Noe Valley Voice September 2002

The Cost of Living in Noe
No Fire Sales on Homes This Summer, but Renters Smiling

By Corrie M. Anders

The hot new parlor game, right up there with Survivor and American Idol, is trying to figure out how high Noe Valley housing prices can fly before crashing back to earth.

There's also the renter-landlord version of reality real estate: After two years in freefall, how low will rents sink before hitting bottom?

"We saw a lot of deals out there," said renter Peter Landreth, who inked a $1,850 lease last month on a two-bedroom apartment on Noe Street. "Prices have come down quite a bit. Some landlords were willing to throw in a free month's rent or garage."

As for house sales, on a recent weekend, dozens of shoppers poured through an "Edwardian charmer" on Noe Street that was being shown by Lorrie French, a real estate agent with Coldwell Banker. In a neighborhood where $1 million homes have become routine, the Edwardian's $849,000 price tag didn't seem to faze anyone.

"The buyers are out there," despite all the bad news about the economy, French said. "We [agents] keep saying, 'Where is the money coming from?'"

Her theory? "A lot of it is coming from buyers who pulled out their money before the stock market went kaput, and a lot are pulling out what's left."

Still, French has detected a slight shift in the wind.

"Buyers are starting to be a little more conservative," she said, noting that homes no longer attract 20 or 30 offers as they did during the dot-com boom of the late '90s. More typically, sellers will receive up to three bids -- "five to six max."

To be sure, the latest data from Zephyr Real Estate shows fewer sales this summer of homes and condominiums in Noe Valley. A total of 21 single-family homes changed hands during June and July -- a quarter fewer than the 28 homes sold during the same period a year earlier. Twelve condos sold during the two summer months, down from 17 in summer 2001.

Though the crush of buyers has eased off, shoppers continue to overpay for choice Noe Valley properties.

Zephyr's figures reveal that in June, homebuyers on average ponied up 7 percent more than the seller's asking price, compared with a year earlier when they paid right at the asking price. Buyers in July forked over 2 percent more than the asking price, slightly higher than the 1 percent premium of a year ago. It was a similar overbidding story for condos.

Overall, single-family home prices were 7 percent higher than in 2001, while condo prices jumped more than 16 percent.

The most expensive properties this summer included a four-bedroom, three-bath home in the 1200 block of Diamond Street, which sold in July for $1,375,000, and a two-bedroom, two-bath home in the 1200 block of Dolores Street that closed at $1,120,000.

Small apartment buildings were the one area of Noe Valley real estate that boasted a surge in transactions. Sales of two- to four-unit buildings were up by half -- 14 sales during the summer, in contrast to 9 sales a year earlier. "Most of them are twos, which are at a premium," notes Marcia Thomas, assistant sales manager at Zephyr. Two-unit buildings are "easier to TIC [tenants-in-common] and easier to convert into condos."

The pickup in sales of flats and apartments may indicate that investors think rents are close to bottoming out. Still, the latest statistics compiled by Rent Tech, Inc., an apartment listing firm, confirm that rents fell deeper into the basement during the second quarter of 2002.

In the past year, the average rent on a studio apartment has dropped 19.2 percent, from $1,376 to $1,112 per month, while a three-bedroom unit declined 20.6 percent, going from $3,358 to an average $2,665. Two-bedroom and one-bedroom rentals slipped 17.6 percent and 11.6 percent, respectively. In one quarter alone, rents on one-bedrooms went from $1,649 to $1,561, a drop of 5.3 percent.

Obviously, this decline has been a boon to renters. Landreth, a Stanford University law student, and his fiancée found they were able to "take our time" and look at numerous apartments rather than "take an apartment because it was the only thing available."

That's what happened two years ago when the couple moved into a studio apartment in North Beach, paying nearly the same as their current rent.

"We had to take the first apartment we saw," said Landreth. "The market was crazy. Now we've found this time around we had a lot more options."

Of course, the renter's gain is the landlord's pain. Jan Leja has been trying to rent his two-bedroom Noe Valley apartment for two months. Initially, Leja set the rent at $2,700, the price the last occupants paid. Since then, he has lowered the rent to $2,000 and last month dropped it to $1,900.

"Can you imagine that?" Leja said. "A year ago when the market was hot, we'd put in an ad and a hundred people would show up with money in their hands. Now we can't get anybody. It's dreadful."

Prospective renters have come by to size up Leja's apartment, which boasts "fantastic views." But Leja has failed to get them to sign on the dotted line.

"They say, 'Oh, I have another ten to fifteen apartments to look at.'"

Noe Valley Home Sales*
Total Sales Low Price ($) High Price ($) Average Price ($) Average Days
on Market
Sale Price as
% of List Price
Single-family homes
July 2002 15 $525,000 $1,375,000 $865,267 26 102%
June 2002 6 $620,000 $1,120,000 $836,333 22 107%
May 2002 13 $635,000 $1,520,000 $1,022,153 35 109%
July 2001 11 $390,000 $1,300,000 $808,181 30 101%
July 2002 5 $340,000 $925,000 $563,200 10 109%
June 2002 7 $525,000 $825,000 $674,143 22 104%
May 2002 14 $375,000 $1,575,000 $722,714 42 103%
July 2001 10 $320,000 $640,000 $503,500 36 100%
2 to 4 unit buildings
July 2002 8 $660,000 $1,420,000 $1,046,875 64 101%
June 2002 6 $810,000 $1,425,000 $1,083,667 37 103%
May 2002 4 $750,000 $900,000 $826,500 24 113%
July 2001 4 $575,000 $975,000 $720,000 43 98%
5+ unit buildings
July 2002
June 2002 2 $880,000 $2,150,000 $1,515,000 32 99%
May 2002 1 $1,425,000 $1,425,000 $1,425,000 139 97%
July 2001

Noe Valley Rents**
Size of Apartment Average Rents
April-June 2002
Average Rents
one year ago
April-June 2001
% increase (+)
or decrease (-)
Studio $1112 $1376 -19.2%
1 bedroom $1561 $1766 -11.6%
2 bedrooms $2185 $2651 -17.6%
3+ bedrooms $2665 $3358 -20.6%

*Information provided to the Noe Valley Voice courtesy of Zephyr Real Estate ( and based on all Noe Valley home sales (closings) recorded during the month. "Noe Valley" in this survey is defined as the area bordered by Grand View, 22nd, Guerrero, and 30th streets.

**Data courtesy of Rent Tech, Inc (