CFAH

1470 Noe

It’s true, we missed it when the apples to apples sale of 1470 Noe recently closed escrow (hey, it happens). But luckily a reader calls us out (and we’d expect nothing less). Purchased for $1,865,000 in January of 2007 (asking $1,949,000 at the time), closed escrow on 3/27/09 with a reported contract price of $1,850,000 (asking at the time).

Considering the current market a two year “push” might not seem so bad for this single-family Noe Valley home. But do keep in mind it’s also an effective four year push in terms of appreciation as Mr. Alou paid $1,875,000 for the house in March of 2005.

Comments from Plugged-In Readers

  1. Posted by polip

    if this is indeed an apple, it looks like this peak to trough business is going to take a very very long time in the real SF

  2. Posted by LMRiM

    Looks like the current seller underpaid in 2007. That’s why the drop looks so small. Either that, or the current buyer overpaid. In either case, “hey, it happens” 😉

  3. Posted by REpornaddict

    within 1% of its 2007 price – i agree.
    it looks like some are wildly overestimating the extent that good SFHs in good areas have fallen.
    just shows that you can’t take the dataquick numbers, or, even less, the case-schiller and apply them to houses like this – like some are clearly doing.

  4. Posted by REpornaddict

    Looks like the current seller underpaid in 2007. That’s why the drop looks so small. Either that, or the current buyer overpaid. In either case, “hey, it happens” 😉
    but isn’t your argument that pretty much every buyer since say, 1999, has overpaid. either way, it’s interesting to hear that argument ‘the buyer overpaid’ from a bear. its usually used by the other side to defend a house that can’t sell now for close to its previous price – and they are usually laughed out of town for making such a comment.

  5. Posted by Trip

    This seems about right — sold at around a late 2004 price. Lower end homes have rolled back farther. The flat 2005-2007 pricing on this place is an anomaly for this neighborhood. Transactions are so few at this higher end now that it is difficult to gauge exactly how things have fallen there, but with about two years of inventory at the > $1.5M level, it’s not difficult to spot the trend.
    Kudos to the seller! Cost him about $10,000 (post-tax) a month to “rent” this place. Pretty pricey, but he got out from under a peak-market purchase nicely.

  6. Posted by ex SF-er

    I’m not too surprised that this property’s price is unchanged from 2007.
    I am quite surprised that it went unchanged from 2005 to 2007.
    So the bull argument would be that prime homes in great condition (back yard notwithstanding) are holding value. (this supports anonn’s 5-10% off in prime areas argument)
    the bear argument is that this place hasn’t appreciated in 4 years, despite 2-3 of them being a massive RE bull market.
    both have some validity. and it seems to jive with what we’ve all noted.
    Great properties in great hoods sell, and often not for not too great a discount.
    properties with anything “wrong” with them either just sit and sit or sell at a discount.
    if this is indeed an apple, it looks like this peak to trough business is going to take a very very long time in the real SF
    is that a surprise? (rhetorical, I know it’s not for you polip). I for one have been saying for at least 2 years now that this will be like watching the paint dry on a painting of grass growing.
    it also shows why the much anticipated RE “recovery” is not gonna just blindside us in quickness… it’ll be a slow slog back up once the downturn ends.
    as for the house:
    I love the exterior color but hate the shed that’s perched on top.
    I wish there were more pics so we could see the place.
    [Editor’s Note: Always try following the links (as there are).]

  7. Posted by steve

    As Trip hints at, a 4 year push is anything but. Monthly cost to the owners was in the 10-12K range depending on their tax situation, financing and oppty costs. Costs of an eqivalent rental: 6k? 6500? And, don’t forget the 5% commission and associated transfer fees. Any way you slice it, a push is a significant loss when you are talking about real estate. Obviously, things could have gone much worse, but a lot of equity was burned here.

  8. Posted by sparky-b

    yes steve, as anonn would say, selling in 2 years without doing anything to the property is never a good idea investmentwise.
    ex-sfer,
    This place is not a great property, that’s why it did not see the 2005-2007 run up. It is flawed. “Backyard not withstanding”, should read- backyard, basement bedrooms, and bedrooms on different floors notwithstanding. So, it did sell at a discount in 2007 and now, but the discount only drops a property so far based on the other assets of the place (nice finishes, view, Noe)
    Editor,
    Mr. Alou bought a brand new house in 2005, both of the later buyers bought a lived in place. So, it’s not really fair to throw that price into the mix and say no appreciation.

  9. Posted by badlydrawnbear

    just shows that you can’t take the dataquick numbers, or, even less, the case-schiller and apply them to houses like this – like some are clearly doing.

    Umm, looks like you can.

    … the top third (over $527,385 at the time of acquisition) fell 4.2% from December to January (down 17.9% YOY).
    … the top third has fallen to February 2004 levels having fallen 25% from a peak in August 2007.

  10. Posted by LMRiM

    I’m not too good at reading permit history, but it looks like some of sparky’s highlighted concerns about the backyard may have been ameliorated by this recent (March 2007) permit:
    *************************
    Application Number: 200703267156
    Form Number: 8
    Address(es):
    6603 / 004 / 0 1470 NOE ST
    Description: BUILD 2 RETAINING WALL WITH FENCE AND TRELUS AT REAR OF LOT
    Cost: $20,000.00
    Occupancy Code: R-3
    Building Use: 27 – 1 FAMILY DWELLING
    ************************
    Maybe it’s not quite an “apple”, and a little more capital was blown up by the 2007 buyer than first glance would suggest?

  11. Posted by anonn

    “… the top third (over $527,385 at the time of acquisition) fell 4.2% from December to January (down 17.9% YOY).
    … the top third has fallen to February 2004 levels having fallen 25% from a peak in August 2007.”

    No, you cannot. Why do you feel those CMA figures are applicable here? “Top third” is over 527K? Come on.

  12. Posted by REpornaddict

    yup, clearly not applicable.
    the index shows a rate of depreciation in one month of over 4 times what this place has shown in the past two years…

  13. Posted by badlydrawnbear

    The CSI indicates that homes in this price tier, for the entire Bay Area, are selling at Feb 2004 levels.
    The sale of this home, for LESS then it’s 2005 sale price, appears consistent with the trend indicated by the CSI.

  14. Posted by badlydrawnbear

    However, I do take REpornaddict’s point, that it has not fallen the 25% from the 2007 sale price that is also indicated by the CSI.

  15. Posted by hangemhi

    don’t these idiots know they could have bought 1800 SqFt of bay bridge views for this price?
    Trip – not sure what inventory you’re referring to, but it ain’t NV. I count 6 sold homes > $1.5M in the past 3 months, 2 more in contract and 10 on the market now. That looks like 5 months inventory or a “balanced market”.
    Looking at all Noe Valley SFR’s – 19 sold, 7 in contract, 41 for-sale = 7 months inventory

  16. Posted by The Milkshake of Despair

    I saw this place when new in 07 and thought that it was a high quality build. I see Sparky’s point about the floorplan, but with an upslope parcel like this it was the best choice to put the entertaining areas on the top floor (which has a great view) and everything else below. Though I don’t prefer a cave-bedroom it doesn’t matter since I’m asleep 95% of the time that I spend in there.
    The kitchen and LR however are where I spend a lot of the waking time and those spaces should have the best light/views.

  17. Posted by ex SF-er

    [Editor’s Note: Always try following the links (as there are).]
    oops. I looked at many of the links but missed that one. normally you put the listing link at the end… thanks
    I really like the place on the inside, even though it’s not super original I really like the pics.
    Editor,
    Mr. Alou bought a brand new house in 2005, both of the later buyers bought a lived in place. So, it’s not really fair to throw that price into the mix and say no appreciation

    not sure I agree here. what other price would we use? the pre-renovation price? that would be a totally different property.
    Besides, we have TWO transactions since the remodel. both showing no appreciation.
    but your post does bring up a point many of us have known for some time. Much of the “appreciation” that we saw in the past isn’t really appreciation, rather increased valuation secondary to capital investment in the form of renovations.
    the “apples to apples” tries to rectify that.
    I don’t care if RE goes up 10% per year because people spend 10-15% per year on renovations!

  18. Posted by anonn

    Less than its 2005 price is not equivalent to Feb 2004.

  19. Posted by Trip

    Hangemhi, I was using city-wide numbers. I see 12 places > $1.5M sold in March. Redfin shows 249 current listings (looks like a few duplicates; also 85 added in the last 30 days). There are lots of ways to derive “months of inventory.” I just divided current listings by last month’s sales (I ignored listings that dropped off).
    But you’re right that if you focus solely on Noe the numbers are different.

  20. Posted by steve

    Less than its 2005 price is not equivalent to Feb 2004
    just wait a few more months. the lack of the spring bounce many were hoping for will put further pressure on both current listings and shadow inventory. the sellers don’t have to sell adage may be true, but with ownership costs 2x or more rental costs, buyers certainly don’t have to buy.

  21. Posted by badlydrawnbear

    anonn, you are absolutely right.
    Obviously the CSI is not to be used to value a specific property. But I see this sale as following the pricing trend of homes in this price tier and I certainly would compare the current asking price of the home to the current CSI as one of several indicators to see if it priced appropriately.
    So, to me, the comment “just shows that you can’t take the dataquick numbers, or, even less, the case-schiller and apply them to houses like this ” doesn’t hold water. I think this sale shows you can use the CSI to help determine value, even for the +1 Mil “real” SF and the CSI is certainly a much better indicator then median sales price provide by dataquick.

  22. Posted by anonn

    just wait a few more months. the lack of the spring bounce many were hoping for will put further pressure on both current listings and shadow inventory. the sellers don’t have to sell adage may be true, but with ownership costs 2x or more rental costs, buyers certainly don’t have to buy
    Comments such as this one would seem pretty out of place in this thread. Just look at the performance of the property in question. It would be better if there was an understanding of the market in 2004. There isn’t tho. Just a rote attempt to apply C-S MSA figures, and it’s not apt at all.

  23. Posted by tipster

    Ha ha, hoo boy, 2005 price = 2007 price, yesiree, that doesn’t raise any red flags!
    I had a FRIEND once who bought a house from a famous baseball player. To keep the property taxes low, my FRIEND paid the famous baseball player $100K for two years of season tickets that the baseball player got right behind home plate. Of course, the tickets weren’t worth anywhere NEAR that price, but it got $$ in the seller’s hands and kept the property taxes artificially low!
    Now what does that have to do with this home? Nothing, nothing. I’m SURE it was all on the up and up. Lots of people sold homes in 2007 they bought in 2005 for the same price. Ha ha, I can’t even write that without laughing.
    But yup, PLEASE call this an apple that sold for its 2007 price. I’m sure that’s accurate. HA HA HA, shoot, I can’t stop!

  24. Posted by steve

    annon, that’s a fair comment.

  25. Posted by anonn

    Wow @ Tipster today.

  26. Posted by tipster

    C’mon, anonn, we’ve seen this sort of thing before, where the property transaction is artificially low, coupled with a side transaction that is artificially high so that the total costs are fair, but the property taxes and transfer taxes are held low.
    Could it have happened here? I can’t say for sure, but Noe was ON FIRE in 2007, and I don’t think many properties sold for their 2005 prices in Noe.
    So is it possible this went for $100K to 200K higher than its 2005 price when it sold in 2007? Of course it is. Is it possible the 2005 buyer overpaid. Yes. But every Realtor in town will point out how Noe prices aren’t dropping at all. None of them will point out that one of the above two things very likely HAD to have happened for a 2005 price to be gotten in 2007.

  27. Posted by REpornaddict

    Tipster, what city did that happen in?
    SF, detroit, or somewhere else in the middle?

  28. Posted by John

    Wow @ Tipster, amazing
    Actually according to a lot of people (including on SS), 2005 was the real peak.
    Actually, according to me, 2005 was the real peak. The sales price may seem higher in 2007, but only because of remodeling. A lot of normal (un-remodeled) properties exchange hands between 2003 and 2005, but a much larger percentage in 2007 were nicely remodeled.

  29. Posted by anonn

    I’m sorry, Tipster. You are the Boy Who Cried Wolf on here, and I think it’s a tired act.
    But here: http://baseball.espn.go.com/mlb/players/profile?playerId=2360
    Moises Alou was already on the Mets when this sold in 2007.
    Give it a rest.

  30. Posted by REpornaddict

    interesting theory John.
    that would also explain the spike that was also seen in median sales price data for someof 2007.
    maybe 2007 was the real beauty pageant parade?

  31. Posted by hangemhi

    “every Realtor will point how Noe prices aren’t dropping”
    Actually I think every Realtor will tell you there was a practically over-night drop of roughly 10% Sept ’08 including Noe.

  32. Posted by eddy

    Noe certainly peaked in 2007 with a few early 2008 sales setting high marks. The 05/07 Sales prices are a bit odd but hey, it’s possible.
    These apples are great fun to watch, and it is amazing to me that we have seen an aggregate decrease in prices both in terms of mix and value. But the bottom line is that real estate is very sticky on the way down for so many reasons. This house can sell at this price 5 times over the next 5 years. You’re still going to have a 100k loss on each transaction. Buying for short term is just not smart; but a lot of peole got away with it over the past 7 years. Not any more. You’re crazy to buy now if you don’t have at least a 6 year horizon. Even B/E on sale price is a loss; and any % drop in price is potential a wipeout scenario for most potential buyers.

  33. Posted by Geo

    Noe Apple 3859 21st just listed for $1.975, sold for $2.080 in 2007, still $935/ft²..ouch.
    no permits that I could see.

  34. Posted by anonn

    Twenty-second is the cutoff, so would be Eureka Valley. And they’re touting it as over 2600 feet, so if that’s accurate it’s more like 760 a foot. It’s priced at 20K less than the last price point.

  35. Posted by Geo

    I stand corrected on the geography.
    Would be quite curious how they got another 500+ ft² in there.

  36. Posted by LMRiM

    About 3859 21st Street, the additional 500 sq ft seems to be in the basement. From the redfin listing:
    “The Lower level is over 500 SqFt wired for sound home theatre/family room; equipted with wine refrigerator, ice maker and another half bathroom.”
    http://www.redfin.com/CA/San-Francisco/3859-21st-St-94114/home/1873930
    Not sure if that was there at last sale or not.
    It’s priced at 20K less than the last price point.
    Redfin and the tax collector’s website both imply a last sale price of $2,080,000, and so it is now listed at $115K less than the last sale price. If it sells here, after standard sorts of transaction costs, we’re looking at a capital loss of $225K or so, or about $11K/mo +/-. That wouldn’t be too bad I guess.
    BTW, no pics on redfin but a quick google turned up a pic of the fancy paint job here (click on “portfolio” and follow the address link):
    http://www.sflocalcolor.com/home.html

  37. Posted by LMRiM

    and so it is now listed at $115K less than the last sale price
    Sorry, my math skills are getting as bad as realtors’, lol. That should be $105K less. The $225K+ estimate of capital loss is unchanged.

  38. Posted by anonn

    Yeah, I meant to say list price, not price point. It’s listed at 20K than the last time it was listed, when it was listed @ 1.995M and went way over.

  39. Posted by LMRiM

    That’s why I ignore list prices. Sometimes realtors deliberately underprice (to get a sucker to overbid in hot markets), and sometimes overprice (a fishing expedition for a sucker, or sometimes to please the client). Other times I’m sure there are just honest miscalculations as to the desirability the market will ascribe to a particular property, just as at times the market is moving so fast that listing prices can’t be set with too much confidence even by the most capable and well-meaning agents.
    In any event, buyers set the price. Always, and in every market. In real estate (because traders cannot sell short a particular property), it is the marginal purchaser who sets the price, not a speculative seller who has gone short. That price paid by the buyer is the “market price” for that property.
    In 2007, the market price for this 3869 21st Street property was $2,080,000. Now, we’ll see what the market price is today. I don’t really have an estimate, but will note that a number of Eureka Valley properties seem to have disappointed lately, including 444 Douglass, which couldn’t sell at 10% over its 2002 sale price. I’d think that anyone who purchased in 2007 should expect large losses of capital.

  40. Posted by anonn

    First, again, and always, what is it to you, LMriM? Why?
    Secondly, whether people on here want to admit it or not there was a competition premium paid on late 2004 thru 2008 properties. Remove that premium, and list prices look remarkably similar, often. I know many of you think that list prices were fake, realtor machinations, etc.
    This 21st st one isn’t maybe th best example, because they added basement space. But rewind these “apples” back to list price. How does it look?

  41. Posted by diemos

    “competition premium” = bubble

  42. Posted by anonanon

    Some mean $/sqft first quarter listing and selling prices for single-family homes sold in Noe Valley:
    Q1 2004 LP:610 SP:660
    Q1 2005 LP:626 SP:708
    Q1 2006 LP:735 SP:769
    Q1 2007 LP:750 SP:797
    Q1 2008 LP:849 SP:881
    Q1 2009 LP:681 SP:662
    2009 YTD LP:698 SP 680
    Current active listings: LP:733
    If all current active listings were to sell at listing price, it would represent a 17 percent price drop compared to Q1 2008.

  43. Posted by anonn

    “competition premium” = bubble”
    I could have sworn you said “easy credit = bubble” about 6,000 times diemos. Which is it?
    anananon, how many sales in Noe so far this year? And how many big ticket sales were there in Q1 2008?

  44. Posted by diemos

    “Which is it?”
    Both!
    Without easy credit there could not have been any competition premium.

  45. Posted by anonn

    “Without easy credit there could not have been any competition premium.”
    Hypothetically speaking, in a vaccuum devoid of easy credit, I don’t see how one could say that. Supply and demand effect competition. Other scenarios exist that could create a market where overbids occur.

  46. Posted by diemos

    “Other scenarios exist that could create a market where overbids occur.”
    Yes. Any situation where demand (which is the union of desire with money) significantly exceeds supply, for whatever reason.
    We know there was no increase in demand for housing because rents did not rise commensurately with prices.
    We know there was no increase in available cash because incomes did not rise commensurately with prices.
    Thus we are left with easy credit creating rising prices which then creates a self-reinforcing feedback loop where the rising prices creates rising desire. i.e. a bubble.

  47. Posted by anonn

    “We know there was no increase in demand for housing because rents did not rise commensurately with prices.”
    This precept not in the minds of people in the marketplace. It’s yours and a lot of other folks on here. I understand that. But there actually was an increase in demand for housing.

  48. Posted by diemos

    “But there actually was an increase in demand for housing.”
    There was no increase in demand for “a place to live” but there was great demand for a piece of the rising real estate market. Unfortunately history teaches us that that demand has a tendency to evaporate once the rising prices turn into falling prices.
    In any event we can compare notes on January 1, 2012. Cheers!

  49. Posted by anonn

    Oh, and rents were rising at the time, having fallen to their lowest point in the last 10 years around 2002 or so. “Commensurate” supposes a lock step rent/own mechanism for SF that’s been debunked on here many times.

  50. Posted by diemos

    Isn’t it amazing how we can look at the same thing and see two different things?
    I see the divergence as a sign of a market that has temporarily disconnected from fundamentals.
    You look at it and see that the fundamentals have been “debunked”.
    January 1, 2012. Cheers!

  51. Posted by anonn

    Sort of. More like you seem to view economics as an actual science, with “fundamentals” such as a strict rent/own rule, and I do not. Particularly with regard to real estate in unique cities — people simply do not behave that way. They absorb the premium, mentally, and move on from there.

  52. Posted by Trip

    Noe Apple 3859 21st just listed for $1.975, sold for $2.080 in 2007, still $935/ft²..ouch.
    Now reduced to $1,895,000. $729/sf and 10% below peak. Getting close to the right reduction for Noe but not there yet imho. We’ll see — a ton of great places in this price range that are not moving.
    [Editor’s Note: We’re moving the discussion on 3859 21st Street to: The One With The Lions On It.]

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