3859 21st Street
Purchased for $2,080,000 in July of 2007, The Lion House (a.k.a. 3859 21st Street) returned to the market in April asking $1,975,000.
As a plugged-in reader notes, the price was dropped to $1,895,000 today, a sale at which would represent a 8.9% drop in value over the past two years.
And a bit of history and trivia, “built in 1893 for $3200.” Ah, the good old days.
∙ Listing: 3859 21st Street (3/4) – $1,895,000 [herbalston.com] [MLS]
1470 Noe Closes For 100% Of Asking (But $25,000 Less Than In 2005) [SocketSite]

49 thoughts on “The One With The <strike>Deer</strike> Lions On It (3859 21st Street)”
  1. At $1.895M, $300K+ is already on the stairway to heaven. Also, $50K in property taxes over the two year hold. After mortgage and other costs, it will probably turn out to have cost about $20-25K [per month] all in to live there. About what should have been expected, given the enormity and obviousness (by summer 2007!!) of the bubble.
    And it’s not sold yet of course, and so will probably turn out to be worse….
    Anyway, don’t worry people. I’m sure they just “overpaid” back then. Keep paying your mortgages, move along, nothing to see here…. Just some mean-spirited bears cherrypicking….

  2. I’m surprised this hasn’t sold. It’s nice to see the market correcting finally. There was such a frenzy in Noe during that 06/07 time frame. Almost got caught up in it myself. Phew.

  3. For whatever reason, the nice but non spectacular Eureka Valley (Castro) property that should have sold by now, has not. Yet its Noe neighbor three blocks or less southward has indeed sold. It’s all micro, bro, but this is a weird little piece of fallout news.

  4. Funny to see an arbor (an element of Spanish/Mediterranean origins) attached to a Victorian. Oh well, the up-front garage wasn’t really a Victorian thing anyways.
    That said the wood working craftmanship seems to be first class as is the exterior paint job. Though that kind of arbor isn’t Victorian, the designer did a great job at matching the style.
    Anyone want to bet that the former owner was a Leo ?
    And on that 1893 sales price : The CC&Rs for my first home state that all houses constructed in the tract must cost at least $2400. The CC&Rs also explicitly state that potential buyers cannot be discriminated against due to racial or ethnic grounds. That was pretty progressive at the time.

  5. Interesting use of bars on the 2nd floor windows. I guess it is to help prevent defenestration.

  6. What’s up with all the wall-to-wall carpeting? Is there anyone in the world who pays nearly $2M for a place and doesn’t immediately rip that out? Gross.

  7. SF Local Color also did 3990 Washington, shown on their website. That building was two flats for most of its life. How did they get permission to merge two “affordable” “dwelling units” from the Planning Commission? Or was it done before the wise politicians decided that merging units was a bad thing?

  8. I just cannot imagine why someone would spend 1.8 on a large condo in SoMa or Pac Heights when they could have this place.

  9. @NVJ Are you sure that you are correctly interpreting Schiller’s claim. The Wikipedia entry says, “On CNBC’s ‘How to Profit from the Real Estate Boom’ in 2005, [Schiller] noted that housing price rises could not outstrip inflation in the long term because, except for land restricted sites, house prices would tend toward building costs plus normal economic profit…” Many major cities, including SF, would classify as land restricted sites.
    What is unquestionable is that the 2.8 percent real rate of return challenges the claim of certain SS posters that SF real estate has outperformed stocks over the long run. The historic real rate of return in the stock market is 6 to 7 percent…SF housing isn’t getting close to that.

  10. Rule of thumb for property tax: knock 3 zeros from the sales price and that’s the monthly property tax.
    $1.895M home means $1,895.00 per month if it sells at asking.

  11. I really like this place because the exterior has been done very well while the interior has been done just enough to be move-in without disturbing the basically good bones of the structure.
    If I bit on this though, there would be lions in glass and pre-cast something) on E-bay in no time.

  12. My Mom’s a Leo and loves gardens. It would make a perfect gift, a place where she can stay when in town so I wouldn’t have to “motherize” my home. That alone would be worth $1,800/month in prop. taxes.
    It also has the requisite (in my view) eat-in kitchen with garden/patio access so I like it too. Though I’m not too happy about those bathrooms.

  13. It is not I that was doing the misinterpreting:
    Economists from around the world have analyzed this countless times: historically, real estate is not a good investment. Returns usually follow inflation, maybe you beat inflation by a little bit, but that’s about it. Even over hundreds of years and in the nicest areas:
    Old article, I know, but still relevant. Amsterdam is also a “world class city” where they’re not making any more land.
    Posted by: Dude at October 19, 2007 3:41 PM

  14. This property sold in 1996 for 490k, then in 2007 for over $2,000,000. Ok so we know what happened in the market and how leverage was used to not only buy houses but also stocks and financial products this is reflected by the current rate of the dow and s&p. That leverage is gone. The chances of an unqualified borrower getting the kind of finance the previous buyers got are none to sweet FA. The reason the previous buyers were unqualified is because they are selling in a bear market. Selling in a bear market only happens when one cannot pay the cost of carry….. in my opinion the whole of sf is over bought. Buying a property in Noe valley is something akin to the LA Galaxy buying David Beckham for the 250M.

  15. What cost $3200 in 1893 would cost $55733.51 in 1996.
    So a tiny bit less gain, but still substantially over inflation. This property is in The Castro, but your point is probably the same.

  16. I’ve been in this house before and it’s absolutely gorgeous, inside & out, and I’m not a big fan of theme decorating. The owner who purchased in in 1996 put a lot of work into it; I’m sad to see that it’s back on the market. I hope that the next person who purchases it takes care of all of the lions.

  17. “What is unquestionable is that the 2.8 percent real rate of return challenges the claim of certain SS posters that SF real estate has outperformed stocks over the long run. The historic real rate of return in the stock market is 6 to 7 percent…SF housing isn’t getting close to that”
    no, SF housing is not close to that, it surpasses the stock market handily with the usual leverage used to buy RE. RE leveraged at 80% increases the return 5-fold. and since RE was more up than down most of that time period, the leverage worked quite well for most purchases.

  18. The golden rule of Socketsite:
    forget leverage on the way up
    talk about nothing but leverage on the way down

  19. RE leveraged at 80% increases the return 5-fold.
    Return with leverage is equal to:
       ReturnOnAssets * (L + 1) – CostOfFunds * L
    where L is the leverage ratio (4:1 in the case of 20% down, 80% borrowed).
    If ReturnOnAssets is 2.8% real and after-tax CostOfFunds (mortgage rate) is 2% real, then the after-tax real return with leverage is:
       2.8% * 5 – 2% * 4 = 6%
    After tax assumes the house was held the whole time, so there was never any capital gains taxes. For recent owners, this is somewhat realistic, first because of the $500K capital gains tax exemption on owner-occupied houses and second because the capital gains tax rate is a low 15% right now.

  20. “The golden rule of Socketsite:
    forget leverage on the way up
    talk about nothing but leverage on the way down”
    I would have said that the golden rule of leverage is that it magnifies gains on the way up and magnifies losses on the way down (assuming you have any equity to lose). So it’s a great way to make money, if you load up on it before things go up and get rid of it before things go down.

  21. I find this entire discussion of double digit leveraged returns in SF real estate extremely disrespectful and in poor taste. The poor seller of 3859 21st right now is in the process of saying goodbye to at least $300,000. Poof! I hope it wasn’t a lot of money for him.
    Any predictions from the peanut gallery as to how much wealth will be sacrificed to the bubble here? I’ll throw out a wild guess of $1.8M for a selling price (assuming it sells), or about a $400,000 loss after standard costs. Not too bad if that comes to pass, considering the size of the bubble.

  22. “I find this entire discussion of double digit leveraged returns in SF real estate extremely disrespectful and in poor taste.”
    Wow, why the sudden change of heart LMRiM? You used to seem to love to revel in people’s highly leveraged losses. You would go on and on about how it was a good thing and made you happy. What happened, the plight of the little Whoville owners finally get to you?

  23. Buying a property in Noe valley is something akin to the LA Galaxy buying David Beckham for the 250M.
    Really? “Noe Valley” adidas jerseys for the Asian market is it? No chance. Adidas made that deal for a reason, and it’s apples and plutonium that you’re comparing.

  24. It was back in 2003 when I first understood the reasonability of the prediction on real estate prices, first the inflating of the bubble and then the inevitable correction. That’s the nature of human-induced asset bubbles. Fortunately, there is one very simple and proven formula to assess how far away from the theoretically correct prices the observed “market” prices are: it is based on rentals. Even the FED knows there is a very strong fundamental relationship between rentals and house prices. In CA, the factor long-term, “old-school” investors have used for decades to determine the “correct” valuation for a RE investment ranges from a low of 150 times monthly rent to a max of 180 monthly rent. This is just a shortcut to doing a full-blown PV cash-flow model, which as a professor of finance and an experienced practitioner with 20 years of finance and investments work I obviously prefer, but this thingy does work.
    Very similar properties like the Lion one currently rent at a max of $ 6000 a month, check this link:
    $6000 / 6br – 2.5ba: Spacious 2 Level Updated Victorian. 23rd @ Diamond. Coombs (noe valley) (map)
    For simplicity, let’s just do the max estimate:
    180 * 6000 = $ 1,080,000 this should be the value of this RE property.
    In other words, even at the reduced price of $ 1,895,000 this property is significantly overvalued by around 43% give or take. I believe it wouldn’t be insane to think that the Lion property could go down by at least 30% from current “market” price. Of course, unless some short-term desperate and insane buyer purchases it now. Which would be total insanity. Especially since JPMorgan Chase analysts today said that very high-end property values in CA will fall by 60% from the peak. I think they are a being little overly aggressive but not too much.
    I live in Danville, which has some very posh and tony areas, and I am seeing the correction happening, as it was predicted it would. This correction still has quite some legs to go, and now it is the turn of the high-end.
    You’re welcome.

  25. I tend to agree that rents are a proxy for valuation on some level. The 150 to 180x mo rent seems like an average, but someone would have to do the research to show me a point in time in the last 10 to 15 years where SF rentals met this criteria. My guess is that certain urban hotspots will always command a premium. The 180x multiple seems incredibly low on most properties. Trust me, I’d love to see this become a reality, and I agree that there is more “bottom” to this cycle, but I think your multiples do not work for SF real estate, or Manhattan either. Although for more traditional / residential suburban areas, this metric probably works.
    FWIW, I also think rents are going to come down as well, which would further kill fair value prices based on this multiple. Would love to see more discussion on this topic.

  26. This house is still available. It seems that it’s asking Noe Prices and getting Castro interest. I really can’t believe that someone hasn’t offered $1.75 on this place so I can only assume that the sellers here at listing this at bare bone price and can’t afford to sell for less than currently asking.

  27. I really can’t believe that someone hasn’t offered $1.75 on this place so I can only assume that the sellers here…can’t afford to sell for less than currently asking.
    If that market pricing estimate is right (and I always defer to you, eddy, on FMV questions for most areas in SF that I don’t know really well), you’re probably right.
    $1.75M would imply a loss (after frictional costs) of more than $450K. That’s a lot of scratch, even for laughing millionaires. It’s a tossup what would be more galling – blowing that much on such an obviously foolish decision to purchase two years ago, or being trapped paying the mortgage and property taxes on such a clearly underwater place today.
    Most people it seems when faced with such a dilemma try to postpone the acknowledgment of the loss by “holding and hoping”. Good luck.

  28. It looks like another “accidental loanlord” situation here!
    I mean, come on. Just cut the price. Prices haven’t fallen that far (yet) for nice properties – I’m sure that this could be sold at 20% off the 2007 price. If that is a lot of money to the seller (about $500K capital loss after commission and transfer tax), why in the world would they agree to pay $2M+ for a place to live??

  29. Wow, this is Noe/Eureka week.
    This “immune” area is going to provide us more to talk about in the next year including this property I think.
    A wish price rental attempt shows that cash flow starts to matter (woocoodanode?), but that reality hasn’t fully caught up yet. I suggest the seller starts banging at the bank’s door to jump-start a short sale ASAP. Let the taxpayer ultimately pay for your sins. He’s good for it.

  30. short-sale shmort-sale
    Why go through all that hassle and paperwork when you can just throw the keys on the roof and walk away?

  31. Why go through all that hassle and paperwork when you can just throw the keys on the roof and walk away?
    Ah, but you forget one thing, diemos. Everyone in D5 bought with huge cash downpayments. These guys probably put down 40% – no, make that 50%. No one knows where the money came from – it’s subtle. Also, this is the segment of the market – nice SFHs between $1M and $2M – that is on fire. Shhhhhhhhh. Hear that faint crinkling rustle? That’s the sound of subtle downpayment money slowly burning….

  32. There are lots of practicle reasons to short sale rather than jungle mail. First is the salvage of credit. Second is the chace to potentially work something out with the bank. As for this place commanding 7500 rent, no way. There was a SFH on Green St in PH/CH that ended up renting for 7200 after months of working down from 8500. Just as nice, bigger, peek a boo view for 7200. If they really want to rent this home, 5k or maybe 5500.
    The options are running out for these folks….

  33. Keys should be placed in the lion’s mouth, as no banker would dare extract them.
    Or hang them from the lion’s left ear as a form of Foreclosure Pop Art.

  34. Sadly, I suspect they cannot. IF this we’re $1.5 I’d probably buy it tomorrow. I’ve learned that I’m perpetually about 15% more bearish than the market as a whole which tells me this place would sell in a heartbeat at $1.7M. After this long on the market you have to think the sellers know it’s priced to high.

  35. I think eddy is right…this is much more of a house than the 20th street one, and has a south facing yard to boot. A real upstairs, third story space under the eaves, and an entertainment room/au pair down. Only negatives are style (too Victorian for most tastes, and a big evergreen in the backyard.

  36. OMG! Look at this vintage Queen Anne Victorian nice skin but the interior original woodwork in the windows and door casings are not there! Even the flooring, only hardwood floor is in the hallway (doubtful if original) and overall the plank flooring is of soft wood pine, maybe Douglass fir! No wonder they had to masked the floor with carpet covering, a cheap-looking fabric to boot. Are you insane enough to cough out $2 million dollars?

  37. The sale of 3859 21st Street closed escrow yesterday with what appears to be a “confidential” sale price on the MLS.
    Last asking $1,895,000 (purchased for $2,080,000 in July of 2007).

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