2448 Folsom went on the market on August 1st. It got an offer within 11 days, went pending a week later, and sold on 9/22 for $1.509M. That was 34K above its asking price of $1.475M.
This is Folsom street between 20th and 21st. Those of us familiar with the area were very surprised by this to say the least. The reasons for that are many, not the least of which is the fact that this is the very center of the Mission. With all that has happened, wouldn’t you think such a result unlikely?
People are crazy and ignorant to the financial risks that lie ahead for all of us. A shakeout is all but inevitable. How SF will fare is anyones guess. So long as employment in the Bay Area remains stable — we’ll be fine. But unemployment is on the rise all around us:
Silicon Valley unemployment reaches four-year high:
http://www.siliconvalley.com/ci_10510850
And other issues are looming:
$MM Foreclosures:
http://online.wsj.com/article/SB122177752165254337.html
Here is another one highlighting issues in San Francisco. 25% of all homeowners here spend more than 50% of income on housing. Hope they don’t lose their jobs!
http://www.cnn.com/2008/LIVING/homestyle/09/23/cash.strapped.homeowners.ap/index.html
Rent aint cheap either, tho. How much monthly income is spent by someone renting a Mission studio for $1400? That’s $16,800 a year. Let’s assume they make 50K. That’s ~33% of income — before taxes — to rent. I don’t think those numbers are particularly unrealistic, do you?
Kenny, I don’t think someone making 50k a year could buy a place for 1.5 right in the mission right now.
Eddy, please define INCOME. and please define HOUSING costs.
I can present to you our family budget so the ratio is 10% or 90%. There is nothing lying more than stats and ratio.
example: 2 jobs at 200K/year. mortgage at 25K/month (300K a year). that leaves 100K for take outs and other gas money. I wouldnt worry to much for them. and they are at (75%). lets hope they have a little pile of stocks and likes to bridge the gap for a few months.
then the above example: 1 job at 50K. rent is fine at $1400. Suppose mortgage at same price (33%) on ARM reajusting (a 400K 1BR). That person is in deep trouble. even without readjusting, and EVEN without loosing the job, simply because living costs (gas, food etc) have been up like 30% since january (eddy, do you groceryshop? it’s shoking)
Now lets consider housing costs. Do they include property taxes? insurance? gas money (think commuting daily from fairfield to SF)? does it include heat, parking/garage lease? maintenance? HOAs?
Now lets consider income. Do they include bonuses? child support? portfolio dust (my name for the income from a mega large brokerage account)? does it include some colateral cash account that can be tapped into?
the ratio is not as important as the size of the piggy bank and other financial cushion. Again, we are back to all the people who use mortgages as a tax reduction trick, because they buy cash anyway (as in cash, not as in maybe-when-I-sell-I-get-some-money-from-my-stock). And those people are the last ones to woory about (if they crash, they CHOOSE to).
-> back to the definition of MEDIAN vs the use of AVERAGE. Average is messed up by the top 1% of the datas.
“Kenny, I don’t think someone making 50k a year could buy a place for 1.5 right in the mission right now.”
No argument there!
Just stimulating conversation. Lot’s of people ignored fundamentals and look at what happened in the financial markets. Rents are up, home prices are up and people are spending a high % of income on housing. We’re largely back to 80/20 financing except for cash / well funded buyers. I don’t know if the shoe is going to drop in SF but there is certainly some justification on fundamentals.
Sophie, take all disposable income earnings for a household, subtract all amounts paid for housing (morgaage + taxes + common charges if applicable), add back income tax benefits of home ownership. It’s not that complex.
Eddy
Also, people assume that home process and rents always find a nice happy medium; but it IS conceivable that both could drop.
eddy
on your last equation, I so agree with you. That doesnt mean every single bear or bull newspaper is using the same math. thus my question: Are those articles you quote using the same definition than you and me?
(plus, I have to add that “disposable income” has a large application. like you won the lotery [the real one, or any going-public-dot-com]. Is the amount a disposable income or savings? either answer doesnt work – tiping the ratio to 10% or to 90% unless there is a way to annualize people pot of gold)
You point is valid…. but ask anyone that you know who has lived in SF less than 6 years and is under 40 what their percentage of DI is spent on housing. My guess is that you will find this stat not too far off. As for DI — I do not include savings in this equation. A one-time cash influx would be considered DI in the year that it was received. As would any subsequent interest on those amounts in future years.
Isnt there a ‘quarter’ rule? It says a quarter for tax, a quarter for housing, a quarter for savings, a quarter for fun.
Or after tax, it’s one third housing, one third savings, and one third living.
i thought we were talking about this particular house? if i remember correctly, this one was very unique and sat on a double lot. point being that it was the kind of house that could have appealed to a specific buyer, who happend to see it 11 days after it came on the market.
We got off topic for sure.
My point is, double lot or not, Folsom and 21st and $1.5M+, right now, is borderline amazing. I have a theory about the Mission. I’m not sure if it will play out or not. But the advent of Mission Bay and the proximity of freeways is going to keep Mission r.e. afloat, IMO. To a degree. It’s going to be block by block. For example, there’s a house for 849K on 25th street @ Shotwell that has been sitting unsold for quite some time — it would have sold rapidly six months ago. But I would have thought 21st and Folsom would be a block that would take a hit.
i can see your point. still, i’ve got to wonder if the absolute unusualness (is that even a word?) of this place made it impossible to contextualize in the greater market. i mean, it was pretty unusual.
oh, and props to us for staying on-topic.