-er.
I'll just add that the declines for 1-2 bedroom condos will continue until they are cheaper to buy than to rent. It makes no sense to buy one of these units while the prices are falling. I am sure savvy real estate professionals and super agents will advise their clients otherwise.
Posted by: alazyman at July 27, 2010 6:12 PM