Reductions, Rent and a Harsh Reality Part Two

As we outlined back in October:

Purchased for $1.650 million in July of 2016, the 1,366-square-foot, two-bedroom unit #7E in the Lumina tower at 201 Folsom Street, an interior facing unit with “peaceful garden views,” returned to the market priced at $1.899 million in 2019 but was withdrawn from the MLS without a sale having closed.

Listed anew for $1.690 million this past May, reduced to $1.525 million in July and then offered for rent at $7,000 per month, the list price for 201 Folsom Street #7E is now down to $1.400 million while the asking rent was dropped to $6,500 per month without a lease having been signed.

At the same time, the estimated carrying cost of the unit would now run around $10,400 per month “at asking,” including a 30-year jumbo mortgage at the prevailing benchmark rate with 20 percent down, property taxes, insurance and HOA dues of $1,287 per month, but not accounting for the opportunity cost of that $280,000 down payment. The carrying cost with a 5-year ARM would be closer to $9,500 a month, assuming a conforming rate could be secured.

The resale of 201 Folsom Street #7E has now closed escrow with a contract price of $1.35 million, which was “within 4 percent of asking” according to all industry stats and aggregate reports but down 18.2 percent on an apples-to-apples basis from the third quarter of 2016, with a leveraged carrying cost of around $9,800 per month, assuming 20 percent down at prevailing rates but not accounting for the opportunity cost of said $270,000 down payment.