March 31, 2011

From Quintessential To Designer And A New "$15,000" Kitchen

2721 Sacramento #B Kitchen Before

2721 Sacramento #B wasn’t listed as a "designer" condo when it sold for $1,400,000 in 2008. At the time, it was simply "quintessential." Since then, however, and amongst other improvements, the kitchen has been remodeled from the above to the below.

2721 Sacramento #B Kitchen After

According the permit and associated fees for the remodeling, that’s a $15,000 job. But if you buy that, you really don’t understand the rules of the game. Or if you'd be willing to bid that work for $15,000 let us know, we'll keep you busy all year.

Back on the market and asking $1,450,000, while not noted this time around, in 2008 the condo was listed at 1,350 square feet.

∙ Listing: 2721 Sacramento #B (2/2) - $1,450,000 [MLS]

First Published: March 31, 2011 12:00 PM

Comments from "Plugged In" Readers

you can't even see the floorplan and whats the purpose of the vent-like bulge above the new microwave/exhaust fan? was a fancy hood planned and then nixed due to cost?

Posted by: jake at March 31, 2011 12:11 PM

love it and love the outdoor space. Unit A (below) sold for $1.479m in 2004 (3300 sq. ft.) Predict $1.1m?

http://www.redfin.com/CA/San-Francisco/2721-Sacramento-St-94115/unit-A/home/1244052

Posted by: noob at March 31, 2011 12:21 PM

Great job and they even cut in a window.

I think some microwaves have ducting and a fan that operates as a range hood. The fans tend to be loud because they have to be speedy to get the kind of airflow of a real range hood through the smaller opening around the microwave.

Posted by: tipster at March 31, 2011 12:27 PM

jake, I've seen that layout in many other apartments/condos. Usually you'll find a grate/grill for the range fan on the bottom of the microwave installation and I guess the fumes/smoke from the range somehow gets routed around the microwave up to the vent-like bulge you refer to. I can't imagine that it works well, but I guess it does something.

And usually you can confirm this is supposed to be an actual working vent by opening the mini cupboard doors which are always above the microwave (as they are pictured here) and you'll see that about half of the room has been taken over the sheet metal duct work, which is presumably routing the fumes to the vent. Like I say, I can't imagine that it works well, but I've seen it multiple times, usually in newer construction.

Posted by: Brahma (incensed renter) at March 31, 2011 12:35 PM

I really like this unit but even with the tiny floor plan you can tell that a lot hinges on that "large secure storage unit in garage" because I see only 3 smallish closets in the unit itself.

Posted by: redseca2 at March 31, 2011 12:37 PM

300 cfm is typical so they work pretty good actually.

Posted by: sparky-b at March 31, 2011 12:40 PM

n00b question - why would the permits only suggest $15k where the real job appears to have cost much more? Can you give some insight into "the game" for us non gamers?

Posted by: lolcat_94123 at March 31, 2011 12:54 PM

lolcat_94123 - regarding your question: The editor here apparently is suggesting some kind of "game" was played here by the contractor and/or homeowner.

The building department uses a chart when determining the valuation of a project. This chart assumes a "bare bones" kitchen remodel will cost 15k and the permit fee is based on 15k. The plan checker does not sift through drawing details and crank up the valuation because Carrera/Carrara marble is specified rather than formica. In the good ole days, it was possible to get a project's valuation lower by having a good relationship with the plan checker - those days are gone.

Posted by: bubblesurfer at March 31, 2011 1:28 PM

@ lolcat_94123 -- My impression was that the assessors office receives copies of all building permits. Since a remodel/addition can trigger a re-assesment it can behoove the homeowner to greatly lowball the permit figures.

Posted by: tc_sf at March 31, 2011 2:02 PM

bubblesurfer is right for the most part. The cost of a kitchen remodel for permit purposes is based on a chart it is something like $9000K + $150x the square footage. Depends on the type of building.

This comes up all the time on here and I am always repeating it, but whatever. There is no deception going on by shady builders and developers. The city sets the costs and they have a space right next to the one you fill out for their own dollar figure.

One reason they are set up this way is becuase you don't have to pick any finishes before you get your permit. Also, you don't have to turn in any plans or specs. for a kitchen remodel.

Nobody is getting over, nothing about it is shady. DBI collects plenty of money, I had a $4500 five minute review at planning last week.

Posted by: sparky-b at March 31, 2011 2:57 PM

@tc_sf: They don't re-assess the place entirely (which would invalidate Prop 13), but they will tack on the cost of remodel listed in the permit to your valuation. So this person's taxes would have gone up about $175.

Posted by: R at March 31, 2011 3:18 PM

If you put in for a $70k kitchen remodel at DBI, they will not lower it and charge you per what you listed. If you put in a $5k remodel for a kitchen they will definitely bump.

It seems to me that planning fees have gone up this year by about 200%. Planning looked at my drawing, drew one bubble and charged me $4500 too. I seem to remember in the past that it was about $1500 per 5 min.

The last time I talked to the assessors office to ask how they arrived at the new number, they were upping the value on a kitchen/bath remodel count. Perhaps this only applies to multi-unit rental property, but I seem to remember it was $25k per kitchen and $10k per bath.

Posted by: Ryan at March 31, 2011 4:14 PM

I'm always surprised when I hear that people have paid $60K or $70k for a kitchen remodel. I could have that kitchen done for $15K. And if I used Ikea cabinets (I can't tell from the photo if they're any better than that), I could do it for less.

We had put out for bid on a kitchen remodel, and got bids between $12K and $60K for virtually the same job.

In another job, we did three small kitchens (11-foot galley kitchen with undermount sink and a 30" stove) with granite and it was $800 for the granite and $1200 to install it for a total of $2000 (that's for stone countertops in THREE kitchens). I think the marble is slightly more expensive than the granite, but not that much more.

That "carerra marble" or marble that looks very much like carerra marble can be purchase at any of the myriad Chinese marble and granite sellers around Bayshore for something like $15-20 per foot or less. Installed it would be $60-100 per foot (we paid $60 per foot, installed for granite).

I believe you can get that matte finish by simply buffing off the shine that it usually comes pre-finished with from China. It's an extra $200 or so to cut in an undermount sink.

The sink side there in that kitchen is what, maybe 12 feet? and then add another 20 feet or so for the other two counters. 32 feet total at $100 per foot -- $3200 for the countertops (installed) on the high end.

I can't tell from here, but those could even be Ikea cabinets, in which case there's probably $2k-4K worth of cabinets, and I'm being conservative.

I'm not saying that it can't be done for more than $15K, but it can certainly be done for less.

Posted by: marco at March 31, 2011 4:24 PM

BTW, we had to pay a permit fee a lot higher than what they "estimated" at DBI because we used Ikea cabinets, etc. Our actual cost was something like $4K per kitchen and DBI minimum was higher than that.

Posted by: marco at March 31, 2011 4:27 PM

Ryan is right - start low with the valuation and let them bump it up using the chart - and he's right, they are more than happy to let you say the kitchen remodel will cost 75K when their requirement for valuation might have only been 15k! And starting low and letting them bump the valuation up is not "gaming" the system, but paying more than you're required to pay is plain stupid - I can think of better places to make a charitable donation than to DBI.

Posted by: bubblesurfer at March 31, 2011 4:32 PM

@marco: you are absolutely right that one can get a kitchen for $15k.

One can also get a kitchen for $75k or more. One of my recent kitchens was built for $138k.

A simple analogy is this: One can buy a Honda Fit for maybe 15k. One can also buy a BMW X5 for about $65k. They both do the same things, essentially.

The only difference is style, quality, fit, finish, status, etc.

Posted by: noearch at March 31, 2011 4:52 PM

what's missing from this conversation?

This 2bd 2ba condo is priced at $1115/sq ft.

That's $290K down and with a $6225/mo payment + the $200 HOA.

Posted by: Spencer at March 31, 2011 5:33 PM

I bet this sells for under $1.05M

Posted by: Spencer at March 31, 2011 5:34 PM

Over $1000/sf? totally over priced. Compare:

http://www.redfin.com/CA/San-Francisco/2795-Clay-St-94115/home/2035813

http://www.redfin.com/CA/San-Francisco/2238-Divisadero-St-94115/home/1087761

This place should go for $950k-$1050k tops. Sucks but this buyer is out $500k

Posted by: anon at March 31, 2011 5:51 PM

for noearch: You just made your own case as to why you should leave the artichoke out of the equation. One of your recent kitchens was $138k? Are you kidding? How much were your inflated fees for this, and how much did the contractor pocket?

I can custom build cabinets out of any wood, with highest end finishes, granite or marble counters, high end hardware, crown moulding, best appliances, etc etc for any kitchen plan in the world for less than $100k.

Posted by: builder in sf at March 31, 2011 5:59 PM

I think noearch said that the cost rise was driven by the client's request for luxury finishes. There is really no upper bound for how much people are willing to pay for marginally better stuff. If someone wants a solid gold toilet and is able to pay for it you can bet that a supplier will appear.

Posted by: The Milkshake of Despair at March 31, 2011 6:03 PM

MoD: yes, of course, the PT Barnum theory -- however, as professionals we have a responsibility to protect people, not exploit them.

If, after advising them, they STILL want to spend foolishly, by all means, let them. However, my guess is that most of the time they aren't given all the options.

Early in my career I was exposed to people who thought nothing of milking rich clients. I found it distasteful, so I've never done it. That's just me. Others, of course, can do as they please.

I sleep better knowing I've done a good and honest job for someone than by knowing I've marked something up 100% just because I can -- and believe me, there are plenty of opportunities.

Posted by: builder in sf at March 31, 2011 7:49 PM

@MOD: yes, exactly. The client often develops their program and desires. Many of them do indeed have substantial budgets.

The particular clients with the $138k kitchen were very pleased with my work and the contractor was outstanding. They got what they wanted and were more than willing to pay the right people to design and construct it. The clients went on to hire us for more work, including a very custom master bath suite for $110k.

It turned out to be awesome.:)

Thanks MOD!

Posted by: noearch at March 31, 2011 7:53 PM

yea - right on noearch and mod

Posted by: bubblesurfer at March 31, 2011 8:58 PM

"...however, as professionals we have a responsibility to protect people, not exploit them."

I agree though when an honest firm can't convince a client to be more reasonable there's always another willing to step in and satisfy no matter what the costs.

This reminds me of the recent 2507 Pacific Avenue sale which looked like a naive seller was exploited by his own agent.

Posted by: The Milkshake of Despair at March 31, 2011 11:06 PM

$138K for a kitchen?

$110K for an "awesome" custom master suite? i'd hope so.

i also find it really ironic that anyone would spend that kind of money on residential real estate in the midst of an historic housing bubble price correction, however immune they feel sf is or however much money they have.

"a fool and his money..." comes to mind. but i'll suspend judgment without more details. were these new constructions or remodeled spaces? what was the cost breakdown - materials vs. labor vs. fees/permits? were the homes in construction or geographically challenging spaces? what is the cost/sq ft breakdown?

if remodels, and likely in most other cases, i hope your services included a statement something like "you are certainly free to spend your sizable fortune anyway you wish, but you should realize that you will NEVER recover these costs when you sell. live in it and love it."

while FLW had some historic cost overruns, it is really surprising how affordable construction costs were for many of his homes, and those of gropius, neutra, gaudi, and many modernists. my understanding of overruns where they occurred was that they were usually related to project redesigns on site or unhappiness with finish work, or something really novel - like building a home over a waterfall or a new construction material.

Posted by: modernedwardian at April 1, 2011 7:20 AM

^ lol. It never ceases to amaze me how a bathroom remodel in SF can cost more than an entire house in flyover country.

Posted by: diemos at April 1, 2011 7:28 AM

need an architect?
hundred thirty eight reasons
say you do, kitchen

Posted by: [anon.ed] at April 1, 2011 8:09 AM

I'm really enjoying some of the comments here regarding costs. Some of you, not all of you, really have NO idea what you are talking about.

Since when is it the job of the architect or contractor to step in and tell a client to be more "reasonable" with THEIR money? Seriously? These are always intelligent, well-to-do people who know what they want and want the best. Guess what? money is no object. They have no interest in "recovering costs". It's not for resale purposes.

Get it?

Some of these clients I have designed for live in Pacific Heights or Presidio Heights. The homes we remodel are in the range of $4-8million. And you seriously think a well designed and built kitchen for $138k is UNREASONABLE? Seriously? In fact, this particular kitchen was probably too "low end" for this particular residence.

I have seen some impeccable kitchens built by Ryan Construction, one of the best contractors in SF, for over $500k. Guess what people? This is completely "normal" in the context of the location and house. One actually expects a kitchen of this caliber for that location.

Guess what people? Expand your mind outside the box. Don't bother comparing OUR costs here to anything in "flyover country". What's the point?

The end of my brief lesson is how design and construction costs apply to some clients in SF.

Have a nice day.

Posted by: noearch at April 1, 2011 8:55 AM

noearch - exactly - and I wonder how many people have pulled a chair up to a table at Postrio or Farallan.....only to then be "reasoned" with by the waiter after "foolishly" requesting a $400 bottle of wine. And if a waiter serves this wine, is there talk of "How much were your inflated fees for this, and how much did the waiter pocket?" - probably - and these people likely would rather pick up a bottle of Boons Farm Blackberry Ridge at the corner 7-11 - nothing wrong with that.....it's just a different experience.


Posted by: bubblesurfer at April 1, 2011 9:29 AM

"Don't bother comparing OUR costs here to anything in "flyover country". What's the point?"

The point is that if you need to own a place outright so that you have a place to live in retirement "geoarbitrage" is an extremely attractive option.

Posted by: diemos at April 1, 2011 9:47 AM

bubblesurfer- great analogy! perfect, and you "get" exactly what I'm talking about.

very cool. thanks.

Posted by: noearch at April 1, 2011 10:17 AM

"And you seriously think a well designed and built kitchen for $138k is UNREASONABLE?"

Yep. Unless there is some odd detail you are neglecting to tell us about, like it's a 1500 sf kitchen, or used for a commercial catering service, or something like that.

We had our kitchen redone a few years (including new subfloor) for $27,000. And it is all very nice. Sure, we could have paid the contractor triple the negotiated rate "just because" and sure we could have gotten cabinets, appliances, and fixtures that cost 4X as much even though they would have been no prettier or longer-lasting "just because." But I'd rather use my money for better things (charitable giving among them). Yes, 138K is UNREASONABLE unless there is some extremely odd factor involved. Sounds to me like the customer probably got soaked.

Posted by: A.T. at April 1, 2011 10:20 AM

Conspicuous consumption. Status symbols.

Commercial grade kitchens that are never used for anything except microwaving leftover takeout.

Fine for those who care. For those who want someplace to live just foolishness.

But many people in this world carry the burden of excess money and there are no lack of people willing to relieve them of that burden.

Posted by: diemos at April 1, 2011 10:24 AM

The point is that if you need to own a place outright so that you have a place to live in retirement "geoarbitrage" is an extremely attractive option.

Watch out for "geoarbitrage" decisions. when you're in retirement you might want to travel, house-swap, do vacation/short-term rental. SF is a very attractive city for that purpose.

What are you going to do with your Detroit mansion that you cannot rent if you want to do this long overdue one-year trip around the world? An SF property (provided you didn't overpay) will pay for itself and even give you a bit of travel money.

Posted by: lol at April 1, 2011 10:26 AM

Yea A.T. just like the poor saps who pay $400 for the above mentioned bottle of wine - how UNREASONABLE when they could have that bottle of Boons Farm for 3 bucks! Ask anyone walking out of a 7-11 with a bottle of Boons Farm in tow if they'd consider spending $400 for a bottle of wine and they'll tell you how crazy those people are for paying so much for a bottle of wine!

A.T., there is nothing wrong with you for having that box of Blackberry Ridge in your Frigidaire, but are you really gonna stick to your guns here and say there is something UNREASONABLE about your neighbor who wants to put a bottle of Chateau Margaux in his Sub Zero???

Posted by: bubblesurfer at April 1, 2011 10:36 AM

I wonder how that window got put in. There are no permits for it at all. Could they have pulled out the countertops and found a window that had been covered over and just put it back? You'd think it would be difficult to get the permit approved if suddenly there was a new window.

Posted by: tipster at April 1, 2011 10:43 AM

Oh bubblesurfer! I think I love you!..well, maybe just "like" you.

For those who don't "get" what we are talking about, isn't is really about the choices we make in life?

I make no judgement about the kitchen AT did for $27k. If it works for him and satisfies his needs and is what he wanted to pay, then excellent!

My clients for the $138k kitchen wanted certain things; a Sub-zero ref., a Bertazzoni range, a Bosch dishwasher, custom cherry cabinets, cherry floors, etc. And no, it was not a large kitchen; about 144 sf, which came out to about $958/sf. Reasonable for a Pacific Hts. condo and exactly what THEY wanted. Plus fees, of course.

@lol: yea, exactly about so called "geoarbitrage" way of thinking.Living and owning here is not for everyone. People can go live in Fargo, MN if they want for a lot less..and enjoy 7 months of hellish winter.

Yea, that's right folks; it's all about choices. And thankfully we don't live in Communist China where everyone lives meagerly and has no choice.

I'll stick with my bottle of 1979 Napa Valley BV cab any day and really enjoy it.

Posted by: noearch at April 1, 2011 10:54 AM

People can go live in Fargo, MN if they want for a lot less

You don't have to go quite that far.
SFRs in Moraga are under $400 psft. Here's what $329 psft gets you. Crime is near zero. Schools are excellent:

http://www.redfin.com/CA/Moraga/297-Corliss-Dr-94556/home/595813

Posted by: tipster at April 1, 2011 10:59 AM

^ Re windows/permits...

In SF, there is stuff that happens before final inspection... and stuff that happens after.

Posted by: Kurt Brown at April 1, 2011 11:05 AM

"I wonder how that window got put in."

At first I thought that the window had always been there because the "before" photo was taken at a different angle and might have excluded the window. On closer inspection I think you're right, the window was added. Also not sure how it was added without a permit but it is the best feature of this kitchen remodel.

And all this talk of high end wine got me thinking that one way to avoid that expense is to go for beer. High end beers go for a mere $15/bottle (25cl), about where midrange wines are priced. But then like always when someone wants to pay more, there are suppliers willing and ready to step in with an even higher priced item. I tried one of those beers and it was nothing special. In fact it was a bit stale.

Posted by: The Milkshake of Despair at April 1, 2011 11:16 AM

"when you're in retirement you might want to travel, house-swap, do vacation/short-term rental"

Note that traveling elsewhere can be accomplished using money and does not require ownership of SF real estate. Also note the strangeness of the argument that one should attempt to own RE in san francisco in order to travel elsewhere in retirement.

Posted by: tc_sf at April 1, 2011 11:19 AM

Who would really want to live in Moraga? totally suburban, soccer moms, mini-vans, rug-rats, dads on riding mowers.

Just what I'd want to live next to in retirement.

Posted by: noearch at April 1, 2011 11:24 AM

tc_sf,

Something you have in retirement is time and flexibility. House-swaps, renting out your place short term are a great option precisely when you have that time. say you want to discover Kuala Lumpur and live in a good area for a month with the locals. You cannot really do that in an hotel, plus decent hotels will cost you over a 30-night period. Plus hotels that give you the space and comfort of a house are out of reach to most.

Of course you could sublet or do house-swapping with a rental. But it depends on your relationship with your landlord. You're risking someone else's property.

Posted by: lol at April 1, 2011 11:34 AM

Well, there are a lot of options between $400 Bordeaux and $3 ripple. Let's just say my kitchen was the very good $100 cabernet, leaving me with 100 to give away and 200 in my pocket. But the sommelier is not so well off.

Posted by: A.T. at April 1, 2011 11:45 AM

Countless people who either own outside of SF or rent are able to travel during retirement. For the $138k some may spend on just remodeling a kitchen one could probably outright buy a place in Kuala Lumpur.

Not to say that there is anything wrong with having a nice kitchen if one so choses, but to imply that one should "watch out" about not owning in SF because it may constrain travel during retirement seems unjustified.

Posted by: tc_sf at April 1, 2011 11:49 AM

"What are you going to do with your Detroit mansion that you cannot rent if you want to do this long overdue one-year trip around the world?"

Well, I only paid $10,000 for it, so if I'm really struggling with the payments for that year while I'm spending big bucks traveling around the world, I probably have bigger problems...

Posted by: sfrenegade at April 1, 2011 11:52 AM

tc_sf, no questions there. It's all about priorities.

I just bought 4-5 months ago and I have no interest on wasting $$$ to impress my friends by tearing down a perfectly good functional kitchen. I still lack storage space, but I have an empty wall and 1K will soon take care of that issue.

Our discussion slipped from the rationale of buy in SF vs cheaper flyover country. If the price is right SF is a competitive option compared to a place that you choose solely because of upfront expenses. And you get to live in SF, one of the greatest cities on earth. Try and beat that, Moraga.

Posted by: lol at April 1, 2011 11:59 AM

sfrenegade ,

Your 10K house will cost you up to 5K/Y in property taxes, or as much as a 400K place in SF.

Posted by: lol at April 1, 2011 12:01 PM

Yes, and if you can't afford less than $500/month in property taxes while you're traveling the world in relative luxury, then you probably have problems, as I said.

Posted by: sfrenegade at April 1, 2011 12:07 PM

lol:

"wasting $$$ to impress my friends"

wowzer - It would appear that assigning certain motives (to impress friends) to others helps you rationalize your own personal choices - hey if that's what works for you, fine - but "own it" please.

Posted by: bubblesurfer at April 1, 2011 12:21 PM

Sure, if we go to that extreme.

But between a 500K SF property that would rent for 2500 or more in short-term rental with mortgage paid and $500/month in taxes, and a Detroit property you cannot easily rent and that costs you the same amount in taxes, I will pick the former.

Posted by: lol at April 1, 2011 12:23 PM

None of my clients, that I know of, remodels their kitchen to "impress their friends". That's just plain silly and immature.

Posted by: noearch at April 1, 2011 12:31 PM

The mystery window: It is obviously a single fixed pane of translucent glass. Itmay well be fire rated glass by TGP, Pilkington or one of the other manufacturers that are UL fire-rated for 1 or 2 hours with fully tested assemblies. You could install a zero lot line window with a higher fire rating than the wood sided, wood frame wall if you wanted to.

Using these products, we regularly include windows from stairways in the interior lobbies and public spaces of hospitals.

Posted by: redseca2 at April 1, 2011 12:32 PM

redseca2:

"You could install a zero lot line window with a higher fire rating than the wood sided, wood frame wall if you wanted to."

absolutely correct - but remember......don't forget to obtain a building permit first!

Posted by: bubblesurfer at April 1, 2011 12:38 PM

"Sure, if we go to that extreme."

Hey man, you brought up the Detroit example, not me, but I think the point you were trying to make is flawed in the first place. I'm more in tc_sf's boat and don't understand why living in SF has anything to do with traveling the world ("but to imply that one should "watch out" about not owning in SF because it may constrain travel during retirement seems unjustified."). If you live somewhere else than SF, you presumably have more money to spend on said travel, and if you're engaging in said travel to begin with, you're probably comfortable enough with your housing situation and don't need to worry about making house swaps to make ends meet.

Posted by: sfrenegade at April 1, 2011 12:40 PM

Although the subjects of the piece were not SF based, the cron just did a story about the "Not Quite Retired". Basically people who are house poor and need to return to the workforce post "retirement" .

This would seem to be that outcome that people should truly watch out for.

Posted by: tc_sf at April 1, 2011 3:17 PM

So I went looking for the article that tc_sf at 3:17 PM was referring to and it's a doozy. From Mar 27th, Millions of Not Quite Retireds just want jobs; the 'graph that's relevant to this thread is this one:

A recent AARP survey revealed that "1 in 4 respondents 45 and older are planning to work much longer. One-third of them cited falling home prices and shrinking investments as the main reasons." Statistics from the National Home Price Index concur. The latest report shows a 15 percent decline in home prices – the worst drop ever cited. "Our home was our fallback position, and now that's gone," says Michael, a 51-year-old engineer who worked as an executive at Fairchild Semiconductor and Lam Research. He retired to Boise, Idaho, but has dusted off his resume and is preparing to re-enter the workforce.
Emphasis added. I don't know anything about real estate prices in Boise, Idaho, but I suspect that they are lower than in the Santa Clara Valley. Also, I can't have too much sympathy for an executive who retired before age 55; cue the violin music.
But here's the frankly brilliant money 'graph:
[Not Quite Retireds] are the silent victims of broken pensions, endangered Social Security and Medicare benefits, a volatile stock and real estate market, and prices rising faster than any financial planner could have prepared them for. They live in every neighborhood in America, silently pondering nest eggs that are now half the size they need and puzzled about what to do about financial safe havens that no longer exist. The latest report from Fidelity Investments indicates that retirees have already lost an average of one-fourth of their retirement savings. But the most shocking report came from Wells Fargo Bank at the end of 2010. In its sixth annual retirement survey, the bank indicated that the average retirement savings for Americans 50 to 59 is a paltry $29,000. At a 5 percent return rate, this means they have $190 per month to add to their Social Security income – not enough to cover the average household grocery bill.
When I read this, I thought, well, retirees shouldn't have that much still in the stock market, so if they're getting a 5 percent return, they're not doing that bad; the Barclays Capital Aggregate Bond Index returned about 5.8% over the last five years ignoring fees. But $29k just isn't enough principal to support oneself, regardless of any reasonable rate of return, that's the takeaway. And that's why people need reverse mortgages.

Posted by: Brahma (incensed renter) at April 1, 2011 6:43 PM

"Since when is it the job of the architect or contractor to step in and tell a client to be more "reasonable" with THEIR money?"

houses are in fact the largest capital expense most individuals ever make. very few people are remodelers at all - let alone serial remodelers. whether you like to admit it or not, homes are a source of capital gains and forced retirement savings for many, if not most homeowners. as such i'd expect ANY professional involved in real estate to be aware of costs and to bring up things like neighborhood comps and ways to save money - or at least not spend it unnecessarily - during a construction project. this is not about being reasonable or modest; it is about being logical and using the full skill set of your hired experts.

i don't know anyone, including the superrich, that likes, or will admit to, wasting money.
i have never heard anyone freely talk about how much they lost on the sale of their home at a cocktail party but i have heard many stories of investment gains as well as belly-aching about remodeling costs and overruns. included in the belly-aching have been a billionaire finance classmate with a very expensive and very exclusive, seafront vacation home in Mexico, another classmate who retired at 45 to a home on a prime hole at pebble beach with views of point lobos, a dot.com 100's millionaire turned angel investor with homes in rancho santa fe and palo alto, the heir apparent son from one of the richest families in california, a member of a large extended family with one of the largest private working ranches in Wyoming, and the daughter of a man who once had a boutique tech bank named AFTER him (and owns a big island home designed by a very famous mexican architect).

while i will agree that recovering costs is not everyone's concern, most people are concerned with unnecessary expenses and don't like to feel cheated, even in hindsight.

$138K (at $958/sq ft) for a remodel "PLUS fees, of course", seems silly to me. and you are essentially stating the prior existing kitchen was worth nothing, and the existing infrastructure was useless. the materials you mention don't strike me as particularly luxe or rare. then again in the context of a $4-8MM home i can see it, though i doubt i'd ever do it. what i did spend on in my own remodel - custom teak cabinetry, white oak and high gloss built-ins, rstoration, moldings, modifying antique and vintage pieces, quartz and carrara marble (in slabs, basketweave and large format tile), porcelanosa tile, radiant flooring, antique french industrial lighting, oversized doors, beautiful hardware, and top end plumbing fixtures (duravit wall mounts, hangrohe showers, kohler purist wallmount faucets), as well as all new infrastructure, came in at about this for 2800 sq feet, plus labor and fees, of course.

when i did my own remodel, another friend, an AIA award winning architect, was kind enough to give my free advice over several dinners with wine and walk thrus. their advice included telling me i really didn't need an architect for what i wanted to do in the first phase - but did include the name of a very good structural engineer, as well as several ideas which saved me many thousands of dollars. i was also advised to avoid doing the next phase of my remodel - several hundred feet of unfinished space the will require a new internal staircase and might benefit from an addition to the back at the lowest level of my home without giving them a chance to bid. as i really can't get my head around this space, i suspect this was also great advice.

and comparing an hour of enjoyment for a bottle of wine to the decisions involved in making a major capital purchase is hardly a "great analogy". fyi, my harlan estate shipment arrived yesterday right on time.

i guess i must be going to the wrong cocktail parties and have the wrong friends, but i really don't know anyone who truly believes "money is no object". but i don't know an drug lords, reality tv stars, or lottery winners, so i guess my horizons might be limited.

Posted by: modernedwardian at April 1, 2011 11:26 PM

"...came in at about this for 2800 sq feet, plus labor and fees, of course."

Totally apples and oranges, don't you think. You did 2800sq.ft. of space but aren't counting LABOR into that number. Wasn't the labor significantly more than that number. Plus that is a nice list of material but it isn't the full material list for 2800 ft. there is lots of lumber, wires, lighting/switching, copper, cast, drywall, paint, etc.

The cost given by noearch was the construction budget and not the finish materials list.

Posted by: sparky-b at April 2, 2011 8:42 AM

actually that is slightly more then the full materials price for our remodel, phase one.

separating materials and labor is not always easy though. the house had some great features which just needed refreshing and cleaning and we took away more walls then we added to get an open modern floorplan. i didn't want to give you another 2 paragraphs describing CAD 6 wiring, tankless water systems, media hubs, etc (my home is not for sale :).
some of my choices, like ge cafe appliances in my rental unit are probably not high end enough for some.
it also includes some labor costs, like the labor component of refinishing and matching my 80-100 year old oak flooring, my stoneworker's fees, and my cabinetmaker's fees.

there were, of course, other materials wrapped in the contractor/labor fees - 15 feet of unexpected foundation upgrades, retrofitting and shearing, framing, insulation, soundproofing, and new concrete garage floors were "all in" contracts with regard to materials and incidentals.

yes. labor wasn't cheap. an additional 1.3 times materials in our case for other labor related work not included in materials, but this is also an underestimate as i don't count our time. this included several weeks swinging sledge hammers and crowbars for the self done demolition (the demo bids at $13-18000 seemed silly, we did it on weekends and evenings, for $2800 in hauling, and donated another $3000 in material to architectural salvage and metal recyclers), many days of supervision and meetings, nightly sweeping the job site, stripping paint with my silent paint remover, sanding, painting, and steaming off 12 layers of wallpaper in one area.

my contractor jokingly told me he'd hire me, and more then once told me it would be cheaper to gut something then restore it (imagine having the audacity to tell me how to spend my money and time). i learned a lot that i wanted to learn.

also my place is not finished. once we crossed the $300k marker we needed to slow down. i'm not a building professional and some things took more time then expected resulting in higher then anticipated interest and carrying expenses which are included in our total costs. my floors went through 2 subcontractors which cost my contractor money and me time (and interest money).

so i still have 2 closet systems to design and install and i'm having trouble sourcing 10 feet teak veneer sheets for one project. there are also skylights and roofing. exterior work and the garden are likely phase 2 now. and the additional new space will be phase 3. and after phase 3 we have a second kitchen that will be phase 4.

i wasn't claiming to be comparing apples; just commenting on remodeling costs which to my mind sound unnecessarily excessive. i'd hoped to stay under $100/sq ft for my phase one. i didn't. it is currently more like $115/sq ft and will likely come in at $140 (though i pray for less). this made sense to us given what we paid for the house and for what duplexes in our area of san francisco sell for.

Posted by: modernedwardian at April 2, 2011 10:55 AM

Once again, some people here aren't listening.

@modernedwardian: I "advise" clients how to spend a budget wisely, once I learn their particular program and needs, but I do not tell them to be "reasonable". Why is that my business? I have no interest in their net worth. I am there to design them a great project that satisfies them.

Why is $138k a "silly" thing to you. Compared to what? Yes, the original kitchen and layout and materials were completely worthless to the client.
And no, I didn't say the particular items were "luxe" or not luxe. They were what the client wanted. They were of high quality. The kitchen was not large in area. Size does NOT always matter when it comes to square foot costs of construction. In this kitchen labor costs were very high due to lack of parking for the contractor, very little staging areas, the client was meticulous about keeping hallways and walls completely sealed against dust during the entire period. Demolition was extensive. A steel column had to be removed,involving shoring and a new column and footing added. The list goes on and on.

The client essentially said that "money was no object". Why is that so hard to understand? They would have spent much more (if necessary) to get the kitchen I delivered to them for about $138k.

And from my experience on similar kitchens, the cost of about $958/sf is not unusual nor unreasonable. Nor is anyone ripping off the client.

Your experience and costs worked well for you. You did a lot of the labor yourself. Most of my clients want to HIRE out every single facet of work. Big difference.

@sparky-b: not sure what you mean when you say "finish materials list", but that cost of $138k did include everything, ALL materials and labor, down to the final painting and clean up before the contractor signed off.

Posted by: noearch at April 2, 2011 11:32 AM

Okay that's fine you weren't trying to compare but it was giving an unrealistic cost to what you did. This new description is much more realistic to people who may be reading. Those same readers should note that $130/ft or so averages in some rooms that don't need that much work or aren't expensive rooms. If you just do kitchens and baths there is more cost per foot.

Also, I'm suprised you are having trouble getting 120" teak veneer, are you looking for a special saw or figure?

Posted by: sparky-b at April 2, 2011 11:35 AM

yes. sparky-b are right; it is an average but it wasn't just surfaces and fixtures. we did do 2 floors of all new infrastructure, 3.5 bathrooms, a kitchen and foundation work and retrofitting.

noearch, if you go back to my original post you'll see several questions which you have just answered. (so i guess i'm not "not listening"?). so you were working in a geographically challenging area and you needed to do a lot of structural work to remodel at all. and you were working in a strict building environment. believe me, i'm not trying to insult you. i wanted to understand, though i still find this total really high. and the irony of these expenses against the backdrop of the listing losses featured on this site was just too sweet.

i have never said it was your job to tell people to be "reasonable", (your word not mine). i have said i expect cost and areas of savings to be what i hire professionals for. we likely disagree about your responsibilities to clients given the indisputable fact that homes are retirement vehicles for most americans.
but if you'd stretch the bauhaus precept that "form follows function" and acknowledge that one of the functions of a home is retirement savings, it HAS to effect the form.

after a year+ of remodeling, with 3-5 fold differences in bids between contractors and subcontractors who worked off the same spec sheets and were vetted through prior work with friends, i find it "silly" when anyone spends more money, often way more money, then they need to during residential work. i also know some very high flying homeowners who have had unfortunate crash landings so to speak. call it a conservative upbringing in a blue collar household. i could never spend a year's post tax money on any single thing. i'm cheap and want to retire relatively young and yet i like nice things. so i'd ask my contractors to explain per hour rates that seemed expensive (and only half joked with them that i couldn't justify paying anyone more for a hour's work then i make myself as a professional with 2 graduate degrees) and i researched the true costs of anything that i was told was very expensive.

as for the teak, i'm looking for very striated wood (more flat cut or quartersawn) for a 9.5 high by 16 ft long wall with four flushmount closet doors. i'd even go with the right engineered or shipbuilder product. i want the feel of a 1950's gio ponti cruise ship suite. 8 ft seems more standard and i'm really picky about the look as i know it is going to cost me and i want it to last forever.

any sourcing ideas?

Posted by: modernedwardian at April 2, 2011 1:51 PM

modernedwardian...

Did you down a full bottle of that Harian Estate before you started tapping on the keyboard?

Look - In your posts, you've created a vivid picture of how you live. I know people who live like you. Your house is in a constant state of disarray and in the middle of some remodel project. When people come to visit, you walk them around on partially refinished floors and through rooms with mismatched trim moldings and stud walls with no sheetrock. In between coughing up sheetrock dust, you make them listen to your stories about how this wall will be removed during phase 8 and that addition will be put on in phase 9.....all while explaining to them how many tens of thousands your saving by not hiring architects, designers and skilled general contractors that only add up to "unnecessary expense".

Well you know what modernedwardian, some people like to live differently from the way you choose to live, and they don't appreciate being thought of as "wasteful" and "foolish" for doing so.

Some people prefer to have their project professionally designed, managed, built and completed. They like the peace of mind that licensed professionals bring to their project - peace of mind that comes from knowing a general liability insurance policy will stand behind ALL of the work performed in their home - peace of mind that comes from knowing a skilled designer created a sensible floor plan and specified durable finishes that will last for years.

I have no reason doubt that you've acquired a taste for fine wine, and hope you enjoy that Harian Estate.

I also have no doubt that the way you live is analogous to drinking that Boons Farm Blackberry Ridge straight out of the box with no glass.


Posted by: bubblesurfer at April 2, 2011 1:58 PM

bubblesurfer-

i actually didn't move into this house until after most of the work on 2 residential units was complete (that was phase 1), which was to include ALL interior work in existing living spaces, except for a second kitchen remodel which just wasn't and isn't in the budget at this time.

i'll admit there was way too much dust in my life for 4 months, mostly due to construction delays and an unfortunate flooring subcontractor vs. contractor issue. i'd planned to move into finished space and to rent a unit by august. it didn't happen.

i'll also admit i have two very ghetto looking unfinished closets at this time. and everything i owned was in storage for 5 months. but otherwise the interiors are done.

my new tenants are happy and we had 3 completed rental applications 24 hours after our only showing with a 7 day move-in in october.

you are likely aware of how difficult construction loans were to get in 2010. my solution was to buy and self finance. which for me meant staging the project and only using funds that we felt comfortable using. so the exterior will have to be done on it's own as will the yard. and my 700 sq ft of unfinished gutted ground floor storage, (which had been a really toxic illegal unit) will have to wait until i have enough money to do it right or the construction loan situation eases up (i'm told it's still tough).

i'll own my delays and their complications but my friends are mostly amazed by what we have gotten done and some had longer overruns on their concierged projects in sf and on the peninsula and still have their stuff in storage. i'll also freely admit that my choices aren't for everyone or even most people. what we did was a hugh amount of work.

my moldings were custom milled for seamlessness throughout 2800 sq feet and took a team of 3-4 men many nights and weekends to install. these same men work for other millwork companies m-f but were really happy for me to essentially cut out their boss and pocket, i suspect, more money then he pays them. my floors took so long because the first sub installed inferior wood which my contractor then had to correct. the floors get a lot of compliments now and are a custom stain with walnut, teak, and rosewood notes. we wouldn't be able to tell what is 80 years old and what is new. my realtor was breathless in my bathrooms, and she's very hard to please.

all of my major contractors were licensed and bonded professionals and my project was insured. even my off hour workers were covered under my general's insurance for occupational hazards though luckily our site was without incident.

we were the only hacks on our project and really didn't do anything i'd call skilled but were eager to learn. i'm also lucky to have architect and designer friends who reviewed my floorplans; though honestly providing the right amount of space for appliances and toilets and work triangles and door openings is hardly rocket science.

i don't think i used the word wasteful, that's your baggage. i stick by silly and unnecessarily excessive.
sorry if i hurt your feelings.
my home, using your analogy, is probably more like that affordable pinot you wished who'd bought another case of.

Posted by: modernedwardian at April 2, 2011 3:25 PM

OMG! now I know for sure that you (modedwardian) were not listening. I'm just wondering why you remain so obsessed with this one particular client and this one particular kitchen that you still feel they they are "silly" to spend the amount I discussed. And that you actually know what they "need".

I'm convinced now, as bubblesurfer said so well, that you have been drinking way too much cheap wine.

My clients were not blue color, and probably not "conservative". In fact they are a very nice, young (early 30s's) couple in high tech.(google to be exact). They could give a rat's ass if their house is a retirement vehicle or not. It was never part of the discussion. They are well-to-do: end of story.

You can go on and on and on about your little story. It's how YOU live, not how others live and certainly not how others HAVE to live.

@bubblesurfer: you certainly have a great way with words and thoughts..and you have a great sense of humor. Thanks!

Posted by: noearch at April 2, 2011 3:37 PM

noearch:

"You can go on and on and on about your little story. It's how YOU live, not how others live and certainly not how others HAVE to live."

ditto - well said!

Posted by: bubblesurfer at April 2, 2011 8:39 PM

In escrow after a week on the market! Not surprised. The market is pretty hot.

Posted by: Eddy at April 8, 2011 10:38 PM

Apparently "status kitchens" are a real phenomenon:

"Jack Schwefel, the CEO of Sur La Table, talks about “the romance” of the high-end kitchen gadgets he sells. Take something like a Margaritaville Frozen Concoction Maker, which has “550 watts of shaving and blending power” and four preset frozen-drink settings and, according to Sur La Table’s Web site, was featured in the March 25, 2009, episode of South Park. (Stan tries to return it to the company but can’t because it’s on a payment plan and he can’t find out who owns the debt.) It retails for $349.95.

Why pay $349.95 for what is essentially a souped-up blender? Customers “picture themselves outside by the pool, surrounded by 20 of their friends,” says Schwefel. “There’s always been a lot of gimmick to the gadget world, and you’re starting to see this proliferation of specialty gadgets.” Each of those gadgets comes with a vision of yourself doing something warm and inviting: baking bread, rolling your own pasta, slow-cooking a pot roast."

http://www.theatlantic.com/magazine/archive/2011/05/the-joy-of-not-cooking/8442/1/

Posted by: tc_sf at April 12, 2011 4:13 PM

I'll bet that there is an inverse relationship between the cost of a kitchen and the amount of food prepared over its lifetime. We've seen plenty of showpiece kitchens here on SocketSite that are dysfunctional as a place to cook, but great to stage a bowl of fruit and a vase of flowers. At the other end of the spectrum are urban southeast Asian food stalls where a kitchen consists of two buckets, a folding table, and a camp stove.

Another "aspirational" element often seen in outdoor staging are the cliche "two chaise lounges" where prospective buyers can imagine themselves relaxing under the sun's warmth.

That Margaritaville Frozen Concoction Maker is for the peasants. A real SF showplace kitchen would have a stainless-clad built-in blender (next to the built-in espresso maker of course). And on the deck, a two stroke gasoline powered blender.

Posted by: The Milkshake of Despair at April 12, 2011 4:47 PM

"I bet this sells for under $1.05M

Posted by: Spencer at March 31, 2011 5:34 PM"

No chance.

Posted by: [anon.ed] at April 12, 2011 4:59 PM

"A real SF showplace kitchen would have a stainless-clad built-in blender (next to the built-in espresso maker of course)."

Stupid built-ins like this are a great example of Milkshake's phenomenon. Just the other day there was a kitchen on SocketSite that had a built-in espresso maker. It's a waste of space for one thing -- a real chef would prefer the extra counter space. If it dies on you (as overpriced espresso makers tend to do), you either have to get a replacement from the exact same company who sold you the inferior product or you have to redesign the space to fit a different model. It's dumb all around.

The random single-use devices that tc_sf mentioned are a waste of time and money too. Many of those useless gadgets are not really that much more convenient than basic kitchen products and most don't get used enough to be worthwhile.

Posted by: sfrenegade at April 12, 2011 5:05 PM

Posted by: n00b at May 2, 2011 11:58 AM

Move along. Nothing to see here.

Amazing outcome for a 2008 pear.

Posted by: eddy at May 2, 2011 12:16 PM

Speaking of 2238 Divis; looks like the seller / 08 buyer is about to get cleaned out.

Posted by: eddy at January 4, 2012 7:08 PM

Could be over a $400,000 loss on 2238 Divis for a 3/2 condo. 1700 square feet. Paid around $900 psft, last offered for about $655 psft. Appears to be off by around 25%, which doesn't look so bad, but for more than $400,000, in the words of everyone's favorite former poster on this site, "That's a lot of scratch".

Posted by: tipster at January 4, 2012 11:08 PM

Yeah, that is not a great outcome. I'm surprised the owner would take that sort of hit versus just mailing in the keys. Unless of course they have a huge down payment. Even still I am surprised to see someone taking that type of loss.

I do think many 2008 buyers "moved up" and took prior 'gains' that were rolled into a new place. So if you bought a condo for $800k in 2001, sold it for $1.3 and rolled it into this place at $1.5 I could see where that scenario would let a buyer walk away since that equity would have been crushed anyway. It's the first time, 0 down buyers that walked away.

Either scenario, this will be a pretty stark reality and a good market read of condos from 2008 - 2011.

Posted by: eddy at January 5, 2012 9:18 AM

A couple blocks away from 2238 divis. (in the better direction) we have what looks like a very nice place that is now reduced below its 2000 sale price - 40% off over 11 years accounting for inflation (a reverse inflation hedge?). The more sales we see around 2000 pricing the more likely I am to agree with bottom-callers.

http://www.redfin.com/CA/San-Francisco/2900-Pacific-Ave-94115/unit-201/home/2035989

Posted by: A.T. at January 5, 2012 9:50 AM

Wow, to listen to tipster and eddy you'd think a $400k+ loss in a few years is a big deal. Newsflash! No owner in the Real SF is going to care about it. Maybe in the east bay or south of California....

Posted by: El Bombero at January 5, 2012 12:08 PM

No one is disputing a 400k loss and no one is pretending that the bubble has deflated, especially in condos. It is stark to see it play out on an actual property as opposed to charts and graphs.

Posted by: eddy at January 5, 2012 1:57 PM

2900 Pacific #201 closed last month for $1,738,000, 6% below its 2000 price.

http://www.redfin.com/CA/San-Francisco/2900-Pacific-Ave-94115/unit-201/home/2035989

That's more than a $200k loss (after commissions and costs) on an almost 12 year hold. Love seeing that!

Posted by: El Bombero at March 27, 2012 3:16 PM

Interesting: if you look at Case Shiller Condo prices, 2900 Pacific hit it maybe 5% under where it should be. That's pretty good for an estimation.

Posted by: tipster at March 27, 2012 3:43 PM

2900 Pacific seems a bit odd... I guess it was remodeled in 99.. Hence the almost 70% increase from the sale in 99 to the sale in 2000..

Posted by: Denis at March 27, 2012 4:19 PM

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