Closing escrow with a recorded contract price of $628,000 in February 2008, within two months 425 1st Street #1805 was listed for sale with an asking price of $719,000.
Following a series of price cuts, and at one point seeking a short sale for “$499,000,” this past August the One Rincon Hill one-bedroom was purchased on the courthouse steps for $441,886 cash.
Back on the market at $599,000 this past October, in November the list price was reduced to $579,000 and yesterday it was reduced to $559,000.
By our count, there are at least five other condos at One Rincon Hill currently scheduled to hit the courthouse steps (versus simply being in default) within the next 30 days.
∙ Listing: 425 1st Street #1805 (1/1) 710 sqft – $559,000 [MLS]
∙ A One-Bedroom Resale Officially Joins The Twos At One Rincon Hill [SocketSite]
∙ One Rincon Hill ’08’s Appear To Have Slipped More (Not Less) In 2010 [SocketSite]
It was exciting to follow development of this building from the permit process on through to units being sold. Getting approval to build One Rincon was a clear sign of how attitudes toward tall buildings and development in general changed since the 1970s. The mix of units combined with clever engineering appeared to be about to make high rise view living accessible to proles who had not previously had the option.
Then the building opened and long lines of interested buyers formed to bid up prices. Buyers at the time were lining up to get burned, and many of them were merely speculating and would never live there which really is a waste. Saying this openly would get one labeled envious and bearish, but now only people who love to live there could be envied and prices that seemed unreasonably bearish predictions in the past have become unyielding price ceilings. Hopefully these units that got used as gambling chips will soon be occupied.
to add to what Mole Man said, what a nightmare for those who moved in with intentions to stay and live for a while. Not only are they dealing with a significant price decline, they are also facing a lost of anticipated benefits with the loss of the second tower.
It really is too bad that Rincon seems to be heading into a downward trend. When I was looking to buy a home, I considered Rincon (despite the outrageous prices, despite the high HOAs) solely for the view. There is something great about having the City splayed out from your living room window. I hope Rincon, and other “view living” buildings, will recover from this (temporary?) setback quickly.
I’ve been on the hunt last month for a 2bd and considered ORH. Sales lady and agents of resales didn’t mention anything about this. Glad I checked this website. Is Infinity going through the same situation? Also considered some resales there.
I’m not one of the uber bears on Socketsite but when it comes to this building I most certainly am. $559,000 for a 710 sqft one bedroom is seriously overpriced. This unit has a long way to fall. Like a lot of new SOMA construction ORH is headed for further deep declines particularly given it’s challenged location. There’s a lot better value at the Infinity & SFBLU.
Sealed tomb.
Every new building is going to have them. Lots of them.
And foreclosures will bring still more foreclosures as more and more flippers, holding on by the skin of their teeth, throw in the towel and walk away.
When this unit sells it will provide interesting info on the sort of profit that can be expected by flipping an auction sale of a unit in a large building. I think it is generally accepted that auction prices are lower due to the more stringent funding requirements (i.e. bring your spectrum of cashiers checks to the courthouse and close the same day) as well as the inability to fully inspect the property being auctioned. Auction buyers who can round up the cash as well as take the as-is risk can flip the property for a difference that roughly represents the value of that risk plus self-financing.
For buildings like 1RH there really isn’t much of a need to inspect the property, so that part of the auction to flip sale delta is gone. What is left is the value of self-financing.
My guess is that the current owner of unit 1805 will profit though whether it was worth his/her effort and risk is yet to be seen. A sale at asking will yield a pre-tax net profit of about $84K. Not too shabby. I hope they can pull it off without having to go lower.
Quick! Let’s build another tower!
@Milkshake — I agree it will be interesting to see the result. Given the state of the economy and the difficulty in getting bank financing, you’d expect that there would be a high value for putting cash at risk.
So if the auction flippers don’t mis-price at time of purchase you’d think they will show a decent cash profit.
Flips and foreclosures aside, isn’t this building only about 80% sold? It’s now 2011, which marks nearly 5 years that the sales office has been at it. What’s common for new buildings to sell out, around 2 years, I belive? Holding the line on pricing doesn’t seem to be working that well – at this scorching pace they’re tracking to sell out by 2018 or so, and resales are already proving that values are down materially even if the sales office doesn’t want to admit it openly.
Regarding views, ORH does feature uncomparable views, no argument there. But from my experience, good views shouldn’t be a driving factor in the decision to buy. A nice view is something people tend to get used to fairly quickly – you eventually become oblivious to it. But a subpar location never goes away.
I lived at One Rincon for a year and was attracted by the view, but soon realized that, IMHO the architects / builders cut too many corners in getting a “pretty” building up, at the expense of comfort. It has hands down the worst ventilation of any place I’ve ever stayed. And I’ve never lived anywhere so noisy: dogs; stereos, dishwashers, washing machines; traffic, etc. A little more soundproofing could have gone a long way to making it nicer. As it is, the place we stayed at was TERRIBLE.
Milkshake: I think this unit is already mispriced. Including HOAs, a buyer who purchases this place at asking is going to pay over $3000 a month assuming they can come up with a 20% down payment ($111,800). If the down is less than the monthly amount obviously goes higher. In the end I see this selling closer to $500,000 than $559,000. I suspect the profit is going to be significantly smaller. Probably closer to 20-30K. Better taking that risk on AAPL or GOOG.
Willow, I thought the very same thing. Seems like an awful lot of risk for $20K. And that’s assuming there were any appliances and the floors/cabinets/countertops weren’t damaged when the old owner ripped the appliances out. $10K can go up in smoke pretty quickly in a foreclosure, prepping it for sale.
And you’d have to show up to 50 auctions where the opening bid is the outstanding loan amount (i.e. not worth bidding) before you’d find one of these. I don’t think you can quit your day job doing this.
The good news is it looks like someone moved right in. So their holding costs are only the difference in rent + HOA move in/move out + movers. But that’s already up to $4K and at least 5K before they take off. So expected profit is maybe $5-10K. Seems like there is easier money to be made.
“So expected profit is maybe $5-10K.”
That’s so close to nothing that I’d consider it zero. No way would anyone engage in this sort of auction flip if they expected a net return so small. Just a minor blip in the market and you’re negative.
So I’m sure that the auction winner’s expectations are higher.
Ostrich wrote – “Quick! Let’s build another tower!”
Good news is there will likely never be another tower – TRC. Bad news is that ORH was ever built. It’s a blight on the skyline and turned out to be a very questionnable developemtn deal to boot.
The hoped for broader ramification of ORC is that it’s sorry history will dampen and maybe totally forestall any more SOMA condo towers.
Yes, we should only build victorian SFRs in Soma. Or leave it full of empty warehouses.
???
Gil, I think you took the wrong freeway exit – Walnut Creek is about 25 miles away. I’m afraid you’re still in the city.
I agree with Gil. I think ORH looks fit for a mid-90s Houston office tower.
Do you really think a more daring or innovative design would’ve had any chance at actually getting approved and built in the city?
@g: yes, I do.
Just a reminder that 2307 went for $560k in 2009. I’d be surprised if this one goes over $450k. Even at that, I wouldn’t; 05 is just an awful stack.
I like the “Directions to Property” on the listing: “From elevator lobby, turn right.”
Succinct.
“If you start to bid, there are about five guys who work together and who box you in,” said the man, who asked not to be named for fear of retribution. “One guy came up to bid who clearly was not part of that crew. The guys were bidding. At some point, (their ringleader) turned to (the outsider) and said, ‘You must really like this property. It must be really important to you.’ He had a piece of paper in his hand; he showed it to the guy. The guy nodded OK and then disappeared into the building.”
[Editor’s Note: FBI Looks Into Auction Bid Rigging (And Shouldn’t Have To Look Far).]
“It’s a blight on the skyline”
Meh. Distinctive structures follow the same pattern.
Initially they’re denounced as blight. After 30 years they’re familiar and beloved SF icons.
I gotta agree with diemos on that one. Even le Tour Eiffel was initially despised. Closer to home we experienced similar negative reactions towards the Transamerica Pyramid.
While I really doubt that 1RH will attract similar affection I do think that the hate it inspires will fade over time.
[Editor’s Note: One Rincon Hill: Another Fontana Or Transamerica In The Making?]
I am pretty sure that 20 years from now ORH will be in the middle of an archipelago of condo towers. Just wait for one or 2 more boom/bust cycles to fill all these underutilized lots.