CFAH

82 Ellsworth
The sale of 82 Ellsworth on the South Slope of Bernal Heights closed escrow yesterday with a reported contract price of $855,000 (asking $899,000).
Purchased in April 2005 for $975,000, it’s a 12.3% drop in value below its 2005 price for the two-bedroom and two-bath single-family home two blocks above the heart of Cortland.
Apples To Apples (Aside From Any Other Analytics) In Bernal Heights [SocketSite]

Comments from Plugged-In Readers

  1. Posted by curmudgeon

    Wow, that sure doesn’t have curb appeal.

  2. Posted by anon

    Only 12.3% below the April 2005 sale price. So I guess Bernal is holding up better than many parts of the city.

  3. Posted by Ronald

    This house didn’t sell because its ugly.

  4. Posted by diemos

    Ummmm….
    It did sell.
    For 12.3% below what it sold for in 2005, when it was just as ugly.
    Apples.
    Nutritious, delicious apples.

  5. Posted by EH

    To my untrained eye, it looks like an old shack was jacked up to put a garage underneath, then a top story and gablet added. Frankensteiny.

  6. Posted by 3 words

    apple
    bernal
    bath

  7. Posted by sparky-b

    Sold in ’03 for $660K
    [Editor’s Note: Remodeled a bit (like adding the shower above) thereafter.]

  8. Posted by FormerAptBroker

    It is hard to believe that fluj has not told us that the buyer in 2005 “overpaid” yet…

  9. Posted by 45yo hipster

    12.3% loss is a heck of alot less than the 25-30% obsessively quoted here by the usual SS bears.
    FYI- I recently sold a condo in bernal and I also estimate about 12% less than what I could have gotten for it a few years ago, based on comps.
    I think there are alot more properties, that are well located and under $1 mil, that lost 10-15% from market top, ALOT MORE than the bears care to admit. So, how do you like ‘dem apples!

  10. Posted by nc

    I am so tired of these overly remodeled distastefull mixes of old and modern designs that are always ridiculously overpriced. Come on that bathroom tile is hideous!

  11. Posted by sparky-b

    Sold in ’03 for $660K
    [Editor’s Note: Remodeled a bit (like adding the shower above) thereafter.]
    Not adding the shower with a permit!

  12. Posted by curmudgeon

    No one has pointed out that 2005 was not the peak. This apparently came down alot more than 12.5% from peak, although that jump between 03 and 05 seems astounding.

  13. Posted by anon

    45yo hipster, that’s 12.3% less than the April 2005 price. Do you really think market values in SF did not rise between April 2005 and Spring 2007?

  14. Posted by 3 words

    2005
    not
    peak

  15. Posted by tipster

    45 YO does that every time there is a 2004/2005 apple. He’s hilarious when he does that.

  16. Posted by Dan

    2005 and 975k was peak for this apple, as it did not sell again in 2006 or 2007. No one knows whether a buyer would have paid over 975k for this particular home in 2006 or 7.
    “Not peak” is like “overpaid in 2005.” Spinning an apple.

  17. Posted by anon

    Yes, Dan, everything in the city went up through 2005 and 2006. But I guess you’re right that hypothetically, maybe, this would have been the one single property in SF not to see any appreciation during that time.

  18. Posted by steve

    I like apples and they are one of the best ways to guage the market. however, this house is a perfect illustration of their limitations. if we follow the logic we learn that the SF market *doubled* between 2003 and 2007 (the “peak price” everyone is freaking about above has to be $1.2, right?) and then has fallen 30% since then.
    I think it also exposes the selection bias inherent in the methodology. to be an interesting apple, the property has to turnover much faster than average and it needs to be unimproved. this elimates two types of transactions from consideration — folks that did what their parents taught them (buy and hold for long time) and the savviest flippers/builders who spend money on the right things to maximize return. plenty of houses in the latter category end up on SS for other reasons, but apples seem to be either amateur flipper hour or real folks with a change in their financial circumstances.

  19. Posted by FormerAptBroker

    45yo hipster wrote:
    > 12.3% loss is a heck of alot less than the 25-30% obsessively
    > quoted here by the usual SS bears.
    Who is the “bear” that said that said: “82 Ellsworth on the South Slope of Bernal Heights” is probably down 25-30% from 2005”?
    > FYI- I recently sold a condo in bernal and I also estimate about 12%
    > less than what I could have gotten for it a few years ago, based
    > on comps.
    If you got a price of 12% below peak pricing this year I congratulate you (and you should congratulate the listing agent). I’m willing to bet that if you called your agent and look at where MLS prices per foot peaked in bernal and where they are now that most 2008 sales are more than 12% below the peak prices per foot.

  20. Posted by tipster

    Agreed steve, from now on, all apples are inherently flawed and should be disregarded.
    A 4.5 year hold is an amateur flipper. And someone with a changed financial circumstance is not representative of the market, in a market in which 16% of the people are underemployed and every business owner, architect, etc is suffering. Ha, ha, you guys are funny when you’re desperate!!

  21. Posted by steve

    tipster, where did I say “all apples are inherently flawed and should be disregarded”? where did I imply it? my actual words were that apples “are one of the best ways to gauge the market”
    now I did argue that they had limitations, and, can you not concede that the conclusions you wish to draw from this apple with your incessant harping on “peak” are a touch absurd? to prove that the market is down 30% since 07 do you really mean to claim that it doubled 03 and 07?

  22. Posted by sfrenegade

    “I think it also exposes the selection bias inherent in the methodology. to be an interesting apple, the property has to turnover much faster than average and it needs to be unimproved. this elimates two types of transactions from consideration — folks that did what their parents taught them (buy and hold for long time) and the savviest flippers/builders who spend money on the right things to maximize return. plenty of houses in the latter category end up on SS for other reasons, but apples seem to be either amateur flipper hour or real folks with a change in their financial circumstances.”
    That seems like grasping for straws. Apples are the best way to compare prices over time. If we had perfect information, we’d know what flippers/builders spent, so we could consider them, but saying that apples aren’t meaningful just seems like flawed reasoning.

  23. Posted by steve

    yes, sfrenegade, because when I write apples “are one of the best ways to gauge the market” that really is code for “apples aren’t meaningful.”

  24. Posted by 45yo hipster

    And for the record, no I don’t think prices in 07 were substancially higher than summer 05 in bernal. Bernal had a huge run up in 04-05, and grew modestly at best afterwards.
    And tippy, you’re the hilarious one with your incessant negative spin mongering…it’s soooo old dude.

  25. Posted by anonn

    “Not peak” — let’s examine that.
    Peak is a term that gets used all the time on here.
    As of now it is this, “A period of time that nobody can agree upon.” Was it a month? Was it a quarter? What year was it?
    I recently looked at Bernal 1M+ properties. Seemingly 2008 was “peak,” price wise. (You remember 2008? It was the year some of you flaming would be gloaters had all internalized market collapse?) Volume wise, it was 2007.
    So that’s a second question. Peak price, or peak volume? Or should it be a combination of both?
    Once that’s established, let’s apply the dollar per foot, what, average? Is that fair? I know some of you hate averages.
    Take that and apply it to this individual property. Oh, feel free to ignore whether or not the purchase of this property was an outlier in 2005. Right now without digging into it my gut says the purchase was a little high for the time, and that 12 percent is what, two points off the 5 to 10 percent so many of you jumped down my throat about, post September 2008.

  26. Posted by The Milkshake of Despair

    “And for the record, no I don’t think prices in 07 were substancially higher than summer 05 in bernal. Bernal had a huge run up in 04-05, and grew modestly at best afterwards.”
    I can’t comment on the 04-05 run up, but my experience was that Bernal did see large gains 05-07 as well. In fact the overbids that I started seeing on little Bernal shacks in 07 was a big part of why I paused my search.
    Either the market was insane or I was. I avoid signing onto large debt obligations while insane.

  27. Posted by classicFluj

    Gotta love fluj’s last post — “it’s all micro, bro” followed by “must have overpaid.” Should have thrown in another realtor meme like “buy now or you’ll be priced out forever” for the 3-hit combo.

  28. Posted by anonn

    Gotta love fluj’s last post — “it’s all micro, bro” followed by “must have overpaid.” Should have thrown in another realtor meme like “buy now or you’ll be priced out forever” for the 3-hit combo
    So what’s “peak” then?
    Were you one of those who bashed me for saying 5 to 10 percent down? I’m sure you were.
    Say something. Once.

  29. Posted by 3 words

    dude
    bro
    patronize

  30. Posted by Dan

    Not peak! Overpaid!
    Bears and bulls dance through orchard.
    Apples spin and spin.

  31. Posted by Shza

    That’s fine fluj, but I don’t follow your post. It may be that I’m just missing something. It seems you concede that on any reasonable metric, the “peak” for this property was not 2005. It was 2007 or early 2008. You also say, let’s go ahead and toss any argument that the buyer “overpaid” (though you say as an aside that he probably did).
    But then you conclude by saying that 12% (from non-peak 2005) isn’t much more than 5-10% fall from peak you were throwing around after the collapse in late 2008. Apples to oranges, no?

  32. Posted by EBGuy

    A couple of points: will this affect the median? I’m being rhetorical and sarcastic, here. To re-emphasize my point from yesterday — seller’s agents are getting this market moving again (all jokes about starvation aside).
    Seller: But I can’t lower my price by $50k, that’s my entire down payment gone up in smoke.
    Agent: Here’s a box Kleenex.
    Seller: Sniff!
    All hail the rising median!
    That said, we’ve got two more South slopers that sold a lot quicker recently. Very interested to see where they come in at. Don’t count your apples before they rot…

  33. Posted by anonn

    Shza, the point is this. Is it unreasonable to attribute “peak” to a property that was high for its year, but that corresponds to a later “peak” period(s)’ average prices?
    These guys all want to toss peak around all the time. Number one, they wouldn’t know peak from Pike’s Peak from peek a boo if I didn’t inform them in the first place. And two, while I was informing them, they all hostiley disputed that ’07 amd ’08 were in fact peak at the time! “Bernal” was “tanking” — like Satchel used to say. No real estate savant was he. LOL. Now all these Satchel/LMRIM worshipers want to use ’07 and ’08 as “peak,” to bash, when it suits them. What a joke.
    So again, is it inaccurate to establish a peak and apply it backwards in time? I think it’s not. If it sold for 975K was in the top 25% of Bernal sales in 2005, above the average $662 a foot from 2005’s 199 sales.
    But I do not see a sale in the MLS for 2005 for this property. So if it sold off market, “peak” is more than fairly attributed. And then, OK, I’m a few points off what I predicted.

  34. Posted by 45yo hipster

    you
    got
    it!

  35. Posted by anonn

    Scratch that. It was in the top tier price wise, but dollars per foot it was more like 560 a foot. (If it indeed sold in 2005 and wasn’t a re-fi.) That brings up another problem with “peak.” There are real value ceilings at play in Bernal. Once a property gets over a certain price point, flatly attributing a dollar per foot ratio is never going to work. Over 900K you’re going to see less per foot in a lot of areas.

  36. Posted by 3 words

    white
    elephant
    bargain

  37. Posted by Mikey

    One bad apple don’t spoil the whole bunch, girl.
    Give it one more try before you give up on love.

  38. Posted by Rillion

    Yawn, another apple and the same tired argument from both sides.

  39. Posted by Willow

    In the context of the current economy this represents a reasonable outcome for the sellers. A 12.3% decline from the 2005 purchase date is significant but comparable to most areas in San Francisco, if not slightly better. Bernal is definitely not getting mauled like the SOMA condo market or Bayview. In terms of “peak” pricing or volume I’m more in the 2007 camp for BH rather than 2005. Accepting this premise however does not necessarily mean that this home would have sold for more in 2007. Drawing that conclusion is the equivalent of those ridiculous pricing charts that Zillow generate that plots the value of your home over a period of time. You never really know the value unless you actually sell it!
    I also must note the editorial bias again here. As was noted in the 3661 Folsom thread last week there were a number of recently sold properties in Bernal that have held up really well. While I agree with probably 80% of socketsite views it’s too bad a more balanced approach is not taken.
    [Editor’s Note: Please see comment below.]

  40. Posted by [45yo hipster]

    more
    balanced
    approach

  41. Posted by 3 words

    plenty
    other
    sites

  42. Posted by SocketSite

    I also must note the editorial bias again here.
    Please keep in mind that we had no idea what the closing price of the property would be prior to our identifying it as an apple to be back in September. And as much as some would like to believe, we don’t go looking for big drop apples after the fact.
    If you’ve got some other Bernal apples in your basket that you’ve picked, please feel free to either post them here or send them our way (tips@socketsite.com). In either case, however, please do your homework first.
    Regardless, and as always, thank you for plugging in.

  43. Posted by SFHawkguy

    In the context of the current economy this represents a reasonable outcome for the sellers.
    I don’t think it was a good outcome for the sellers. They would have been much better off renting during the last 4 and a half years. They are a cautionary tale to others.
    Here’s my attempt at the number:
    Purchased in April 05 for 975,000. Assuming a 7% interest rate and using my trusty bear calculator (from Irvine Housing Blog) I get a monthly cost of ownership and a corresponding down payment as follows:
    20% $5,398/month COO $195,000 down.
    10% $5,637/month COO $97,500 down.
    0% $5,655/month COO $0 down.
    Of course, if a house goes down in price, as this one did, and sells at $855,000, it would only leave the seller who put 20% down with any return on his down payment–and not much. Minus a 6% sales fee the 20% down owner would only get $23,700 of his $195,000 back (I realize this figure would change depending on the amortization). And of course the 15, 10, and 5 down people would lose 100% of their down payment. A 12% drop is devastating to all these people.
    And over that 4 and 1/2 years the owners would have been paying more to live there than they would have paid renting a similar unit. The above three down payment scenarios all have a cost of ownership around $5,500 a month for a 2 bedroom 2 bath place in Bernal. I would estimate the average rent for something like this to have been $3,500 a month over that period. I’m open to proof I’m wrong but I bet my guess is even conservative.
    In fact, the first result in my search of Craiglist Bernal places turns up this 3br place for $3,800 month:
    http://sfbay.craigslist.org/sfc/apa/1478115426.html
    So, using the conservative estimate, that owners like these paid a $2,000 a month premium over renting, and extend that out over 4 and half years, it would cost our owners an additional $108,000 to own here instead of renting.
    So, the final losses for our 20, 10, and zero down payment folks:
    20: $279,300 (includes $171,300 lost down payment)
    10: $205,500
    0: $108,000
    And going forward? At a $855,000 sale price, assuming 10% down, 6% interest, and $100 in HOA fees (the default setting at IHB), the monthly cost of ownership for this hypothetical buyer is $4,427.
    So that is still a $1,000 a month premium over renting (again, would love to see proof that I’m wrong here). Over another 4 and a half year period that would be $54,000 extra to own instead of renting. Accounting for the 6% sales fee, a future sale (in 2014) would have to be at ~ $975,000 to break even. A sale at less than ~$915,000 would start eating into a down payment, and if a buyer put 10% down for instance, anything under what, ~$830,000, means the buyer is underwater.

  44. Posted by Dan

    The comparison rental house you picked is on Leese St, near Crescent Ave., a less expensive neighborhood than north of Cortland.

  45. Posted by SFHawkguy

    Thanks Dan. Farther down by Holly Park would indeed be a little bit of a “lessor” neighborhood.
    That rental also appears to be a bigger place.
    What is your estimation of an equivalent rent?
    Do you think a 2 bedroom in Bernal could have gotten over $4,000 a month? That would still be a loss of $72,000 over 4 and a half years. Also, what is the HOA on a place like this in Bernal? Am I underestimating the cost of ownership?

  46. Posted by SFHawkguy

    Here’s another rental comp. 3Br 2 ba for $2775/month. This one is north of Cortland, right next to Bernal Hill park.
    http://sfbay.craigslist.org/sfc/apa/1477089375.html

  47. Posted by Dan

    That rental house is a good deal, and it is very cloes to the house for sale on Ellsworth. Certainly one would save money renting it rather than buying now.
    Don’t know whether that rental would have been available at that price the last time that the house sold, though. I suspect that there are better deals to be had renting now.

  48. Posted by anonn

    Yeah, sight unseen that’s a very good rental deal.

  49. Posted by SFHawkguy

    Dan,
    I would agree that rents have fallen and that $2775 asking rent would have been higher in the past. Here’s a quick snapshot of what went on in neighboring Noe Valley from 08 to 09:
    http://noevalleyvoice.com/2009/May/Cost.htm
    Asking rents on 2 bedrooms went from $3133 to $2754 in a year.
    I think an average of $3500 during the last five years on equivalent rent for the above place is a good (maybe high) estimate and now rents are probably closer to $3000. I’m giving this place a “cuteness” premium of $300/month or so over the nearby rental–although the rental has another room, is probably bigger, is right next to the park, may have better views, and has a bigger garage–so the argument could be made equivalent rent was $3,000 in the heyday and is now closer to $2500 (I personally would rather have serviceability and size and not pay for cuteness but hey, lotsa people like cutesy).
    There also only seems to be downward pressure ahead on rent. So $3000 now and heading to $2750 seems like a reasonable equivalent rent to me.
    This would revise up the cost of owning for a buyer in this situation. With a $3,000 equivalent rent there is an $1,500/month or more premium to own, and over 4 1/2 years time that’s a cost of ownership of $81,000. Each year the buyer pays the premium to own he is depending upon greater price appreciation to recoup that investment later.
    What happens if rents only slowly ascend to $3000 again sometime around 2014? Or 2015? What would happen to our buyer if rents “only” slowly rose to $3250 by 2020?
    In many of those situations the current buyer is going to need massive housing price increases to break even.

  50. Posted by R

    Let’s not forget mortgage interest tax deduction if we’re gonna go all thunderdome buy vs. rent.
    Assuming Hawk’s figures above, and also assuming I haven’t confused myself, you’re looking at $55-67k a year deduction, saving yourself upwards of $20k a year.. or something over $1500 a month.

  51. Posted by SFHawkguy

    Using the word “thunderdome” to describe a rent v. buy calculation is a bit hyperbolic–as if trying to objectively quantify the price of something is crazy. I guess you’re saying you don’t like the implications of the data .. . .
    As for the substantive critique of the data, in this case, the mortgage interest deduction is accounted for in the calculation. Here’s the calculator I’m using:
    http://www.idealhomebrokers.com/calculator/
    Clearly, that would be a fundamental mistake not to exclude the mortgage interest tax savings from the calculation. Of course the calculator accounts for it.
    Let me know how you would tweak the other factors or what cost of ownership you get for a buyer of a $855,000 place. I may have the HOA fees set too low. The calculator also uses a 1% property tax rate and SF is higher than that. I’m assuming 6% interest–that would be another big input to account for correctly (is a rate closer to 5% a better approximation of an average rate for buyers of these homes?).
    I would love to see a more accurate cost of ownership calculation than the one I have. So far IHB seems to be pretty good.

  52. Posted by SFHawkguy

    Rats. Mangled the sentacne above. It should read: “It’s a fundamental mistake to exclude mortgage interest deduction from calculation.” Too many negatives.
    Also, a note of interest. Another similar home for sale:
    http://www.mcguire.com/listings/190810-64-Prentiss-Street-San-Francisco-California–Single-Family-Home-Bernal-Heights-363797
    Quite a hefty asking price for 1,000 square feet!

  53. Posted by BernalChallenger

    Care to hazard a guess on what 64 Prentiss will sell for, anonn?

  54. Posted by Dan

    Where do you get that 64 Prentiss is only 1000 SF?

  55. Posted by anonn

    I’d guess 64 Prentiss is more like 2000+ feet from looking at the pictures. I don’t want to guess without viewing it. It’s at the top of the market and I gotta see something like that first.

  56. Posted by R

    “Using the word “thunderdome” to describe a rent v. buy calculation is a bit hyperbolic–as if trying to objectively quantify the price of something is crazy. I guess you’re saying you don’t like the implications of the data .. . . ”
    No, simply trying pointing out there is no win to the rent vs. buy argument.. There are far too many variables to make a black and white determination. One of which I pointed out.
    Would I pay double to buy vs rent? No.
    Do I think owning is worth it (assuming your extra cost is not significant)? Hell yes.
    Does my situation work for everyone? Hell no.

  57. Posted by R

    And 64 Prentiss is a brand new house.. don’t know what was there before.. So that might account for the square footage issue.. Certainly looks a lot bigger than 1000 sq ft now.

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