July 28, 2011

A Sour Sale For The Stunning Pacific Heights Apple At 2679 California

2679 California Facade

The sale of the "beautifully remodeled" and "stunning Pacific Heights Victorian home" at 2679 California closed escrow yesterday with a reported contract price of $2,335,000.

As previously reported, the property was purchased for $3,005,000 in April 2008 having sold for $2,850,000 in 2005. Call it a 22 percent ($670,000) apple-to-apples drop in value since 2008 and 18 percent ($515,000) below 2005.

Apples To Apples To Apples At 2679 California [SocketSite]
Apples to Apples: Pacific Heights Single-Family (2679 California) [SocketSite]

First Published: July 28, 2011 7:45 AM

Comments from "Plugged In" Readers

I appreciate the liberal use of quotations: "Stunning," "Pacific Heights" apple. Same problems with the recent sales on Gough. Locations that were poor in 2003 didn't suddenly become better in 2007. Irrationality and fear inspired those sales and people that bought on crap streets just to be in D7 (is this house actually in D7?) are paying the price. Anyway, I hope the new buyers enjoy the place. I still wonder why it fell out of escrow so many times.

Posted by: Denis at July 28, 2011 8:49 AM

This "Sour" Apple reminds a bit of the "Bitter" apple over at 3016 Pine. Both in LOWER Pac Heights and on busy streets. This is not a great location as Denis notes.

http://www.mapjack.com/?e=yZAnWpqxbFKD

The 3016 Pine was actually a little nicer although I never saw 2679 in person.

Cross posted from the other thread:

...Let's not forget the 2003 sale of $2.025, and although slightly upgraded since then from the looks of those 03 listing pictures, this place is largely unchanged. So it's up 300k since 2003. And there is no way 300k of improvements were made to this place.

The 2005 sale for $2.8 and 2008 sale for $3M are just nutty; but the market was nutty and people (or likely this case, foreign corporations) are getting killed. I think the buyers here got a good deal. I've got no issues with market corrections. But this place isn't going to trade much lower than this price any time soon.

Cheers.

Posted by: eddy at July 28, 2011 9:58 AM

It's frustrating to see the numbers on something like this; however, I think this will be the norm until our economy and housing market turn around. Really is a "stunning" "sour apple" though.

Posted by: DanSanFranMan at July 28, 2011 10:08 AM

Down 22% from peak is pretty much right in line with the SF market for nice places in nice neighborhoods. This place is a little further down since it has lost 22% from April 2008, which was after declines had already begun. Some places have done a little better, and many have done much, much worse. But this result is certainly in the fat part of the SF curve. Of course, on a $3mm home, a 22% loss is a fortune in dollar terms - $800,000 with transaction costs (plus more with all the other premiums over comparable rent). The binge affected everything, top to bottom, and the hangover is doing the same.

This looks like a very, very nice place. The buyers should enjoy it.

Posted by: A.T. at July 28, 2011 11:13 AM

"Down 22% from peak is pretty much right in line with the SF market for nice places in nice neighborhoods"

Yawn. I'll let somebody else do it.

Posted by: [anon.ed] at July 28, 2011 11:42 AM

Location location location

Posted by: kathleen at July 28, 2011 12:33 PM

Location indeed. I'm not familiar with the intersection of California and Scott...is that in Bayview, or Hunters' Point?

Posted by: Legacy Dude at July 28, 2011 1:23 PM

It must have moved moved moved since the 2005 and 2008 sales. That's the only explanation. Can't be the market . . .

Posted by: A.T. at July 28, 2011 1:25 PM

@Denis, why are you talking about Gough? Anybody who is claiming this is a bad neighborhood doesn't know what the hell they are talking about. I lived 2 blocks from there, and happened to walk by this house yesterday.

It's a good location, California is quite nice there, and not particularly busy. There are lots of nice, expensive houses there, walking distance to the Fillmore shopping district with lots of high end restaurants and shops.

If this was on Pine or Bush, or actually anywhere near Gough you might be able to argue this was a challenged location, but it's not.

Posted by: lyqwyd at July 28, 2011 1:58 PM

I'm referring to the sale of 2416 and the sale of 2312 Gough.
The former sold at 31.6% below its 2008 price and the latter at 15% under a 2004 sale (correct me if I'm wrong).

California Street is similar to Gough in that it's a busy street and it simply isn't that great of a location for the money. I've lived in D7 for about 10 years and I just don't really care for California St. It always seems a little dirtier than even Pine and parts of Bush.

Posted by: Denis at July 28, 2011 2:36 PM

Another great result! The SF market continues to be amazingly resilient. Here, the latest sellers bought on a busy street, near the top of the market, and only lost a little more than $800k. I bet if they had held out for another 330+ days rather than go for the quick sale they could have kept the losses under $800k. Regardless, down only 22% is not too bad. I'm sure the sellers are quite happy.

Posted by: El Bombero at July 28, 2011 2:48 PM

^^^

You forgot to say it's better than the central valley and then close with "Congrats to all!" But well done otherwise.

Posted by: Legacy Dude at July 28, 2011 2:52 PM

Fair point, Denis, but that has already been baked into the price of this place for 20+ years. It is a very nice, huge 4700 sf Victorian. If it were a few blocks north (say, Pacific), there is no way it would have sold for only $2.3mm today, or $3mm in 2008, or $2.8mm in 2005. It would have sold for much more.

California and Scott is nevertheless an awesome location, and this is a huge, great place. The steep 22% price drop is simply yet another illustration of the broad decline, top to bottom, in every neighborhood. There is no "nice place exception" as some have been trying to assert (not you, to my knowledge), although, as I noted above, some areas have fallen a bit less than average and some more, as one would expect with any curve!

Posted by: A.T. at July 28, 2011 2:54 PM

This was a horrible purchase in 2008 predicated on a similarly horrible purchase in 2005. Full stop. There were much better homes on the market at this time (2008) such as 2021 Webster just off California in D7 Pacific Heights (See name link). So you could have bought 2021 Webster for less money in a better location and there were

But I'm not sure why there is much debate over this house falling by so much. I'm more curious how an individual can sustain this kind of capital loss. A note on the seller from SF Blockshopper seemed to indicate that this was perhaps backed by a corporate situation, but I'm not really sure. But the facts here are clear. No debating them. It's still up over its 2003 sale price as I indicated before.

I think we're all looking for a sign that the great double dip is coming, or is right around the corner. This isn't it.

Posted by: eddy at July 28, 2011 3:58 PM

Denis. I live on Scott between California and Sac, about 300 feet from the intersection. Gough it is not. Not at any time. Ever. And this area is dirty? Compared to what? SF is filthy. I hate that about our city.

And a lot of people seem to argue that the location was "baked in" to the price at the previous sale and shouldn't be considered when looking at the recent loss. But doesn't it make sense that the biggest losses would be at these spots just as the biggest losses as a percentage of value in SF were in the bottom tier areas? This would sort of be bottom tier Pac Heights. But not Gough bottom! The bottom tier areas spiked the most right? Or is that not the case and I'm making a stupid assumption? It kinda makes sense to me but that usually means I've missed something simple.

Posted by: Boo at July 28, 2011 5:31 PM

@boo, I am agreement with Denis that this is not a great area relative to prime D7. Anything this location has over Gough / Franklin is offset by the fact that it is Lower Pac Heights whereas the aforementioned properties are in Pac Heights.

The big issues was that low inventory combined with high demand and easy credit caused all properties to sell fast and often times at unreasonably high valuations. Mistakes were made on certain fringe homes; often by people moving in from out of state that don't know the difference between gough and lyon street; or the difference in the north side vs south side of California street, or that living on California street is generally not desirable. All these homes were trading at similar $/PSFs or relatative $/PSFs and certain homes sold during that period were destined to blow up. This home is case in point.

I remember clearly thinking that 2021 Webster was over valued and sure to be a bomb, but in retrospect that wasn't a bad deal and that home would probably sell at its 2008 price or higher if I had to guess. So here you have a home that sold within months of eachother with similar qualities; and one is down 22% and the other is probably much closer to par give or take a point.

Some people pay market, other get a steal (2507 Pacific), and some wildly overpay (2679 California). In the end the market tends to even things out. Personally, I think the current buyers did quite well for themselves. They might not make a killing on this place over a 5-7 year hold, but I do not think they will lose 22%.

Posted by: eddy at July 28, 2011 6:24 PM

There are many funny things about this thread-- including the fact that the realtors on here are calling this "lower Pacific Heights" to explain away the outcome. Realtors are so crazy liberal with neighborhood boundaries (and generally with the facts) that it is funny that for once they are emphasizing that a property in a good neighborhood really isn't in that neighborhood. Irony.

And no, I'm not saying all realtors lie. There are good ethical realtors. But I have been lied to blatantly in trivial and trivial matters. There are no consequence to it in that "industry" and the NAR will work hard to defend that.

By the way, I'm not a huge r/e bear in SF. There is a lot of money and cash in SF. But there's a very plausible scenario where buying a house now is lower in ten years. Not the instant meltdown to 1990 levels that people on here seem to hope for, but a sideways, up and down, net lower unwind that takes years to play out. The bears are looking for the collapse. The realtors are calling for a clear bottom and nothing but upside now. The only reason I am voicing one more worthless opinion is that people here either seem to be strong bulls or strong bears with nothing in between. It could be slow and painful for both sides. Markets don't always move in straight lines. One downtrade doesn't mean an imminent collapse, and one uptrade doesn't mean the bottom is in and we're resuming the myth that housing never goes lower. Plenty of room in between and it's funny that no one seems to consider that here.

Posted by: grayarea at July 28, 2011 8:21 PM

thank you grayarea for expressing a well founded opinion that reflects my feelings on this website of doomsayers and cheerleaders.

Posted by: guest at July 28, 2011 8:51 PM

Did a single realtor actually call it "Lower Pacific Heights" ? Because it is not. It's technically Pacific Heights, per the SFARMLS designation. It's funny what people read on here. Because it's often not the words that are used.

Posted by: [anon.ed] at July 28, 2011 9:19 PM

You'd think it was Upper Pacific Depths with the way people are trying to say what a crappy location this is...

Nonetheless, isn't it technically in D7B as fluj/anonn implied? Looking at the SFAR map, it appears that houses on both sides of California are Pacific Heights per SFAR. Usually if they only meant to include the north side of California, they would set the boundary on California, but this boundary is clearly set south of California Street.

I don't understand the argument that this location is worse than Gough, Pine, or Bush -- seems rather weak.

Posted by: sfrenegade at July 29, 2011 11:00 AM

Eddy and Denis have takes on this specific area, its dynamics over the past few years, backstories on individual properties, and the micro-neighborhoods within the area, that are consistently exponentially better than anyone else who writes on this website. Neither of them are realtors.

Posted by: [anon.ed] at July 29, 2011 11:10 AM

The SFARMLS map was redrawn in 2009 to make this much more clear and it was ambiguous prior to that with the maps indicating that North-side California was D7 and South-side was D6. It's still a little unclear since the lots for the south side of California St technically show up on the D6 Map.

http://www.sfrealtors.com/images/MLS_District_Images/zone6.jpg

http://www.sfrealtors.com/images/MLS_District_Images/zone7.jpg

Frankly, after looking at these two maps in detail I am more convinced than ever that the map shows clearly the Lot Area as part of District 6; and property shark has it listed clear as day in Lower Pacific Heights.

I would sincerely appreciate it if someone could post something more technical, or definitive specifying where the south side of California Street officially belongs. Happy to be proven wrong.

Nevertheless, it doesn't really matter. It's not a prime location just as major sections of Gough / Franklin are not Prime even though they are in what is considered Prime nabes.

Posted by: eddy at July 29, 2011 1:37 PM

It really makes zero difference how a realtor group drew a map. This place is in the exact same location that it was in back in 2008 and 2005. California Street is no busier or less busy. It is no dirtier or cleaner. 4,700 square feet is still 4,700 square feet.

Grayarea's take on things is a good one. And it is, of course, true that nobody can say with any certainty how the market (micro or macro) will move in the coming years. However, there is still a (very) small coterie that chimes in to suggest (they never say it outright because it is so laughable) that prices have not fallen in any material way at all from peak for some magic market segment in SF. Ain't so -- and this extremely nice place in an extremely nice neighborhood experiencing a 3-year $670,000 price decline is yet another of the many, many pieces of evidence confirming that fact.

(Heck, and even if one accepts some magic super-micro market that has held up, the other 99.9% of SF has seen declines ranging from big to enormous, so this is all pretty academic)

Posted by: A.T. at July 29, 2011 2:34 PM

"This place is in the exact same location that it was in back in 2008 and 2005"

And if you say this again a fourth time it will be even more true. heh. Come on already.

Nobody is denying that it's the same location. Whether or not you care to entertain the notion that busier streets in locations on the peripheries of top areas stand to get harder hit if/when the market shifts south is up to you. That was the point which was made, and it remains valid.

Posted by: [anon.ed] at July 29, 2011 2:46 PM

And it's not in a neighborhood. It's on a very busy 4 lane, double yellow split line street with a bus line. I'd be willing to be these folks know fewer than 5 of their "neighbors". But none of that is important.

And it is still up over its 2003 price.

Posted by: eddy at July 29, 2011 4:12 PM

Fine, accept arguendo the premise that top places in top neighborhoods - but only in the center of top neighborhoods at that, not at the peripheries - have not been as hard hit. As I noted earlier, that still leaves 99.9% of SF homes that have been hard hit. This debate is all an academic exercise over whether this 4,700 sf Pac Heights home is in that 0.1% or not.

Posted by: A.T. at July 29, 2011 4:43 PM

It's not particularly difficult to avoid being sweeping with language. Truly it is not.

Posted by: anon.ed at July 29, 2011 4:49 PM

I don't think anyone has suggested that prime Pacific Heights homes haven't suffered major losses... It's been difficult to gauge because of the lack of true apples. If you go directly north of this property, three homes along Scott have sold over the past year, and while their status as apples is debatable, their losses have either been much less than this place (2207) or have even shown a modest gain (2655). My initial post reflects my feeling that during the mid-00's, low inventory in prime D7 along with over-eager realtors helped inflate prices along the periphery, which, to my knowledge, had never really been all that desirable. I mean, come on... There are two gas stations a couple of blocks away and virtually no set-back on south side properties. The architecture is a haphazard melange of hideous 50s/60s condos, victorians (many of which are dilapidated) and various businesses.

All that said, some homes in inarguably prime areas have obviously suffered major losses. A good example, not featured on SS (I don't think), is 2552 Baker, which sold for 16% below its 2005 price. When closing costs etc., are taken into account you're looking at a really hefty 600k+ gone. That puts it in league with this place in terms of terrible buys and that part of Cow Hollow really isn't debatable in terms of its desirability.

Posted by: Denis at July 29, 2011 5:47 PM

I concur with the last two comments.

2552 baker is still up over it's 2002 price. :)

Posted by: Eddy at July 29, 2011 7:58 PM

I meant last 3 comments, including ATs. Maybe 89%, not 99.9%

Posted by: Eddy at July 29, 2011 8:01 PM

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