The housing market is hurting all across the country. San Francisco seems less affected than most other areas since supply is so low, and for the most part tech jobs are safe.
However, I think SOMA is going to get hit hard. All around us, new condo developments are being built. This was a good idea in the housing boom, but now? Not so much. Come on guys, SOMA is not really that cool. Prices are already coming down, and thousands of additional condos are coming soon.
We’re living in a beautiful ultra-modern building that opened just a few years ago. We’re renting it from the original owner. There was an open house in the unit just 5 doors down from us. I popped in to check it out. It was the mirror layout to what we have now, but otherwise pretty much identical.
1 bedroom, 1 bathroom, Condo, 691sq feet
Originally listed for $579,000
Now listed for $549,000
The gory details:
Last sale: 09/18/2008: $645,000
OUCH! Someone bought this unit just 6 months ago, possibly at the peak of real estate in San Francisco. And they are immediately selling it at a huge loss. After selling fees, their loss could be close to $150,000! Seems like they might have bought the condo as a second home, or simply as property to flip. With the economy tumbling, they can’t hold it to weather the storm.
I’ve considered purchasing something several times in the past, and I’ve built some gnarly excel spreadsheets to model it all. Bottom line: don’t buy to flip. You only make money if your property goes up by a lot. Otherwise, it’s cheaper to rent. If you buy, buy a home you will live in for years. It’s a home, not just an investment.