Act Like You Can Afford It

June 6, 2017 by Shreyas Vijaykumar 23 Comments

On Sunday my friend Sarah and I did an open home circuit, visiting four homes between $2.5m-$4m. The itinerary would have included a few homes in the < $1m range but our ambitious plan didn’t account for 20 minutes to find parking in Cow Hollow.

All the time circling Union Street was worth it though, because that first Cow Hollow home is the one that I want to write about today. 1662 Union Street is a 3 bed 3 bath condo with two floors of living space and an expansive backyard, listed at $3,495,000.

$3.5m is an interesting price threshold to me. In the $1m-$2m range you are looking at a broad spectrum of condo location/size/quality. At the higher end of that range you will see great condos in desirable neighborhoods and some smaller single family homes in less desirable neighborhoods. In the $2m-$3m range you will see luxury condos and some larger single family homes still not in the most desirable neighborhoods, like these. Once you get to $3.5m you should be getting nearly everything – a spacious and well laid out out single family home or luxury condo with some subset of good location, great curb appeal, view, and garden/outdoor space. You’re still not at a Pacific Heights mansion, but maybe you have that home without the view, in the Inner Sunset.

I think this means that there’s a soft middle from $2.75m to $3.5m, where the majority of the buyer demand is either a step down or a step up in price. On the step down, you can get around 2,000 square feet of living space under $2.5m which is as far as most buyers would ever want to go, and on the step up you are looking for that “nearly everything” home. At least that’s my theory, and so any home listed in the high 2s and low 3s piques my interest.

Alright let’s take a look at 1662 Union Street – with more photos here:

it’s the lower two floors of the green and brown building

The main living floor is great – it has an open kitchen, dining area, and living room with no compromises and enough space – there’s no layout penalty. That floor also features two bedrooms and two bathrooms with a wonderful deck overlooking the backyard one floor below. The lower floor has the master bedroom, an office, and a terraced backyard with a deck and open space behind.

Here’s what I don’t like about it. First, it’s a condo, though there are only two units in the building. Your neighbor has the smaller unit but they also have the roof deck. Roof decks are pretty cool. Second, the backyard isn’t awe-inspiring. It’s fine and it’s big, but it doesn’t offer tremendous privacy. I saw a nicer one in a less expensive single family home last weekend, 152 Fairmount in Glenn Park.

For the estimate – I’m going to call Cow Hollow (on Union Street toward Van Ness) a 1.2 neighborhood and I give the home a 1.0 layout score. And while Redfin does not have square footage, Zillow lists it at 2,219 square feet.

Estimated sale price = ($ / square foot) * region score * neighborhood score * square footage * usable square footage score

Estimated sale price = ($1000 / square foot) * 1.0 * 1.2 * 2,219 square feet * 1.0

Estimated sale price = $2,662,800

I’m also going to add a $600k premium for the backyard and 2nd floor balcony because they are both going to factor into anyone’s calculation. If you’ve been reading along, this is 50% more than I would pay for a small roof deck with great views in Russian Hill. It’s hard to compare these very different features (view vs. backyard space) but I’m comfortable with these relative scores.

Estimated sale price = $2,662,800 + outdoor space premium

Estimated sale price = $2,662,800 + $600,000

Estimated sale price = $3,262,800

Now the audience participation piece – I would love to get some crowdsourced sale price estimates from anyone who has 5 minutes to look through the listing photos and throw a number into the comments. I’m not looking for a rationale necessarily, just what your gut feeling is as if this were a “guess how many marbles are in the jar” game. I’ll bring all these estimates into the sale analysis (through an average) and see how we did as a group.

P.S. The title is a reference to one of the tour stops, which reminded me of walking into a high-end boutique where the sales people offer you a drink immediately and you feel a little bad for (probably) wasting their time, that you’re just there to window shop and tie your shoes 🙂