1581 Masonic

As we first reported last year, the sale of the ex-Mayor’s ex-home at 1581 Masonic closed escrow on July 13, 2011 with a reported contract price $2,750,000. As plugged-in people knew, the Newsoms purchased the property $2,738,000 in 2009.

Returned to the market this past June listed for $2,895,000, the sale of the Buena Vista Park four-bedroom home at 1581 Masonic closed escrow today with a reported contract price at asking, up 5.2 percent year-over-year on an apples-to-apples basis.

1581 Masonic: Living

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Comments from “Plugged-In” Readers

  1. Posted by eddy

    This along with the 45 Lake Street Apple shows a lot of strength in quality homes. I’m sure anon will come and tout the real dollar inflation card and ignore the fact that the trend shows San Francisco real estate prices are showing surprising resilience. The fact is that homes prices have not continued to crater. This is good news for anyone that owns real estate in San Francisco pretty much any way you attempt to slice, dice or obfuscate it. Things could be much worse.
    Congrat’s to the buyers/sellers. Hope the new owners decide to stay more that 12 months.

  2. Posted by eddy

    Also, here is the history of recent sales on this home:
    2012: $2,895,000
    2011: $2,750,000
    2009: $2,738,000
    It’s hard to make out from the text in the article above.

  3. Posted by REpornaddict

    Agreed. Resilience is a key word in SF.
    As per the much touted stages of housing bubble, we had some denail, some fear even, but we never hit the stages of capitulation and despair.
    and there may even have been a little bear trap happenin last year, so think we are well on the way, somewhewre inbetween media attention and enthusiasm
    😉
    http://4.bp.blogspot.com/_SqsTu1kXgNg/TUy4XawIpBI/AAAAAAAADaA/QZV9VTzYeR4/s1600/Money-Week_clip_image001.jpg

  4. Posted by lol

    Wow, I really thought the last sale price wouldn’t be matched.
    There was some level of mild capitulation in 2010-2011. But not as deep as expected by the uber-bears. There were places that stood there in 2010 for months and months.
    Most had a flaw, either major or minor. Others had a clock ticking on them with sellers fearing they would get stuck at the wrong end of the market cycle. It was very localized, but I have witnessed a couple of sellers panicking a bit.
    Also many stuck sellers were smug and ended up NOT selling, which was gutsy, but also pretty smart in retrospect.

  5. Posted by anon

    As noted on the other thread, the slight increase from the 2009 “bottom” price is about a 1% decline in real (inflation-adjusted) terms. That’s what passes for “resilience” and “strength” in this down market, I guess. No need to even get into selling costs, etc. to see the real losses on this one since that ol’ “bottom.”

  6. Posted by R

    Steady increase on this house in three sales since 2009. There is no way a reasonable and intelligent person can claim that as a sign of a “down market”.

  7. Posted by anon

    R, the cw is that 2009 was the “bottom.” Yet this place has trailed (very modest) inflation since then. That is by definition bouncing along the bottom, or a continuing down market. No way to deny that other than to actually be in denial.

  8. Posted by lol

    Hey, buying and selling within 2 years can cause you to marginaly lose money. Shocker.
    Yawn. (makes a McKayla Maroney not impressed face)

  9. Posted by fancy rental

    sellers lose (a little), realtors win!

  10. Posted by gyuppy

    closing costs, maintenance costs, property tax, title fees, realtor fees. It adds up to a loss but no one talks about it at cocktails parties when they boast about selling price.

  11. Posted by tipster

    2.738*0.058= $158,804 in interest per year in 2009.
    2.895*0.040= $115,800 in interest per year in 2012.
    It’s pretty obvious what the source of the “appreciation” is. It isn’t the home itself. It has declined in “value” every year.

  12. Posted by Eddy

    No it hasn’t.
    Deflation.

  13. Posted by anon

    Huge decrease in interest rates, yet this place still sold for less than 2009 in real dollars. And 2009 was the so-called bottom after massive price declines the previous two years. Pretty astounding. SF housing is, again, following the nationwide trend of bouncing along the bottom to a little down.

  14. Posted by Michael

    “It adds up to a loss but no one talks about it at cocktails parties when they boast about selling price.”
    I bet the realtors are: 400k in fees since 2009, 3x the change in the price of the house!

  15. Posted by lol

    Now that the long-expected massive collapse hasn’t happened, perma-bears are sustaining their hunger for schadenfreude with crumbs. Lots of whining, very little dining 😉
    I would have suggested humble pie…

  16. Posted by anon

    lol, are you seriously arguing that prices did not take a huge hit in SF from peak to trough? Or are you just drawing fine lines by accepting that but claiming it was not a “massive collapse”?

  17. Posted by ugh

    “sellers lose (a little), realtors win”
    Realtors always win. The NAR does its job with its massive lobbying budget and effort.
    “Now that the long-expected massive collapse hasn’t happened, perma-bears are sustaining their hunger for schadenfreude with crumbs. Lots of whining, very little dining 😉 I would have suggested humble pie…”
    wow, it must be tough to be that superior all of the time, it almost smacks of…shadenfreude.
    as someone who is long a condo in a decent neighborhood, I hope SF r/e does well, but I still think we could drift around a little up, a little down for a number of years. Same story for me. A home is a place to live. Buy it for at least five years in SF and I am guessing you’ll be fine, maybe better.
    While I do agree that SF is resilient with very few forced sellers, but resilient is a far cry from what my realtor spams me with trying to get me to move to a larger sfh. They prey on fear that you will never get in to the market because crazy bidding wars are back and we’re going straight up from here.
    -from: not a bear.

  18. Posted by [Anon1]

    It would be better if the site provided the context that properties traded several times within a handful of years without improvement are subject to a small rate of depreciation, not appreciation. Instead we get a bunch of people saying the same things over and over again, desperate to find negative things to say. Whatever. It’s “internet by and for Internet,” anyway.

  19. Posted by eddy

    1581 Masonic:
    2012: $2,895,000
    2011: $2,750,000
    2009: $2,738,000
    45 Lake:
    2012: $2,510000
    2010: $2,150,000
    135 Locust:
    2011: $3,430,000
    2009: $3,000,000
    137 Buelah:
    2011: $1,613,000
    2006: $1,590,000
    440 Tereista
    2012: $1,200,000
    2009: $1,200,000 (listed, not sold)
    2005: 900,000
    1278 Church
    2012: $1,425,000
    2008: $1,368,000
    2535 Green
    2012: $4,400,000
    2006: $4,100,000

  20. Posted by lol

    anon,
    A massive collapse would be like Vegas or Modesto, where prices were divided by 3 or 4 and nobody would buy.
    SF had a 25-30% correction overall. Some areas lost a bit less, others a bit more. Sales still happened. Foreclosures didn’t swamp SF long enough to make permanent damage in the psychology.
    But then prices stopped falling. Bargain hunters jumped in, followed by mainstream (whatever the mainstream SF buyer is). Prices have recovered 1/2, 2/3, sometimes all of the losses. All of this happened in less than a year, leaving perma-bears with “crumbs” of these sales where short term holds justly churn up value.

  21. Posted by REpornaddict

    “SF had a 25-30% correction overall. Some areas lost a bit less, others a bit more. Sales still happened. Foreclosures didn’t swamp SF long enough to make permanent damage in the psychology.
    But then prices stopped falling. Bargain hunters jumped in, followed by mainstream (whatever the mainstream SF buyer is). Prices have recovered 1/2, 2/3, sometimes all of the losses. All of this happened in less than a year”
    I disagree that the correction was that much. You imply that,with around 2/3rds of that correction happening in less than a year, than some places would have seen prices go back up by around 20% in less than a year. Theres no way thats happened either.
    I think both your claim as to the severity of the correction, the suddeness and steepness of the recovery are significantly overstated.

  22. Posted by Mole Man

    What this shows about the market is what a great place SF is for agents. Even discount arrangements are likely to be at least 4% and probably higher, and expensive properties like this keep getting sold every few years. This is why we see so many spoiled reactionaries having tantrums every time there is a suggestion that the market may have a lull or correct to a lower level.

  23. Posted by [Foolio]

    Is there any answer from the realtors to tipster and anon’s point about rates? I didn’t see one

  24. Posted by REpornaddict

    “Is there any answer from the realtors to tipster and anon’s point about rates? I didn’t see one”
    heres a really quick one..since when have changes in prices been expressed relative to changes in interest rates? Never, as far as I can tell. this seems like a tipster invention!
    I can see the inflation argument, althought I’ve never calculated the ‘real’ return on any of my transactions….but interest rates..just No.
    also the numbers assumed 100% financing which I thought was kinda ludicrous.
    So, no, I just dismissed that post. but as you’re pushing for a reply, heres a hurried one.

  25. Posted by lol

    REPornaddict,
    1 – Yes, overall prices did fall by that magnitude.
    http://www.socketsite.com/archives/2012/07/recorded_san_francisco_sales_up_99_in_june_yearoveryear.html
    Of course, locally things are very different.
    2 – Also, the one year period I give is for the recovery, not the correction. It was probably not clear enough in my post.

  26. Posted by REpornaddict

    1. Medians are not prices.
    2. I knew that about the recovery, but still don’t see that prices have increased by around 20% in less than 1 year, as you claim.

  27. Posted by anon

    down 25-30% overall is about right. A lot higher in districts 9 and 10, probably lower in district 5. But that’s crazy talk to argue that 1/2, 2/3 or all has now been recovered (hmm, could that claim relate to one’s personal timing decision on buying?). Most places are flat to down since 2009 with some places up a few percentage points at best. Also, we are now 5 years past peak, and that is too much time to ignore inflation, about 10% since 2007. In real dollars, basically nothing has come back from the “bottom.”
    I agree that a 25-30% decline is not a “massive collapse” only in relation to Modesto. It certainly is a “massive collapse” by any absolute standard.

  28. Posted by tipster

    @REPA, “also the numbers assumed 100% financing which I thought was kinda ludicrous. ”
    Psst: 100*X/100*Y = 80*X/80*Y.
    As for the rest of it, I had businesses that tech companies used as part of the process of reaching an IPO during the dot com boom. I raised my prices during that time, but understood quite clearly my role in the whole bubble, that it was a bubble, that my time to extract those kinds of prices would be limited, and that the value of my businesses had not really changed.
    What had changed was that the federal reserve was blowing a bubble and in order to be a part of that bubble, the dot coms required services, some of which I could provide. So I took the money while the getting was good, and collapse it did. But I harbored no illusions about some fake increase in “value” or any other such nonsense.
    Obviously, had I been selling those businesses to illiterate suckers, I would have claimed that all of the increase in rates was a result of an inherent increase in value when in fact it was a result of an election year and a fed that was trying its best.
    That’s all I am seeing here. A bunch of hucksters trying to pawn this off as something inherent in real estate when in fact, A)it’s an election year and B)the fed has artificially depressed interest rates, most likely to due it being an election year.
    But those forces are temporary. Buying anything under those circumstances would have been as fool hardy as buying one of my businesses at the dot com peak. Lots of people bought pets.com at the dot com peak and they all lost their shirts. Lots of people bought Groupon when I was laughing at them and they all lost their shirts. Lots of people bought Zynga when I was howling at them and they all lost their shirts.
    Don’t buy anything when temporary forces are propping up prices. You tend to lose money when you do that.
    Next year: not an election year. It will be different.

  29. Posted by R

    “Most places are flat to down since 2009 with some places up a few percentage points at best.”
    “1581 Masonic:
    2012: $2,895,000
    2011: $2,750,000
    2009: $2,738,000
    135 Locust:
    2011: $3,430,000
    2009: $3,000,000”
    I guess it depends on your opinion of “few”, but I’d generally say ~6-15% is more than a “few”.

  30. Posted by REpornaddict

    @REPA, “also the numbers assumed 100% financing which I thought was kinda ludicrous. ”
    Psst: 100*X/100*Y = 80*X/80*Y
    Psst: and .001*x/.001*y = 100*x/100*y
    Why should the all cash segment of the market be affected by interest rate changes as much as those that put little or no cash down? Yet your equation suggests the effect will be identical.

  31. Posted by lol

    REPornaddict,
    Well, the medians are as good as any other metrics I think. From the editor’s chart, the top in 2007-2008 was at 835K. The bottom during the panic of late-2008/early 2009 was at around 580K. This is a loss of roughly 250K or 30%. Since that time, medians have recovered to 713K, possibly higher when numbers come out in 2 days. This is a 130K snap back or around 55% of the loss.
    There are many ways to look at numbers, and you’re certainly right from your prospective.
    for instance, Zillow’s Zestimate sees a more muted fall but the snap-back is still pretty worthy of notice. Locally some areas have almost fully recovered like 94114. Others are still stuck at the bottom.

  32. Posted by DataDude

    I believe in 2009 this house had some type of lawsuit against the contractor, which was detailed in the disclosures, which would bring the price down. So, the new owner (Newsom) inherited that liability as part of the purchase.
    I don’t know if this lawsuit has been cleared up, but if so, that would support a higher value for the house. It’s hard to quantify these intangibles like lawsuits and other disputes, but clearly they detract from the value of the house.

  33. Posted by Judith

    You know what? The buyers and sellers don’t care that much about your debate. They wanted to sell the house or buy the house. In this price range and to these buyers and sellers, the differences were negligible, particularly if it was all cash.

  34. Posted by tipster

    ^Ha ha, I love this part, when the Realtors get flustered and angry. I just love “You know what?” as an opening line in an argument: it always preps me for the complete lack of logic and lack of intelligent discourse that is coming next.
    And REPA: “Why should the all cash segment of the market be affected by interest rate changes as much as those that put little or no cash down? Yet your equation suggests the effect will be identical.”
    Because all cash buyers are a minority, competing in the same market.

  35. Posted by REpornaddict

    OK, tipster, forget about all cash buyers as I think thats distracting and confusing you.
    Try this instead:
    Why should those putting down significant down payments be affected by interest rate changes as much as those that put little or no cash down? Yet your equation suggests the effect will be identical.
    I’m not saying interest rate changes have no effect, but its no way as simple, significant or even as linear a relationship as you are suggesting.
    You seem to be saying, ceteris paribus that for prices to have stayed level in your eyes, new price should be
    old price * old interest rate / new interest rate
    which seems ridiculous to me. and certainly not one I’ve ever heard when rates were higher and rising. Surprise surprise!

  36. Posted by eddy

    “Because all cash buyers are a minority”
    They are? Anyone buying a $2M+ property is operating in a different income / wealth stratosphere. The choice to finance versus using all cash for most $2M+ home buyers is usually a cost of capital, versus a can I afford this home/loan, decision. This was not true during the housing bubble and we saw the ramifications.
    When your wealth is massively increasing year over year certain things get overlooked in the total asset portfolio.

  37. Posted by tipster

    Oh, yeah. Everyone is paying cash in a 4% interest rate environment.
    Every buyer has had a mortgage on this property.

  38. Posted by eddy

    Except Zuckerberg who has a 1.05% interest rate. And he’s not the only one.
    http://www.sfgate.com/business/article/Mark-Zuckerberg-s-mortgage-rate-1-05-3711118.php
    …adjustable rates below 2 percent have become common for high-net-worth borrowers. He has handled about 65 sales worth $120 million this year in the area.
    “I have a 1.8 percent rate and I’m not too special,” he said. “A lot of my tech clients are doing it. Those rates exist for clients who don’t need a mortgage. I tell them to enjoy the free money and pay it off when the rates spike up.”
    Zuckerberg’s 30-year mortgage started with an initial rate in May of 1.05 percent, which also is the minimum rate for the loan, according to a document filed with the Santa Clara County clerk’s office.
    It adjusts each month with interest payments calculated as the London interbank offered rate, plus 0.8 percentage point. The maximum rate cannot exceed 9.95 percent.

  39. Posted by CH

    tipster: “Because all cash buyers are a minority”
    eddy: “They are?”
    A: Yes, even for million-plus market.
    “Buyers who appear to have paid all cash – meaning no evidence of a corresponding purchase loan was found in the public record – accounted for 27.3 percent of [Bay Area] sales in July. That was the same as in June, and up from 26.3 percent a year ago. The monthly average going back to 1988 is 12.2 percent.”
    http://www.dqnews.com/Articles/2012/News/California/Bay-Area/RRBay120815.aspx
    “Also of note, leverage has increased as 31.0 percent of the million-dollar-plus buyers in the second quarter paid cash, down from 37.7 percent in the first quarter, down slightly from 31.9 percent in the second quarter of 2011. In the five million dollars or more segment, 59.4 percent of the purchases were cash.”
    http://www.socketsite.com/archives/2012/08/bay_area_tops_the_list_for_million_dollar_home_sales_in.html

  40. Posted by eddy

    Those figures are specific to SF or the “Bay Area”? And what about the prime area of SF? What are those stats? You missed my point about people with wealth who will choose financing for greater return on cash; or simply to take advantage of low rates, even if not needed. And taking a 1% loan as noted is nearly free in terms of ‘cost’.
    In the five million dollars or more segment, 59.4 percent of the purchases were cash.”
    59.4% = majority.
    I wonder what it was for homes above $4M, $3M, $2M, $1.5M. I’m sure the ratio is pretty high and even higher for all tiers when considered against those with super low cash equivalent financing.
    From the same quoted article:
    Last quarter, 31.0 percent of the $1 million-plus buyers paid cash, down from 37.7 percent the previous quarter and down from 31.9 percent for second-quarter 2011.
    30% is still a pretty big number. And given the percentage of cash equivalent financing not included in this figure, (e.g., Zuck) combined with the fact that we are rarely discussing sub $1M homes as it relates to SF, compounded with the splitting of hair factor, I don’t think the majority/minority statement is an accurate portrayal. Again, we’re discussing very wealthy people across the board here for the most part.
    Your selective choice of data points confuse “Bay Area” stats when there are decent metrics for the tier of homes we are discussing ($1M+) and I’d argue that we’re often speaking of a higher number for the most part.
    Anyone have any insight into how many these transactions had financing?:
    1581 Masonic:
    2012: $2,895,000
    2011: $2,750,000
    2009: $2,738,000
    45 Lake:
    2012: $2,510000
    2010: $2,150,000
    135 Locust:
    2011: $3,430,000
    2009: $3,000,000
    137 Buelah:
    2011: $1,613,000
    2006: $1,590,000
    440 Tereista
    2012: $1,200,000
    2009: $1,200,000 (listed, not sold)
    2005: 900,000
    1278 Church
    2012: $1,425,000
    2008: $1,368,000
    2535 Green
    2012: $4,400,000
    2006: $4,100,000

  41. Posted by SocketSite

    A bit of perspective with respect to the price tiers in San Francisco (not the Bay Area): less than one quarter of all home sales over the past three years in San Francisco were over the $1 million mark; about six percent were over the $2 million mark; and less than one percent of sales were over the $5 million mark.
    In other words, even if 100 percent of the buyers of million-dollar-plus homes and 27 percent of the buyers of homes under a million dollars paid cash, the majority of purchases would still have been financed.
    Or, if you’re making a case for San Francisco based on sales over $2 million, you’re making a case based on six percent of the market.

  42. Posted by DataDude

    @ eddy
    These are only 7 data points (our of thousands) from the last 7 or so years. From a statistical point, they are irrelevant.

  43. Posted by tipster

    Eddy,
    I checked this property and every prior owner listed in your prices financed it. Gavin used Union bank and the buyer from him used First Republic. The seller to Gavin also had a mortgage.

  44. Posted by NJ

    I think what is often lost in these discussions is that the high-end market in SF — say, above $2 million or so — includes a pool of buyers who want a “good” property, and currently have the ability and willingness to purchase it at a very high price.
    By “good” property, I am referring to something that comes up relatively infrequently: usually a SFH, at least 3 or 4 bedrooms, a modern floor plan (i.e., NOT a Victorian floor plan), expensive finishes, often with views, in specific locations.
    Simply put, few of these properties come on the market in SF, and when they do, the rich folk will pay a pretty penny for them. Maybe that will change one day — based on the health of tech, interest rates, whatever — but, until it does, these “good” homes will fetch a good price, IMHO.

  45. Posted by Rillion

    While I do think the upper end of the market has had a great year, the lower end is still lagging and even though it pains me, I have to agree there is something to what Tipster is saying about the election year & the Fed. Although comparing the RE market today to the peak of the dot com bubble is a stretch (2005-2007 would be more comparable to the dot com bubble peak).
    The deleveraging of private balance sheets is not yet complete, there are many parts of the global economy that are still struggling, a financial crisis of the magnitude we experienced is going to take more then four years to fully resolve itself. I’ve long been saying that we are going to be bouncing around the bottom for years. Bouncing implies ups and downs, I believe what has happened this year is one of those ups and that it won’t be long until we move back down again. I doubt we will surpass the previous lows by much so anyone that bought before this recent uptick is likely to do okay over the long run.

  46. Posted by eddy

    What were their interest rates?

  47. Posted by eddy

    Thanks for the perspective. How about some local perspective? For specific homes featured on Socketsite, what is the percentage of homes featured here broken down by the same price tiers as above (over 1m, over 2m, over 5m). Ignoring trend and general topic threads, I’m willing to wager that the frequency of homes above $1M discussed on Socketsite is well above 25%. Maybe I’ll do a quick analysis over the weekend.
    There is some correlation to the bottom / middle tier; but as the S&P/Case-Shiller trends clearly show the swings on the top are not as wild. And even that data is flawed since the top tier is defined as $536k+. Just looking at 1m+ transactions in the case shiller data would further validate this point I would guess.
    DataDude, I’d link to the P@ragon SF Lux Report but it gets removed every single time.

  48. Posted by sfrenegade

    “Thanks for the perspective. How about some local perspective? For specific homes featured on Socketsite, what is the percentage of homes featured here broken down by the same price tiers as above (over 1m, over 2m, over 5m). Ignoring trend and general topic threads, I’m willing to wager that the frequency of homes above $1M discussed on Socketsite is well above 25%. Maybe I’ll do a quick analysis over the weekend.”
    Speaking of which, Prestige Index should be out soon for Q2, methinks: http://www.firstrepublic.com/lend/residential/prestigeindex/sanfrancisco.html
    “I think what is often lost in these discussions is that the high-end market in SF — say, above $2 million or so — includes a pool of buyers who want a “good” property, and currently have the ability and willingness to purchase it at a very high price.”
    Yes, those are the houses that end up in bidding wars sometimes, whereas other houses just sit. I think what’s different right now is that there are a lot of high end listings of better houses vs. low-end + short sale/foreclosure compared to the last couple years. This is true in SF and the other Bay Area counties.
    Many of the listings I’ve been to lately have been just plain better houses than the listings I saw 2 years ago. 2 years ago, there were a lot more poorly maintained houses with ramshackle renovations with crappy floorplans, and other inventory that deserves low prices.
    Those houses are still out there, but it seems like the number of high dollar listings is much much higher than I can remember for the last few years. The mix appears to be quite different, and I’m seeing fewer houses below certain important dollar thresholds across the Bay Area than prior years, but more listings well above those thresholds (e.g. the relatively rare $2M category that eddy is talking about).

  49. Posted by Eddy

    This home is back on the market, at $3.9mm

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