House on Eugenia Sells for Waaaaaaaay Over Asking Price

Our real estate-junkie friends at CurbedSF tell the tale of a Bernal Heights home that just snagged a big price premium:

First listed in mid-July for $549,000, 120 Eugenia in Bernal Heights sold today for $671,132, or$122,132 over asking. It would appear this Bernal Heights property had a bit of a bidding war, and we’re curious if it’ll spark the trend that’s happening in other hot neighborhoods like Eureka Valley and Noe Valley. The 2-bed, 1-bath, 1,000 square foot single-family home was owned by the same person for over 40 years and needs a little TLC to “make it amazing.”

Wow. That’s a big bump in price for a modest fixer-upper. Any armchair real estate pundits out there care to theorize about why the house sold for so much?

UPDATE: Promoted from the comments, here are two insightful perspectives on this sale from two typically brilliant Bernalwood readers.

SFhillrunner says:

We’ve been looking to buy a place since January, so I sorta qualify as a [real estate] pundit at this point. Looked at over 80 houses so far, offers on 5. Here’s what’s going on, as far as I can see:

Sellers and listing agents intentionally set their asking price way under what they expect to get. If there were only one offer of $549K on this house, the seller would probably have rejected it. Houses that have fantasy list prices generally just sit on the market.

Housing inventory is 45% lower YOY and 30% of sales are to investors. That means there really is hardly anything left for end-users who just need a place to live.

One third of people in SF with mortgages are underwater. SF is different and special and yes they’re not building anymore land but we’re not that different. What’s currently going on here with RE is actually happening around the country.

That and a completely rigged market (shadow inventory of REOs that banks won’t sell and very low interest rates) are creating an artificial market.

Great if you are an investor and already a homeowner, sucks for the rest of us who just need a place to live. Try buying a house right now if you have to get a mortgage. Who are all these folks with $700K in cash???

Sucks to be the 99% in Bernal right now. Or SF for that matter.

Housing is a basic need. It is shelter. We moan and groan when the price of food or health care or gas goes up, but everyone cheers when the price of housing rises. It’s wrong.

Neighbor Andrew adds:

I work in the real estate business and live a couple blocks from this house on Eugenia. I walked through and chatted with the agent, who actually was surprised by the amount of interest. The house has some wonky features, including a not-really-legal addition in the back and a partially (mostly) brick foundation.

But that said it actually has a very cool loft-like feel as it is, and a cozy and private back yard. Add in expansion potential (garage, second floor, remodel, etc) and a great location and it is not really that surprising the house sold close to $700k.

The comment above is dead right in terms of market dynamics though, very hard time to be buying right now. In terms of who are these all cash buyers, lots of foreign nationals armed with cash, investors and just good old fashioned wealthy folks.

I hear the frustration for high home prices. All I would say is that despite market manipulations there is a lot of supply/demand fundamentals playing right now as well.

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31 thoughts on “House on Eugenia Sells for Waaaaaaaay Over Asking Price

  1. We’ve been looking to buy a place since January, so I sorta qualify as a RE pundit at this point. Looked at over 80 houses so far, offers on 5. Here’s what’s going on, as far as I can see:

    Sellers and listing agents intentionally set their asking price way under what they expect to get. If there were only one offer of $549K on this house, the seller would probably have rejected it. Houses that have fantasy list prices generally just sit on the market.

    Housing inventory is 45% lower YOY and 30% of sales are to investors. That means there really is hardly anything left for end-users who just need a place to live.

    One third of people in SF with mortgages are underwater. SF is different and special and yes they’re not building anymore land but we’re not that different. What’s currently going on here with RE is actually happening around the country.

    That and a completely rigged market (shadow inventory of REOs that banks won’t sell and very low interest rates) are creating an artificial market.

    Great if you are an investor and already a homeowner, sucks for the rest of us who just need a place to live. Try buying a house right now if you have to get a mortgage. Who are all these folks with $700K in cash???

    Sucks to be the 99% in Bernal right now. Or SF for that matter.

    Housing is a basic need. It is shelter. We moan and groan when the price of food or health care or gas goes up, but everyone cheers when the price of housing rises. It’s wrong.

  2. I work in the real estate business and live a couple blocks from this house on Eugenia. I walked through and chatted with the agent, who actually was surprised by the amount of interest. The house has some wonky features, including a not-really-legal addition in the back and a partially (mostly) brick foundation.

    But that said it actually has a very cool loft-like feel as it is, and a cozy and private back yard. Add in expansion potential (garage, second floor, remodel, etc) and a great location and it is not really that surprising the house sold close to $700k.

    The comment above is dead right in terms of market dynamics though, very hard time to be buying right now. In terms of who are these all cash buyers, lots of foreign nationals armed with cash, investors and just good old fashioned wealthy folks.

    I hear the frustration for high home prices. All I would say is that despite market manipulations there is a lot of supply/demand fundamentals playing right now as well.

  3. Our real-estate agent/friend said there are quite a few “teaser” prices in Bernal these days – she had a client bidding on a house on Wool St a few months ago that had something like 26 offers and went for (if I recall correctly) $150K over the list price. The house was attractive because it had a basement with high ceilings that could easily be turned into nice, legal living space.

    She also agrees there are lots of all-cash buyers and have been for some time. I echo the question: who are these people?!?

  4. This is nothing new in SF. I had been looking for the last year and put down multiple offers all of which were overbid by $100K+. I finally just landed a place in Bernal where I bid $50K+ over.

    I am a single person and did this with 3.5% down with an FHA loan. PMI sucks, but 20% down sucks even more!

    It’s still possible, people! Especially if, as in my case, you consider multi-unit properties. I know land-lording may not be for everyone, but the extra money brought in from rent will boost the max you can get approved for.

    In my opinion, multi-unit places are the last vestige for “regular” single folks buying entire houses in SF. After all those have been sweeped up, you’re gonna be left with only condos and TICs.

    Best of Luck, house hunters!

  5. I think this is happening in most of the Bay Area’s hotspots, including all across SF. Most houses on the market are listed below the real “asking” by about 10-20%. And that’s true of multi-family homes, too, in cities that don’t have rent control. There’s one in our neighborhood now listed at under $850K that I’m guessing will go for about $0.95-1.0 mn.

  6. We recently tried to buy our rented house from the bank who foreclosed on our landlord. Were outbid by a suspiciously low margin with an all cash offer from a known flipper. Welcome to the neighborhood, profiteers.

    • I had this same experience with a bank-owned property though I was not living in it. The place was on the market for over a month, and my agent and I tried and tried to get a showing but the listing agent always had an excuse as to why we couldn’t see it that day. I finally got in to see it, bid over asking, and was informed that they were already in contract with a bid which was UNDER asking!

  7. There’s something uncomfortable about reading these comments and seeing someone write that 1/3rd of mortgages in SF are underwater and reading in a later post someone being fired up about putting 3.5% down on a property. It’s 2012 and we haven’t learned any lessons I guess… 20% down doesn’t seem so terrible.

  8. FHA is a fixed-rate loan, not some wacky variable-rate. Just because someone puts down 3.5% doesn’t mean that they are going to go underwater anymore than someone who bets their entire life savings putting down 20%.

    I have a nice cushion to float me through tough times, something that I would NOT have had I put down 20%. This money also allows me to remodel. Why buy a house with 20% down then have no money to spend to improve upon your investment?

      • Welp, I want a house in a neighborhood that I’d actually care to live in. Also, somewhere where remodeling will actually increase the value of the property. You assume, without having any facts, that someone putting down 3.5% automatically implies that they must be living outside of their means.

  9. Bernal’s classification as a Special Use District in the planning code also contributes to the exorbitant prices. Off-street-parking requirements, square-footage restrictions, zoning much of the hill as RH1, etc., all have a cost, borne by people who want to buy in and paid to the incumbents who choose to cash in.

  10. Re: Who are these people with $700K cash?

    People who’ve saved all their lives and need somewhere to park their cash. Not everyone lived beyond their means for the last 20 years. With interest rates at 0%, there’s not much incentive in banking cash right now, especially since a nice dose of inflation coming around the corner that will make those savings worth less in real dollars. So where to park that money? The stock market is viewed as a rigged game; few outside of institutional investors or connected insiders trust in it. Bonds? With municipalities teetering on bankruptcy around the state?

    Real estate provides a tangible, usable asset in real time (housing for the next generation of the savers’ families, potential rental income) that in theory is less prone to devaluation through inflation.

  11. i live in the in-law of one of the (perhaps *the* aforementioned) $850K houses for sale in bernal. someone please buy it and let me stay and keep paying rent for your mortgage, please!

  12. If someone wants to buy my 1947 2/1 + office & half bath down for $800+ I’d be happy to sell—but I doubt there’s actually more than a handful of buyers really paying such prices… But the few who do make the stats look wacky.

  13. My grandparents have lived on Moultrie for over 50yrs!same exact sq ft,rooms/baths as Eugenia, they paid a cool $8,800.Bernal heights is certainly nice,will always be a part of our family but really??
    My brother and I thank you people in advance for funding our retirement!!

  14. Actually, I am the listing agent. I did try to price the house on the low end, but I really was surprised at how so many people fell in love with the place, and also where the price ultimately landed. We got 15 offers, and one was a good chunk over $700K (the seller chose an all cash offer instead of one with financing). The people who bought it are sweet, intelligent, Bernal residents who happen to live around the corner and have saved all their lives and wanted to stay in a neighborhood they love.

    • Okay, MKSF, if you’re going to come in here with facts and stuff, you’ll ruin everyone’s fun. Knock it off already, why don’t you?

  15. Fairly interesting to get a snapshot of the Bernalwood-respondents (assuming these are all sincere statements):

    1. Respondent A went through the non-traditional route because “he/she want[s] a house in a neighborhood that I’d actually care to live in”.

    2. Respondent B opts to help pay someone else’s mortgage.

    3. Respondent C will gladly sell his/her 1947 house for $800k.

    4. Respondent D is incredulous at prices being paid for houses in Bernal, but is happy about his retirement being funded.

    I suppose the other “ugly” side of the coin is the so-called gentrification?

  16. I don’t understand how one-third of SF mortgages can be underwater at the same time that there seems to be so few SF houses on the market and prices are so much higher than they were a year or two ago. Am I reading this right? If so, can one of the real-estate pundits please explain?

    • “Being underwater” means that your house is worth less than you paid for it. If you own in Bernal, Noe, Potrero or the Mission, there is very little likelihood your house is currently underwater. Being underwater and wanting to or needing to sell are mostly mutually exclusive. If you bought a place for $700K and it is currently worth $650K, and you like where you live and are comfortable with the payments, there is no need or desire to sell.

      I think 1/3 of all houses being underwater in SF is a very high estimate. I would be surprised if 1/3 of all homes in SF were on the market between 2005 – 2008, when the prices would have put owners underwater. And some of those home sales would have been in areas that are now booming, and would no longer be underwater.

  17. Pingback: Peter Orner Ponders the Gentrification of Precita Park in the New York Times | Bernalwood

  18. Recently there was a dump of a house on 20th St in Noe Valley that listed for about $800,000 & sold for $2 million. And apparently the buyer paid cash!!

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