890 De Haro
In 2007 the Potrero Hill home at 890 De Haro sold for $1,350,000. The sale is yet another example of a “winning” offer in San Francisco that was financed with 100 percent debt, a first for $1,080,000 and a second for $270,000. And here you couldn’t understand how you kept getting outbid or what was driving appreciation (less than two years before the property had traded for $1,185,000).
A year later the owner posted a “make me move” price of $1,650,000 which was withdrawn in March 2010, three months after a notice of default was filed with $50,289 past due.
The property was subsequently listed as a short sale for $1,150,000 this past November, was in and out of contract, and has now returned to the MLS listed for $1,013,000. And while its courthouse sale has been postponed in the past, the home is once again scheduled to hit the steps in San Francisco next week.
For some reason the current listing for the property doesn’t tout the “sophisticated indoor marijuana cultivation/processing room” which last occupied the back half of the garage. Oh, did we not mention the seller was arrested for cultivating marijuana here and at another home back in 2009?
We’d sure love to see Merrill Lynch’s loan documentation for the purchase in 2007. And no, we don’t believe the Mercedes is still parked in the other half of the garage.
∙ Listing: 890 De Haro (3/1) 1,517 sqft – “$1,013,000” (short sale) [Redfin]
Working All The Angles And Coming Up Short In The Marina [SocketSite]
Groveland Marijuana Investigation Moves To San Francisco [SocketSite]

62 thoughts on “100 Percent <strike>Doobie</strike> Debt Financed On Potrero Hill”
  1. The 2007 dopehead wasn’t so dopey after all. The real dopeheads were the ones who put down real cash at a time when banks would lend you everything you needed to “pay” for “your” bubble trophy.
    Every buyer back in 2007 was high on the idea that their new property was going to appreciate 5-10% a year if not more. Every one of them.
    By the way, didn’t fluj/anonn/anon.ed tell us a million times that SF buyers didn’t do 100% financing? Something about all the money in SF, subtle money, family money…

  2. If similar properties in Noe cannot fetch 800/sf, this one shouldn’t fetch more than 600/sf. I say 900K tops. For that price I hope they threw some seeds in the backyard. Hey, it’s a weed!

  3. Another fine example of the widespread madness. $900/sf for a plain ol’ place in Potrero? So close to 101 you’d hear 24 hr/day traffic zooming by? And a couple blocks from a nasty housing project? Absurd. Rivals the worst bubble-era deals in Modesto.
    It may be true that some buyers during the 2004-2009 psychosis paid lots of cash, but the same was true in Modesto, and “the market” was set by no-down free money like this — no cash discount available. All homes within that market are now crashing regardless of the financing mechanism because the free money is no longer there to establish “the market.” SF still has a long way to go before this all bottoms out.

  4. The current “owner” (seller) was probably planning on Prop. 19 passing and catapulting him into fame and fortune as one of the ‘market first movers’ in the legal marijuana cultivation business. But he’s obviously a loser, since if he were growing with that kind of sophisticated equipment, he should have been clearing well over $9k per month, which would have been plenty to cover the mortgage payments on this place. Clearly someone with less-than-steller cash management skills; he was probably leasing the Mercedes.

  5. In my opinion, A.T.’s post at 9:18 AM is a classic example of the kind of hyperbole he and Tipster love to post. I’d be surprised if there’s much of any freeway noise being heard at this location – I have a friend of mine who lives at the very Western end of 19th Street and simply put in new windows and filled the walls with insulation and now it’s impossible to hear any noise despite the fact the freeway is literally right below his living room.
    I also have another friend who lives on the south slope a few blocks from the housing projects and hasn’t experienced any kind of the “problems” A.T. is alluding to. IMO, it’s not a bad location.
    But A.T. and others like him will spout off about a home and a location they haven’t been to in person – with an air of certainty that what they’re saying is absolute fact – when it actually isn’t.

  6. I don’t know – in his business, leasing the Benz probably makes sense. He can use it as a delivery vehicle and claim the tax advantages.

  7. But he’s obviously a loser, since if he were growing with that kind of sophisticated equipment, he should have been clearing well over $9k per month, which would have been plenty to cover the mortgage payments on this place.
    Well, the “MML” article says he got arrested in September 2009, which very probably led to the NOD in March 2010. Heck, staying current on a house when it was financed with 100% OP’sM wasn’t certainly his first priority from the joint.
    A great nugget from SocketSite.

  8. C’mon Fischum, I don’t care how much insulation and double-paned glass you have (never going to open a window?). Being that close to the freeway and that close to particularly nasty housing projects is going to bring a home’s value way down.
    But you don’t need to take my word for anything. The current list price is 25% ($337,000) below the 2007 sale price, and it doesn’t seem to have sparked any bidding war at that “bargain” price. Fine, the place may be superbly insulated and miraculously immune from the widespread nastiness just blocks away, and it has still crashed in value. Makes my ultimate point about the bubble madness prices even stronger.

  9. lol, I didn’t get the sense from that article that he was actually being held in custody pending trial. And of course, anyone holding “$12,000 worth of processed marijuana” at time of the bust probably can come up with enough cash to make bail so he could at least tend to his remaining crops.
    I’m sure the mortgage broker is laughing his jaw off right now: “at least I got my commission”.

  10. Brahma,
    Yeah, he could have. But his grow house was raided and therefore unusable. Plus the mortgage was upside down in late 2009 already, then why throw good money after bad? It’s not like he should worry about a ding on his credit report with his current record. Jingle Mail is the way to go when it’s only OP’s M.

  11. A.T., I walk by that location all the time and I hardly notice any freeway noise. You’re almost 800 feet from the freeway; my dog can perhaps hears the traffic but I couldn’t.
    As for the project, it’s far from the project by SF standard. I have never seen any undesireables on my walk. The Painted Ladies are about the same distance from the projects as this house is. Using your logic, prices in Alamo Square should be down the tube.
    I don’t mind hyperbole if it’s funny or shed some element of truth. But you obviously have not the slightest idea about this location.
    Bottom line is that prices are down across the board, even for houses in A+++ location. The problem here is not the location, the problem is that the owner bought during the bubble.

  12. A.T. I live on Potrero Hill. Let me tell you, it is a very quiet neighborhood. The reason? It is residential and have little through traffic. How about freeway? Yes you can hear it if you go outside and concentrate to hear it. Mostly it recede in the background and is unnoticable. When people say Potrero hill is close to freeway the truth is the freeway is a few blocks away. But we can’t say the same for many parts of SF around busy streets, e.g. SOMA, Mission St, Fell St, etc… Unlike Potrero Hill, the traffic nosie and that honking is right in your face, which you cannot ignore.

  13. A.T., I’m not denying the decline in value that you mention – I’m just saying that without going out there (which it doesn’t appear you have) your opinions about freeway noise and proximity to the housing projects are totally baseless.
    Yet there you were, offering up your opinions as if they were “facts”.

  14. Alternate thread titles:
    This guy’s income was “doobious” at best.
    His debt to asset leverage was extraordinarily “high”.
    Ganja glad you didn’t put 20% down?
    At lease we know what he was smoking when he placed that bid in 2007.
    Where once there was green, now there is red.
    Peak pricing, but not quite so High anymore.
    Love this pic from the listing:
    http://media.cdn-redfin.com/photo/10/bigphoto/697/40495697_7_0.jpg
    And what is with the cabinate doors super glued onto the wall in this pic:
    http://media.cdn-redfin.com/photo/10/bigphoto/697/40495697_2_0.jpg

  15. The socketsite editor wrote:

    We’d sure love to see Merrill Lynch’s loan documentation for the purchase in 2007.

    I’m not a lawyer, but it seems really strange to me that we’re not seeing more prosecutions for straight-up mortgage fraud; as the editor implies, the current “owner” of this place probably had the bulk, if not the entirety, of his income coming from his black market marijuana cultivation and wholesaling operation.
    Now if he got one of those infamous “no doc” or NINJA loans, well okay. But if one of the aforementioned notes required normal verification of a stable stream of income and actually proves that the borrower lied and indicated that he had a legitimate income level required to sustain the payments on a $1.35M house, the U.S. Attorney should indict Mr. Lewis for violating 18 U.S.C. § 1344, but since Casey Serin hasn’t been charged yet, I won’t be holding my breath.

  16. “I also have another friend who lives on the south slope a few blocks from the housing projects and hasn’t experienced any kind of the “problems” A.T. is alluding to. IMO, it’s not a bad location.”
    Wasn’t this house literally used as a drug grow house?
    “As for the project, it’s far from the project by SF standard. I have never seen any undesireables on my walk. The Painted Ladies are about the same distance from the projects as this house is.”
    Don’t the projects start at 23rd and Wisonsin?
    Google has this as 10 times closer walking then the painted ladies…
    http://maps.google.com/maps?f=d&source=s_d&saddr=Steiner+Street,+San+Francisco,+CA+94117+(Painted+Ladies)&daddr=890+De+Haro+Street,+San+Francisco,+CA+to:23rd+and+Wisconsin&hl=en&geocode=Fb5rQAIdE9Oz-CHFWZ5vwNAhhA%3BFTcmQAId4k20-Cl9eRRVtX-PgDG4BSHIZlFeKw%3BFYoXQAIdHFi0-Cm_9FyAtH-PgDG0sZtaQVo74A&mra=ltm&dirflg=w&sll=37.76298,-122.415848&sspn=0.034537,0.074415&ie=UTF8&ll=37.766305,-122.415848&spn=0.034536,0.074415&z=14
    While someone could potentially have made an error, distances to the freeway and projects seems like facts. The 24/hr freeway noise seems like conjecture, but the fact that someone went through all the trouble of replacing windows and soundproofing walls would lend credence to the conjecture that noise is an issue.

  17. i’ve ruled out any house close to a freeway.
    not because of the noise, i’m more worried about living next to the constant pollution.
    i might be paranoid, but i don’t think it’s worth risking damage to my(or my family’s) lungs.

  18. @Brahma — They don’t seem to get reported much in the mainstream media, but this blog reports on a number of prosecutions and convictions for mortgage fraud:
    http://www.mortgagefraudblog.com/
    Just now the ticker on their site showed them tracking 1851 criminal sentences.
    I read somewhere that the FBI differentiates “Fraud for Housing”, committing fraud just to owner occupy a house, from “Fraud for Profit”, committing housing/mortgage fraud for financial gain. The article I read indicated that prosecuting “Fraud for Housing” was a very low priority for the FBI compared to “Fraud for Profit”.
    Now if you’re running a grow house, who knows what they’ll do.

  19. @tc_sf: “Google has this as 10 times closer walking then the painted ladies”
    I think he was comparing the distance between the Painted Ladies and the projects in Western Addition to the distance between this house and the projects in Potrero.

  20. tc_sf
    Not the same projects, different projects.
    You don’t hear the freeway from Deharo. I just left Kansas street and you don’t hear it from there either.

  21. Tc_sf you can certainly parse something conversational/meaningful into an absurd abyss with the best of ’em.

  22. This location is pretty prime for Pot Hill — some of the best views, right across from the neighborhood house, and the projects really are on the other side of the hill from here, so they don’t affect your life much (saying this as a 15-year resident of the hood)… And no, you don’t really hear the freeway noise from De Haro. Most of the houses on that block go for well over a million dollars, mostly for the views.

  23. Fine, you can’t hear the freeway (you just need extra insulation and double-paned windows – well, just because), and the criminals don’t venture two blocks from their “Escape from NY” projects. Yet it is still down in value 25%, $337,000, and counting.
    Imagine if it were not in such a good location!

  24. tc_sf, I was referring to the fact that the Painted Ladies are literally down the street from Hope VI housing on Hayes and Webster, not to mention several other projects within a 10 minute walk.
    Correct Q, and thanks.

  25. Propublica has a nice followup to their Magnetar Trade article that puts the spotlight on ML:
    Two years before the financial crisis hit, Merrill Lynch confronted a serious problem. No one, not even the bank’s own traders, wanted to buy the supposedly safe portions of the mortgage-backed securities Merrill was creating…. But how to get the [new] group to accept deals that were otherwise unprofitable? They paid them.

  26. A.T., Fishum said he has a friend who lives at the very western end of 19th (right on the freeway) and that is where the insulation and windows come in. This place is not in the same location, it is at least a few blocks farther away from the freeway with a higher hill in between.

  27. “i’ve ruled out any house close to a freeway.
    not because of the noise, i’m more worried about living next to the constant pollution.
    i might be paranoid, but i don’t think it’s worth risking damage to my(or my family’s) lungs.”
    “.”, I’m curious where you’d buy the house. I’m not being sarcastic, just curious because I faced the same dilemma – studies show that one has to be at least one mile away from a freeway or busy route to be free of constant pollution, if one take into account busy thoroughfare like Van Ness, Market, Masonic, etc; it essentially rule out most neighborhoods including Noe Valley, Castro, SOMA, North Beach, Russian Hill, Marina, etc, etc. I looked at the map, and the only “safe” places are the Outer Richmond, Sunset, St. Francis Wood, etc. Those are nice nabes but not everyone like to live there.

  28. “Wasn’t this house literally used as a drug grow house?”
    tc_sf, there are drug grow houses in Laurel Heights!! What’s your point? That this is a dangerous neighborhood because of one guy growing stuff in his own house? Is Laurel Heights and the Richmond District dangerous then?

  29. @Samuel — I see how I misunderstood your original wording.
    Also note though that from the google satellite view, the area of barracks like buildings near 23rd and Wisc. appears to be quite large. Bigger then what looks to be the Hayes and Webster projects and probably bigger by area then all of Alamo Square! Also, my understanding was that Hope VI housing was mixed-income.
    It’s possible that a few blocks makes a world of difference, but I don’t think it was hyperbole for A.T. to point out the proximity of this place to a freeway and large low-end project.
    It would be hyperbole to state that any house within a few blocks of the projects was connected to drug activity, but since this house was literally a drug house it seems pretty reasonable to at least wonder about the character of the neighborhood. (Although one could make some argument that the proprietors of a grow house have some vested interest in keeping things quiet.)
    Think of it this way if you were considering moving your family sight unseen into a former drug house which was 800ft from a freeway and a few blocks from a large housing project, would you dismiss concerns about noise, pollution and crime as baseless? Or would you look into them?

  30. sparky-b, if the locals say you can’t hear the freeway even though it’s only two blocks away, so be it. I can’t say I venture out much to the parts of Potrero south of about 18th street. I’m not crazy about the area (bordered by two freeways and a large nasty housing project) but it’s fine. But no way is this a $900/sf $1.3mm house or location except in the same bubblemania that gave us $1mm sales in the Bayview and $3mm sales in Lower Pac Heights – that was my point.

  31. I’m not making a comment on the value of the house, or the quality of the weed produced there. I just know that I was in the area today, closer than this house to the freeway, and I couldn’t here it.

  32. This is more than 2 blocks from the freeway, more like 6, and the freeway is way down a huge canyon, so you really don’t hear it from the top of the hill. Also, the projects really don’t affect this neighborhood much and the projects on Potrero Hill are going to be torn down starting in 2013 or thereabouts.
    It’s one of the best areas in Potrero Hill, and the price is well below what other comparable houses are still selling for. The Kronos Quartet house at 610 Rhode Island (a block over) is still on the market for $2.4 million — though it’s a much more interesting and bigger house of course.
    This case is nothing like the million dollar Bayview houses — not at all comparable. AT doesn’t care how many people tell him he’s wrong, he’ll keep saying he’s right. Whatever dude!
    The market for north-slope Potrero Hill SFRs seems very strong to me, or I’d move from my condo into one. This SFR is currently the cheapest in the neighborhood.
    [Editor’s Note: Strike Up The Band, 610 Rhode Island (“Kronos House”) Returns.]

  33. Potrero weather is the best in the city.
    I have a question about the pollution from the freeways. I live up on 20th, fairly high above 280. It seems to me the pollution is would be less prevalent if you are a couple hundred feet above the freeway than if you were on the same level. Does anyone know?
    In my experience, the power plant really was a big problem. Lots of grit on the window sill. If it is not closed already, it is about to be.

  34. “… and the projects on Potrero Hill are going to be torn down starting in 2013 or thereabouts.”
    That is interesting. Any references about this?
    From afar that area always looked like it could make for some good hillside homes. It might not make much difference, but good homes would certainly be better then a giant housing project for neighborhood property values.

  35. “Potrero weather is the best in the city.”
    Now that is something I can agree with!
    In particular I’ve always thought that if the Dogpatch part of Potrero were seriously spruced up, it would be a great place. Sunny, on the water, far enough from the freeway and close to downtown.

  36. tc_sf — here’s the first article I found about it.
    http://www.potreroview.net/news10350.html
    The rebuilding will certainly make that drive up Connecticut much more pleasant.
    With respect to the freeway conversation, my personal experience is that everything outdoors got a lot dirtier than expected when living next to a freeway. We had some outdoor furniture that we basically threw out because it was so covered in nasty grime (not merely dust). The air quality never seemed that great either, and we often kept the windows closed.
    That was even on the side of the building away from the freeway, which resulted in a lot less noise than the near side, but didn’t reduce the grime. If I had to guess, the near side was 250 feet from the edge of the freeway and the far side was 400 feet from the edge of the freeway.
    890 De Haro is a little farther away — maybe 600-650 feet away at the nearest point? kic00 is correct that this is the cheapest SFR in Potrero.

  37. “It seems to me the pollution is would be less prevalent if you are a couple hundred feet above the freeway…”
    Definitely true for the particulate part (tire and brake dust, smoke) of car pollution. Gravity.

  38. @sfre —
    ” When the EIR is finalized, the project will be voted on by the San Francisco Planning Commission and Board of Supervisors. A final decision is expected by early 2012, with construction to begin sometime in 2013.”
    Hmm, according to the article doesn’t seem like it’s a done deal.
    “The 606 units on the 33-acre Annex-Terrace site – home to approximately 1,200 people – will be razed, replaced and joined by an additional 800 to 1,100 affordable and market-rate homes. ”
    Also looks like it’s going to be rebuilt and expanded, rather then just torn down. Although the article seems unclear as to the proportion of “affordable” to market-rate houses to be added.
    “Current plans depend in large part on sales of market-rate homes to help offset the cost of the affordable units. But, with a wobbly real estate market, and an over-supply of densely-developed housing complexes stretching from South-of-Market to Bayview, financing remains a critical challenge. ”
    This seems like an understatement!

  39. the particulate part (tire and brake dust, smoke)
    I should hope that there’s no smoke coming from cars! Smoke is generally a bad thing, but also remember that smoke indicates heat, which will rise. Diesel exhaust generally has particulates too.
    This house is more than 100 meters away, so that significantly reduces the issue (per the studies), and this house is 200-300 feet up which helps too. Prevailing winds also make a difference.

  40. @lark — Much of the stuff that you should be worried about, particulates and hydrocarbons, is heavier then air, but some is lighter then air. Additionally car tailpipe emission that is hotter then ambient temperature can be more prone to rising.
    Here’s a wikipedia article with some links: http://en.wikipedia.org/wiki/Air_pollution_dispersion_terminology
    If I had to guess, I’d guess that above a freeway is better then below. But if may be hard to get a definitive answer within a few hundred feet. It might be best to send in some sort of carbon filter test to a lab.

  41. kic00, whatever you say. The maps are wrong and that two blocks from the freeway is really six.
    Here’s my point. In 2007, $1.35mm got you this 1500 sf 3/1 place, 6 (ahem) blocks from the freeway in Potrero and really far (ahem) from the projects in Potrero.
    In 2011, the same amount gets you this place, a 2100 sf 3/1.5 in a really great neighborhood:
    http://www.redfin.com/CA/San-Francisco/1154-Clayton-St-94117/home/2027215
    Which do you think is the better buy for that money?

  42. The freeway is four plus blocks west of here: http://www.google.com/search?q=890+De+Haro+San+Francisco&sourceid=ie7&rls=com.microsoft:en-us:IE-SearchBox&ie=&oe=&rlz=1I7ADFA_en
    That’s three city blocks, and a small park, and down a cliff. Yet at least four of you were on and on about noise and pollution and whatnot. Typical.
    As for neighborhoods, Clayton all the way up at 17th, which is very busy to say the least, to De Haro and 20th is probably pretty equivalent to a lot of people.

  43. See the name link for a file from SFDPH that might be of interest. This block of DeHaro is one of yellow streets. The methodology isn’t perfect, but I’m not surprised by the predicted noise level here.

  44. Interesting map acoustician. Do you have any theories why the Outer Richmond is consistently quieter than the Outer Sunset ? Those two neighborhoods seem similar.

  45. These models are pretty sensitive to vehicle speeds, counts, and time-of-day distribution. But it’s also possible that the granularity in the mapping overstates the difference (ie, “chatter” between different categories). Another, more-detailed map (with categories defined differently) makes those neighborhoods look a little more alike (see name link, but warning: large file).

  46. Yes, I had suspected granularity (or color binning) might be the cause. The second larger map you posted seems a lot more realistic with the Sunset and Richmond approximately the same. BV/HP also looks better. Also it is no surprise that a freeway bridge would be a big noisemaker but holy smokes : the Bay Bridge is by far the single biggest noise generator in the city.
    I have a hunch that these maps were generated from a model based on traffic volumes/speeds. Notice how quiet things look at Ft. Funston. There’s no cars but the Pacific waves make noise albeit a much more pleasant sound.

  47. Thank you acoustician, that’s very helpful.

    Cool map. Probably helpful if in fact there is a current or potential future Potrero buyer reading. But when it comes to posters, do you really feel that pan-hater posters who see Potrero Hill, then shout ‘Projects + noise'” every single time will check back and look at the yellow and green that marks much of the ‘Hill? I doubt it. I think they’ll holler “Projects! Noise!” the next time too. Because they don’t care. And people like you encourage their behavior, sfrenegade.

  48. Yeah, for most of Potrero the projects are not a big problem. It is a little different if you’re directly adjacent to the projects parcel though.
    There are other surprises on Potrero that I didn’t expect like taxi traffic. That’s probably induced by the cab dispatch yard at the bottom of the south slope. Hang out at the corner of Carolina and Southern Heights for a while and you’ll see what I mean. Those cabbies drive like maniacs. I have no idea why they take this route as opposed to C.Chavez but they’re professional drivers so there must be a good reason to cut through up and over the hill through residential streets.

  49. I have a hunch that these maps were generated from a model based on traffic volumes/speeds.
    I think you’re right; both of those maps reference transportation (the first one explicitly references TNM, the Traffic Noise Model from FHWA). I doubt that they did much (if anything) to incorporate non-transit sources.
    Probably helpful if in fact there is a current or potential future Potrero buyer reading.
    Perhaps in the aggregate, and they can probably help buyers put things into perspective. But these maps are really generated for planning purposes. Pro-tip for developers: you can look to these maps to see if the City is likely to require an acoustical review for a new construction.

  50. “And people like you encourage their behavior, sfrenegade.”
    Read my comments again, micro bro. If anything, I was more positive than negative about this location, and said it was further away from the freeway than I suspect will cause noise/pollution problems.
    The magic number is more like 300 meters, but anything more than 100 meters mitigates much of the problem.

  51. As opposed to other times when I provide facts and analysis? I provide plenty of information here, and everyone but you seems to read it. I often disagree with you, fluj, but that doesn’t mean I support other people, like tipster or whoever else, although you constantly accuse me of this.
    If anything, my viewpoint has been consistently more like NoeValleyJim’s than anyone else’s: that we would see first nominal drops, then nominal returns would stagnate/flatline, with real numbers consistently dropping, and that’s what we’ve seen thus far. This is fairly typical in housing busts, although we have had plenty of government intervention in this bust to keep things afloat for longer than is warranted. Things like weaning banksters off of Fannie and Freddie are a good thing and we need more of that.
    Instead of taking that as my philosophy, you take my disagreements with you and your incredibly broad statements as agreements with tipster and his incredibly broad statements, which is misguided. That’s what causes comments like the above, when you didn’t even read what I said in this thread and are now backpedaling.

  52. My statements are broad? Hardly. I take more flak for being narrow and precise in my interpretations of what any one thing actually “is” than anybody on the site. Your fault is that you don’t call them out on their nonsense and let it go, leaving it to bullish posters and only if they are up for it. You aren’t alone in that. The editor should be policing those nuts. But you and posters like you treat the panhaters as if they’re actually trying to engage. They’re not.

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