As we wrote a year ago last month:

“Speaking of list price reductions in San Francisco, the asking price for the “rarely available” corner one-bedroom unit #802 on a penthouse level of the Palms at 555 4th Street, a level which is outfitted with gas stoves and Sub-Zero refrigerators, has just been reduced for the fourth time.

Purchased for $770,000 in February of [2015], the unit returned to the market this past July listed for $829,000, a sale at which would have represented total appreciation of 7.7 percent, or roughly 5 percent a year, on an apples-to-apples basis.

But having been reduced to $819,000 in September, to $809,000 in early October, to $795,000 at the end of October, and then to $789,000 as of this morning, a sale at asking would now represent total appreciation of 2.5 percent since early 2015, or an average of 1.4 percent a year on a straight-line basis, for the 670 square foot Central SoMa condo with a separate storage unit in the building and a deeded parking space in the garage.

With 20 percent down and the prevailing rate at the time, the 30-year mortgage payment for 555 4th Street #802 would have been roughly $2,800 per month when purchased in early 2015. Based on current rates, the monthly payment would be $3,000 at asking. And in order to match the $2,800 payment today, the purchase price would need to drop to $740,000, which would represent depreciation of 3.9 percent over the past two years.”

Subsequently withdrawn from the MLS without a reported sale at the end of last year, 555 4th Street #802 has just been listed anew for $790,000, a sale at which would now represent total appreciation of 2.6 percent on an apples-to-apples basis, or roughly 0.9 percent a year over the past three years.

And based on the current benchmark mortgage rate, the purchase price would still need to drop to $740,000 to match the aforementioned mortgage payment of $2,800 a month (which doesn’t include the current HOA dues of $600 per month nor taxes or insurance).

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Comments from “Plugged-In” Readers

  1. Posted by jwb

    That is one seriously depressing apartment. Layout and finishes on par with my starter 1-bedroom apartment I rented when I was 18 years old. Priced the same as my 3-bed house in Oakland. Who would buy this? Someone who just really, really wants to live right by a freeway?

    As for “rarely available”, unit #827 sold less than a month ago.

    • Posted by Anonoly

      There have been many small and drab units such as this selling in SF for similar prices the last 3 years.

      • Posted by jwb

        Sure, and Baywatch was the most widely watched TV show in history, but I still don’t understand.

        • Posted by SocketSite

          Most starter rentals aren’t outfitted with Bosch appliances and sub-zero refrigerators. Regardless, we’re guessing that the rent on your first apartment wasn’t around $3,400 a month (which is the going average asking rent for a one-bedroom in San Francisco or a three-bedroom in Oakland).

          But if you still don’t understand, you might try running the numbers with a range of assumptions for property appreciation rates and rents, perhaps starting with expectations for a “hot, hot, hot” market circa early 2015 and working your way down.

          • Posted by Anonoly

            SF real estate is overvalued and buyers are fraught with irrational exuberance. The bottom will eventually fall.

          • Posted by SFRealist

            People have been predicting that the bottom will fall out for years. For decades.

            Not going to happen. This is the new normal.

          • Posted by jwb

            On a time scale of decades the bottom has in fact fallen out, more than once.

          • Posted by SFRealist

            Over the decades, San Francisco real estate has been one of the best investments in America this side of New York.

          • Posted by patty

            0.9% per year is not even close to the best returns in America, barely beats inflation. And you are forgetting about costs to stage and sell. Probably been vacant this whole year they have been trying to sell, no rent income or use of property that whole time.

  2. Posted by EBGuy

    Current owner appears to be a Singaporean entity that bought for cash, as far as I can tell.

    • Posted by Metroliner

      *feigned shock* Foreign buyers?! In San Francisco??

  3. Posted by Anonoly

    If you go back a decade, the bottom fell out very hard.

    • Posted by SFRealist

      That was a bubble that exploded. Even then, SF’s prices fell much less than almost everywhere else. We’re about at the same level again, but this time it’s not a bubble.

  4. Posted by Mark F.

    Nice views into the windows of another building! Good for Peeping Toms.

    • Posted by jwb

      Those are actually views across the interior courtyard of the same building.

    • Posted by ess

      “Blade Runner views!”

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