Saturday, December 8, 2007

"Ultra Chic Urban Dwellings" in the Mission - Kevlar required?

This thread on SocketSite discusses the new development at 20th and Shotwell with its 6 spacious contemporary units, including 2 enormous 2700 sq ft penthouses priced very reasonably (in this market anyway) for the space.

Nice units overall but the penthouses stand out as unique. The point of contention here is the exact location within the mission - arguably one of the roughest spots that is smack-dab on the of boundary line between rival gangs (a bloody street, literally) and a 1/2 block from the fire station.

Bottom line - either you can live in the mission and handle it, or you can't - and you should live in Pacific Heights or the Marina where apparently no crimes ever happen.

Google Map It

Potrero Hill Fixer in contract - don't believe the pretty sketch

Wow. This piece of work was priced at $760k and is in contract within 2 weeks of listing. The 1044 sq ft 2 bed/1 bath SFR has dual garages holding up to 3 cars, or room for additional living space in lieu of car storage. The floor plan is strange and mostly dysfunctional in that old traditional way and needs full systems upgrades and likely should have walls relocated with a more modern layout.

If the purchase price is anywhere near the asking price, I see this as a terrible play. The comps aren't much more than the asking price here, and trust me when I say this is a major fixer that needs a minimum of $200k (more like $300k) in work to bring up to the $1M home the buyer is hoping for. If anyone knows more about this property, or sees something I am missing here, please enlighten me.

I know "the Hill" is desirable and all, but this particular locale is just around the corner from everyone's favorite public housing complex - the Potrero Hill Projects - where O.J. grew up. Oh how appropriate.

Google Map It

Friday, December 7, 2007

Downward spiral in Oakland beginning?

Jump down to the UPDATE on 721 Rosal.

2 good examples of the mess (for sellers/owners) in Oakland are highlighted by these properties currently for sale: 6690 Girvin (above) and 721 Rosal (below). Girvin was built in 2001 and sold for $855k in October 2004. It was listed for $1.249M (per zillow) as of 10/12/07 but currently is listed for $799k, an astonishing $450k drop. Rosal is in a fantastic neighborhood in Crocker Highlands hear Piedmont, and was also purchased for $855k (no relation to Girvin) in August 2005. It is currently listed for $829k after a 100k reduction and has been on the MLS for 35 days at the new price. Owners purchased with 100% financing. This is only the beginning, folks... and a major reason I have my radar on certain parts of Oakland for 2008-2009 purchases.

UPDATE 12/19/07: 721 Rosal has been reduced yet again to $749,950 - a total reduction of $180k from original asking price 3 months ago. The trustee sale is still scheduled for Thursday 12/20/07 so this seems to be a last ditch effort as a relist to get an offer before the bank buys it back.

UPDATE 12/9/07: 721 Rosal has been reduced for a 2nd time - now to $799k (down from $929k about 3 months ago). A trustee sale is also scheduled for Dec 20 on the Alameda County courthouse steps in Oakland.

An interesting visit to the vacant open house today revealed the location to be on the far Lakeshore side of Crocker Highlands (not bad, but not great) and the "stylish contemporary home" to be a strange mix of design including strange bright-colored plastic sheets as backsplash and wall panels (not kidding) in the kitchen and "media room."

A discussion with the listing agent revealed his belief that it comps at $850-860k right now - this after I commented on the downward direction of the market in Oakland. He disagreed, and then in true realtor sales-speak said "someone paid that much once, someone else will pay that much again." I was speechless, but then again not surprised. He not only subscribes to the idea of the greater fool but also the idea of the NEVERENDING greater fool! Cheap comedy.

He also claimed that it comped out at the original $929k asking price only 3 months prior. So he admits there has been a drop in "value" of approximately 70-80k in 3 months? But according to Mr. Real Estate Agent, there is no slowdown in Oakland. Of course not.

All asset bubbles burst, my friend. The air leaks slower in some (real estate). Fast in others (dot com bust).

Buy? Sell? Rent? Answer my question, jerk!

Sorry for the vulgarity, but this is one of my fave sports moments when John McEnroe yelled this at the chair umpire way back when....

So where do you stand? Are you a happy buyer, seller, or renter of San Francisco/Bay Area real estate right now? If you want to know my take on this, keep reading. If not, keep reading. Let me start with the wonderful notion that afflicts many desirable areas: "Real estate can never go down here - everyone wants to live here and they always will." Over time, sure - this may hold true. But for market timers and true followers there are times this is simply not true. The next several years is one of those times. San Francisco is holding up rather well thus far but that has been mostly a supply issue at this point, whereas Oakland and the other parts of the Bay Area are starting to implode. Terms such as "short sale" and "foreclosure" and "lender approval" are already running rampant there. San Francisco will follow suit in coming years. Like I said.... where do you stand? I wanna hear from you....

Noe Valley 3 unit: Fast Track or not?

This very nicely done Noe Valley 3 unit property consists of a traditional 2-flat building front with a large detached 2-story cottage in the rear. The owner/investor purchased the property in January 2007 for $1.35M and completed a $300k remodel via contractor before putting it on the market on November 9 for sale as 3 TIC units, or as a whole building.

The nicely remodeled flats (minus the popcorn finish walls and sliding-mirrored bedroom closets) are vacant with floor plan changes and 3 beds/2 baths each, while the rear cottage is tenant-occupied by a very protected tenant. The garage is a piece of art (if you appreciate that sort of thing) with steel beam upgrades and room for 4-5 cars.

The caveat to this deal is the tenant's status in the cottage - the 85 year old woman appears to be the only tenant and is no doubt a protected tenant, but her daughter claims to be living there and protected as well, which raises some questions, as records show she is married to a contractor and resides in another SFR in SF. Hmmm.... Alterior motive for the daughter? Ya think?

Regardless, this can be a nice score for buyers of the 2 flats if Granny buys the rear TIC, as the whole group can then enter the lottery immediately with no 3 year waiting period. Herein lies the opportunity.... but who do you believe? And don't forget if it doesn't pan out that way, Granny is protected at a cash-flow drainage-ditch rate of $397/month in the cottage, which really does need upgrades. Can be a nice opportunity if the cards fall right for this killer location..... or not.

Google Map It

Thursday, December 6, 2007

Intro to Me

After failing to coerce friends to jump into the San Francisco real estate market with me in 2003, I dove in by my lonesome. Since then I have become hooked on the subject and industry - got my RE license in 2004 (though non-practicing), continue to research the hell out of everything on the subject, and have bought and sold 2 properties in SF since. Let's just say I am happy to be a renter currently. I am a true market timer and contrarian/momentum investor, and I am downright elated to wait on the sidelines for the coming years when cash will be king and the proverbial blood will run in the streets. This is my blog... Welcome to Bloody Street.