Eye-Popping Appreciation For A Modern Noe HomeMarch 14, 2014
While the sale of 625 Duncan just set a new record for the most expensive home in Noe Valley, it’s the sale of the modern Noe Valley home on Hoffman pictured above that might end up raising more eyebrows.
Purchased for $2,850,000 in early 2011 having first sold for $2,970,000 in early 2010, the 4,500 square foot home at 465 Hoffman was listed for $3,795,000 last month. A sale at asking would have represented a rather healthy 33 percent ($945,000) gain in value for 465 Hoffman over the past three years, but it didn’t sell for asking. It sold for $5,105,000.
Call it a 79 percent ($2,255,000) gain in value, effective 21 percent annual appreciation, for the modern Noe Valley home over the past three years, apples-to-apples style.
Comments from Plugged-In Readers
While “mix” does play some part in the rise in the median price in SF, clearly it is not the only factor.
wow that hoffman sale is nutzo, I bet those first buyers that sold it at a bit of a loss are really pissed they didn’t hold onto it.
This is going to be fodder for the tech-people-are-ruining-the-city crowd.
Between, this and Duncan all one can wonder is what is the ripple effect throughout the City, never mind Noe/Castro/Mission/NOPA. What about the Excelsior? And is this the end, the beginning of the end, or the beginning of the beginning of this purchase price activity?
I feel there is going to be a large ripple effect. The more senior (presumably) tech people make Noe and its surrounding area a destination the more attractive it will be for the remainder of the industry’s aspirational denizens.
Wonder how much of a ripple effect even the one off Zuckerberg purchase had now, looking back…
I found the NY Magazine article about Mark Zuckerberg (presumably) knocking on doors pretty entertaining. Even if this is most probably a dramatization it is nonetheless the narrative about tech invading the City.
the ripple effect only happens to the extent there is a supply of specific buyers willing and and able to pay staggering prices for certain assets where other people dont see any alignment with the assets / prices, and terms – i.e. all cash 7 days, whatever – or simply cannot play economically.
i think its a finite supply. if you get a w2, no stocks ops, no company to cash out of, etc. etc., you just will not play in the “funny money” game.
how many more people are there in the tech fueled SFH price-is-no-object-market? 1000? 2000? 5000?
its a real question, not intended to be rhetorical.
The article (story) about Zuckerberg is interesting, and I suspect partly true. I see nothing wrong with what he did. He did nothing evil. He made one owner very rich, very quickly. I assume he was polite and not pushy.
He’s welcome to come knock on my door anytime. I’m ready.
As for Matt Gonzalez being evicted several times, I’m sorry that has happened. Being a renter probably has that risk built in. That’s not a judgment, it’s a statement.
Perhaps should Matt (the renter) change things in his life to become Matt the owner?
It’s very clear to me that when I’ll be in the market for a house in a few years I’ll have to leave the city. My girlfriend and I actually do pretty well financially, I’m a lawyer and shes a private school teacher. A lot of cities in this country we could live fairly high on the hog, but in a few years here? I dont see it happening.
I guess it saddens me to a certain extent, but I lived in the bay area since 2003 (age 18 at Berkeley), and except for a few years of law school in DC, have lived here since. The Mission district in my late teens, and then my 20s was a very special time in this cities existence. I truly couldn’t think of anywhere in the entire world I would rather have spent that time. I visited Portland in the mid 2000s, and liked it, but it lacked the energy of a big city and the weirdness of SF. Seattle, Austin, even new york, nothing compared.
As Hemingway wrote, “If you are lucky enough to have lived in Paris as a young man, then wherever you go for the rest of your life, it stays with you, for Paris is a moveable feast.” That’s how I feel about having lived in SF, and the mission in particular, during roughly the last decade.
Sam, the market is all about cycles. If you can manage to have a good professional and financial situation when the market is depressed you’ll get an opportunity.
I started considering buying in SF in 2006, but had to wait for 2010 to pull the trigger. 2007-2008 prices seemed foolish and it didn’t last. Now this cycle could be different but you know what they say about “this time it’s different”?
This is a really lovely house, with a killer view, and it is massive.
While the apples-for-apples appreciation is indeed surprising, its not especially out line on a price per square foot basis (things in Noe/Cole/Castro have, for the past few years, been moving at the 1K/psf range when they are modern and reno’d). The real mystery is why it had such a low price per square foot when it previously sold.
Anybody who wants to buy a fixer lacking a drop-dead view is going to be paying in the neighborhood of 1M (4-600 per square foot), — this hasn’t changed of a while.
What does seem to have changed is the unfreezing of the high-end mortgage market, and a growing sentiment amount the well-off that their money (owned and borrowed) is well-placed in luxury housing. Beyond the sale of this place, every block in the trendy parts of town has at least one high-end reno going on….
We’ll see I guess. I’ve come to terms with it, as much as I’d love to have a kid raised in this city, it’s probably not in the cards. Seattle/Portland, Oakland, maybe even LA. Who knows, but I definitely want to raise a family in a city.
“The real mystery is why it had such a low price per square foot when it previously sold.”
There were some comments on earlir thread that its status as a 2 unit building may affect it’s price, so perhaps this, although I don’t know the details.
Other than that, I guess “the previous buyer underpaid” is the new “the previous buyer overpaid”
It’s interesting that Sam says that he and his partner “do pretty well financially”, I am puzzled that he feels he will have to leave the city, not being able to afford a house/condo to buy.
Since we don’t know the actual numbers I’m wondering why there are literally no neighborhoods that he could afford. We seem to hear that a lot here, but at the same time many buyers are not willing to venture further south to less trendy/hip/hot areas.
Is “pretty well financially” mean $200k a year? $250k? or? And that means nothing is available to buy? Nothing?
What about fixers? sweat equity? cutting back on other things?
I find it fascinating (and somewhat hard to believe) that a lawyer and a private school teacher cannot afford to buy anything in SF proper. And no, I’m not criticizing or disbelieving anyone. I just don’t get it.
I’m a first year attorney, together we make approximately 240k, not including any end of year bonus we might get.
We recently were looking in the Excelsior, which does indeed have houses worth pursuing. In a few years when we have a necessary down payment? I’m more skeptical.
Also at some point the allure of San Francisco starts to die down once all homes reach a certain price point. As I said, this city was amazing to grow up in, but if I can get a house in Oakland for less, or Portland for half (or even less) than I will probably jump on that.
My partner and I make a similar combined income (200k) and we cannot afford to buy in the city. That makes sense if you consider buying something at 3x (4x is pushing it) your income. We also have two kids to support (soon going off to college) and I’m paying off my graduate loans. More expenses. How many single family homes or 3BD condos are available in the 600k range? If you know of any please enlighten me.
It is believable that middle class folks, with or without families, cannot afford to buy in SF. You get it now?
I think that this is kind of a unique house. How many 4000+ square foot houses are there outside of the D7? Especially in Noe Valley. Most are 1600-2400 sq foot range with multiple tiny rooms and very narrow and old, or status post multiple prior and strange renovations. I think if a rich or very rich person wants something grand in SF it’s a) hard to find, and b) appropriately costly. Maybe these houses are more like boats with the cost raising as a square of the length!
That neighborhood is white hot. Some neighborhoods are white hot, some not so much. I live in the Outer/Central Parkside and our appreciation since 2010 when we bought it is relatively modest, I estimate 5-10% which is not bad, but not as crazy as Bernal/Noe. We’d probably get out with most of the repair/decoration/transaction costs covered if we sold and been lucky to have lived in the city for the price of interest and property taxes.
As for affordability…when I bought, the bank approved me to 1 mill with a 200K income. Interest rates were a bit lower then. But getting the down payment is the hard part for most people; I was lucky to have saved up for the first three years of my career living in the cheaper Southern California. 200K income with rent of 500/month for shared 1 bedroom – very fast route to a down payment. Of course with a house and kid now, I’m practically hand to mouth now.
Whether the insane price increases will spread to the rest of the city or whether it just means Noe is now the new Santa Monica, while the Sunset stays Long Beach-y (only people who lived in LA five years ago may get this), I guess we’ll find out.
Affordability aside there are plenty of people who like SF and can afford to buy but won’t at extreme prices. Heck, I really like beer and can afford to pay $100 for a bottle of a rare limited edition. But I won’t.
Is it just me or is the second to top clapboard over the entry buckling?
I think much of this is directly tied to the rapid appreciation of local tech stocks. It’s not just Google/Facebook/Linkedin/Twitter. There’s a lot of lessor known non-consumer facing companies exploding in valuation since 2010-2011: Workday, FireEye, Tableau, ServiceNow, just to name a few. Each one likely created hundreds of new millionaires or multi-millionaires.
If and when the stocks of the local tech companies fall, the market at the high end (3M+) will cool off drastically.
You can afford to buy a place here if you want Sam, but you really have to want it. You can afford something like this, which is a good starter home:
You have to cut your expenses to the bone and scrimp and save to do it. But if you don’t have parental help with a down payment, that is the only way. Such is life in the most expensive real estate market in the country.
I did that: scrimped and saved and got rid of my car and took Muni and lived like a college student in a big shared communal house for 10 years until my wife and I finally got our place.
And even then we bought a two unit so we could have rental income from the downstairs unit and still brought in a friend to rent out the second bedroom until we had our first kid.
Second best decision I ever made.
Lol, etc.- you think we’re near bubble territory now? I think this market will keep growing over the next two years. Maybe more modestly, but upwards. After two years, who knows?
I think we’re in a crazy cycle but a cycle nonetheless. Things will get better for buyers one day, they always do.
But most important is to who this opportunity will be open. SF’s population is changing. A lot of people are not going anywhere thx to rent control, but the buyer pool is seeing a big change where average middle class candidates are replaced with techies and other professionals who can support higher prices.
I have no idea now where we are in this current cycle. Everything is rather unprecedented. I can just tell you that buying to rent makes less and less sense since rents are becoming a bit sticky while prices still climb. Then again what makes sense in SF?
I agree that rents are becoming sticky wrt escalating prices. But this dynamic, along with the change in demographics you discuss, also happened during the last cycle boom. So the good news is that we do have some precedence, and hence some predictability.
I do think that SF’s real estate is getting more tied into tech success than the past as a general trend. But as the city gets wealthier, more property (especially in specific neighborhoods and streets) becomes more like fine art; meaning it changes hands less and less frequently. That and all the rent control squatters keeping their units off market helps create that perfect storm that we’re so familiar with. It took a major recession to break that dynamic for a couple of years. But barring a major global meltdown, I don’t see a major recession coming soon. That’s my perspective on it.
“You think we’re near bubble territory now?”
If we are, its a very different type of bubble than the prior one. It’s based much less on people buying just in the expectation of double digit asset growth each year (although that is currently happening, again, price wise…)…
It’s more tied to the tech industry and their apparent taste for living in SF and in particular Noe/Mission etc depending on age, family status, seniority etc..
So I actually feel it’s on more stable ground than the last price explosion…though others may disagree.
Many people who bought into the real estate bubble in, say the early 00’s now wouldn’t be bake to – due to higher prices now compared to then, and tighter loan restrictions. So, it’s less speculative I think.
What about all those people, with all that “new” money in that company Zuckerberg just bought. Its around 30 or 40 people with a lot of money and those houses around 1 million are most likely going to be bought by contractors who will turn them into multi million dollar homes, with or without a view. Or they will be bid up by the people with all the cash who will then do the remodel.
Sorry about Sam and the others. Gotta hope for a little crash, the trouble though is the “starter” homes are disappering.
Welcome home to district 10. Seeing a number of first time home buyers with a variety of work professions including tech buying affordable single family home stock and new affordable condominiums (5800 3rd St. Crescent Way units, and many more to be built). Easy commute access to South Bay, East Bay, and downtown. Public tranisit is pretty decent. More coffee shops, restaurants, etc etc. I too would love to live in D5 or D9 but can’t afford a sfh in those areas with my decent but not outrageous six figure income. So yes home ownership is possible in SF with an average or somewhat above average Bay Area income. But not currently trendy areas.
As far as the future and buyer pools. Of course Twitter employees coming out of their stock lock up post IPO period is looming. How many and what kind of bucks? UCSF medical and now looking to be administrative and research hubs in Mission Bay. Other Biotech start ups in the area. I see a solid pipeline of maybe a few thousand professionals in the 6 figure income bracket who are not millionairs shopping in Noe, but who could likely demand a home in D10.
Sam, We sound alike. I’m a lawyer, I lived in the Mission for a few years, then moved out to Bernal. After the kid we ultimately moved to Portland. I felt the same way about not being able to afford SF. People like Futurist can make all sorts of obnoxious comments about scrimping or moving to the Outer Sunset, but there are many people who agree with you. I grew up in the Bay Area, and I’m surprised how much I like Portland and don’t miss SF. There really is life outside of SF. If I had unlimited resources, no question that SF blows Portland out of the water, but it’s amazing how much easier life is in other parts of the country, which you sort of forget about after having lived in SF/LA/NYC for a long time.
$240K household income makes plenty of houses in San Francisco affordable. If one has other debt, or doesn’t have a down payment, those things aren’t going to change if one moves to another city. It may well be that [having a well informed opinion on better eating and drinking establishments throughout the city] + $240K hh income puts the city out of reach, but that is a life choice. I think most boomers who grew up with Depression-era parents were flinty about saving for down payments etc..
Getting into debt is a choice made by a borrower and getting out of debt is equally a choice. Pick your populist finance guru – from Suze Orman to Dave Ramsey. They will all tell you to start saving carefully.
Hemingway had a nice life, but he also waited desperately for editors in the US to forward him advances to pay his hotel bills and wine purchases.
I like the D10 story. The wasteland of empty lots around Candlestick seems to me like one of our great SF examples of wasted opportunity at present. We don’t need that stadium or those lots, but we could use some decent housing there to turn that area around.
We bought a condo in 2007 in SF when we made only $100k a year. I must be one of the poorest owner posters on this site.
I suggest you read my comments again, ExBernaler, VERY carefully.
There was nothing obnoxious about my comments. But you seem highly defensive when others suggest ways to actually afford to live in SF proper. The fact is there are plenty of well off people here in SF who can afford to live here, but refuse to explore other less trendy (and pricey) neighborhoods, but then continue to whine and complain about the lack of affordability.
And $240k income is an income that, in fact, does allow one to buy and own in SF. Lifestyle choices and spending habits have a LOT to do with owning and living here.
I’m just calling it like I see it. I wish you luck.
@Futurist fka @Noearch:
I re-read your comments. Although I agree about choices/making it work, etc., and I think the substance of your comments are well-taken on many socketsite posts, your delivery is obnoxious.
Then you have a problem with understanding intent as well as language.
Like I, and others have said before, not everyone can afford to live in SF. That’s reality, that’s life.
“but refuse to explore other less trendy (and pricey) neighborhoods, ”
There’s some truth to this, but also SF has been through many boom and bust cycles before and some neighborhoods have gentrified and some have not.
As I’ve said before, a big problem here is that turnover is so low in SF (Thank Prop 13 and RC) that it’s harder than it should be to achieve critical mass in any one neighborhood to change its character.
And financially, stretching to buy a house that shoots up in value is very different from stretching to buy one that stagnates or declines. So appreciation expectations very much factor into affordability.
Think about even the supposed hordes of tech millionaires. For some lightning does strike twice or more, but in general tech is risky and many startups end without a successful exit. Given these odds and the young skewing tech demographic (i.e. expected career length), a million pre-tax might may a good down payment, but not enough to make one even comfortable in SF in a mid-end home. Even a post-tax million isn’t much.
There’s a huge missed opportunity in the families in the $200-$300k range that the city seems to be losing. There’s nothing wrong with the small handful of people buying $3M-$5M houses, but there aren’t enough of them to transform a neighborhood or effect political change. And the occasional cash dump from the IPO of a profitless internet company is nice, but a broad base increase in the median household income would be much more transformative.
The telling thing is that there is a reliable market for developers to by a 1M fixer, spend 800K on it, then flip it for 3+M.
Where are the middle-class buyers when that 1M fixer comes up for sale? I believe they are at the open houses for the post-developer 3+M houses that they can’t afford.
You can indeed live in the city on a middle-class income and even live in a home in a cool neighborhood. But if you also demand an architect-designed glamour house with high-end-everything then you had better look out in Crocker Amazon like Futurist advises.
Case in point: 339 31st Avenue, Lake District
Sold for 1.08 in 12/2012,
Sold 2.98mm 3/2014
I think the idea that first time buyers didn’t try for this house is probably unfair, but they were outbid by someone who knew what to do and how to get it done. (Eddy was this you?)
It’s only a matter of time before the dusty pastel southern neighborhoods clean up. Those rougher areas are probably good bets for new couples pre-kids. Happened to Potrero, Mission etc..
I like this house with a view, on “the hill” in the Bayview. (Remember crime doesn’t climb?)
Asking $425K. I would bet $50K and sweat equity gets this to $675K in 2 years easily.
But the number of fixers flipped into $3M+ homes is limited by the number of buyer in the $3M+ range. Someone posed last week that $2M+ sales only accounted for 8% of SF sales, so $3M+ has to be an even smaller fraction.
As the other post today mentions, SF inventory is down 75%!!! since 2009. Limited inventory not only hinders neighborhood transformation potential as I mention above, but also causes intense competition for the little that is available. And a middle-class income competing against people who can now eye a $5M exit is going to end predictably. (Not to mention that many fixers indeed need fixing and a $800k cost for a pro is going to be much higher for someone without experience)
To be clear, I’m not saying the flippers are a problem. In a normal market there’s cream that the flippers might get, but there’s also plenty of milk for the middle income. The problem is the inventory collapse that has eliminated the milk. Part of the inventory problem is SF/CA specific (building restriction, Prop 13, Rent Control). But even nationally, inventory has dropped around 40% as existing home owners have not been selling their homes even in the face of higher prices.
Anyone know when those 2 nasty projects in bayview/hunters point are slated to get demolished as part of the new shipyard plans? There’s one between palou and oakdale, and one is Griffith. Once those go, it’ll help that area lot.
anon2 – right on regarding the “milk”. I live in Mission Terrace- when I bought 12 years ago there were quite a few older properties needing updating that were good for middle buyers willing to put a little money and time into the house beyond the purchase. But those are becoming few and far between. We just had a flip house sell for $1.1 million – bought for $460, gutted and dwellified (not particularly well, either), marketed at $899, sold at $1.1M. Excelsior may have more opportunities, but those are getting snapped up with all cash offers, flipped quick and sold for top dollar.
Katdip- why do you think mission terrace is more expensive of an area than excelsior? From an outsiders perspective they seem similar.
If you look at zillow or trulia you’ll see the values in Mission Terrace are higher than Excelsior. Most of the lots are bigger, the houses are nicer and better kept, there are some detached houses, there is more grass and street trees, and it is closer to Balboa Park and the BART station. It feels more like the Sunset/Parkside even though it is 2 blocks from Mission Street.
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