CFAH

As we outlined last month, the previously remodeled three-bedroom home at 3806 22nd Street, which is “located on one of the best, flat blocks in Noe Valley,” was purchased for $3.275 million in October of 2016 and features “high ceilings, warm living spaces, and an open floor plan,” returned to the market priced at $3.895 million in June of 2019, sporting a newly remodeled lower level which was “expanded to include a 4th bedroom with [a] separate entrance, laundry room, kitchenette, and huge family area perfect for entertaining.”

Withdrawn from the MLS and then relisted for $3.495 million in February of last year, the home was then relisted anew for $3.295 million at the end of last September, a sale at which would have represented net appreciation of just 0.6 percent since the fourth quarter of 2016 (not accounting for the cost/value of the expanded/remodeled lower level of the home).

And the resale of 3806 22nd Street has now closed escrow with a contract price of $3.155 million, which is 3.6 percent below its value in the fourth quarter of 2016, not accounting for the cost/value of the expanded/remodeled lower level of the single-family home.

Keep in mind that the Bay Area index for single-family home values is up 24.6 percent over the same period of time and the “median sale price,” which is a deeply flawed metric for measuring changes in values, is up as well.

Comments from Plugged-In Readers

  1. Posted by Cave Dweller

    $3M+ gets a lot bigger and better home .. something that is relatively superior if one has to survive indoors for the next year or more. I have no desire to visit the city even if I miss it at times.

    • Posted by Anonymous

      Does it? The house is 3500 sq feet.

      • Posted by Cave Dweller

        Just sold last month [in Pacifica]. It is not quite 3,500 sqft. But Pacifica does allow for 1200 sqft ADU that can be built on this property.

        • Posted by Ohlone Californio

          Odd. Why not a San Luis Obispo sale?

          You’re not involved. You’re clearly detached. Not sure why you post here still…

          • Posted by Cave Dweller

            I clearly don’t agree with the way houses are priced in SF market. But nevertheless it is quite an economic phenomenon given the amount of money involved and obvious class/housing disparities. The data and discussion on this site is informational. Now, I do own a little bit of real estate in SF. So I am in fact not detached. If the market flies like it did in the past 20 years, I am not going to complain.

        • Posted by Anonymous

          That’s a pretty irrelevant comparison. Nobody in their right mind would argue that it’s not an expensive house in general or for its size if you are almost anywhere outside SF. But in SF city limits, I think you’d be pretty hard pressed to find a remodeled/modernized single family house at that $/sq-ft price point, particularly in an area that is generally considered “more desirable”.

          I mean come on, the title of the post is literally “So You Thought You Knew the Market in *Noe / San Francisco* “

          • Posted by Anonymous

            Also, the Noe house is cheaper per square foot than that Pacifica house.

            Noe house:
            $3,155,000 / 3510 sq ft = $898.86 / sq ft

            Pacifica house:
            $2,100,000 / 2226 sq ft = $943.40 / sq ft

  2. Posted by Cave Dweller

    Another way to look at it, better to take a loss now and split that leverage into a diversified basket elsewhere (RE or something else) — especially now since rates are low and 0 down is becoming fashionable once again. That might offer a better hope at covering for the loss and maybe even make a small profit.

  3. Posted by Brahma (incensed renter)

    I think what happened here is an example of idiosyncratic risk, in this case this particular flip resulted in an unusually ugly home that the buyer is going to have to correct before they themselves sell it.

    I don’t know what Cave Dweller is talking about. Usually (but I can’t say from expert knowledge, as I am not a flipper; I’m sure I’ll be corrected here) from what I’ve read, lenders for flips want to be paid back immediately when a home they’ve lent the funds for changes hands, so there is no “tak[ing] a loss now and split that leverage into a diversified basket elsewhere”.

    • Posted by Cave Dweller

      Buy for $5. Sell for $4. Re-invest $4 elsewhere and try to make $6 to cover for the loss. This is a well worn approach in retail trading.

      Put another way, if you spend $20 to watch a bad movie, you’d be better off walking out of it sooner and putting your time to better use elsewhere rather than suffering through the rest of it.

      Single home flipping is generally a bad strategy. But rising tide carries .. and so on.

      • Posted by Adam

        Only 2 weeks in but this is the post of the year. Maybe the greatest I have read on this site. I think that’s the right perspective. Curious where the owner is allocating the 3m bucks. Probably buying office buildings or maybe a hotel. Will probably take a 500k paper loss but hopefully get a 2m gain in a different asset class. I wish them the best.

        • Posted by SocketSite

          The “paper loss” was realized, and became an actual loss, when the home was sold.

        • Posted by Cave Dweller

          Heh! I don’t know what the owner did or will do. But if it was indeed bought with leverage they’ve probably lost all their equity which is painful but not as bad as negative equity. But i could be wrong.

    • Posted by Cave Dweller

      But, I do agree with the example of idiosyncratic risk — which happens to be embedded within (I believe) a systematic risk (SF) which in turn is embedded within a systemic risk. The loss is compounded in this case because of the double embed. Without all that stimulus, this is a dead market.

    • Posted by SocketSite

      Purchased in 2016 and remodeled shortly thereafter, this wasn’t a failed flip or speculative project.

  4. Posted by Ian Berke

    One of the better Noe Valley blocks but such a homely facade. Stucco, modern windows, painted clay tile, etc. Why put all that money into the interior and not bother to restore the facade? Especially on a block that has so many other handsome Queen Anne rowhouses.

    • Posted by tipster

      “Especially on a block that has so many other handsome Queen Anne rowhouses.”

      See my name link. This house already matches the others on the block. Making it stand out probably wouldn’t have been a good return on investment.

      • Posted by Jenofla

        I actually agree now. It’s in the middle of a cluster of very similar homes, 5 in a row, with very bland stucco facades. It’s quite confusing because the house and I presume its neighbors are built in 1900 and every other house across the street and the ones going down the street have more decorative or historic facades. I wonder if someone remodeled this cluster en masse sometime in the middle of the last century, maybe when it was far more affordable?

      • Posted by Anonymous

        Yeah, it matches that little row of houses. I live on this block and there’s a few different style sequences on this street.

        The building on the corner just underwent a seismic retrofit which displaced the laundromat. The space is available, but I have no idea what anyone would put there now.

  5. Posted by jimbo

    i guessed $3.2 in the original posting. Does that mean i win?

    • Posted by SocketSite

      As we never specified Price is Right rules, that would mean the bragging rights are yours (along with an acknowledgement that you have a plugged-in sense of how the market is actually moving).

      • Posted by tipster

        Wasn’t his guess 3.32, which was above the then current list price of 3.295, indicating he thought it would go over, not under? I mean he still wins as the only entrant, but he was off by quite a bit and in the wrong direction…

        • Posted by Mike L

          I would have won by stating $1 if it was true price is right rules.

  6. Posted by ELC

    This house does not appear to have a main bedroom, i.e. one with its own bathroom. Or am I missing something? $3M plus for a house where you share your bathroom with the kids or guests? That’s a hard sell.

    • Posted by Jeffrey W. Baker

      It also has two bedrooms with so many swinging doors there’s no floor area remaining for the furniture.

  7. Posted by agent=middleman

    All those looking hard for deficiencies in the house (intentionally) miss the point that the same house sold for more in 2016. Nothing changed except the market.

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