Fire-Gutted Bernal Heights Home Asks $799,000, and America Asks WTF?!

121 Gates Street on the day of the fire in July, 2016. Photo via @SFFFLocal798

Remember the sad tale of 121 Gates Street, the small house that was gutted by fire back in July, 2016? The house was never rebuilt after the fire, but the property was recently put up for sale, with the ruined, 1746 sq. ft. structure remaining more or less unchanged since firefighters left the scene — and an asking price of $799,000.

At a time when the median price of a California home stands at $550,000, the idea of asking almost $800K for a fire-gutted house in Bernal Heights has attracted a predictable flurry of attention since the listing surfaced on Reddit over the weekend. The photos included in the listing capture the devastation of the fire:

Unsurprisingly, the media latched on to the listing for 121 Gates as a bellwether indication of San Francisco’s utterly bonkers, scarcity-fueled housing market.

Curbed SF, a housing news site, looked at the listing for 121 Gates and concluded:

It doesn’t appear to matter what condition a San Francisco house is in these days. So long as the property rests squarely within the city boundaries, the potential value of the mere dirt under the foundations will drive buyer interest.

Indeed, despite the fire, the dirt under that foundation is very well situated.

To start, 121 Gates is located in Bernal Heights, which has a very fixed and highly coveted supply of single-family homes, which currently sell for a median price of about $1.5 million. Also, 121 Gates is a block from Cortland Ave., and the property has a swell view of the waterfront to the east. On top of all that, 121 Gates comes with RH-1 zoning and an existing residential structure, which means the renovation rebuild of the house will allow the new owners to bypass the expensive morass of San Francisco’s permitting process for new construction.

For all those reasons, the realtor for the property told Business Insider, a national news site, that the teardown, fire-gutted house at 121 Gates may actually be under-priced:

The home was “completely gutted” in a fire in 2016, and the new owners will need to demolish what’s left, according to realtor Jim Laufenberg.

“I suspect it will sell for more than what I’m asking,” Laufenberg told Business Insider, adding that the seller listed the property below market value to incite interest in the first few weeks.

Median Home Price Hits $1.46 Million in Summer 2017 Bernal Heights Real Estate Report

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

Gasp! $3.8 Million Home Sale Sets New Bernal Price Record

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

Rents in Bernal Heights Remain a Relative Bargain, But Only Relatively

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

Your Bernal Heights Residential Real Estate Report: Wintercooled 2017 Edition

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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

Former Bocana Tenant Receives $400,000 in Settlement With Landlord

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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

New York Times Deems Bernal Heights Idyllic (But Expensive)

nytrealestate

Over the weekend, the online Real Estate section of the New York Times published a big profile of this neighborhood we call home. Under the headline “Bernal Heights, San Francisco: An Inclusive Village With Lofty Prices,” NYT writer Julie Lasky says:

Bernal Heights has the ambience of a village, with small shops, public bulletin boards papered over with notices and even a wild coyote whose welfare many in the community fuss over. But some Bernalese declare themselves ambivalent about the San Francisco real estate boom that has put their once-humble neighborhood out of reach to many.

Ms. Burdman, 50, an advertising executive who lives in the house on Bonview Street with her teenage daughter, said, “I’m happy by how our houses have appreciated, but it’s changed the character of the neighborhood.”

Kristin Hofso, an owner of Bernal Hill Realty in Bernal Heights, acknowledged that the community has grown more affluent, with the average price of a single-family house rising from $800,000 in 2012 to just under $1.4 million this year. “But it’s remained progressive, racially diverse, with some vibrant artists and many independent businesses,” she said. In her experience, newcomers seek out those aspects before any particular property. “I’ve sold real estate here for 25 years,” she said, “and almost all the buyers who come to us say, ‘We want to live in Bernal.’”

So how just spendy is Bernal Heights real estate these days? The Times says “as of Dec. 8 the median sales price of a single-family residence in Bernal Heights was $1,400,000, an increase of 7.6 percent over a 12-month period, based on 151 sales. The median price of a condominium was $1,011,000, a decrease of 7.5 percent over the same period, based on 23 transactions.”

We’re fortunate to be here.