for reference, mls#357364 = 650sqft 1/1/1 for 540K.
I’ve been checking every MLS listing in 375K-550K in districts 1, 5-9
I need to get my hands much more dirty than typing on my laptop – but the infinity unit(s) has some STRONG elements vs anything else in those 274 or so listings. (like, it’s new, it’s not TIC or any “I need to be in good terms with my neighbors or it will be hell”, it has parking, some “views”, earthquake, electrical etc code, it’s clean of mold, dust, it’s new, painted, has elevator, etc)

the only other listings that caught my eye are by BonnieS – at the other end of the spectrum: super victorian, super charm, super architecture etc. (and might well need some work).

it’s scary – how can you pick something in such a galore of listings?

But, I think YOU first need to decide if you prefer palo alto or SF! For god’s sake dude, life is short and first and foremost, live where you will enjoy it the most. (anecdotally, I lived a few years in shallow alto, and was much happier relocating to SF- you have a broader range of people/cultures/lifestyles here which is very stimulating, IMO.)

Also consider the commute. If you live in SF close to Bart, that will probably be your best bet and will beat driving.

As for investing, I understand where you’re coming from as I own investment props in the city. SF will probably be the best for long term appreciation. But I think you are grossly underestimating the time frame required to achieve that. And you will need to committ to living in your unit for minimum 3-5 years. And you may still have a negative cashflow when you want to rent the condo out. But at least 5 years from now you have a better chance at higher rents and your negative may be minor at that point. The good news is that SF is a solid rental market- rents may fluxuate, but you will always be able to get the unit rented. Also, condos are not under rent control, which is a huge advantage. As far as speculating if now, 6 months or 1-2 years is the best time to buy, you will hear many opinions, and ultimately you will have to decide yourself what makes the most sense with your particular circumstances.

Bottom line: I think you’re smart for trying to get into a modest unit, and eventually turning it into a rental. That’s what I did in ’94, and was able to leverage that into several properties. Now I live off the rental income and sip lattes in my backyard, commenting on blogs . (btw, SF has the best coffee roasters/cafes around, especially in the mission.). Best of luck!

chances are this young person won’t want to live in a condo for a long time so i would say NO to this purchase. The inventory of $1mm homes in CA is now over 18 months and will ONLY go up. So if you think this pressure won’t trickle down to condos that are priced at $500k well…

do yourself a favour – read this presentation (in the attached blog) on why the mortgage mess is JUST getting started for high end housing:

http://valueplays.blogspot.com/2009/06/tilsons-updated-housing-analysis.html

thanks!

TFS Reader: SF is definitely more fun than the peninsula. Restaurants are way better up there. People rave about the fabdled PA downtown, but honestly, it is no comparison to the city. And I haven’t found a single restaurant there that really knocked me out.

Also, if you plan on renting this place out in a year or two, you will lose money on a monthly cash flow basis, and will have to rely on appreciation to bail you out. Given that we’re coming off the largest real estate boom in the history of the world, SF was one of the most inflated markets in that boom, interest rates are going higher, the move-up market has been decimated by REOs, and these factors are only *just* starting to impact high-end homes ($800K – $1.4M), the chances of appreciation being there for you are zero. You will almost certainly lose your downpayment. Then it will be up to you if you want to subsidize the renters who are living in your new place for below what it’s costing you to keep it.

As far as waiting for 2010 for a better price (aka dothemath) MAYBE but I highly doubt it. End of 2010 should see most of the new developments sold out, then you are looking at resales and no new projects any time soon. There are screaming deals on barely used distressed properties already but no one seems to be biting at those… Want a ridiculous price on a 1 bdrm? Look to the Palms – 555 4th St for a bunch of 2 yr old 1 bdrms in the mid $400k range, most that wont cost you the added minimum $20k in upgrades (aka flooring, window coverings, w/d) and you cant cheap out on those and expect people not to notice come resale. People have since the first tower opened always preferred the Infinity. I thought it was overpriced when the first tower came on – now I’m plugging buyers in there because I agree with you that it’s good value.

As far as peninsula vs SF goes – sheeze that’s a no-brainer for all the reasons listed above. But if you aren’t going to live there, and only plan on holding for a couple of years that’s risky. Normal appreciation on real estate before the past 10 year run up varied between 2-7% per year so to be safe I would bank on no more than 4% and you have to factor that on your final – post upgrade price + 7% selling costs which assumes you wont have to stage your place to sell it. Not to be rude but if this is your first pad, it’s unlikely it wont need to be staged for maximum price.

Just food for thought. I still think this is quite possibly one of the best windows to buy a property we are likely to see for a long time. Go for it, just have realistic expectations about your future appreciation.