2nd San Francisco House Goes For 1 Million Dollers Over The Asking Price

[WhatInThe]

For the second time in a few months a San Francisco area home went for one million dollars OVER the asking price selling for 5.5 million instead of 4.5 million. Over 4K square feet, office, gym, 7 bedrooms and new wood floors.

https://www.sfgate.com/realestate/a...s-for-1M-over-asking-real-estate-16220013.php

 

[Don M.]

Whoever bought it should plan on staying there for many years. If/When housing supply begins to catch up with demand, these ridiculous housing prices will probably crater, and some of these houses will lose half their value.

 

[Aunt Marg]

Whoever bought it should plan on staying there for many years. If/When housing supply begins to catch up with demand, these ridiculous housing prices will probably crater, and some of these houses will lose half their value.

I'm beginning to think the day will never come, Don.

While I can't speak for the United States of North America, I can speak for Canada, specifically British Columbia where we reside, and for years now analysis have been talking about "the bubble", and how "artificially inflated" real estate prices are, yet we've seen no slump in asking, and we've definitely not seen a slump in closing figures.

 

[Lethe200]

Whoever bought it should plan on staying there for many years. If/When housing supply begins to catch up with demand, these ridiculous housing prices will probably crater, and some of these houses will lose half their value.

Local RE differs, as always. I've lived in the SFBA since 1969; this is what I've seen:

#1 - FYI for those unfamiliar with Northern CA RE, this is NOT a San Francisco house. It is in Mountain View, an upscale suburb within easy reach of Silicon Valley. It is a full 40 miles south of SF city/county. It's also a duplex with that legal ADU, which alone in the South Bay Area must have cost them a good $150K-200K.

You couldn't find a lot big enough in SF proper to build that home without it costing twice what it went for. The average lot is 25x100 sq. ft. in The City, as we call it. There are multi-million $$$$ old mansions in SF built on lots that are 60x75 sq. ft.

#2 - there will never be a time when "housing supply catches up with demand" in the San Francisco Bay Area, unless there is a major earthquake and half of the SFBA slides into the ocean. We are geographically constrained by mountains, state/county/city parks, watershed preserves, etc. There are no hundreds of acres of flat cheap land on which developers can throw up 3000 SFHs for $300K.

Such geographic areas exist only a sizable distance from the SFBA. Out here what goes up is hi-rise (in SF only) or multi-level (every other SFBA city) condos, because the developers are lucky if they get one city block on which to build. Usually they only get 1/2 a city block, at most.

#3 - no matter what you hear about remote ("Work From Home") employment, the vast majority of workers are not being given that option. Companies are already beginning to constrain it and require at least several days a week inside the office. Our commuter traffic is already back to 90% of normal region-wide, and the state isn't even opened yet.

I know people who regularly drive over 90 min each way to work. It isn't fun, and it's EXPENSIVE. Our gas is the highest in the nation, which is what's driving the push to hybrids and e-cars. You really do not want to be more than 40-50 miles from where you work....and these days, there isn't a single young person I know who has not had multiple employers with HQs in different SFBA cities.

Gone are the days when "everyone commuted into SF and back home again". So you don't want to tie yourself into buying a home so far away where it's just not possible to easily reach potential employers. But that means you must be closer to the "center" of the SFBA - not further into the exurbs where land is flat and tract homes pop up like mushrooms after a rain (rain? - what's that, LOL?).

#4 - In the SFBA you are always competing against foreign buyers with cash. They faded under Trump, but never completely stopped. To wealthy Asians, West Coast RE looks like a bargain compared to HK, Tokyo, Singapore or Malaysia.

And that doesn't even count RE holding corporations. A lot of hedge funds love to invest in urban RE, both commercial and residential.

====

Anyway, hope that helps others understand the very singular market of an area which only exists because its historic demand has ALWAYS outstripped supply.

 

[Aunt Marg]

Local RE differs, as always. I've lived in the SFBA since 1969; this is what I've seen:

#1 - FYI for those unfamiliar with Northern CA RE, this is NOT a San Francisco house. It is in Mountain View, an upscale suburb within easy reach of Silicon Valley. It is a full 40 miles south of SF city/county. It's also a duplex with that legal ADU, which alone in the South Bay Area must have cost them a good $150K-200K.

You couldn't find a lot big enough in SF proper to build that home without it costing twice what it went for. The average lot is 25x100 sq. ft. in The City, as we call it. There are multi-million $$$$ old mansions in SF built on lots that are 60x75 sq. ft.

#2 - there will never be a time when "housing supply catches up with demand" in the San Francisco Bay Area, unless there is a major earthquake and half of the SFBA slides into the ocean. We are geographically constrained by mountains, state/county/city parks, watershed preserves, etc. There are no hundreds of acres of flat cheap land on which developers can throw up 3000 SFHs for $300K.

Such geographic areas exist only a sizable distance from the SFBA. Out here what goes up is hi-rise (in SF only) or multi-level (every other SFBA city) condos, because the developers are lucky if they get one city block on which to build. Usually they only get 1/2 a city block, at most.

#3 - no matter what you hear about remote ("Work From Home") employment, the vast majority of workers are not being given that option. Companies are already beginning to constrain it and require at least several days a week inside the office. Our commuter traffic is already back to 90% of normal region-wide, and the state isn't even opened yet.

I know people who regularly drive over 90 min each way to work. It isn't fun, and it's EXPENSIVE. Our gas is the highest in the nation, which is what's driving the push to hybrids and e-cars. You really do not want to be more than 40-50 miles from where you work....and these days, there isn't a single young person I know who has not had multiple employers with HQs in different SFBA cities.

Gone are the days when "everyone commuted into SF and back home again". So you don't want to tie yourself into buying a home so far away where it's just not possible to easily reach potential employers. But that means you must be closer to the "center" of the SFBA - not further into the exurbs where land is flat and tract homes pop up like mushrooms after a rain (rain? - what's that, LOL?).

#4 - In the SFBA you are always competing against foreign buyers with cash. They faded under Trump, but never completely stopped. To wealthy Asians, West Coast RE looks like a bargain compared to HK, Tokyo, Singapore or Malaysia.

And that doesn't even count RE holding corporations. A lot of hedge funds love to invest in urban RE, both commercial and residential.

====

Anyway, hope that helps others understand the very singular market of an area which only exists because its historic demand has ALWAYS outstripped supply.

I had a feeling there was more to this sale.

When I viewed the article, the lot size triggered me to question the area in which the house was located based on the size of the yard.

Very interesting info you posed, Lethe, Thanks for it.

 

[Jules]

Almost everything that @Lethe200 wrote could be applied to Vancouver, BC. It’s been called a sister to SF.

We are geographically constrained by mountains, state/county/city parks, watershed preserves, etc. There are no hundreds of acres of flat cheap land on which developers can throw up 3000 SFHs for $300K.

We also have the ALR (Agricultural Land Reserve) created many decades ago to prevent prime land being used for housing rather than food.
I’m thankful the government did that.

4 - In the SFBA you are always competing against foreign buyers with cash. …. To wealthy Asians, West Coast RE looks like a bargain compared to HK, Tokyo, Singapore or Malaysia.

Our Canadian dollar is at least 20% lower than the US$, so the foreign buyers have even more strength in Vancouver. There was also money laundering done by buying houses and driving up prices.

 

[Aunt Marg]

Almost everything that @Lethe200 wrote could be applied to Vancouver, BC. It’s been called a sister to SF.


We also have the ALR (Agricultural Land Reserve) created many decades ago to prevent prime land being used for housing rather than food.
I’m thankful the government did that.



Our Canadian dollar is at least 20% lower than the US$, so the foreign buyers have even more strength in Vancouver. There was also money laundering done by buying houses and driving up prices.

Great post, Jules!

Oh yes, don't even get me started on foreign buyers!

Biting my tongue hard to avoid slamming our government on that one!

 

[Brookswood]

Why do people want to life in San Francisco? This is a city that dammed up Yosemite National Park to get its water supply. I would choose a place that is more ecologically concerned.

 

[Brookswood]

I'm beginning to think the day will never come, Don.

While I can't speak for the United States of North America, I can speak for Canada, specifically British Columbia where we reside, and for years now analysis have been talking about "the bubble", and how "artificially inflated" real estate prices are, yet we've seen no slump in asking, and we've definitely not seen a slump in closing figures.

Given what's doing on in Hong Kong, I expect B.C. will be flooded by more rich Chinese looking to find a safe haven outside of Hong Kong.

FWIW, these unbelievably low mortgage interest rates can't last forever. When they do rise, housing prices will slow down if not fall.

 

[Aunt Marg]

Given what's doing on in Hong Kong, I expect B.C. will be flooded by more rich Chinese looking to find a safe haven outside of Hong Kong.

FWIW, these unbelievably low mortgage interest rates can't last forever. When they do rise, housing prices will slow down if not fall.

While not my husband and my worst fear, I can only imagine the turmoil it's causing among the younger generation who has yet to get their foot in the door in the way of owning a home.

It's gone bonkers here in BC, and for that matter, all across Canada.

 

[officerripley]

Why do people want to life in San Francisco? This is a city that dammed up Yosemite National Park to get its water supply. I would choose a place that is more ecologically concerned.

Because sometimes that's where the jobs, family, etc. are. And if you're thinking, well just live elsewhere and commute to SF to work: we're talking at least a 2-hour-in-each-direction commute from affordable housing in to SF.

 

[Don M.]

California experienced it's first decline in population over this past year. Some 180,000 more people left that State, than moved, or were born there. That is just a drop in the bucket compared to the states overall population of over 36 million...however, it might be a sign of things to come as the California cost of living drives more people away.

 

[Lethe200]

Why do people want to life in San Francisco? This is a city that dammed up Yosemite National Park to get its water supply. I would choose a place that is more ecologically concerned.

What the socio-economic outlook was of people that lived and died well before any of us were born, and why that has anything to do with today's RE housing prices, is not at all clear to me. Today's society in the San Francisco Bay Area is much more ecologically concerned than almost anywhere else in the U.S.

I am genuinely curious to know what your reasoning is.

A great many cities get their water from somewhere else. Have you been as concerned about Lake Mead (AZ), or Glen Canyon (CO)?

San Francisco's Hetch Hetchy watershed in the Sierras was approved by Congress 'way back in 1913. Not too many people were thinking of ecological concerns in those days, as witness the old water cannons as well as use of mercury in Gold Rush mining days.

Los Angeles wouldn't exist at all without taking water from other areas. It's all desert. They use water from Northern CA and the Colorado River. It was a huge state vs state conflict when AZ finally cut down CA's percentage of water allotment from the Colorado River - at one time 80% of LA's water came from CO.

Let's not forget Palm Springs, CA, either. With its median home price of $522K and a paltry 5.5" of water annually, it keeps its multiplicity of golf courses green even during mandatory drought restrictions elsewhere in CA. The city likes to say it gets its water from groundwater, but between 1973-2015, the area's water agencies channeled more than 3.1 million acre-feet of imported water back into the aquifer.

Water and land use rights have always been very big issues in the Western states. Brookwood, is it your opinion that historically other cities have deliberately developed with ecology in mind? If so, which cities are those? And how has this affected housing prices, to get back on-topic?