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The Cost of Living in Noe:
$1 Million Homes Selling Like Hotcakes
By Corrie M. Anders
The real estate bubble in Noe Valley continues its amazing puff-up, with nary a hatpin in sight.
Home shoppers purchased 13 single-family properties in August, the majority of them costing at least $1 million. The August sales, one fewer than the 14 homes that changed hands the previous month, are part of a two-year hot streak in Noe Valley, with homes selling almost as soon as they come on the market.
Buyers also snapped up 10 condominiums in August, three more than in July. And shoppers looking for a less expensive alternative to homes and condos grabbed eight flats--continuing robust sales of small buildings that owners can share as tenants-in-common (TICs).
"It's just astounding," says Randall Kostick, sales manager at Zephyr Real Estate on 24th Street. His office provides monthly sales data to the Voice.
Kostick says there was an increase in homes for sale this summer, a boost that usually puts a crimp in price spikes. "But there was such a backlog of buyers," the properties were quickly "gobbled up."
The result: bidding wars that saw buyers on average pay a remarkable 16 percent more than the asking price. Kostick notes that 11 of the single-family homes sold above the asking price, while two sold exactly at the price sellers requested.
The most dramatic example of overbidding was a house listed in the mid-$800,000 range. It sold for $1.3 million, or 50 percent more than the asking price. In all, eight of the 13 homes sold for $1 million or more.
Kostick says one reason for the frenzied bidding is that some sellers have changed their sales strategy. In the past, they would list their properties higher than the desired price in order to leave themselves room to negotiate downward.
Now, he says, "sellers have gotten wise to the idea that they can list a property conservatively, and that draws a whole lot of attention. When you're working with a crowd, you can get a much better price."
The availability of relatively cheap mortgage money also remains a big factor in the hot market. "Though interest rates have bounced around and have risen a little," Kostick says, "it's not enough to affect people's perceptions of what they can afford."
And home shoppers have more mortgage options these days. Many Noe Valley buyers have shifted from fixed-rate to adjustable-rate mortgages, and lenders are offering everything from 100 percent loans and interest-only loans, to combination fixed-rate/adjustable-rate loans. Those loans offer monthly payments, initially, that are less than fixed-rate mortgages.
So lenders "can qualify the buyers at lower monthly payments than they were getting two years ago," says Kostick.
With a $1,560,000 "sold" sticker, a three-bedroom, 21/2-bath home in the 400 block of Day Street was August's most expensive home. The costliest condo--$1,155,000--was located in the 500 block of 29th Street.
Both sales occurred in Upper Noe Valley--the southern half of the neighborhood--and were reminiscent of the dot-com boom days. Along with Glen Park, Noe Valley is known for providing easy access to the freeway for those who commute to Silicon Valley.
"People don't want to drive across town, so suddenly these neighborhoods have some advantages," Kostick says.
Noe Valley Home Sales*
Total Sales Low Price ($) High Price ($) Average Price ($) Average Days
Sale Price as
% of List Price
Single-family homes August 2004 13 $638,000 $1,558,888 $1,107,838 34 116% July 2004 14 $722,000 $1,250,000 $984,500 34 110% August 2003 11 $682,000 $1,475,000 $1,013,091 39 105% Condominiums August 2004 10 $590,000 $1,155,000 $833,500 24 110% July 2004 7 $595,000 $1,115,000 $800,300 25 109% August 2003 8 $592,000 $1,082,400 $775,050 26 106% 2 to 4 unit buildings August 2004 8 $927,000 $1,700,000 $1,244,625 45 112% July 2004 6 $770,000 $1,600,000 $1,160,000 48 110% August 2003 7 $676,000 $1,635,000 $1,053,714 32 101% 5+ unit buildings August 2004 0 July 2004 0 August 2003 1 $1,580,000 $1,580,000 $1,580,000 41 88%
Noe Valley Rents**
Size of Apartment Average Rents
one year ago
% increase (+)
or decrease (-)
Studio $1062 $1028 +3.3% 1 bedroom $1425 $1456 -2.1% 2 bedrooms $2086 $2098 -0.6% 3+ bedrooms $2580 $2536 +1.7%
*Information provided to the Noe Valley Voice courtesy of Zephyr Real Estate (www.zephyr-re.com) and based on all Noe Valley home sales (escrow 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 (www.renttech.com)