Michael Minson and Danielle Lazier are Bernal neighbors who work by day as local realtors. Their business gives them unique insight into the utterly bonkers San Francisco housing market, and because they’re Bernalese, Neighbor Michael and Neighbor Danielle also pay close attention to the housing market here in Bernal Heights.

Neighbors Michael and Danielle’s executive summary for the first half of 2017 is that home prices in Bernal Heights continue to appreciate at a nosebleed-inducing pace, despite their February prediction that prices may have plateaued.

Bernal’s very limited housing supply, coupled with continuing strong demand, has had a predictable effect on prices. During the first six months of this year, with a total of 94 homes trading hands, the median home price in Bernal Heights has grown by 7%, to $1.46 million. OMFG.

Now let’s hand it over to Neighbors Michael and Danielle, for their full report:

At the beginning of this year, the Bernal home price trend was slowing down, with consistently decreasing year-over-year appreciation since 2013.

Here are median sale prices for homes in Bernal Heights, along with the year-over-year % change for the past 4 years and current half year:

The four-year trend toward decelerating appreciation, coupled with uncertainties after last year’s presidential election, led us to believe home prices had hit a plateau. But that’s not how things worked out. Instead, the trend reversed and started a slight uptick for the first half of this year.

As has happened consistently for the past 5 years, Bernal Heights hit another record high median sale price for single family homes during the first half of the year, clocking in at an astounding $1.458M. That’s a 7% increase over the median price of 2016 when it was $1.363M

74% of houses sold so far in 2017 have been between $1M-$2M.

We’ve had two new entrants to the $3M club – bringing Bernal’s lifetime total to 5. As reported in Bernalwood., 88 Montcalm set a new Bernal Heights record price of $3.85M. This monster house, with 4 bedrooms, 5.5 baths and parking for two cars sold after only 5 days on the market.

We remain bullish that Bernal Heights home prices will continue to increase, but we expect the second half of 2017 to grow somewhat more slowly than the first half. July saw a seasonally slow start, as many buyers and agents took off to enjoy summer vacations. We anticipate an influx of homes to hit the market in September, October, and November, which typically defines the Fall selling season.

Demand in Bernal remains exceptionally high, as homes here are perceived to be a better value for the money than our more expensive neighbors in Potrero Hill, Noe Valley, Glen Park and the Mission. Meanwhile, inventory is fairly fixed as very few new homes are built in Bernal these days. We expect to continue to see multiple offers over asking for well-priced, well-presented properties for the rest of the year.

At some point, we anticipate affordability will cause price growth to stall, but as long as local wages and employment levels continue to show positive gains, Bernal Heights is well positioned as a relatively affordable, well-located, charming neighborhood with great weather to boot. The secret is out.

With Bernalwood’s permission, Neighbors Michael and Danielle have also used our Bernal Heights microhoods map to take a granular look at prices in different areas of Bernal. The result is reflected in this chart of median home prices per square-foot in different parts of Bernal:

IMAGES: Top, aerial view of Bernal Heights by Telstar Logistics. Below, 2017 market graphics by Michael Minson and Danielle Lazier

Fact: If you own a single-family home in San Francisco, you live in luxury housing.

Or, at the very least, a home that is a luxury.

Your house may not be fancy. It may not much to look at. You may not have marble countertops, or recessed LED ceiling lighting, or glamorous views, or an elevator. Yet thanks to San Francisco’s booming economy and limited housing supply, the median price for single-family homes  in (relatively) “more affordable” Bernal Heights now hovers around $1.4 million, which means that even fixer-uppers sell for princely sums.

Still, some luxury homes are more luxurious than others. Earlier this month a new home-sale price record was set for Bernal Heights, as 88 Montcalm was sold for (gulp) $3. 8 million.

At that OMG price, you do get all the amenities — including an elevator.  According to the property listing:

The magnificent light-filled brand new home has sweeping vus of the City to the GG Bridge in 1 direction & water of the Bay ringed by the East Bay hills in another. This extraordinary home has 4 bds & 5.5 baths w/ 3 levels of living, elevator to all levels & panoramic roof deck. The master bdrm has 2 baths & each bdrm has en-suite ba. The entry level has a spacious 2+car garage, media room or exceptionally large bdrm w/ marble bath & walk in closet. This level has easy access to the level, landscaped backyard. On the top level is the finest entertainment level w/ drop dead vus. The marble & Miele kitchen looks out to the Bay, glamorous living room w/ window wall & wrap around terrace.

PHOTO: 88 Montcalm, via Zephyr Real Estate

It goes without saying that thanks to San Francisco’s ongoing housing shortage, the rents are too damn high. But according to a recent survey of median rents around San Francisco, rents in Bernal Heights are a relative bargain.

According to data compiled by Apartment List, an apartment rental listings service, the median rent for a two-bedroom apartment in Bernal Heights now hovers around $3800 — a nosebleed-inducing sum, but a good value compared to adjacent ‘hoods such The Mission ($4350), Potrero Hill ($4850), Noe Valley ($4390), and even Bayview(!!!), where 2BRs now go for $4160.

Citywide, Apartment List says rents in San Francisco are down 1.1% from a year ago, with the median rent for a 1BR hovering around $3400 and 2BRs renting for $4600.

To put all of this in (absurdist) perspective, consider some national comparisons: Apartment List data also shows that the median rent for 2BR units in New York City is now $4260.  In Seattle 2BRs rent for $2290, Washington DC is $3050,  Austin, TX is $1470, Denver, CO is $1840, and Chicago is $1580.

IMAGE: via Apartment List

Michael Minson and Danielle Lazier are longtime Bernal neighbors who work by day as local realtors. In light of their expertise, Bernalwood invited Neighbor Michael and Neighbor Danielle to update us on the state of residential real estate in Bernal Heights. Here’s their analysis:

Bernal Heights Today
Despite another record-breaking year, the Bernal Heights Real Estate market has officially cooled.

In 2016 we saw a modest 5% increase over the previous year’s median home sale price — from $1.3M in 2015 to $1.36M in 2016.  In any other market that would be remnarkable, but this is Bernal, and we’re not like any other market. In fact, this is the third consecutive year we’ve seen slowing growth since 2012, when we experienced a record 23% gain over the previous year.

In context, prices here have nearly doubled since 2011, when the median price to buy a house in Bernal was $699k, believe it or not.

On the high end, Bernal added a new member to the $3M Club in February. 1669 Alabama St sold for $3 million, and it’s the third property in Bernal to sell for $3M or more in the last few years. There were 11 sales in the $2Ms last year, which is slightly more than double 2015, which reported 5 sales.

The Outlook
Barring a major environmental or economic event, our outlook for 2017 is cautiously optimistic.

Demand in Bernal remains strong for all the reasons we love it here:  great weather, ample charm, wonderful views, and a convenient location. Meanwhile, compared to many other parts of the city, Bernal is still relatively affordable. Yet we seem to have a hit a plateau in terms of price appreciation for the time being.

The recent sharp rise for interest rates and the surprise election results shocked many buyers in the last half of 2016, even though interest rates remain roughly on par with where they were in 2014.

Overall, the US economy is performing well, and San Francisco’s economy remains especially strong. As employment and wages grow, so do housing prices. Many home buyers use stock market earnings to make their down payments, so as the stock market rallies, buyers’ buying power does as well.

All told, we expect slower growth to continue until we see another jolt to the economy.

PHOTO: Aerial view of Bernal Heights, as seen from the west. Photo by the Bernalwood Air Force

The awful tale of the Bernal Heights resident who was forced from her home at 355 Bocana after receiving a $6500-per-month rent increase came to a conclusion yesterday, as lawyers agreed to settle a lawsuit stemming from the incident.

As you may recall, back in March 2015, Bernal renter Deborah Follingstad  was hit with a shocking315% rent increase by property owner and lifelong Bernal resident Nadia Lama.  At the time, Lama was receiving legal counsel from lawyer Denise A. Ledbetter.

The 315% rent increase forced Follingstad to move from 355 Bocana, and Lama moved in. Yet in August 2015, Follingstad filed a wrongful eviction lawsuit,  and yesterday the matter was put to rest, shortly before the case was set to go to trial. The result: Lama will pay Follingstad a $400,000 settlement to end the lawsuit.

Reporter Dan Brekke from KQED writes:

In the August 2015 lawsuit, Follingstad and her lawyer, Joe Tobener, accused Lama of trying to get around a city ordinance that requires payments for tenants displaced in an “owner-move-in” eviction.

That litigation proceeded without gaining much attention — until now.

Tobener announced Tuesday that, with a jury trial scheduled to begin next week, Lama had settled for the staggering-sounding sum of $400,000.

Tobener said the high settlement amount reflected both what he called Lama’s “egregious” behavior in raising the rent and the risk Lama ran in allowing the case to go to trial, where a jury could award triple damages for his client’s emotional distress claims.

“It’s the highest constructive-eviction-by-rent-increase case we’ve ever had,” Tobener said, adding that such cases typically settle for amounts “in the high five figures.”

Tobener said that under the city’s owner-move-in ordinance, Lama would have been required to pay Follingstad $9,522 for forcing her to move.

Lamar Anderson from San Francisco Magazine spoke to former Bernal neighbor Deb Follingstad, and he reports she’s had a difficult odyssey:

After [Follingstad moved out], Lama moved in. Follingstad spent the next year bouncing from place to place, house-sitting and staying with friends. As an independent contractor, she had a hard time applying for apartments, because she lacked the paystubs landlords frequently ask for. The places she could rent easily were too much of a compromise. “I was looking at efficiencies with no kitchen, just a hot plate,” she says. And sometimes her story followed her: “I had landlords be like, when they found out who I was, they hated me. They’d never even met me, but I represented this class of person who got evicted. It was weird, the way they looked at me.”

Last May, a year after her displacement, Follingstad was diagnosed with breast cancer. In July she moved in with her boyfriend. She went through months of litigation while undergoing radiation treatments. “I looked like the Michelin tire man, I had so many coats on, and drinking hot tea,” she says. “I was there because I had to be, but I was basically curled up in an office chair, in these meetings that went on for, like, eight hours.” Last month, she finished her radiation treatments. Her hair is coming back, and she’s styling it to look like leopard spots.

San Francisco Magazine adds that after lawyer fees, Follingstad will receive about $280,000, which will then be taxed. Much of the remaining funds, she says, will likely be used to pay medical expenses.

PHOTO: 355 Bocana in 2015, by Telstar Logistics

And now, that most precious of things: A happy story about housing.

At a time when new subsidized-affordable housing in San Francisco costs almost $600,000 per unit to build, stabilizing our existing housing supply is often a more cost-effective way to prevent the displacement of current San Francisco residents. That’s why it’s great news that the Mission Economic Development Agency (MEDA) used the Mayor’s Small Sites Program to purchase 1500 Cortland Avenue, a four-unit building built in 1960 on the corner of Bradford.

MEDA writes:

There are four units at 1500 Cortland that are called home by families — the types of families MEDA is looking to help stay in their neighborhood of choice.

Unit 1 is a one-bedroom apartment that is the 23-year home to Lisa and her husband, Winefredo, who is disabled and receives in-home care. Lisa, who is a hotel worker and the sole income provider, was in a car accident last winter, with head and back injuries meaning she cannot currently work. Daughter Jennifer lives with her parents, but is ready to start college.

In Unit 2 reside Gabriela and Ramon, devoted parents of Javier, an eighth-grader at nearby Paul Revere K-8 School. The family makes this one-bedroom apartment work for their living situation, and they feel part of their Bernal Heights community.

Unit 3 is the two-bedroom residence of Tomas and Greisy, plus their two young children, Jennifer and Kevin. Tomas works in construction, while Greisy is a full-time mother. This Latino immigrant family has felt welcomed in the neighborhood and were excited to find a way to stay. If not for the Small Sites program, they knew they would be displaced from San Francisco.

In two-bedroom Unit 4 reside 77-year-old Jane and her spouse, Claudio, who is one year older; their sole income is from monthly Social Security checks. The couple has lived over half their lives in this apartment at 1500 Cortland. Claudio’s sister, Bernadette, also lives with them for now. This is the third generation to call this apartment home.

To showcase how 1500 Cortland has become its own community over time, Jane serves as caregiver for Winefredo in Unit 1.

“These four units’ residents seized the opportunity to make this Small Sites program deal possible,” explains Housing Opportunities Coach Johnny Oliver, who helped structure the sale. “Tenants agreed to increase their rent a bit to maximize the amount of the first mortgage, but they will still be in affordable housing that is around 50 percent of the median for this neighborhood. This is a win for the community.”

Indeed it is.

MEDA didn’t say now much it cost to acquire 1500 Cortland, but the property had been listed for $1.6 million. (UPDATE: A plugged-in reader tells Bernalwood the property ultimately sold for $1,150,000.) The acquisition will also include a rehabilitation of the aging building, during which the current tenants will be temporarily relocated.

Bravo, MEDA, and big congrats to all our Bernal neighbors who can now remain Bernal neighbors for many years to come.

PHOTO: via Google Street View