A Look at the Leaning Tower of SF
So, yesterday the one they call "Broke A-- Stuart" put out an article that claimed real estate values are in freefall at Millennium Tower. This is an assertion I have heard over the years since it has had the settlement problems that led to it being nicknamed, "The leaning tower of SF." While there are some facts that support this assertion in some way, I don't see declines being quite so dramatic that way as I look at the data, which I will share with you here:
So, above I graphed the sales prices since 2020, and fit a line to the data: looks pretty flat but this is not the way to look at the data realistically because it does not account for the varying features of these homes or other market dynamics. Views are an extremely important aspect. So is the individual home size. Let's not ignore the fact of that most recent sale being among the lowest.
Now we see a declining trend on a price per foot basis - still not one I would call "freefall" particularly when we consider other factors such as interest rates shooting up in 2023 and the pandemic destroying property values in the condominium tower markets as work from home and shutdowns drove value into the single family home markets. So let's take a step back and look at how Condominiums in the neighborhood sold during the time period:
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The visual suggestion is one of correlation between the Millennium Tower and the market niche. However, looking at the data sale by sale, in the building does more to suggest prices are dropping. At the small end the homes sold have been around 666 square feet. 3 "H" stack sales between March 2021 and November 2023 certainly suggest a strong decline with the 19th floor selling first for $715,000 and the 20th selling last for $558,000. At 833 square feet, we see an $150,000 difference where a 5th floor "C" sold for more than a 22nd floor that sold 2 years and one week later in October 2023. The difference is even more dramatic when a 22nd floor G sold for over half a million more than a 5th floor G that sold a little over 26 months later in September 2023. Interest rates and tech layoffs play a part in the explanation, and we see dramatic differences in the average prices on the graph above that correlate with these sales.
What makes the assertions of value decline even more true and meaningful at Millenium Tower are the sales prices prior to the issues causing the tower to lean. The most recent sale that likely prompted Stuart's headline closed for $615,000 on 9/11 this year after fetching $1.1 million in 2014 and $675,000 in 2012. The sale before that, a 40th floor $1.6 million sale previously sold in 2010 for $2,073,000. It is my view that the stigma surrounding the building has dramatically trimmed the perception of value, and the issues do make it harder to finance. A lot of the buyers have been cash buyers but finance is possible and some have used conventional loans. Prices being in "Freefall" is an exaggeration that implies a recent drop instead of an accurate description of the impact of the leaning issues that were reported in 2016, and market conditions as they exist today. Uche Nchekwube is a full service real estate broker active throughout the Bay Area. Text or call (415)322-0774 or send an email to [email protected] to get help to buy/sell real estate or more information on affordable housing. Information here is from the MLS, other soruces as stated, not legal advice, for information purposes only, deemed reliable at time of posting subject to errors, omissions and change at any time.
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