690 Market #1502
As we wrote this past October:

Purchased for $1,481,000 in October 2007 ($1,239 per square) and then taken back by the bank this part March with $1,234,899 due, the two-bedroom Ritz-Carlton Residences (690 Market) #1502 returned to the market six months ago.

Asking $999,900 ($837 per square) over the past 37 days, as a plugged-in reader notes, the list price was reduced to $949,905 ($795 per square) today. A sale at asking would represent a 36 percent decline in value for the luxury unit over the past three years.

And while “still not cheap” at almost $800 per square, we’re guessing that’s of little solace to those who were sold on $1,200 or more.

And as a plugged-in reader noted late last night, the bank-owned “auction” resale of 690 Market #1502 closed escrow on Monday with a reported contract price of $805,000.
Call it $674 per square foot and a 46 percent ($676,000) drop in value for the 1,195 square foot Ritz-Carlton two-bedroom since October 2007.
And yes, the Sub-Zero was still in place (as were all the cabinets).
Puttin’ On The Ritz (And Pressure) At Under Eight Hundred A Square [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by asiagoSF

    $2,400 of monthly HOA sting
    that’s equivalent to more than another $400k of purchase price

  2. Posted by Jimmy (No Longer Bitter)

    Its a really kind of a pedestrian living space — average-looking cabinets, low-ish ceilings, no great view to speak of. Don’t even get started on that HOA …

  3. Posted by lol

    Yes, very expensive HOA dues that totally kill the resales. What could be considered a luxury vanity market in 2007-2008 now looks more and more like a white elephant style oddity.
    Had it been built 5 years before it would have done pretty well, but bubble-topping is just bad luck.
    Looking at the fractional ownership units on the MLS, I couldn’t help but notice HOA dues were also pretty insane… for a mere 1/12 share of the unit. How does that even work for fractional ownership? Does 1K+/month for a 1/12 interest mean the 12 buyers each shell these 1K+ each and every month? That would add up to 150K+ a year which doesn’t seem right.

  4. Posted by A.T.

    Yet none of that – HOAs, cabinets, ceiling heights, view, etc. – changed from 2007. But the 2011 price was 46% lower.
    Bottom line is that prices have fallen. A ton. $674/sf did not even get you the Beacon in 2007 but now it gets you the Ritz.
    And the Beacon has also fallen by 40%. No property exists in a vacuum. Prices plummet for one property type and others follow right along. Same as when prices were rising.

  5. Posted by Jimmy (No Longer Bitter)

    Personally I cannot imagine who would be in the market for an $800k apartment with $2400/mo in HOA dues. I can’t think of that as being a very large demographic group if only because $30k/year in non-tax-deductible overhead expenses (in addition to the financing costs of the underlying property) is a rather steep cash outlay for 99+% of the population. That sort of conspicuous consumption is a little bit out of fashion lately and hard to justify in an environment of tepid asset price appreciation.
    As opposed to, say, families who can pay $3500/mo to live in a comfortable single-family home with good local schools, which basically defines my neighborhood. That’s a pretty big demographic on the Peninsula.

  6. Posted by tipster

    Everyone needs to take a look at that photo and realize just how emotional real estate purchases can be. To all of us, it looks like plain, boring space, really more of a burden than a benefit, given the high HOA fees.
    Now back up 3 years ago. I walked in there during one of their evening open houses. Champagne was flowing and there were about 30 people in the lobby in expensive suits and furs. With my 7 figure income, in I go, wearing jeans and a T-shirt, and the male model salesperson, who probably is busing tables right now, wouldn’t even show me the space. He had people looking way wealthier than I, going nuts over those units and told me to come back.
    Look at that photo again. That’s what they were going nuts over. And that photo is how the place YOU are about to buy will look to Gen Y. They’ll just see it as really just a burden and see it as nothing special. They will have watched their parents finances get CRUSHED by their family home and will not look at real estate the same way you do.
    Look at that photo again. Is that something that special? Can you see that selling for $200K in 5 years. I can too. That’s exactly how the home you think is so special is going to look to the next pool of buyers. 3 years ago, people were lining up to pay these prices because they easily saw it worth 10X $200K and now you and I see it as nothing special.
    That’s what’s going to happen to you. Your 20% down is as good as gone the minute you move in. Bid accordingly.

  7. Posted by Jimmy (No Longer Bitter)

    Nah, you’re wrong. Those people in suits and furs were in there going nuts over the presumption of future appreciation of their impending purchase. In fact the price was really immaterial to them at that time because, for them, there was a very real economic gain to be made by purchasing the property at any price.
    Once you take that presumption of future appreciation out of the equation things no longer look quite so rosy.
    Only an amateur salesman would judge potential buyers in California by how they dress … but having said that he probably sensed that you and your (supposed) 7-figure income were just a looky-loo.

  8. Posted by Jimmy (No Longer Bitter)

    And, while we’re here, let’s peel the onion a bit on the assumption that apartments in SF will be selling “for $200k” in 5 years as you suggest.
    So if the demographic of new buyers (as opposed to the population as a whole, most of whom are not potential buyers) is dual income middle-class families, which presumes an income of $200k-$300k (the average income for my neighborhood is about $180k but that includes an older demographic who bought 20-30 years ago and brings the average down)…. and there is a relative scarcity of housing for sale (true in my area — only 3 single-family houses for sale right now), then what will the fair market value of the available properties be?
    We’d all like to pay $500/mo or maybe even nothing for our house, but could you find someone who will pay more than that? If so, how much more? $2000/mo? $3000/mo? $4000/mo?
    Given the average income of new buyers and the scarcity of available homes, monthly payments in the range of $3000/mo – $4000/mo are not uncommon or impossible. My brother pays $3000/mo to rent a 2-bed apartment in Palo Alto for example.
    In order for that to substantially change, then incomes of all potential buyers would have to decline substantially, but the opposite is happening right now. Incomes are rising and the economy is improving.
    Can we all see where the “world is ending” hypothesis fails? (all except tipster that is. He must be very busy earning 7 figures to think too hard about this).

  9. Posted by anon.edu

    nice analysis, bitter jimmie. especially love the way you generalized tip’s comment about this 1 condo to a comment on all condos, allowing you to ignore the $2400 monthly hoa nut in your calcs

  10. Posted by A.T.

    JNBR, it is not relevant how high a would-be buyer can pay. Nor is it relevant how low a would-be seller can sell for. All that matters is supply and demand. What is the pool of substitutable homes being offered for, and what is the pool of buyers willing (not able) to pay for those.

  11. Posted by tipster

    Homes aren’t scarce. Bubbles induce builders to build too many and that’s why bubbles pop. Supply rises to even the distorted bubble demand and then prices fall. Then you look up and realize that they built too many.
    Projects that were NEVER profitable under reasonable times got built because people were willing to pay more. Stuff got built everywhere. The whole country has far too many houses because the builders built so many that they actually satisfied an artificially inflated demand. The actual demand is far, far less.
    It will be YEARS before that actual demand can rise up to meet the supply.
    As for your comments that homes can only change in value based on incomes, did incomes fall by 46% in this case? Nope. They don’t need to fall at all. I could have paid the 2007 price on this tomorrow if I wanted, but I’m not going to. That’s all that changed here. I’m sorry you just bought, but it’s the facts. What changed is the perception of value here. Incomes had nothing to do with this 46% drop.

  12. Posted by tc_sf

    @Jimmy — Were interest rates to go back to ~6% a place in the $200′s would give you about a $1,200 mortgage payment. Add in a $2,400 HOA and you’re at $3,600 monthly outlay. Which as you point out is tax disadvantaged compared to a pure mortgage payment.
    I wouldn’t go so far as to predict this, but it hardly seems like the end of the world.

  13. Posted by Jimmy (No Longer Bitter)

    Tipster, as ever, you are wrong. Homes in desirable neighborhoods ARE scarce. No net new homes have been built in my neighborhood for more than 40 years. New single-family homes are only created when an older single-family home is destroyed and replaced. You cannot substitute a home in Fremont (where buildable land is plentiful) for a home in Hillsborough, where buildable land is non-existent.

  14. Posted by MCM

    There have been 60,000 new condo units added to SF since 2007. Another 30,000 are projected by 2020. Most have been lofts or small units, designed for the single, childless demographic that still pushes the market. Or, at least, it’s what developers like because roomless, open plans are cheap to build and easy to market as “luxury living.”
    At the same time, average incomes in SF have risen 23% between 2009 and 2010. The relationship between what people can pay is still relative to what people want to pay for. Living downtown in a area without parking, grocery stores or more utilitarian shops like hardware stores that are open on weekends is not for very many people. However, buying a home, gutting it and making it your own, roomless, open space with lots of huge bathrooms seems to be more appealing.

  15. Posted by tipster

    If homes in Freemont were $1, at least some of the Hillsborough buyers would move to Freemont.
    That’s why your home price will get crushed. There are too many homes. They don’t need to be right next door to yours to have an effect.
    Kiss your downpayment good bye. It’s as gone as 46 percent byers was.

  16. Posted by tipster

    If homes in Freemont were $1, at least some of the Hillsborough buyers would move to Freemont.
    That’s why your home price will get crushed. There are too many homes. They don’t need to be right next door to yours to have an effect.
    Kiss your downpayment good bye. It’s as gone as 46 percent byers was.

  17. Posted by A.T.

    Yep, no more land in desirable Hillsborough. Yet look what’s going on there:
    http://www.redfin.com/CA/Hillsborough/45-Woodgate-Ct-94010/home/2004883
    $2,850,000 in 2000 (dot-com bubble)
    $2,500,000 in 2003 (post dot-com bubble)
    Foreclosed in November 2010
    $2,200,000 in 2011
    You see? “No more land,” “high incomes,” “desirable areas” etc. are not relevant when one is discussing real estate price movements. The bubble occurred top to bottom in all areas in CA. It is now popping top to bottom in all areas.

  18. Posted by Jimmy (No Longer Bitter)

    See, now you’re just plain delusional. No one would move from Hillsborough to Fremont unless they were desperate, bankrupt, or, like you, really, really cheap. In which case they would never have lived in Hillsborough in the first place. Those housing units are not interchangeable at any price.

  19. Posted by Jimmy (No Longer Bitter)

    You need only look at the price of the house I bought last year to see the deflating bubble effect.
    $899k sale in 2005
    Extensive renovation over the intervening 5 years.
    $1.1M asking price in 2009
    $850k short-sale in mid-2010.
    I never said there was no bubble, I just said that prices will never decline to “$200k.”
    The scarcity of single-family homes on the Peninsula and the average income of new buyers precludes it. Let’s not even get started on rents, which are, I can tell you, quite a bit higher down here than you imagine.

  20. Posted by lol

    I don’t know if this property go go down to 200K, 500K would be more likely based on cost.
    The FiDi is not going anywhere and redevelopment/gentrification is creating a bigger and bigger cushion in Mid-Market, which anchors this building into desirable territory for the foreseeable future.
    Also, sure local incomes do matter for RE prices.
    But 2 other factors that do matter a lot for today’s market are 1 – the true cost of owning and 2 – the supply of homes from people with 50%+ equity.
    I can tell you that a lawyer friend in Cincinnati who works for P&G is making his big bucks but his housing costs are 5 times less what he would pay in the BA. He is not the only one. Pretty amazing bangs for the bucks.

  21. Posted by Jimmy (No Longer Bitter)

    Ok, so now we’re going to compare housing in Cincinnati to the Bay Area? I’ll revisit the discussion when you all get real.

  22. Posted by sfrenegade

    “No one would move from Hillsborough to Fremont unless they were desperate, bankrupt, or, like you, really, really cheap. In which case they would never have lived in Hillsborough in the first place. Those housing units are not interchangeable at any price.”
    Hillsborough seems to have instances of granny’s decrepit house because of Prop 13. It would be better if granny moved to Fremont for $1 rather than having a deteriorating place in Hillsborough, so that a new family could move in. She’d save money too, since her Prop 13 valuation would then be based on $1.

  23. Posted by A.T.

    “I never said there was no bubble, I just said that prices will never decline to ‘$200k.’”
    That may very well be true. But it has nothing to do with high incomes, desirable areas, no more land, etc.

  24. Posted by Jimmy (No Longer Bitter)

    AT — um, well, yeah it does actually. It has everything to do with those factors.

  25. Posted by A.T.

    JNBR, you’ve been bitten by the realtor bug!

  26. Posted by Jimmy (No Longer Bitter)

    Go and buy a house because, you know, you need a place to live, then come back and tell us how your theories fare in the real world. I can guarantee that no matter where you live on earth, you will rent forever with your mindset.

  27. Posted by tc_sf

    “No one would move from Hillsborough to Fremont unless they were desperate, bankrupt, or, like you, really, really cheap. In which case they would never have lived in Hillsborough in the first place. Those housing units are not interchangeable at any price.”
    To the casual observer it would seem that you just listed three price related reasons for someone to move to a less costly area, then immediately proceed to state that the areas are “not interchangeable at any price.”
    A similar short attention span would seem to hinder one in the valuation of properties with attached liabilities such as a high HOA’s.
    For example were I to offer you a bond that paid $2,000/month in interest but required you to pay $2,400/month in fees. Perhaps this would not quite be such a deal.

  28. Posted by gallileo

    Jimmy,
    You say that like it’s a bad thing….

  29. Posted by eddy

    I tend to agree with Jimmy on his specific case although without knowing the specific home / location it is hard to make any real judgment.
    But the guy picked up a home on, or near, the bottom of the current bust cycle fully knowing that he might endure some short term losses as the market slides sideways or slightly down. But based on his market assessment, he feels pretty good that HIS new house isn’t going to drop another 10-30% in value. That is not to say that other homes surrounding his may show big declines back to an mean near where his house was purchased recently. Surely they will. And if he lives there for 10 years he will probably do just fine servicing a loan that is probably @ or below 5%. He made a bet as does anyone that buys a house. There are no guarantees in life and history has proven that buyers are willing to put a premium on owning versus renting.
    The folks waiting for SFH in prime SF to take a full double dip (e.g., another -25% from where the comps are today) are speculating. I’m all for a mean reversion but I’m not sure where the new mean is exactly. Neither does anyone else. Too many variables.

  30. Posted by A.T.

    “history has proven that buyers are willing to put a premium on owning versus renting.”
    eddy, I agree with your post, but this comment is only accurate in SF for a very short period of history, the ’00s.

  31. Posted by anon.edu

    the Real SF has been replaced by the Real Hillsborough. prices haven’t gone down there and won’t, either

  32. Posted by lol

    Cincinnati is relevant there. Many high income families but yet low RE. Income is only one element of the whole picture.
    What counts is scarcity of housing, if there are enough buyers for the available units, the level of equity of the sellers, local laws that can affect scarcity, etc, etc…
    Think SF in the early 90s. The military left the city scarred for 1/2 decade until a new model came to replace it. That element by itself was enough to send prices into a moderate downward spiral.
    Today, it’s limitation on financing, left-overs of the national RE crash, higher unemployment. These will balance the higher incomes of the newcomers.

  33. Posted by dB

    Based on the perpetual argument that takes place on SS, it’s awfully clear that many with skin in the R.E. game are going to believe what they believe whether or not facts support the argument.
    Since the nature of speculation is that no one knows for sure, the arguments can (& certainly do) continue forever.
    One inarguable fact that I’m happy to take away from the past decade: No one in my generation will again utter, or believe, some iteration of the phrase “SF real estate doesn’t go down.”
    Man did I get tired of hearing that…

  34. Posted by Mole Man

    The suggestion that these units were purchased for emotional reasons seems completely unsupportable. During the bubble the most luxurious units were the easiest and most profitable to flip. Look at the dollar amount paid. Now multiply that by some percentage. The result is a big number, much bigger than for most other units. This was a big bet and nothing more.
    The HOA fees are not a problem with this unit, they are the main point. This is the Ritz Carlton. If there is anything you need or want to know then you can get someone to handle that for you right away. The level of service those HOA fees buys is is routinely rated the best that money can buy.
    That these lovely high end units come across as pedestrian is a good example of how the boom transformed the landscape. In recent history having a house with working appliances and everything in order would be considered acceptable, at least for middle class living. Now most people, the very same who in large numbers label themselves middle class, insist on stone counters, fancy cabinets in exotic materials, commercial wannabe appliances, and the rest. All that stuff is luxury and serves no particular purpose, but the boom made needlessly upscale home features into necessities.

  35. Posted by Just Looking

    As a SF homeowner, I think this is all bad news all around. I just hope that Phil Ting is listening. I would love to have my assessed value decreased by 30%+ too!

  36. Posted by tc_sf

    “The suggestion that these units were purchased for emotional reasons seems completely unsupportable. During the bubble the most luxurious units were the easiest and most profitable to flip. Look at the dollar amount paid. Now multiply that by some percentage. The result is a big number, much bigger than for most other units.”
    If people let greed dominate their purchasing decisions then that could arguably be called an emotional reason. (Some people undoubtedly figured out the “heads I win, tails I walk” nature of buying with high leverage and cash out refis. While logical, the virtue of this is dubious)
    People have posted on this blog wondering what the little guy can do about the banks, government, … While there are many larger factors at play, you aren’t doing yourself any favors if you don’t at least attempt to analyze what for many is the biggest financial transaction of their lives.
    Not to pick too much on, or overly broaden the original intent of the poster, but I think the “not interchangeable at any price.” line is worth hammering on. Being completely price insensitive due to an emotional attachment to particular area, an emotional attachment to expected future wealth or any other reasons, is probably one of the worst things you can do to yourself. If you are willing to pay any price, it is very likely you will find a seller willing to accommodate you.
    The banks undeniably deserve some blame, but I have yet to meet anyone who consulted Goldman Sachs when bidding on a house during the boom. In fact a great deal of trading and arbitrage that these banks do consists of going to great lengths to seek out price differences or construct equivalent substitutes with more favorable pricing. It would seem wise to at least consider how being willing to drive a bit could get you a cheaper substitute.

  37. Posted by ex SF-er

    So if the demographic of new buyers (as opposed to the population as a whole, most of whom are not potential buyers) is dual income middle-class families, which presumes an income of $200k-$300k (the average income for my neighborhood is about $180k but that includes an older demographic who bought 20-30 years ago and brings the average down)…. and there is a relative scarcity of housing for sale (true in my area — only 3 single-family houses for sale right now), then what will the fair market value of the available properties be?
    Do you have a source for this claim? Based on census data I would consider $200-300k/yr household income to be much higher than simple middle class… or are you restricting your argument to buyers of properties in so-called “prime” SF? I don’t disagree that SF is an affluent city but I’ve found that people vastly overstated incomes there. Just asking.

  38. Posted by sfrenegade

    “(the average income for my neighborhood is about $180k but that includes an older demographic who bought 20-30 years ago and brings the average down)”
    Seems to me there was another recent thread where the average was more than $45K higher than the median as supported by Census Tract data. That neighborhood was Noe Valley.
    “About a house that sold for $2.1M in 2007, I looked up some census data on census tract 212 which appeared to have the highest house hold income in Noe.
    http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=14000US06075021200&-qr_name=ACS_2009_5YR_G00_DP5YR3&-context=adp&-ds_name=&-tree_id=5309&-_lang=en&-redoLog=false&-format=
    This shows a Median household income of $139k, Mean of $186k with a per capita income of $92k.
    Hat tip to tc_sf.

  39. Posted by Jimmy (No Longer Bitter)

    That’s nice but I don’t live in Noe Valley, I live on the Peninsula …
    And the $200k-$300k demographic for new buyers is supported by the fact that underwriting criteria are now so strict that you could not normally qualify for a $700k+ loan with an income of less than about $200k.

  40. Posted by sfrenegade

    I wasn’t suggesting you live in Noe Valley, but rather that you overplayed your hand by quoting an average. Care to provide the median for your neighborhood?
    “underwriting criteria are now so strict”
    28/36 ratios are not “strict.” Back in the day, 28% gross income ratio was a minimum for prime non-jumbo loans. $200K under traditional standards means a $714K qualification, and that’s almost $900K if you put 20% down, and we’re still in jumbo conforming territory. So yes, if there was a median income of $200K in an area, $900K houses in that area might be supportable by minimum lending standards for well-underwritten loans.
    But I’m not even sure what you’re getting at or what point you’re trying to make with all of this without telling us what housing prices are like in your area and where your area is and how big your neighborhood is. The Peninsula is huge and diverse, and you can probably find a $200K house in East Palo Alto — I think I saw one on Burbed recently. There are plenty of houses for sale on the Peninsula, even in these January doldrums, so your market of 3 doesn’t mean much without context.

  41. Posted by SFwatcher

    Hey Jimmy,
    Considering your own argument, why did your home go down from 1.1M to 850K from 2009 to mid 2010? Did the household income go down by 25% in that area?
    What ever caused the decline is still there and will be there. History will repeat itself.

  42. Posted by Jimmy (No Longer Bitter)

    West of El Camino, north of 92. “San Mateo Park Adjacent” as I like to call it. Figure it all out from there … and remember, I am talking about income of New Buyers not income of residents, some of whom might rent, or be retired … Given a rudimentary understanding of current underwriting criteria and home prices, you can work backwards to figure out what recent (2010) buyers’ personal financial situation must be. At the low end, it is a $200k household income and at the high end it is in the $400k+ range.

  43. Posted by tc_sf

    While the census data does a good job at debunking some of the worse “new guilded age” and “people didn’t stretch in high income areas” myths. Note the margin’s of error for the data and consider what precision you are asking of it.
    “And the $200k-$300k demographic for new buyers is supported by the fact that underwriting criteria are now so strict that you could not normally qualify for a $700k+ loan with an income of less than about $200k.”
    Consider what happens to the pool of qualified buyers for a $700k house before and after the income limit is raised to $200k. The median & mean income for “qualified buyers” will both go up under the new “strict” criteria. But what has the new strict criteria done to the income of any particular potential borrower?
    What if I again raise the limit so that only people with >$300k income are qualified? Again the median and mean rise! But no individual potential borrower is richer and the pool of qualified borrowers is smaller.

  44. Posted by Been there

    If you are an owner, at what price point does it makes sense to rent this out rather than sell it? I’d like to see a rent vs sell analysis not just for this property, but for any property. Anyone have one handy?
    [Editor's Note: To Rent Or To Buy, That Is The Question (That Only You Can Answer).]

  45. Posted by eddy

    @Been there: http://www.nytimes.com/interactive/business/buy-rent-calculator.html
    Click the advanced tab and have at it. Please report back your findings.

  46. Posted by sfrenegade

    There are over 30,000 people in 94114 (18K male, 12K female), and over 17K housing units, and that’s per the 2000 Census. http://zipskinny.com/index.php?zip=94114
    I would have expected more people with net worth over $1M with the kind of housing prices in Noe/Castro. Note that 193 people do not have $1M+ in IPA but do have $1M+ in net worth. That doesn’t weigh in favor of large numbers of people having huge amounts of equity (or “all cash” sales, for that matter).

  47. Posted by tc_sf

    @anon — Note first that I believe that this is data sourced from Nielsen. Which I believe is self-reported and used primarily for marketing purposes.
    Secondly, using a # housholds of 16,627 for the 94114 zip, I get that 1 – ( ( 416+312)/16627) = 96% of households have liquid financial assets of below $1M as measured by their IPA statistics.
    Sometimes self reported wealth data can err-high since people may exaggerate.
    As a reality check if I look at Visitation Valley in the linked calculator I show 280 + 186 = 466 with IPA > $2M with the census showing 10,757 households this appears to yield the same 96% as the Noe Zip you provided.
    Bayview Hunters-Point ( 94124) yields 174 + 114 = 288 out of 9,296 households for a slightly different result of 97%
    Note that the wealth data is from 2007 and the pop from census 2000.

  48. Posted by lol

    2000 census. That’s light years ago.

  49. Posted by tc_sf

    @lol – Census 2010 data should be online shortly. As to why the census doesn’t break out the more timely ACS data by Zip, who knows!
    But as far as the main point, if anything I’d expect that population has increased from 2000-2007, which would make the proportion of people with less then $1M even larger. Additionally I’d posit that net worth on average has taken a hit since 2007.
    Additionally, unless the population change of Noe, Bayview and Visitation Valley diverged wildly since 2000, the anomalous similarity would seem to still be present.

  50. Posted by sfrenegade

    “But as far as the main point, if anything I’d expect that population has increased from 2000-2007, which would make the proportion of people with less then $1M even larger.”
    That was exactly my point when I said, “and that’s per the 2000 Census.” If anything, population in SF has probably gone up since 2000, and 94114 likely with it.
    As tc_sf also mentioned, there are probably fewer people in these IPA and net worth categories since 2007 as well. How many of those 193 households do you think dropped out of the club due to the recession and housing bubble bust?
    The available data skew the results in a manner most favorable to people who claim Google money, rich foreigners, all cash, huge amounts of move up equity, etc.

  51. Posted by [anon.ed]

    There are over 30,000 people in 94114 (18K male, 12K female), and over 17K housing units, and that’s per the 2000 Census. http://zipskinny.com/index.php?zip=94114
    Total population? Total housing units? Why? That’s not what we’re talking about. The relevant number is how many housing units get traded. In 94114 MLS shows 978 SFRs have traded since the market broke north big time, which was fourth quarter 2004.

  52. Posted by sfrenegade

    By the way, if you want to see an even starker difference between mean and median income, check out Census Tract 213 in which 469 Clipper, a house featured on SS, is located. Mean: $181K. Median $106K.
    http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=14000US06075021300&-qr_name=ACS_2009_5YR_G00_DP5YR3&-context=adp&-ds_name=&-tree_id=5309&-_lang=en&-redoLog=false&-format=
    Maybe it’s heavily skewed up by Googillionnaires.

  53. Posted by sfrenegade

    “That’s not what we’re talking about. The relevant number is how many housing units get traded. In 94114 MLS shows 978 SFRs have traded since the market broke north big time, which was fourth quarter 2004.”
    Please explain why how many housing units get traded is most relevant and what point you’re trying to make with this. If anything, the people who moved out are the ones who became millionaires (a true cash out), not the people who moved in.

  54. Posted by [anon.ed]

    No. I won’t explain that. We discuss the trading of property on here. That is what we do. The subject was “who can afford what.” I’m truly tired or your ridiculous need to parse everything right out of meaning. 921 millionaires ca 2007, versus 978 SFRs traded since 4th quarter 2004.

  55. Posted by tc_sf

    @anon — The sfgate data you reference is for households. And so what I used as the denominator for my percentages was also for households. Thus the result that the data indicates that 96% of households in that zip have less then $1M in investable assets by the IPA measure.
    Note again though the questions about the data source’s reliability.

  56. Posted by [anon.ed]

    It’s not about number of households.

  57. Posted by sfrenegade

    fluj, thanks for your valuable contribution. Would someone else like to make a point from it, since fluj has declined? Is the point that every single person who moved in is a new rich person and so those 921 + 67 others are those 978 buyers and sellers? But even that’s not accurate, because some houses were sold more than once during that time.
    Again, the results have been skewed most favorable to the lofty claims. I’m glad to see the lofty claims are mostly false.

  58. Posted by sfrenegade

    “It’s not about number of households.”
    Oh, but it is. Even if all 978 of those people are the higher IPA/net worth people, which they most certainly are not, it tells you how slowly things actually change.

  59. Posted by lol

    I live in the 94114 and I have witnessed many changes in the 2 main nabes I have lived in.
    In my street, just 4 new buyers (including me) in the past 5 months: At least 1 is in the true millionaire club (>10M), and 2 others are in the 1M+ range. All high cash down. The people before: a retiree landlord who cashed out, a retiring family that moved out, etc…
    In a street I lived in before in Noe: in the past 5 years, 1/5th of the houses have changed hands. All 1.4M. A Google-type couple, a manager-type couple, a successful book writer, etc, etc… The people who left: retirees mostly.
    Sure the sales did create cash outs, but the people have high salaries and net worth.
    Just saying.

  60. Posted by [anon.ed]

    sfrenegade, you’re still talking after saying that the people who sold are the ones who are the millionaires and higher.
    The people who sold. And moved.
    Now you’re on about how slow things change.
    After saying, on this site, “Please explain why how many housing units get traded is most relevant and what point you’re trying to make with this” before your people who sold are the millionaires thing.
    You talk too much. I’m going to stop talking now myself because I might just use a word which has a secondary meaning. And you and your pals will offer up a dictionary definition and try to take the argument sideways. No thanks.

  61. Posted by The Milkshake of Despair

    The data source that tc_sf cites shows similar wealth ratios across the three neighborhoods :
    Noe : 4.4%
    Visticon Valley : 4.3%
    Bauview/HP : 3.1%
    All percentages are (number of > $1M NW individuals) / (number of households)
    Never mind that this is somewhat of a mixed ratio, the formula is applied uniformly and serves as a gauge of aggregate wealth.
    While I don’t doubt that there are wealthy residents in all three neighborhoods, it is suspicious that Noe and VV are almost identical in wealth and BV/HP is only 75% less affluent. I’d expect much greater variance.
    Does anyone have an explanation other than the base data is inaccurate ?

  62. Posted by lol

    tc_sf’s data is 11 year old. SF has gained a lot of wealthy individuals in the past 11 years.

  63. Posted by The Milkshake of Despair

    I see my last statement was murky on a couple of aspects. First I did not mean to imply that tc_sf was promoting the data as a good resource, he/she is pointing out flaws. I just expressed those flaws a different way. I think that anon.ed had originally offered that smelly data.
    And yes the data is old which makes it even less useful. But even if it were fresh there’s reason to doubt that such disparate neighborhoods are so homogeneous in wealth.
    The 2010 census data can’t arrive soon enough.

  64. Posted by sfrenegade

    “sfrenegade, you’re still talking after saying that the people who sold are the ones who are the millionaires and higher.
    The people who sold. And moved.”
    No need to be dense, fluj. The people who sold and moved cashed out big time. The people who moved in could easily be highly leveraged, and some of those people have lost some of their down payment as part of the bust. 20% of $2M is only $400K.
    Basically, you’re happy saying almost nothing, fluj, because you don’t want any analysis or predictions someone could pin you too, so you can still spew your lack of substance and ad hominems. Then again, when you do show any sort of courage, it’s “scare tactics are dead,” so I understand why.

  65. Posted by sfrenegade

    “tc_sf’s data is 11 year old. SF has gained a lot of wealthy individuals in the past 11 years.”
    Not true. The 2000 Census data is old. The survey of net worth and IPA is from 2007. The ACS data, provided earlier, is based on data collected in 2005-2009.
    “1/5th of the houses have changed hands.”
    More clear data would be helpful, but that high figure doesn’t sound typical if there are 17K housing units, even if you assume that some houses will be rentals and didn’t necessarily change hands.

  66. Posted by [anon.ed]

    No need to be dense, fluj. The people who sold and moved cashed out big time. The people who moved in could easily be highly leveraged, and some of those people have lost some of their down payment as part of the bust. 20% of $2M is only $400K.

    Dense? I see through your shenanigans and it’s child’s play. None of that is apropos. They sold and moved and therefore were not counted as millionaires in 94114. You now concede what is completely contrary to your initial point. Also leverage is not counted as wealth, per the given criteria. What they may or may not have lost is another subject. So you attempt to take it sideways once again.

  67. Posted by tc_sf

    Yes, the *wealth* data was provided by anon and TMOD has correctly divined the intent of my post.
    Note also that the *wealth* data linked to by anon is from 2007, and indicates the number of *households* which supposedly have certain degrees of wealth.
    To illustrate the percentage of *households* that these results indicate, I divided by the number of *households* indicated by the 2000 census. It should not require too much thought to ponder what changes in this denominator from 2000-2007 would do to the percentages nicely tabulated by TMOD.
    The new UI for the Census 2010 data appears to be up here: http://factfinder2.census.gov/
    But I have not seen any actual 2010 data uploaded to it.

  68. Posted by lol

    Yes, 1/5 might sound a lot in 5 years. But this is what happened between late 2005 and today. This block has 34 houses and there were 7 sales/transfers. 1 house got transferred twice in a year due to a neighbor passing (sad sad story, I knew both women), the book writer who bought from a retiring couple, the power couple moving in with their 2 toddlers, the Google style couple, one gay couple, one flipper stuck with her house who finally unloaded last year. No new rentals that I know of. I could give more details but tend to value my (and other’s) privacy.

  69. Posted by sfrenegade

    “They sold and moved and therefore were not counted as millionaires in 94114.”
    Yes, I realize that elementary principle. Those people now have hard cold cash, whereas these new buyers who gave them that cold hard cash could easily be leveraged and not have very much equity and might not be millionaires (asset rich, but net worth poor). After all, only 193 people who didn’t already have $1M in liquid assets had enough home equity to push them over the $1M net worth mark. Are you really suggesting that some of these people have $999K in home equity but $0.00 in liquid funds?
    What specifically have I said that is contrary to my original point and what have I conceded? If you said something of substance rather than simply parsing words, it would be helpful.

  70. Posted by [anon.ed]

    Oh, now it’s the old adopting my language tack? Pass.

  71. Posted by sfrenegade

    Well, you haven’t made any arguments or assertions fluj. Call me again when you are willing to engage in a real discussion instead of saying “no, I am afraid to say anything because then you will make a counterargument.” That is weak sauce.
    The data we have been given by fluj aka anonn show that a large number of Noe buyers may not have as high net worth as people have claimed.
    It’s also worth noting that many people in the sample of data given by fluj have between $1M and $2M in liquid investments. Surely not all of these people are spending $1M of their former liquid investments as a down payment on housing, unless they’re really not into diversified portfolios.

  72. Posted by A.T.

    sfrenegade, don’t waste your time. You’ve accurately described fluj’s M.O. He is never going to say something that can be confirmed false. He simply shouts “you’re wrong, you’re an idiot” when someone else does so, or he points to some imperfection in their facts and concludes, “see, so the reality must be just the opposite of your conclusion.”
    On this issue of incomes, etc., as I noted above, it is largely irrelevant. It’s pretty clear that SF incomes have risen, yet prices are falling fast. Little to no correlation between the two. Supply and demand drives prices, not incomes. Incomes have some impact on demand, but it’s fairly small – far from the whole game as realtors want you to believe.

  73. Posted by sfrenegade

    “But this is what happened between late 2005 and today. This block has 34 houses and there were 7 sales/transfers.”
    No doubt, lol, that is what happens during a bubble — there are transactions that wouldn’t have otherwise happened because people cashed out.
    However, it’s a far far stretch to go from that sample during a bubble to then saying that all housing units in Noe Valley will in the near future be occupied by people with over $1M in net worth, as soon as all the former homeowners die, retire in another city, get jobs too far away, etc. There are only so many millionaires out there, and one could argue that the bubble created an artificially large saturation of them through move-ups.

  74. Posted by lol

    sure, sfrenegade. I am just describing what I saw around a block in the 94114 where I still have connections.
    Some of the buyers were cash rich, others are in a lot of debt. All overpaid, I think, even the 2010 buyers…
    As I said a few days ago, this market is not efficient and is happening on the margins. Many elderlies are clinging to their property thanks to prop 13. This reduces the # of places for sale. On the buyer side, you’ve got wave after wave of cash-rich Google-types. It only takes a few dozen of these to completely change a market. If these are gone, the 94114 will go back to a more reasonable buy-vs-rent rationale. But with the Facebook IPO and other similar deals probably happening this year in the region, we might not have seen the end of the NV craze yet.

  75. Posted by sfrenegade

    lol, I think we’re on the same page and I appreciate your contribution. These things definitely happen on the margins, since real estate is such an inefficient market. That’s also why it’s significant that foreclosures are more than 10% of sales.

  76. Posted by lol

    Yes it is. Which is why shopping around is a very good use of one’s time. I saved 15% in the place I just bought simply by looking at the situation of the seller: he had no debt, he needed to sell ASAP because this specific sale was the key to other deals he had in the pipeline. I made a quality low ball offer he couldn’t refuse. Maybe I overpaid, but I have a tiny mortgage in a great location. One of the best feeling in the world.

  77. Posted by tc_sf

    While I could be misinterpreting this, my impression is that prop’s 60&90 allow people over 55 to move and take their tax basis with them “once in a lifetime” with restrictions on price and destination.
    See: http://www.wwlaw.com/prop60.htm
    The restriction that you trade down (in price, not basis) would hardly seem to effect many people wishing to move out of SF.
    The location restriction seems more onerous.

  78. “No need to be dense, fluj.”
    um..
    “It is difficult to get a man to understand something when his job depends on not understanding it.” – Upton Sinclair

  79. Posted by [anon.ed]

    good grief. Look whose part you took up. Read the threads once in a while, Your Parrotry Will Be Rotated.

  80. Posted by your equity will be assimilated.

    no need to get all ornery now, fluj. just pointing out that you’re just doing your job.

  81. Posted by [anon.ed]

    Nobody was ornery, bro. You guys are a laugh. Don’t talk about transactions. Talk about number of households. Count the people who sold as millionaires. You got that guy’s back. good one.

  82. Posted by sfrenegade

    No one counted the people who sold as millionaires. That was merely a joking aside, and you’re just being obstinate here. I said that the people who moved out are very likely to be millionaires due to cashing out because they got cold hard cash. The people moving in could have used leverage, and in fact very few if any of the people moving in have $1M in home equity, and very few had enough equity to put them over $1M in net worth. I don’t know why this is such a difficult concept, as I’ve explained numerous times.

  83. Posted by [anon.ed]

    And again, the criteria did not count leverage as an asset.

  84. Posted by sfrenegade

    Umm, yeah, leverage isn’t an asset, an elementary concept — I’m talking about the people who moved in using leverage, not the people who are millionaires using leverage. You are being deliberately obstinate on this point.
    Unless you can connect and make a good argument that the millionaires are solely connected to the people who moved in between 2004 and 2011 (as you stated earlier), you are just throwing dirt here. Until you connect transactions to millionaires with an argument or analysis, you have said nothing and are just handwaving as usual.

  85. Posted by [anon.ed]

    And what is it that you’re doing? I introduced numerous interesting data. You just sat back, parsed, tried a few talky internet-guy tangents, now you’re trying to say you were joking, blah blah blah. The point is that you guys constantly underestimate how much money people have who buy in good areas in SF. I showed a healthy amount of millionaires, and I showed a relatively small amount of SFRs changing hands over a long period of time. Can I draw a direct correlation, illuminating all 900+ transactions and who put what down? No, of course I don’t have time for that. But don’t pretend like what I’m saying is not logical.

  86. Posted by sfrenegade

    So far, the best you can say is about 700 people with big investment portfolios live in Noe Valley. 900 people with high net worth live in Noe Valley, of which about 200 people have $1M in net worth solely due to home equity. But you still can’t connect that to the almost 1000 transactions since 2004 without more information. Isn’t it just as likely that some of those millionaires moved in during the dotcom boom? That produced more millionaires than recent times. You’re trying to handwave several statements and conjectures that you repeat over and over on SocketSite into some sort of coherent argument and failing entirely. Nice try, but we’re done here unless you say something of substance.

  87. Posted by sfrenegade

    Interchangeable or not, the Zappos founder bought his 5/3.5 house in Hillsborough for $3.2M in November 2007 and just sold it for $2.3M. See subject link from the Chron.
    Also in the same article, 212 Avila in the Marina looks like it might be an apple (no permits). 3/2 bought for $2,382,500 in February 2008, now being sold for $2.2M. tipster mentioned it in this thread:
    http://www.socketsite.com/archives/2011/01/from_2006_to_2011_for_the_vintage_cow_hollow_fixer_at_3.html

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