146 Connecticut
With a reported eleven or twelve offers, the sale of 146 Connecticut #3 closed escrow yesterday with a reported contract price of $665,000. While that’s 27 percent “over asking and with multiple offers,” the sale price for the Potrero Hill condo was also 24 percent under its sale for $880,000 in 2004 and 9 percent under its sale for $729,000 in 2001.
From a plugged-in reader with respect to the top-floor condo three weeks ago:

I put out some feelers on this property and was told the final sales price is going to be in the high 600k range, so it should sell close to it’s 2001 price. views from this place were absolutely top notch.

And once again, the 50 percent larger but lower floor (i.e., without those absolutely top notch views) unit #1 at 146 Connecticut sold for $980,000 in October 2005 having originally sold for $699,000 (4 percent less than #3) in May 2001.
An Offer Inciting Potrero Hill Price At 40 Percent Under 2004 [SocketSite]
The SocketSite Reality Check For CBS’s Infamous “42 Offer” Home [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by A.T.

    Sheesh, 12 offers and the highest only bid 9% under the 2001 price and 24% under the 2004 price! To paraphrase/flip a common refrain heard a few years ago: so of all the other potential buyers out there, only 12 were willing to bid at all and 11 were not even willing to bid within 9% of the 2001 price. Does not bode well for other sellers of similar places.

  2. Posted by diemos

    Scare tactics may not work but taking away the cheap funding and the expectation of endless appreciation works like gang-buster.

  3. Posted by anon.edu

    yes, but lots of stickers peeled off since 2001

  4. Posted by [anon.ed]

    It’s a nice place. The Potrero Hill condo market is really all over the place and this result is stark. (They should have priced it at 699 to start with, IMO.) And some of you hate the overpaid meme but man oh man was 833 psqft massive in April 2004. Condos averaged $525 psqft in ’04 over there. This looks like the most expensive one in those terms. That said, even the list price of 799K was audacious. The market has shifted greatly and this illustrates that fact. But that is not incongruent with people making bad buys.
    [Editor’s Note: There’s no doubt many people made bad buys or "overpaid" over the past decade. The real problem is that one person’s bad buy became the next person's market comp. And so on, and so forth.]

  5. Posted by sparky-b

    I don’t understand how you can scoff at the hard facts of stickers reducing sale price. It’s not even debatable.

  6. Posted by diemos

    “person’s bad buy became the next person’s market comp”
    Anyone who bases their idea of value on comps is only insuring that they will run off the same cliff as the rest of the lemmings.
    Price/income gives a better measure of what people can afford.
    Price/rent gives a better measure of housing as an investment (as opposed to speculation)
    I said back in 2006 and still believe today that those two metrics will eventually return to their long term values.
    We’re not there yet.

  7. Posted by [anon.ed]

    [Editor’s Note: There’s no doubt many people made bad buys or "overpaid" over the past decade. The real problem is that one person’s bad buy became the next person's market comp. And so on, and so forth.]

    It doesn’t work like a stack of dominoes. Subsequent peak year Potrero Hill values agree with this being an outlier in hindsight.

  8. Posted by lol

    I agree this was probably an outlier, but was it reported as such in the agents comp packages at the time?
    My agent did a fantastic job at giving me relevant information and trimming out outliers. Thanks to his work I could see I was looking at a decent deal and price accordingly.
    But I am not sure everyone is always so honest. Seriously, especially in bubble years when overpaying didn’t seem a big problem (appreciation would save the client anyways).

  9. Posted by pobeb

    [anon.ed] is right, the Potrero Hill condo/tic sales are all over the map. Lookup 485 Potrero Ave. #B. Sold for $510k in 2007, sold in June 2008 for $440k, and just closed last week for $450k. This unit fetched $10k more than the pre-economic melt down price! Trying to wrap your head around all this comps and coming up with one explanation that fit all of them is not a smart thing to do.

  10. Posted by The Milkshake of Despair

    Though comp inflation isn’t like a stack of dominoes, there is a compounding effect. Most buyers are influenced by comps to some extent. Some are entirely influenced by comps, having no firm independent way to determine value besides the advice of their broker. Others like diemos have solid idea of value and mostly ignore comps.
    When you’re in a multiple bid situation you’re competing against a mix of buyers. During the boom those who weighed comps higher drove prices up and “won” sales. This allowed price to drift significantly away from value.
    In normal markets prices track value. In a bubble they start drifting apart and comps are a key force behind that drift.

  11. Posted by PostIt

    A compendium of complex compound comps completely compact comparatively complementary competition, comparting compatible compatriots, compelling compensatory complaints. Comgratulations!

  12. Posted by tc_sf

    Even if the 2004 buyer “overpaid”, the most recent sale is below the 2001 price!
    While determining the outlier status of an interim transaction has some merit, I find the sub-2001 pricing far more salient.

  13. Posted by Buy High Sell Low

    I wouldn’t call it an outlier at all. There’s a very generic condo within a few blocks listing at $649K. It’s utter crap compared to this and it’s going to sit for quite some time now without a significant price reduction.
    If something as nice as this place goes for less than its 2001 and 2004 selling prices, what does that say about the prospects of lesser properties?

  14. Posted by SocketSite

    It doesn’t work like a stack of dominoes. Subsequent peak year Potrero Hill values agree with this being an outlier in hindsight.
    That’s right, the “outlier” sale of 146 Connecticut #3 for $880,000 in 2004 likely had little bearing on the sale of 146 Connecticut #1 for $980,000 in 2005. And the $652 per square foot sale of 146 Connecticut #1 was likely dismissed by all in 2005 because it had obviously been juiced by the sale of 146 Connecticut #3 the year before.

  15. Posted by Evan

    I find it hard to believe the views from 146 connecticut are “top notch”. You’re barely above 16th street at that address. I used to live on the 600 block of Connecticut, and THAT was a top notch view, and probably 150 feet higher.

  16. Posted by Buy High Sell Low

    “I find it hard to believe the views from 146 connecticut are “top notch”. ”
    You had to see the unit – I was ready to make a list price offer on the spot. My home down south has panoramic ocean views (and I bring this up to establish I do kinda have a sense of perspective here) and its views of the city were above all the surrounding buildings. I’m sure the views from the 600 block are better and I hope a unit near there and similar to this hits the market in the near future.
    The only downside was its proximity to the highway (or upside for a commuter like me). And again, what does this say for the prospects of nearby cookie cutter condos?

  17. Posted by Buy High Sell Low

    I’ll also add there was a dopey-looking apartment nearby (look at the upper right hand corner of the picture above), and it might be quite a source of noise on Saturday nights, but I think one could still see above it.

  18. Posted by oscar

    agreed with buy high, those views at this place were outstanding. even the bedroom view was awesome and the patios as well.
    also agree with anon. They should’ve priced this place higher and probably put it on sale around now. people were still on the holiday highs when the bids were due. bank did a poor job on this one for sure.

  19. Posted by [anon.ed]

    That’s right, the “outlier” sale of 146 Connecticut #3 for $880,000 in 2004 likely had little bearing on the sale of 146 Connecticut #1 for $980,000 in 2005. And the $652 per square foot sale of 146 Connecticut #1 was likely dismissed by all in 2005 because it had obviously been juiced by the sale of 146 Connecticut #3 the year before
    Easy now, King Paraphrase. Sure. It probably had bearing on the same building.

  20. Posted by your eqquity will be assimilated.

    “It probably had bearing on the same building.”
    But not across the street. Or the next block. It’s all very micro.

  21. Posted by tipster

    When I was looking during the bubbble, I never heard any realtor use the term, ‘outlier’.
    “New normal”. I heard that term a lot.

  22. Posted by [anon.ed]

    But not across the street. Or the next block. It’s all very micro.
    The atual numbers agree with your snarky take.

  23. Posted by [anon.ed]

    Did you hear any of them say “too much” ? same thing minus the hindsight and blogging. I never once “won” a big bid-off because I used to say “too much.”

  24. Posted by tc_sf

    Since it claims to have been featured in the Chron, perhaps there is more to it, but one street and a few blocks down I see another top floor condo with “partial views” 381 Missouri
    http://www.zillow.com/homedetails/381-Missouri-St-San-Francisco-CA-94107/15149515_zpid/
    Appears to have gone for $1.4M in 2004 ($883/sqft)
    In 1999 went for $945k ($581/sqft)
    And stuck around for a few months last year not selling at $849k ($522/spft)
    One would think that when appraising a top floor condo, one would look at nearby units of the same type even were they not to be located in the same building.

  25. Posted by MH for Movoto

    2001 prices… amazing. it’s like time-travel. or rather, back-to-the-no-longer-existent-future….

  26. Posted by A.T.

    “I never once ‘won’ a big bid-off because I used to say ‘too much.'”
    Exactly. We agree on something! As I’ve been saying for a long time, if you bought a place in 2004-2009 you paid “too much.” But that “too much” was the market price because that is what people paid on the public, open market, and that is what appraisers and lenders used as a reference. Now the new market price is “much, much less” and still declining.
    And I’ll add – again – my usual refrain that it is great to have these 2001 and 2004 reference points, otherwise we’d be hearing there is NO WAY anyone would ever have paid that much back then. People paid crazy-a** prices all over town (and the country) top to bottom. Cheap no-down money will get people to do that.

  27. Posted by [anon.ed]

    Not willing to go that far with it. If you look at the condo sales, plenty of people bought condos in Potrero for around ~600 psqft during the runup years and if they were to sell now they might not get hosed. Because that’s what the market is doing right now too.

  28. Posted by your equity will be assimilated.

    “plenty of people bought condos in Potrero for around ~600 psqft during the runup years and if they were to sell now they might not get hosed.”
    for some strange reason, we don’t see any apples that show that. and, in flujland, the apples can be easily handwaved.

  29. Posted by [anon.ed]

    Sure, 133 Connecticut is one.

  30. Posted by sfrenegade

    Thanks, fluj. There were some repairs in 2006 the new buyer discovered, but I don’t think they would necessarily disqualify as an apple:
    REPAIR LEAK IN FRONT BALCONY. REMOVE + REPLACE TILE ON MORTAR BED, ROOF MEMBRANE. REPAIR STUCCO.
    Permit says $9,000.00, so not significant, most likely.
    What’s interesting is that the 2010 sale price is almost equal to the 2001 sale price adjusted for inflation ($1.1M sale vs. $1.11M inflation-adjusted price). The 2004 sale price would have required a more than $1.2M sale to beat inflation. Still, this is a great result for the seller, and I appreciate someone providing a data point. More please!

  31. Posted by your equity will be assimilated.

    fluj, your apple shows exactly opposite of what you have been arguing.
    Both 133 Connecticut and 146 Connecticut sold on dates close together both in 2001 and 2004.
    133 Connecticut sales history:
    Sold 4/12/2001 for $901,000 and sold again 3/24,2004 for $1,050,000 appreciating 16.5%.
    146 Connecticut, #3 sales history:
    Sold 4/8/2001 for $729,000 and sold again 4/23/2004 for $880,000 appreciating 20.7%.
    At the most you can argue that 146 Connecticut overpaid 4%. But the way the bubble was inflating in 2004, it is equally reasonable to argue that in 1 month from 3/24/2004 to 4/23/2004, market appreciated another 4%, and so 146 Connecticut didn’t overpay at all.
    I love apples.
    http://www.redfin.com/CA/San-Francisco/133-Connecticut-St-94107/home/729222
    http://www.redfin.com/CA/San-Francisco/146-Connecticut-St-94107/unit-3/home/1786463

  32. Posted by anon.ed

    What am I “arguing” Your Parroting Will Be Regurgitated ? I feel as if I said something nuanced, which acknowledged most current sellers from that era are probably going to take a loss, but not necessarily. What was your understandong Your Parroting Will Be Regurgitated ?

  33. Posted by your equity will be assimilated.

    You called the 2004 sale of 146 Connecticut an outlier. Your apple shows it’s hardly an outlier.

  34. Posted by tc_sf

    Perhaps he is referring to your support of the “overpaid meme”
    ” And some of you hate the overpaid meme but man oh man was 833 psqft massive in April 2004. Condos averaged $525 psqft in ’04 over there. This looks like the most expensive one in those terms. ”
    Specifically, the 381 Missouri sale appears higher on an absolute psft basis, additionally the comparison with 133 Connecticut shows that the relative increase paid by both 2004 buyers was similar. Which would not support an argument that the 2004 buyer of 146 “overpaid”
    That being said, it is interesting to see the differing final fates of these two properties.
    (Though given that you could get 2041 Sacramento which is 30%+ larger and in Pac Heights for only ~$300k more perhaps the 2010 buyers of 133 “overpaid” ;)

  35. Posted by [anon.ed]

    Your apple shows it’s hardly an outlier.

    Nonsense. Compare the dollars per square foot. Tell you what. Tomorrow I’ll show you all the 2 br under 1100 sq foot properties in Potrero that ever garnered 800+ psqft.
    Naah. No I won’t. You don’t care. You don’t want to know the market. You want to talk about what you want to talk about.

  36. Posted by tipster

    fluj, they pretty convincingly showed that two different buyers paid consistent prices for that place.
    Do you really expect us to believe that two consecutive buyers paid outlier prices for a place, when one buyer paid X and the next buyer paid precisely X multiplied by the increase in prices over the period as indicated by a property that you yourself selected?
    Doesn’t look like an outlier to me.
    Maybe you can claim “Bad Data” like another realtor did before she slithered away.
    Or you can always just use the ever popular “not enough data points to indicate a trend”. Just say something with an impossibly high standard, like “According to the Pythagorean Theorem, we would need at least twice as many data points on that block in a year as there are houses on that block to reach any meaningful result.” Then throw in some random formula that no one on a blog is going to take the time to really look up:
    8675309 * B52 * EMC^^2 + 3.14159 * 666 + 420
    and viola – QED!

  37. Posted by your equity will be assimilated.

    Comparing the sales histories for 133 Connecticut and 146 Connecticut, it’s very hard to support the conclusion that 2004 sale of either one was an outlier.
    And what does that say about the most recent sale prices of the two properties?
    146 Connecticut has sold with 11 offers in a bidding war. One has to assume it’s closest to the true value. 133 Connecticut massively overpaid!

  38. Posted by A.T. (Sarah Palin the realtor)

    Now, now, don’t go trying to confuse things with your “facts” and your “logic.” Prices have not gone down at all. Any “data” that show such a thing can’t be trusted dontcha know?

  39. Posted by [anon.ed]

    fluj, they pretty convincingly showed that two different buyers paid consistent prices for that place.
    I found that 133 Connecticut apple in about two minutes. I’m sure there are more. But yes, people paid 600-ish per foot in this market. Like I freaking said.

  40. Posted by tipster

    What happened to it’s all micro bro? You used that one when the market started falling to try to convince people to buy in 2008 when they should have stayed the hell out.
    Now you think that because some properties sold for $600 psft that they all should? Since when? Now that it suits your argument, you’ve decided to switch sides, and so everything is NOT micro, bro?
    This one was different. It grabbed some buyers who stupidly let their emotions get away from them, no doubt egged on by the salespeople they in which they stupidly confided. It grabbed two consecutive buyers very consistently. So it sold for more than the others. The right combination of location, features, view, etc. and it worked. Two buyers paid consistently higher prices for it because it was better than the others on your list. They saw your other property, it sold around the same time, they bid more for this one because they liked it better.
    If it was only this property, you might have a chance of convincing us. But the Sacramento property is down just as hard and 2416 Gough street is probably looking at a million dollar loss. Sorry, none of us are buying it.
    Your “I can show you more” just sounds like the pathetic last gasp of a salesperson in a collapsing market trying to get one last sucker to pay the old price.
    You tried and were completely discredited Discredited by your own property and some people who were smarter than you AND I, who picked up on the fact that the property YOU selected as proof actually disproved your whole hypothesis.
    It’s over, dude. Your pathetic attempts at trying to convince people it’s not over, are being shoved right back in your face to allow all of us to see through the arguments of the realtors and to realize that even if they sound plausible, like yours did, they should only be ignored.
    Not only did the new buyer of this place not buy these arguments, EVERY person who bid last month also did not buy them. There is NO COMPETITION. It’s over dude. Find as many more properties as you want, no one is listening.
    No one with a brain and a pair of eyes, anyway. We can see it for ourselves. Just like the 5% declines started here and there and then caught on like wildfire, the 30+ percent cracks have started and there is no turning back. It’s over. We can see it all over the city.

  41. Posted by anon.edu

    “It’s over, dude.”
    it’s never over…but look for another name change/temporary boycott soon

  42. Posted by [anon.ed]

    Your ability to gauge the market is as poor as your ability to measure your words. Singing. All caps. Exclamation points. Obsessively spinning current events that anybody can see on their home page. Whatever. You’re a mental case. Good condos will get 600 now, and then. Or even better. If I showed you or this site the properties that sold for lofty Everest type prices on Potrero Hill late last fall / early winter you’d come up with another excuse. And you realize “it’s all micro bro” is the same thing as “location location location,” right? Do you doubt that maxim, fake pundit?

  43. Posted by A.T.

    There has been a subtle but important shift in the argument.
    Previously, when confronted with examples of significant price declines, the response was some variation of “they overpaid.”
    Now, faced with mountains of evidence of significant declines in all areas and price ranges, the response is “not everyone paid the high, prevailing market prices; some people underpaid and won’t suffer such a huge loss.”
    Evidence of such a phenomenon is still lacking, but I’m sure it does apply to some small fraction of bubble-era purchases. But the exception only proves the rule.

  44. Posted by [anon.ed]

    If I could predict the future I would be running the planet and not typing words into a blog. But “wow, surprising result” and “that’s a crazy price” were said by people, not institutions, the whole time I’ve been posting on Sockestsite.

  45. Posted by your equity will be assimilated.

    If you see a stone rolling down the hill, and you say, “oh, there is a stone rolling down the hill”, that’s not predicting the future.

  46. Posted by [anon.ed]

    Question. Do you speak English, Your Parroting Will Be Regurgitated?

  47. Posted by your equity will be assimilated.

    Si claro, hablo ingles. Pero estoy seguro que me vas a ensen~ar tu!

  48. Posted by El Bombero

    Wow, I bet the buyer of 146 Connecticut #1 is hating life – 980k in Oct 2005 for a less desirable condo than this one that just sold for mid-6’s? I hope they cash-out refi’d when they had the chance, so they can just walk now. Otherwise, they’re looking at 10-15 years of being underwater.
    And that’s the optimistic scenario.

  49. Posted by tc_sf

    While detecting an “overpay” in the past may not be as useful as having something to say about the future. It is worth considering a type of overpay that we may actually start seeing more of and which is actually worth being dismissed as a comp.
    Specifically the use of straw buyers by deeply underwater homeowners. If someone is deeply underwater with their own skin in the game, say 30% down, it may occur to them that the downpayment and selling costs for a loan to make them whole is actually smaller then the loss they would incur by an open market sale. The buyers can get payment for their troubles and then immediately defaults. Given this economy and the fact that you could expect to be in a place 18-months from non-payment till foreclosure, free rent could be payment enough.
    This was not an uncommon fraud during the boom less so for homeowners then for rings of criminals. Higher downpayment requirements make this less feasible, but as we see 30%+ drops, then even 20% DP’s may not stop this.
    Not that this is the opposite of “normal” short sale fraud whereby since the owner has no equity, would sell the house to a related party for an abnormally *low* price and then get a kickback from the buyer.

  50. Posted by [anon.ed]

    Detecting overpays in the present is where it’s at.

  51. Posted by tipster

    tc_sf, what I am seeing more and more of is the mortgage originator buying the home from the bank. They are obligated to take back the loan itself if “discrepancies” in the application documents are discovered by the mortgage lender, but they seem to be buying the home from the owner and then turning around and selling it.
    I think they do it rather than trying to take over the loan because it saves the home from the damage that people facing foreclosure sometimes will do. The homeowner gets to pay off the loan, and they get an intact house to sell for about the same amount they’d pay the bank anyway. There is an extra transfer tax to pay, but I’ll bet the former owner is happy to pay it off to save their credit rating. It’s a big win for the former owner for a fairly small amount.
    That is what I suspect happened at 2041 Sacramento. The “false comp” was a side benefit of the transaction.

  52. Posted by tc_sf

    Additionally, I believe that as an originator if too many of your originations are found to have “discrepancies” or early payment defaults then other parties may no longer do business with you.

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