Anybody here know SF Real Estate?

SWMBOs father recently passed, leaving to the estate a house in San Francisco.

He bought the house for $38,000. In 1970. It's what I'd call a row house, each building is separate, but there are millimeters between the exterior walls.

Living space measures ~1200 square feet, there's a 1-car garage which makes up most of the first floor. There is a sizable back yard, but in this area houses abut the street, so there is no front yard.

The house is in a general state of disrepair, having been lived in for the past 30 years by a retired man of modest means.

Real Estate agents (and this is backed by Zillow, FWIW) are telling the executor to list it at $1.2MILLION - and expect a bidding war!

I don't get it. Can someone explain this to me? Why would a person pay $10,000 per square foot of living space??

Location, location, location.

My condolences on SWMBO's father's passing.

When I used to travel for work to SF (4-5 years ago), my coworkers and i would play a game to find houses for sale for less than a million.

Rarely found one.

$750K is the entry price for any house in SF. Add in a decent yard and I could see that easily. It's nuts what they are charging for real estate in that city and getting it every day.

There is no good explanation for that type of insanity, but that is what passes for normal out there. Sorry for your loss.

Silicon Valley is why.

Sine_Qua_Non wrote: Silicon Valley is why.

+$1.0M

It's all about supply and demand- there's a demand of highly skilled and pretty high paying people, and there's not a great supply of places to live.

What's really interesting- with the high cost of living, many could live better with less income because of the costs. And my company directly deals with that, since we have a new office in Silicon Valley. For that kind of money, you could get 40 homes in Detroit. Or at least live in a mansion in the rest of the area.

If it is anywhere near downtown, the garage alone is worth $1 mil. Parking in the city is tough to come by, and living spaces with a garage included are worth their weight in gold. At the height of the Rear Estate crash, my sister was looking at places in Oakland that were boarded up and near the "murder-dubs" and they were still North of $500k.

T.J. wrote: There is no good explanation for that type of insanity, but that is what passes for normal out there. Sorry for your loss.

Silicon valley (south of SF) is full of companies with crap loads of money. Some from income (e.g. Apple) and some from stupid amounts of speculative investment. Because it was getting so crowded and expensive in Silicon Valley, companies (e.g. Uber) looked for other areas and SF was a target. I think a big aspect of that is that SF is a lot more "hip" and "cool". All the companies means lots of qualified workers to jump and steal from other companies.

It also has a lot more public transit, which is mostly missing in Silicon Valley (the BART train system never made it around to that side of the bay), so it's easier for workers to live farther away. Because of this of course, costs in the surrounding areas are climbing also.

Because of the above, real estate has gone into the stupid zone. I am sure it is not uncommon at all to find people paying a couple hundred a month in mortgage living next to people in the same house paying $4000+. Think Manhatten, and I think that gives you a good idea.

One note: With a lot of these houses, they will buy them for stupid money and literally gut them and re-build them. Because of this, unless you want to invest a bunch and make some sort of hipster playground inside, it is likely best to sell it as-is and allow the buyer to do what they want. It's entirely a sellers market. Be patient, and you will get TOP dollar.

Will it last? Certainly for the short term. Long term? Who knows, but Manhatten has not gotten any cheaper...

All I really know abut the SF market is that I'd much rather be selling a house there than buying one.

Yes the price is stupid as hell, but that's what they are in SF, so you're rich now! Are you still going to post on here or are you going to Ferrarichat?

You can work in Columbus, OH making $50k/year as an entry level web developer or work at Facebook in Silicon Valley and make $115k/year. A few years in and you're making $170k/year in Silicon Valley. With hundreds of thousands of people making salaries like that, a $1.2mm house is not very expensive.

alfadriver wrote:

Sine_Qua_Non wrote: Silicon Valley is why.

+$1.0M It's all about supply and demand- there's a demand of highly skilled and pretty high paying people, and there's not a great supply of places to live. What's really interesting- with the high cost of living, many could live better with less income because of the costs. And my company directly deals with that, since we have a new office in Silicon Valley. For that kind of money, you could get 40 homes in Detroit. Or at least live in a mansion in the rest of the area.

Yep. Precisely why the company I work for (Headquartered in San Mateo) is growing our OKC office by leaps and bounds.

We all get paid pretty well as it is, but not as much as if we lived there. About the only big bonus of being in OK is that with the right job, you make damn good money, but the cost of living here is also very reasonable compared to most parts of the country.

In 1970 dollars $38K is worth $250K now. Just shows how much house prices have escalated in some markets.

EvanR wrote: SWMBOs father recently passed, leaving to the estate a house in San Francisco.

My condolences.

EvanR wrote: Real Estate agents (and this is backed by Zillow, FWIW) are telling the executor to list it at $1.2MILLION - and expect a bidding war! I don't get it. Can someone explain this to me? Why would a person pay $10,000 per square foot of living space??

When I read the description of the house, I was thinking "a million bucks". SF real estate is real nuts right now and a lot of the recent developments are for apartments, not houses.

My dads 1970 $50,000 house got him $350,000 three years ago - Chicago suburbs.

It if wasn't 1970 inside and had a new roof he could've gotten $400,000. Not really SF money but not a bad return.

Just a FYI have the thing actually appraised by someone in that actual market. A backyard alone can add 400-500K more to the sale price and Zillow will not capture it. Zillow is often off in high dollar markets like that.

Cash buyers are king there and want 5% or so off true market pricing right now but its a easy sale. I have had multiple offers up that way to work and honestly it would take 5-6x my Salary to have the same home and I frankly don't understand it. Then again most people would balk at the cost per sqf here in San Diego.

Also 1K per SQF not 10K, still crazy but par for the course there.

I think they're right with "bidding war".

Stuff is ridiculous out there. I'm pretty sure some of the homeless people take home more per year than some of us do just because of the location.

Depending on exactly where in the city it is, having a back yard and garage could almost see double, especially if someone buys it, updates it and flips it.

You dropped a decimal...it's ONLY $1,000 a SF.

Another little stat. Average price for homes nationwide in 1970 was $23K. In 2017 it climbed to $375K. So you could make the argument that in today's home price dollars it would have been a $625K house in today's dollars. So it's only appreciated a little bit in the hot SF market

oops, sorry for the math error. Big numbers boggle me. For those who know the area (I don't, having only been there once) the house is located in what's called the Sunset District, around 19th Av & Noriega.

The executor is in process of getting the house cleaned out and listed. Since SWMBO and I aren't conjoined at the bank account, I don't get any of it, but it will be fun to watch her use it.

In reply to EvanR:

I have no doubt you will benefit vicariously

EvanR wrote: ...the house is located in what's called the Sunset District, around 19th Av & Noriega.

Oh, the overcast district. I used to live near there. Fog would burn off around 11 - 11:30... roll back in around 12:30-1... argh.

19th ave is a VERY busy street BTW (the 280 dumps onto it), so hopefully it's not on 19th. Not that it really maters that much though, SF is SF.

Remember you can negotiate realtor commissions.

5-6% is a $60-$72,000 payout.

Out of curiosity I Googled Noriega Street real estate. A renovated 1400 square foot row house was the first listed at 1.7 million dollars

So there you go!

Of course the other option is you guys could live in it for a few years, enjoy city life, and sell it for a profit when you tire of that lifestyle.

If someone offered a place in San Fran for free I'd probably rent it for a bit, live in it for a bit, rent it for a bit, etc. It's a great place to live if you can afford it...which makes me wonder what the taxes will be like.