Its currently showing unstaged and it looks like they have corrected the sq. footage discrepancies (its now shown as 1017 sq. ft. per the appraiser). When we wrote about this property back at the end of August, we suggested a strike price of $640K (when the property was listed at $660K). With the recent delisting and relisting shannigans, we smell blood, and suggest those interested in the property to not be afraid of coming in with a lower, aggressively priced offer. Any offer in the $625-630K range should do, as they are likely pretty desperate. However, as there are plenty of fish in the ocean these days, see if you can get it for $600K.
UPDATE (9/6/07): Apparently the owner and agent have pulled this listing off MLS as of today. Yet we hear from our sources that they are still entertaining offers......go figure. Perhaps they were afraid of the recent publicity? Or more than likely, they plan to relist this condo after the requisite cooling off period in MLS. In any event, score one for SF Bubble.
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First of all. We're Back!!! I know our SF Bubble faithful have been patiently waiting for our property reviews. To be honest, we have been quite busy this year with property research, but with the lack of volume in the market during the first half of '07, there wasn't much to write about.
When we started this blog back in the beginning of 2006, we did so, based on the premise that a high percentage of homes/condos purchased in the San Francisco in the past 5 years, were done so with ARMs and other exotic loans. Now in Aug. '07, the cheap-financing induced housing bubble has become reality and has started to set in with folks, both current homeowners as well as the media. As mortgages get reset to higher rates, folks who stretched to get into a property (especially those that bought in 2005+) will feel the pain.
Now, let's get back to business at hand.
340 Ritch is situated in the area in SOMA/South Beach near Townsend and 3rd Street is a happening place. Not only are you a stones throw from AT&T Park, but this area of SOMA/South Beach is sunny, has easy access to 280 and Caltrain, and has good access to Embarcadero (nice Sunday walk to the Ferry Building).................not to mention a Safeway and Borders to boot. Condo developments such as 170 off Third and 188 King, have joined a crowded market, with numerous resell units in The Beacon, Glassworks, and One Embarcadero South hitting the market in recent months. 340 Ritch, is located in a narrow alley way off of Townsend........exit the Borders cafe and cross Townsend at 3rd St. Make a left down Townsend and you'll see the alley way to your right. For foodies, it's in the same alley as Koh Samui (so-so Thai food).340 Ritch has your standard 1 bedroom loft layout. It's rectangular, with high ceilings, but lacks some of the period details and architectural nuances of some of the other lofts in the area (which are renovations of historic brick warehouses, factories, etc).
The kitchen is clean, but not high-end. The same goes for the bathroom as well (note: This is a 1.0 bath unit only, so no common 1/2 bath downstairs when entertaining guests).
The upstairs loft, houses the units only sleeping area. It's relatively spacious, but does not really provide a decent flexible-use layout to add say an office workspace (without having it right up to the bed).
When the property was originally listed, it showed a square footage of around 1500 sq. ft, which seems quite large vs. actual. This appears to be builder sq. footage, which likely includes the large deck outside the unit. Remembers, builders typically measure square footage from the external dimensions of the building. Perhaps this is why the listing agent has decided to take square footage off the listing, to avoid any confusion. Our guestimate is that this unit is likely closer to the 1150-1200 sq. ft. Speaking of the deck, it is quite large, and does have some nice outdoor access for BBQs and sitting under the sun. Note, although you can see the city, this is not a cityscape view, rather one that reminds you that you are living in an alley. 1 car garage parking is included.
Now, let's turn the sands of time back 4 months to the end of April. The Dow Jones Industrial average was in the mid 12,000s, and starting to begin its meteoric rise in the next couple of months into the high 13,000. The majority of our readers had just completed filing their taxes and were looking forward to the approaching summer months.
On April 26, 2007, the property at 340 Ritch was listed at a whopping price of $745,000. The owner of this unit must have been ripe with anticipation. The media hadn't picked up yet on concepts such as the "housing bubble", "sub-primes" and their domino effects on the financial markets and impact to buyers in getting financing, etc....................perhaps the owner might luck out and snag an offer in the first week (just like how they do it on the those house-flipping TV shows).....................Well apparently not. After sitting stagnant on the market during month 1, it underwent a series of prices drops.........$725K, $699K, $669K (and probably some more in between)...............until its current price of $660K. That's more than 11% off its original price.
Now for some past comps in the building:
- 340 Ritch #5 sold for $705K in Oct. '06
- 340 Ritch (undisclosed unit) sold for $532K in April '04
Some immediate thoughts come to mind in looking at this data. Recall, the beginning of 2004 was the early phase of a strong housing market that carried well into 2005/early 2006. By the time of late 2006, the cracks were beginning to show, with the market teetering back and forth on whether a top had occurred or not. In some ways, similar to the Dot.com decline in the equity markets, there was "dead cat" bounce on pricing (i.e., a 2nd reversal upward in pricing, albeit temporarily). So in short, the Oct. '06 sale was likely a temporary spike in pricing due to an uninformed buyer.
On the other hand, we know that housing will historically over the long-run track with the inflation rate (i.e., more closer to a 3.5-4% average annual appreciation). If we do a quick back of envelope calculation using the 2004 sales prices of $532K at 4% annual appreciation, we get a ballpark figure of $598K in 2007. Naturally, there's a +/- band range around this number, which we can pull when using a larger sample size. The point is not to focus on the specific price target, but look at things from a relative scale. In other words, this property is a low $600K-type of property, and definitely not a $745K type of property (as the seller would have liked you to believe).
Conclusion: This unit is perfect for singles or a young couple. It's an interesting hole in the wall location, which is off the hustle and bustle of Townsend/3rd, but within easy access of the area's amenities. On the con side though, some buyers may lament the fact that although you have a view, it's stuck within an alleyway........definitely not your impressive water or city views from some of the other condo developments. With the series of price reductions, the unit is approaching a more reasonable range in relation to its competition. While this unit is slightly larger than other 1 Bds in the area, the layout challenged unit is still a 1unit (not a 1BD + den) type of setup. Also, it lacks another 1/2 bath, which makes a difference. Our cursory checks of preforeclosure listings do not indicate any trouble with this unit, so perhaps it appears the owner was just greedy and wanted to get the big price. Assuming a buyer will put $100K down, this will still require a jumbo mortgage (you would have to put $243K down to fit a conforming loan). Given the price reduction history, don't be afraid to bottom fish and wheel & deal on this one. Put in an offer for $640K and see how they bite. If they don't, then just move along to the next opportunity..................or wait another 3 weeks for their next priced reduction! =)
1 comments:
love our blog. keep up the good work!
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