Purchased for $1,610,000 in 2011 following a down to the studs renovation and expansion, the seven-bedroom compound at 676 San Jose Avenue returned to the market this past September listed for $2,495,000.
Reduced to $2,295,000 in October, the sale of 676 San Jose closed escrow yesterday with a reported contract price of $2,310,000, officially “over asking” according to industry stats and as touted on the property’s website, despite selling for $185,000 under original list.
It is a legitimate $700,000 gain in value for the now Noe Valley property since early 2011, however, up 43.5 percent on an apples-to-apples basis or roughly 10 percent per year.
The compound includes a four-bedroom main home, a legal two bedroom apartment which was most recently rented for $3000 per month but is currently vacant, and an unwarranted studio which was also vacant as of yesterday.
This property had everything going for it except the San Jose Avenue address. My guess is that if things keep going the way they are, streets like San Jose and Cesar Chavez will start performing similarly to surrounding streets.
Anyway, here’s an interesting apples to apples one, 61 Manchester. It sold for 610K in April 2013, a post-crash market. It traded again for 915K a few weeks ago.
[Editor’s Note: 61 Manchester wasn’t apples-to-apples as there was a bit of remodeling, including the kitchen, from 2013 to today.]
61 Manchester is in Bernal Heights, not Noe Valley. I think Bernal Heights has much better appreciation than Noe.
Also 61 Manchester only has 440 sf with a 1000sf lot. From the pictures, it seems much larger than 440sf, probably a major remodel and even expansion.
yes, Bernal, six blocks away. But incorrect. nothing was done to the Bernal property in the interim, save painting. the previous owner had also utilized non-tax records square footage.
The kitchen? OK. I was basing this off memory. So a bit of remodeling, and not an apple. My fault.
What’s the general Noe Valley appreciation rate from 2011? 43% seems under average. But it is a multi-family so its value is depressed due to SF’s rent control. No one wants a SF multi-family.
I am curious about the single family and condo appreciation.
“No one wants a SF multi-family.” which is why someone just paid 43.5% more for this.. Cause nobody wants them.
The less-than-perfect Zillow index shows median home value at 980K in 2011 and 1.5M today. I’d say 50 to 60% seems pretty realistic.
Noe Valley is a stretch. More Mission or Bernal Flats. Lots of traffic noise too.
That’s what I was thinking as well. Although, according to the SFAR neighborhood boundaries, this is still Noe. Across the street is not, but this side still lands within the limits. Either way it’s a stretch.
Technically it is noe, but it doesn’t have the same charm; but it is in the flats so not really Bernal; and it is not in the hip part of the Mission. Not a particularly desirable location.
Change the street name to Saint Josephine Le Monde Boulevard, Park Avenue (or any of the more expensive tiles on a Monopoly game board,) expand Noe Valley’s boundaries by calling it Noe Valley extension. Or sell to a wealthy foreign buyer who has no idea what all of these street names implicitly mean and is buying based on perceived location, value, and future appreciation.
Rent out those two units — $4000 for the 2Br and $3000 for the 1Br. You get to live in a redone, 4Br/2Ba place for pretty cheap. Smart.
If this is an investment property, also rent out the main house for $8-$10K a month.
Or maybe the new owners do not want or need to live next to tenants?
2011 was a good time to buy.
Net of property and transfer taxes and buying/selling costs, that’s about a 34% net gain. Quite good. Still S&P 500 is up about 58% during the same time period, with no property taxes and negligible selling costs (and no maintenance costs). The first 250k/500k in gains on the home are tax-free if the owner lived there, which makes this just a little worse than an S&P index fund, Housing is generally a pretty lousy investment qua investment. Even when the timing works out well, it still rarely beats the stock market. Nevertheless, the 2011 buyers did just fine (especially compared to someone who bought in 2005-08 – not such happy stories for that group; a lot of life is about timing).
If you buy with a mortgage that will change the math by a lot.
Say you had put 30% down? You would have doubled your money in 4 years.
Of course 2011-2014 were very special years for both the SF RE market AND the S&P500.
It looks like they put 400K down and financed the rest with a mortgage. So the net gain was much better than a simple S&P index fund.
One could also but an index fund on margin. Gotta compare apples to apples.
there are plenty of investments that would have worked out great in hindsight, if we are inventing scenarios
The whole point of this comparison exercise is to invent a hypothetical alternative investment. Have to invent a scenario to do that.
If you want to run the numbers for the 400k down scenario, then make sure you include the financing costs of the $1.2 million mortgage – about $175,000. Eats up 1/4 of the gain.
Apples to apples with respect to leverage, you’d have been better off with a simple index fund. But the 2011 buyers did fine.
To be honest about it though, far fewer individuals can or do leverage large stock investments (70% on margin) than leverage home purchases with a mortgage. So the leveraged index fund scenario doesn’t strike me as a true 1:1 alternative, and probably wasn’t for the actual buyer.
I’m as much a houses =/= investments person as there is, but clearly these folks happened upon exceptional timing and made out quite well.
There is an old adage if the real estate market does well, the stock market does not. Explanation is once people plunk a lot of money into their homes, it ties up discretionary funds for stock investing. Vice versa.
Buying stocks on margin is ill-advised unless you are a professional who knows all of the ins and outs. I have yet to meet anyone who gambled big on margin and kept all of their winnings.
“the whole point” ? according to whom?
You are the only one slapping a false construct, two actually, one being the nonsense all cash buy, the second being the imaginary put, on to this.
I’ve been to this place a couple of times. Great house.And a short walk to Mitchell’s Ice Cream.
A little disappointed they didn’t include their iconic green Buddha as part of the staging though.
Despite the fact that realtors seem to think that anything within 5 miles of Noe Valley is Noe Valley, that’s not Noe Valley.
NOT Noe Valley!!!!!