I think we’ve found the winning formula — put your down payment in the stock market & rent, and let your equity asset grow faster than the real estate market. Then you buy this house with cash you made in the stock market (after 15% tax), and over bid by 10% to make it the cleanest offer to beat out everybody :)

This place would have sold for $4.25 last year! :-)

Actually, I have no idea about that area of town and the market; I was just making fun.

It’s a beautiful house though. I put this in the same category as 1771 North Pointe. Perfectly redone homes are a true rare commodity in this city and command a significant premium. Well to-do buyers want luxury; not a 14 month project. If I were a developer I’d be looking for dogs in good neighborhoods.

If only I had the time: http://sfarmls.rapmls.com/scripts/mgrqispi.dll?APPNAME=Sanfrancisco&PRGNAME=MLSPropertyDetail&ARGUMENTS=-N885844618,-N215766,-N,-A,-N11443852

Does anyone know (or will tell) the selling price of 1771 NP?

E.

Once again a seller’s agent underpriced a property. You’ve said it here on the Frontsteps. Others on more bearish blogs have said it as well. Over/under list price means nothing but how closely an agent was able to guess the market at that moment. Let’s not get carried away in either direction. That being said, damn, I wish I’d had 4MM lying around… That’s one nice house.

You can’t say that this property was underpriced, intentionally or unintentionally. The pricepoint was far and away the highest 5-E listing ever, and it went over. It’s a very nice house. No doubt about it. Everyone seems to love it. But $3.6M on 17th street was speculative in and of itself. This has surpassed all expectations, clearly.

Up 100% on your 20% downpayment? Or up 100% on your properties entire price? I bought a place in early 2003, and a comp in the building sold for 60% more price/sqft. That’s +300% on my 20% downpayment. You must mean the later.

Balanced, absolutely YES. 1 bedrooms are already over $1mil in areas, and condos for 800K now are around. In 7 years, I can see the majority of SF prices reaching those price points. Meanwhile, rents also rise by 60-100%, and your mortgage payment still stays at 2007 levels. The beauty of homeownership.

James, why so acerbic about the millionaire renter thing? I’ve read several anecdotes on this site about “Google millionaires” who bought their FIRST residences for huge amounts in the city recently. Weren’t they technically renters before? In your myopic view of the world, where “millionaire” and “renter” are apparently mutually exclusive terms, how could this have happened? The way you guys spin it, owning real estate is the only path to becoming a millionaire, yet tech and start-up millionaires are one of the things keeping this market going. So which is it?

james – under normal circumstances, I would completely and wholeheartedly agree with you. But given the stage of the real estate cycle we’re in now, it honestly makes no sense for first-time buyers to jump in. The analysis is different for people like you, who have owned for years and can roll significant equity. But given the current ratio of prices to rents and/or incomes, renting is financially a much better option today UNLESS you can get about 10% a year in annual appreciation. Which is why I asked if people actually thought prices would double again in the next 7 years (about 10.4% implied annual appreciation).

Quite frankly, I think that level of appreciation is impossible given the current economic context, even in San Francisco. Pre-bubble, local real estate appreciated at around 3-5% per year.

Run any buy vs. rent calculator you want to double-check…first-time buyers are much better off renting at 1/3 the cost of a mortgage and waiting for balance to return to the market. Honestly, if you were a renter today, would you jump in now, or wait to see what happens in ’08 and ’09?

Your point about foreclosures and short sales is spot-on: it makes sense to buy today if you get it at 20% below current market, like the guy who sent in the letter on the other thread.

Specific example: had my eye on a nice place in Walnut Creek a while ago but got skittish. In the past year I’ve seen some places in that area reduced by up to $100K. Had I bought in ’05, my entire down payment would have been wiped out by now. And if all the problems in the market disappeared, and normal appreciation of 3-5% came back today, it would take me over 4 years just to make that up and be break even. But the foreclosures are still increasing. Which is why I’m still on the sidelines.

So while I agree that, in the long run, you don’t get rich renting, I have to add that in the short run, you don’t get foreclosed renting, either.

Ha ha…are you kidding? If I get evicted or rent gets increased, I can easily find another rental for roughly what I’m paying today. Which is 1/3 of the mortgage payment on a comparable home.

I’d rather take that risk than losing years of hard-earned savings when my reckless speculator neighbor gets foreclosed on and my property value drops $100K in a year.

Please humor me, James: if you were a first time buyer today, with everything that’s going on in the market, would you buy now or wait a year or so to see how it all plays out? I honestly want to know.

[Editor’s note: James….? We’re waiting…..]

if you make real money and you don’t own real estate, you are a fool. although you should also be commended for paying way more of your share for the war, i guess.

;)

well i expected you to ask what i considered real money paco. but i like ham too, especially at this time of year.

;)

James, you still haven’t answered my question: if you were in my position, would you buy today or wait a year?

If you need details, I don’t have any generous relatives willing to sell me their home at 30% below market, and am wary of foreclosures because I’ve heard some horror stories. Spouse and I make “real money” and are qualified for an $800K purchase. Because of kids, we’re looking at Lafayette/Walnut Creek area. Even friends and coworkers who already own in that area have told us to wait – the foreclosure situation is getting worse, not better, and prices are observably falling.

Renting forever is obviously stupid as inflation and taxes eat you alive eventually. But buying near the apex of the largest asset bubble in recent history can be equally stupid, especially if prices fall materially.

if you can only afford 800k and have 3 kids, i would never buy in the city. lamorinda is a great choice. i’d spend all my weekends, friday’s too, hunting out there. good luck.

Thanks Editor. And thank you, James, for admitting that it’s not always a great time to buy.

Regarding the east bay, there are a lot of factors which aren’t worth getting into here. But #1, In the city, you pretty much have to send your kids to private school, which can be more than Berkeley tuition. You can do public school in the east bay.

For $800K in the city, you get a 2-bedroom condo or an 1,200 square foot SFR way out in Parkside or Excelsior. Same money buys you this in the east bay:

http://sfbay.craigslist.org/eby/rfs/506602712.html

Plus better weather, and BART beats Muni hands down for commuting. Don’t get me wrong – I love the city and all it has to offer. But families just get more bang for the buck in CoCo.

btw, i’m not saying it’s a bad time to buy. you read me wrong. i said you should stop looking in the city, with your requirements and budget. you should read blogs over there too. i wouldn’t waste my time here or on any other blog about the city either.

i tried to find you one on the east bay but i couldn’t. burbed is kind of fun but it’s mostly about the penninsula and south bay.

maybe someone else knows a good one.

here’s a blog i found you on lamorinda. wasn’t easy.

http://www.bobwegener.com/bin/web/real_estate?acnt=AR182765&ZKEY=&action=ACTIVATE_FRAMES&tm=&linkout=http%3A%2F%2Flamorindarealestateblog.com

you can get a great house over there for 550k.

do you think prices in lamorinda are going lower than that?

if so, rent out there and wait and see and get to know the hood

i’d buy at 550k, it it was a great house for me and my family

big yard, turn key, great school district

stop trying to argue with me

if you don’t feel comfortable buying because of other circumstances you aren’t being forthcoming about, job, marriage etc, don’t blame me or the market

I have to second Alex on the public schools. We found the perfect school for our kids and I wouldnt exchange it for any full scolarship (for my 3 kids) in any private school in SF.

I think high housing prices helped the school district in 2 ways:

– increased money from increased property taxes

– increased mortages to a point that homeowners HAVE to give a fair look at public schools.

– forced more great parents to put their kids in public AND bring their parenting presence and help to the school.

Last, dont forget that tests NEVER reflects the quality of teaching, but rather the kids attending the school. Scores are one number among many other datas, and it never reflects that YOUR kid will do well in that particular school (not to mention that tests are 4 or 6 years ahead of your kid, so teachers HAVE changed since, somtime for the better, sometime not)

Quite the opposite. In SF, you can hand pick your school according to your own kid needs – and because of the dense environement, there are most likely up to 10 schools within walking distance (or a couple muni stops). So if you want your kids to be in the best school district… stay in SF and pick the art program for your daughter, the sport program for your son, ALL FOR FREE. (and if you pick a star school, they even feed you for free thru the food bank – the other week, the FB dumped 14 huge boxes of ORGANIC cookies for the families to take!)

Our family starting the public school in SF is the best thing that happened to us this fall.

james, I’ve been thinking about your comment.

Actually, I do think the excat opposite.

FYI, there IS a school map and very strict assignements depending on your address. What makes the lottery interesting is that you dont HAVE TO register at your local school. (and vice versa, if you dont get one of your choices, you get assigned to your local school, or the next closest school that has room for you).

when buying in NValley, we were quite glad that there was no mandatory school assignement. NV is split in 4 different schools, and those schools are not equal – and guess what, we are right at the frontier of some of those area.

– we would have been mad to find a suitable house in NV and be on the wrong side of the street – the stock of sfh is so thin that many home buyers just take whatever they find.

– we would have been priced out one of the attendance area.. ans maybe priced out of all NV (and yes, our alternative to NV was out of the city – south)

– we would have to actually attend the school among 3 that has the longest walk too (did I mention that mapping the city with the hills would be nearly impossible? sometime the closest school is the one 10 blocks away by muni, rather than the one a 7 block- up-hill-hike away)

Look at what happened to MV – compared to NV. MV prices have been thru the roof, the sfh being at least if not more expensive than the sfh in NV. now compare the housing expenses and the transportation expenses (with 2 teens at home that means 4 cars in MV) to the price of private schools in SF, and one particular in NV. And even in that case, NV (+ private school) wins. We did the maths, in all possible ways.

The only difference is that in MV, the school map pretty much forces the prices up -something I’m so mad about, considering that not so few lucky ones (by address) attend private schools anyway!

————-

Take SFrancisco. Remove lottery, and apply hard core geographic maps.

You can start erasing Marina Middle school. There is no geographic kid within a mile. You can erase claire lilienthal. There is no geographic kid (that would attend public) within a mile…. (and high prices wouldnt go down anyway. So by osmosis, adjacent hoods would have prices clinb thru the roof even more). etc.

Now, there would obviously be a war on the map. Who gets where. I can only imagine lawsuits after lawsuits to reasign that side of the street to the same school as the other side of the street. Or what about additional propositions about the school map in each and every election ballot? I’m sure you would be delighted.

Some lucky neighborhoods would get all the kids, and some would simply be drained of the kids. Like NV and glen park would get ALL the kids, and potrero and bernal would have no kids whatsoever. ( <- random cliches examples here. I dont imply anything about the actual schools in those hoods)

Just imagine what impact it would make on the already crazy nanomarkets? And the impact on daily commute in the city.

No seriously, and to refocus on realestate. SF market is crazy enough that it can affort a lottery system to even out some nanomarkets oddities. Or said another way. The lottery has created some affordability in the city – like you can live one block further in the next hood, and still attend the school you want.

Like the long debate where NV stops and Mission starts. If there was a map, we would KNOW for sure. There is no map, if you want to live on guerrero, it’s your CHOICE to ride the 48 uphill to NV or downhill to mission. (and you can even play the SFRA map – also price p sqft already evened out on most of the boundaries across the city)

PS: re residency. not so. it works well. cf the hundreds of ghost highschoolers who attend the SF high schools but CANT POSSIBLY live within the city limits (and our best guess is that they live in DC).

Full disclosure: we are the lucky ones to have both the house we wanted at the address we wanted, AND the school we wanted (and no, it’s not our attendance school, altho our attendance school was #2 on our lottery application). We didnt cheat either time. We educated ourselves in the RealEstate market (thanks Alex!!!!) then bought, then we educated ourselves in the lottery and SFUSD (thanks Sophie A !!!) then applied for our school. There is nothing more gratifying than earning your “wining” combination.