April 28, 2011
The Score Card For 2207 Scott
The sale of 2207 Scott Street closed escrow yesterday with a reported contract price of $3,310,000. As we first wrote about the property last October:
Purchased for $3,425,000 in May 2006 with what would appear to have been "Google money," in 2008 the rear foundation at 2207 Scott Street was replaced, a three-quarter bath added, and a bit of garage space reclaimed for living.
At a permit estimated cost of $200,000, let's call it $3,625,000+ invested in the property.
Back on the market today and listed for $3,600,000, a sale at asking would appear as "appreciation" of 5% over the past four years in MLS based reports, newsletters and statistics but wouldn’t exactly be so.
Closing the day at $543.30, shares of Google are up 47% over the same timeframe.
Relisted for $3,450,000 in January, the property was in and out of contract in February and then reduced to $3,300,000 in March for an "over asking" sale according to industry stats.
Google is currently trading at $536.58 per share.
∙ 2207 Scott Versus The Underlying Shares [SocketSite]
∙ Google Salaries And Shares Up While 2207 Scott Street Returns Down [SocketSite]
First Published: April 28, 2011 11:30 AM
Comments from "Plugged In" Readers
Wow, I was pretty bearish on this place but getting $1100 psf is a pretty remarkable outcome. Sure it's down but this is still a great outcome.
Posted by: eddy at April 28, 2011 10:18 AM
I agree: losing half a million dollars in five years is a great outcome...
...for the agents, mortgage brokers, etc.
Posted by: tipster at April 28, 2011 10:24 AM
"Not as bad as it could have been" is the new definition of a great outcome. Losing enough to fund an OK retirement is pretty nasty, although I agree with eddy in that I expected this loss to be even higher.
Posted by: A.T. at April 28, 2011 10:37 AM
I think a big part of the loss here was because of major flaws in the house itself. It fell out of contract at around 3.5 and then proceeded to have a lot of structural work done. Again, I don't know the back story, but I think this home would've sold for more had some of the major issues been taken care of prior to putting it on the market.
Posted by: Denis at April 28, 2011 10:42 AM
Losing enough to fund an OK retirement
If 500K is what you expect you'll need to have saved comes retirement, please do not throw away these applications for parking attendant at Trader Joe's. You'll need when you're 75.
Posted by: lol at April 28, 2011 10:55 AM
No, of course 500k is not what I expect I will need for retirement. But it is far more than most Americans who have an OK retirement have saved. What I expect I will need and "OK" (a word I chose carefully) are two completely different things.
A half million dollars is a sh**load of money in the real world. And it doesn't look like the banks/taxpayers absorbed this one (not even indirectly as, again, that loss cannot offset capital gains, unlike just about every other type of investment loss).
Posted by: A.T. at April 28, 2011 11:06 AM
What the flow of money has been between 2006 and today is a no brainer.
The top 1% have increased their net worth. The bottom 50% has seen it decrease. The piping that allowed this to happen is just a mere footnote.
Posted by: lol at April 28, 2011 11:11 AM
Other than the sellers themselves why does anyone care about individual losses? The fact that there are buyers out there ready willing and able to plop down $1100 psf on a new view property is remarkable. Also, the clay st home has major renovation already started.
Posted by: eddy at April 28, 2011 11:17 AM
"Other than the sellers themselves why does anyone care about individual losses? "
When looking at any investment it seems extremely worthwhile to look at past outcomes. Even for pure consumption it would seem wise to try and get a good picture of what something may cost you.
Posted by: tc_sf at April 28, 2011 11:30 AM
Well, when I play Frogger, I tend to learn from the previous frogs that got drowned, squished or eaten and try and avoid doing the same errors. I think a loss like this one is a sign to potential buyers they have to do their own homework.
Posted by: lol at April 28, 2011 11:33 AM
eddy, I couldn't care less what these sellers lost. My point was simply to counter the "SF is different" hype you (still) hear all the time -- not from you btw. As you correctly note, these sellers had a great result. Yet they lost about a half million dollars! As I often say, I bet nobody lost that much in Modesto on a home. The downside risks to SF real estate are very big and very real. It is not different here.
My prediction is that if the 2011 buyers sell in 5 years they will do even worse.
Posted by: A.T. at April 28, 2011 12:03 PM
> If 500K is what you expect you'll need to
> have saved comes retirement, please do not
> throw away these applications for parking
> attendant at Trader Joe's. You'll need
> when you're 75.
You will not be a rich man with $500K, but in most of the US you can buy 3-5 modest rental homes for $500K and live in one while collecting the rent from the others that along with Social Security will probably avoid any need to work as a Wal Mart greeter at 75...
Posted by: FormerAptBroker at April 28, 2011 12:12 PM
"If 500K is what you expect you'll need to have saved comes retirement,"
There's a difference between having $500k at retirement and losing $500k mid-career. Assuming investment returns going forward are in line with historical results, this could be quite a big difference.
Posted by: tc_sf at April 28, 2011 12:19 PM
It's unfortunate and tacky to demean good, honest working people at Trader Joe's and Walmart. It's hard work and they deserve respect for their well-earned paychecks. Especially if the person's 75 years old, it's good for their health to be active and many of them don't need the extra money, they're proud to be out in the work force instead of sitting in front of a TV.
Posted by: unwarrantedinlaw at April 28, 2011 12:46 PM
Sure, you can buy 2 houses for income. You'll collect 700-1000 net/month if you're doing it right. A supplemental income, but not a real retirement. Let's hope SS/Medicare are not gutted out by the GOP before that.
To be out of the woods for good, you'll need 2 to 3 millions minimum at age 65. Something impossible to attain to 90%+ of the population. I would advise the unprepared to start learning Spanish or Tagalog.
It depends on when the piping starts to give. For a few that do these jobs by choice, there's a ton that need the money to make up for a poor retirement payout.
Posted by: lol at April 28, 2011 1:15 PM
Sizable loss from 2006 aside...this sale at $3,310,000 surprises me, I was thinking much less. The pathetic outdoor living area killed it for me, but agent said "it has a great stereo system". Proof that the Pottery Barn house sells though...amazing.
Posted by: anon at April 28, 2011 1:55 PM
I bet nobody lost that much in Modesto on a home.
Yeah, but the 75k they lost probably meant as much, or more, to the Modesto family that the googlers who have seen a 47% stock appreciation, a mandatory 10% raise and I'm sure many other good tidings. All leveraged purchases carry huge risks and the market isn't any different here.
No one ever vetted out the 200,000k of permitted work and they did file a bunch of recent permits as Denis noted in what looks like an effort to clean up some home inspection issues. But this sale on a comp basis (since we can't call it an apple), has a recorded loss of 115k. And I don't think the house is materially different from its 2006 status other than some upgrades to the lower level and foundation upgrades. And I think these new buyers overpaid by about 250k. As did the folks on Locust. I think the sellers here got very lucky and the agents earned their commissions on this one. I'm sure the predictable "Oh, they we're lucky to only lose 500k" comments are forthcoming, but somehow it gets lost on everyone that homes are commanding very high prices. As a market observer, I'm simply astounded that these homes are moving at the prices we're seeing. I really don't care what these people lost, or what the new buyers would lose if they sell in 3 years, but it certainly is amazing to watch this market unfold.
[Editor’s Note: Keep in mind the new permits were simply to re-open and obtain signoff on the work done in 2008. Recent work was likely related to obtaining final approval for said work. And based on the permits, we’d be willing to bet the total budget was over $200,000.]
Posted by: eddy at April 28, 2011 2:16 PM
In 2007 the median net worth of folks 75+ in this country was $213,500.
Posted by: rabbits at April 28, 2011 2:18 PM
Poverty bashing is tasteless.
Money is not the measure of a man.
If money were the true measure of an individual
we would all be praying to Oprah Winfrey, bill gates or Bernie Madoff pre arrest.
Christ Almighty (or insert diety of your choice here) leave the poor alone.
Posted by: Kathleen at April 28, 2011 2:31 PM
A home is a home and not an investment.
Almost all buyers buy theri homes for qualities that do not factor into a return on a P&L.
Posted by: Kathleen at April 28, 2011 2:35 PM
"Almost all buyers buy theri homes for qualities that do not factor into a return on a P&L."
Agree that's probably the case today. But it definitely was not the case from 2003-2007.
Posted by: A.T. at April 28, 2011 2:38 PM
[Editor’s Note: .... And based on the permits, we’d be willing to bet the total budget was over $200,000.]
Maybe they paid 500k for all of that work. Who knows. Obviously they have a history for over paying. I'm sure Sparky-B could have had done whatever these folks did for 75k. Point is that they added a bathroom, put up a wall and fixed the foundation. Is the house that much better? Not an apple, but IMO it's slightly upgraded and to assume they 'added value' equal to the amount paid is speculative. Price is what you pay, value is what you get. The amazing thing is that during the bubble years of 2005-8 there was an astonishing level of overlooked issues due to the competition in the market place. Obviously, the current buyers didn't and shouldn't have overlooked these issues and were smart for having them remediated.
Posted by: eddy at April 28, 2011 2:51 PM
"Almost all buyers buy theri homes for qualities that do not factor into a return on a P&L."
And yet, most of them think of their house as an investment. Why is that?
Posted by: sfrenegade at April 29, 2011 11:47 AM
Not too far away is another member of the half-million-plus-loss-club (although as a short sale it is unknown how much came out of the 2006 buyer's pocket):
Good thing they did not consider this big financial catastrophe an investment . . .
Posted by: A.T. at May 2, 2011 11:56 AM
"Good thing they did not consider this big financial catastrophe an investment . . ."
What does that even mean?
Posted by: [anon.ed] at May 2, 2011 12:33 PM
fluj, read a little bit.
You see, in response to the many posts regarding the massive financial hit the bubble buyers have suffered, Kathleen wrote just a few posts up: "A home is a home and not an investment. Almost all buyers buy theri homes for qualities that do not factor into a return on a P&L."
Thus, my point that whether or not these buyers "factor" a return on a P&L, the result is the same - a massive hit to the P&L (and, more importantly, the balance sheet).
Posted by: A.T. at May 2, 2011 12:43 PM
I read that. That's Kathleen's opinion. You seem to be of the opinion that these buyers are in an "either or" scenario. As if buyers of properties such as this one do not have balanced investment portfolios, and money also invested elsewhere? And again, stop using the f--- name. That poster hasn't posted here in two years or more, well before your time anyway. You're only doing it to be impolite. There's no other reason. So please, I'm asking you nicely to stop.
Posted by: [anon.ed] at May 2, 2011 12:49 PM
Wow, those folks bid 260k over asking in 2006. Crazy times. Poof. I'm surprised this place sold for $2.1 to be honest. We've see much better homes in D7 in this range. Current buyers overpaid here, IMO. The neighbor at 1839 is in for a rude awakening as well as this sober inducing comp is sure to set in; having paid $3.335 in 2006 as well. It previously sold for $2.26 in 2004 so not sure if 06 sale was a flip or just market 'appreciation'. Either way, I suspect both of these comps for 1839 are too high.
Posted by: eddy at May 2, 2011 1:37 PM
@anon.ed -- "You're only doing it to be impolite. "
Since you appear to be suddenly struck by a desire for politeness you may wish to review some of your past posts to see how you've faired in that regard.
Note also that the permanence afforded by the internet negates the need for posters to be contemporaneous in order to notice striking similarities in tone, style and point of view between different pen names.
Posted by: tc_sf at May 2, 2011 2:45 PM
You're in no position to lecture people about politeness, Dr. Rotenote.
Posted by: [anon.ed] at May 2, 2011 3:45 PM
You're in no position to lecture people about politeness, Dr. Pedant Q. Rotenote.
Posted by: [anon.ed] at May 2, 2011 3:45 PM
So much for politeness.
fluj, neither you nor I know whether the bubble-buyers taking these massive financial hits have balanced investment portfolios or not, and I assumed nothing one way or the other. But even if they did, that does not change the fact that they took a tremendous financial hit on THIS investment in SF real estate regardless of how the rest of their portfolio performed.
Posted by: A.T. at May 2, 2011 4:36 PM
AT, I was speaking to you. As for TC_SF, constantly telling people to note things is really quite remotely far from a polite manner in which to speak to others, obviously. LOL.
They definitely took a several hundred K hit on this property. No question about it. My point is that it's not an "either or" thing when talking about investments. This particular property lacks much in the way of exterior space. In a market such as this current one, that presents a challeng.
Posted by: [anon.ed] at May 2, 2011 4:47 PM
"As for TC_SF, constantly telling people to note things is really quite remotely far from a polite manner in which to speak to others, "
I have encountered other printed matter written in this style, but have never seen it cause others to curse at a book or paper for being impolite to them. So in this regard you are a bit of an outlier.
If you wish to supplant Strunk & White on the internet you have quite a task ahead of you, but if you wish to increase the level of politeness on this blog you are free to begin setting an example.
Posted by: tc_sf at May 2, 2011 5:40 PM
Books are books. Authors don't talk right at specific people. Blogs are blogs. Posters talk right at others. That is a big difference, and constantly telling people to "note" things is pedantic at its very best.
Posted by: [anon.ed] at May 2, 2011 5:50 PM