Purchased for $2.8 million in April of 2015, the updated Noe Valley Edwardian with “an ideal layout” at 936 Noe Street, three blocks from the main drag, returned to the market priced at $2.995 million thus past March, a sale at which would have represented total appreciation of only 7 percent over the past five years.

While the four-bedroom home, which includes the ground floor “au pair suite” with its own entrance, has since been painted, and there was a small amount of seismic work completed after it was purchased, it’s otherwise apples-to-apples.

And the re-sale of 936 Noe has now closed escrow with a contract price of $2.8 million, representing total appreciation of 0.0 percent on a straight line basis since early 2015.

Comments from Plugged-In Readers

  1. Posted by ST

    Well, I wish every single property is going back to 2015 price, so that I can have an opportunity to buy a home…

    • Posted by grizzley

      Careful what you wish for! The 2015 buyer got in at 2015 price and he/she didn’t do so well. 5 years of mortgage & taxes on $2.8M and all you get is nothing.

      • Posted by jenofla

        Well, you do get to live in the house. They basically paid rent.

        • Posted by Kyle S.

          And missed out on the return they could have gotten for their down payment. Roughly $90,000 if we assume 20% down and a constant risk-free rate of 3% for all five years. (And as we all know, the market has been returning much more than 3% for the past few years.)

          • Posted by Reemz

            What about the amount they would have spent on rent? Sure they could have made $90k+ in the stock market but for a house like that they would have spent at LEAST $5k/month on rent = $300k over 5 years. Then you have to factor in the tax benefit from interest expense which is about another $300k in interest at a 25% tax bracket you’re talking a benefit of $75k. Not the typical bay area return but still a good use of their money.

          • Posted by AY

            Mortgage/taxes/insurance would have been ~14K/month with 20% down. 170K in fees when sold.

          • Posted by anon

            @reemz, There are significant other considerations when comparing rent vs buy including for example realtor fees/closing costs. My guess is if they were in a $2.8mil house their marginal tax bracket was probably more around 37%. And to rent a similar house in Noe would probably be more around 10-12k a month. Even with those increased numbers if you use about a 12% market rate return for the past 5 years they would’ve been far better off renting than buying without any appreciation to the house.

            Can try plugging the numbers into a calculator and see what you come up with.

          • Posted by Kyle S.

            Reemz, I’m assuming they would have spent the same per month on rent as they did on their mortgage.

  2. Posted by Conifer

    Perhaps tastes are changing and people with money do not want a house where almost every architectural detail has been destroyed, and the whole exterior and interior is painted white. Let’s see the selling price of the next house of similar size in a similar neighborhood with its originality preserved. Or perhaps as implied the market is just weakening.

    • Posted by Pablito

      Agreed. Not my style. It’s like they erased everything that made the house unique in the search for blandness.

      • Posted by Brahma (incensed renter)

        Of course, the problem is in finding a home for sale with its original features preserved. Flippers love destroying architectural details in the name of “freshness” and “modernity” and People don’t want to live in a place that feels like a museum, and therefore buyers see so many homes like this one on the market it’s not uncommon for them to think all period homes are like this.

        Tastes are driven by what people see on HGTV and media sources like it, and what HGTV shows is what flippers like to build and sell. And then flippers justify their choices by saying “that’s what sells, so people must want it.”

        • Posted by Anonymous

          If you buy a house, you can make it whatever style you want. They chose to go the way they did and there was obviously a market for it. Why care so much about the aesthetic choices other people make? You don’t have to buy it if you don’t like it.

        • Posted by Panhandle Pro

          I appreciate the citation, and yes I rebranded in favor of more alliteration.

          If we were to compare the last 1,000 sales in San Francisco, which would have the higher price per square foot: the sleek white box, or the original Victorian floorplan? We both know it’s the white box, and it’s not close.

          There are functional reasons for this: plenty of power outlets and modern heating, the removal of useless fireplaces to make a room more useable, more efficient use of space, and the ability to entertain while cooking.

          You can attempt all of the mental gymnastics you’d like about whether the media starts it, or flippers do, but the facts are the facts.

          • Posted by Jake T

            I, for one, love to host house parties across 4 to 5 tiny rooms and have people open two doors in order to wipe their hands after using the loo.

          • Posted by Panhandle Pro

            Indeed, Jake T, a round robin of backgammon, cribbage and three card poker with some tea sounds wonderful.

  3. Posted by tj

    Meanwhile look literally around the corner at this one that closed the same week – 7 days on market, 10 offers, all-cash wins it after a second bidding war among the top bidders. 500k+ over asking. $2.9M for 1.5 bathrooms. Yes, the other one in the post above fits the broader narrative, but the Alvarado one is also important to understand if you want to know what’s currently happening with SF real estate. SFHs are very very strong in the 1.5-3 range. And crazy bidding wars for anything with a good indoor/outdoor flow + backyard, like Alvarado…

  4. Posted by tipster

    So the cracks are starting to form even in Noe Valley SFRs. The “it’s only a problem with SOMA condos” argument seems to have suddenly disappeared, in favor of pointing out flaws with a home that we’re all supposed to pretend didn’t exist in 2015.

    All the above points are valid but markets don’t drop all at once. First the marginal homes fall: busy streets, less than perfect layouts, fringe parts of good areas, etc. Everyone looked the other way at these flaws in 2015 because they had to. Now they don’t.

    It’s like a river starting to flow. First it’s just a trickle, then more and more. I don’t remember a single Noe SFR apple that traded for a 2015 price in five years. Now we have one. Next, we’ll start to see 2014 prices, and we’ll hear all the same perfectly valid arguments. But it won’t stop the trend.

  5. Posted by Mark

    For once, I like the interior. Most of the Victorian/Edwardian stock that’s been redone has been atrocious.

    But, for $2.8M I’d rather get something better in the Boston area.

    • Posted by Back Bay Betty

      As God is my witness, I will never live through a Boston winter again.

      • Posted by jimbo

        Boston has a terrible winter, terrible restaurant scene compared to SF and possibly the most racist city in america.

      • Posted by DaTruth

        Agree Betty, the winters are horrible and too cold

      • Posted by Conifer

        The winter weather in Boston is indeed horrible compared to San Francisco.

        In certain respects, however, the life is richer: people who have been there for a few hundred years have a greater attachment and sense of place than those in SF, the museums are perhaps better, the serious music largely equal, the universities and academic lives superior, the social clubs better, the best neighborhoods equal, with property cheaper. And the trip to London or Paris much quicker. People literally go to London for a long weekend. Boston is also close to idyllic summer places.

        But for all that, we prefer SF.

  6. Posted by Rynsf

    The parties here were epic back in the early 2000’s. (-:

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