Two Homes Tell a Brain-Melting Story About Bernal Heights Real Estate

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Our real estate-obsessed friends at the CurbedSF blog posted two stories this week that provide a snapshot portrait of the current (OMFG) state of the Bernal residential home market.

Coming just after this week’s (OMFG) update on the state of the Bernal residential rental market, the basic story in the residential home sales market is probably easy to anticipate. But let’s go through the motions anyway, if only in the spirit of science and inquiry.

Snapshot One is a remodeled shoebox on Peralta just south of Cortland that was just flipped for a staggering $400K (?!?!?!) above its asking price and doubled in value over the course of a year. Here’s a split view of the home before and after the remodel:

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CurbedSF says:

The little house at 853 Peralta Street sits a mere stone’s throw away from the 101 freeway. It isn’t at the heart of trendy Bernal Heights, but that didn’t stop flippers from fixing up the once-simple house and selling it for $1.75 million. That price is more than double what the flippers paid last April, when they bought the home for $830,000. At that time, the home had the original fixtures from its 1977 construction, including a kitchen squished into one corner, a brick fireplace in another, and a red plank back deck. The house was given a makeover that left it with an open plan, a new kitchen, and a freshly landscaped backyard.

CurbedSF has a cool slider widget-thingy that lets you view lots of before/after shots of this house, so click through to play along.

Snapshot Two is a funny little house on Prospect near Coso:

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CurbedSF sayeth:

There’s something off-kilter about the little blue cottage at 22 Prospect Avenue, on the north slope of Bernal Heights. And it’s not just the wide-set windows, whose lower-than-usual placement gives the facade a somewhat downcast expression. Inside, the two-bed, one-bath home reveals itself to be an oddball cross between a woodsy cabin and some sort of loft. The rafters are exposed, and more than a few walls look as though knotty wood panels (or possibly laminate?) have been rigged up below the ceiling. There’s a pair of stainless-steel sinks in the bathroom, and one bedroom has a weirdly institutional vibe, with streaky carpet tile and a ceiling that wouldn’t look out of place in an office or classroom.

The home—which clocks in at 1,314 square feet, per property records—is listed for $789K, a modest $600 per square for what the brokerbabble acknowledges is a fixer.

What our friends at CurbedSF were really trying to say (though perhaps they didn’t know it) is that this Bernal Heights house is a classic Bernal Heights-style home — only it now comes with a price tag inflated by several years limited housing inventory. Here’s an interior view:

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Anyone care to guess what the sale price for 22 Prospect will be? And what it will look like 18 months from now?

Rents in Bernal Heights Up 24% Since Last Year

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San Francisco’s population is growing rapidly, but we haven’t built nearly enough new housing to keep pace with our City’s growing popularity. The result is predictable to anyone with a basic grasp of supply and demand: Renting a place to live in San Francisco has become nose-bleedingly expensive.

But what about Bernal Heights? For insight on our hyperlocal rental market, the data geeks at Zillow offered to crunch some numbers for us. Bottom line: The rent is too damn high! Median rents in Bernal are even higher than in San Francisco overall, having climbed by 24% in the last year alone. Oof. Zillow’s Tali Wee sent us this summary:

Renting in Bernal Heights is more expensive than the median rent in the San Francisco metro. Currently, the median rent price per month in Bernal Heights is $4,326. For comparison, San Francisco rents are still steep at $3,088, but significantly less than Bernal Heights.

These local prices increased 2.1 percent since last month alone and a whopping 23.6 percent in the last year. If you’re a renter in Bernal Heights, you’ve likely experienced major hikes in your rent throughout the past few years. If you’re looking for a rental in Bernal Heights, anticipate prices to remain expensive throughout the year.

Also in Bernal Heights, home values appreciated 13.8 percent since last year. If renters are planning to buy, it’s becoming more and more difficult to save a down payment because rents are so expensive. Plus, purchasing a home becomes out of reach as values appreciate and prices rise; the median home value in Bernal Heights is $1,127,500. These values are forecasted to grow another 5.1 percent throughout 2015.

Right now, renters pay about $3.25 per square foot, about three times the national rate ($1.10). Across the country, renters are applying an average of 30 percent of their monthly incomes on rent, and an astronomical 44 percent in San Francisco.

Renters thinking about buying in Bernal Heights can breakeven on the upfront costs in approximately 1.3 years. Zillow’s breakeven horizon shows the length of time it would take for the costs of renting to exceed the total costs of buying the same property. So, renters who adore the Bernal Heights community and who plan to stay longer than 1.3 years are financially better off buying then renting – especially as home values appreciate, which increases returns on their investments.

Ellis Eviction Halted on Ellsworth, But Cesar Chavez Residents Remain on Notice

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According to the the San Francisco Rent Board, the number of Ellis Act evictions in San Francisco declined by almost 50% last year. However, the number of for-cause evictions rose by 7%.

Here’s the data from the Rent Board’s 2015 Annual Eviction Report (PDF):

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The report also provides this citywide summary:

During the period from March 1,2014 through February 28, 2015, a total of 2,120 eviction notices were filed with the Department. This figure includes 145 notices given due to failure to pay rent, which are not required to be filed with the Department. The number of notices filed with the Department this year represents a 7% increase from last year’s total filings of 1,977. The largest percentage increase was in eviction notices for illegal use of a rental unit, which increased from 42 to 91 notices. Owner/relative move-in eviction notices increased from 273 to 343 notices. Breach of rental agreement notices increased from 607 to 738 notices. Unapproved subtenant eviction notices increased from 17 to 20 notices, and nuisance eviction notices increased from 349 to 401 notices.

Closer to home, Beyond Chron tells the story of some Bernal Heights neighbors on Ellsworth (near Cortland) who were able to successfully resist an attempted Ellis Act eviction :

New owners of 261-261A Ellsworth Street purchased the property in February 6, 2015. Ten days later they served the long-term tenants, including 82 year old Alberto Lopez, with Ellis Act notices of termination.

On March 31, 2015, the Tenants’ attorney, Raquel Fox of the Tenderloin Housing Clinic,  provided formal notice of entitlement to an extension of the notice period based on Alberto Lopez and his wife’s senior ages. On April 19, 2015, the  Landlords’ lawyer told Fox that the new landlords were rescinding the Ellis Act. The communication included a copy of the Request for Rescission of Ellis Act Notices. On April 20, 2015, the Tenants executed the Declaration of Tenants Continued Occupancy.

The quickness of the Lopez victory means it will not join the ranks of other high-profile Ellis Act evictions. But it sends another message that Mayor Lee’s tripling of Ellis eviction defense funding has had a huge impact. These tenant legal victories show that Ellis cases are not a slam dunk, and help slow the current rising tide of such actions.

On Bernal’s north side, Mission Local reports on a large-scale Ellis eviction effort targeting residents of the 12-unit building at 3301 Cesar Chavez (at South Van Ness).

At 3301 Cesar Chavez, tenants in the 12-unit building near South Van Ness received Ellis Act eviction notices in February. “I’ve lived through six different owners of this building,” said Doña Margarita, a senior who has rented in the building for 52 years. “Because of my age, I can’t just live anywhere.”

Beyond Chron reports that the building at 3301 Cesar Chavez is owned by Robert Imhoff, a property-owner with a rather long history of eviction attempts.

Hovering over all of this is the fact that San Francisco added more than 11,000 new residents in 2014 alone, as the City’s population has soared to new all-time highs. San Francisco’s unemployment rate stands at a 15 year low, but we’ve been running a chronic housing deficit since the 1990s. Oh, and San Francisco rents are currently the highest in the nation.

How can we reduce evictions and improve affordability in the long term? More housing please!

PHOTO: 261 Ellsworth via Google Maps.

KQED: Lama Family Feud Lies at Heart of Big Bocana Rent Increase

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Veteran reporter Dan Brekke knows how to do the legwork required to crack a story open. These days he works for KQED, where he just published a remarkably detailed report on the Lama family dispute that lies at the heart of the now-infamous 355 Bocana rent-increase controversy.

Brekke’s reporting largely confirms rumors that have been rippling through Bernal Heights for the last few days, to the effect that as a result of the family feud, Bernal neighbor and 355 Bocana property owner Nadia Lama hoped to evict Neigbor Deb Follingstad, because Neighbor Nadia herself needs a place to live.

Brekke reports:

Superior Court filings show that Nina Gelfant and Gayle Worrell alleged they were forced from their one-bedroom, one-bathroom, 720-square-foot Cortland Avenue apartment [in 2013] after the Lamas raised the rent from $1,650 to $4,250 — 157 percent.

The suit argued that the rent increase was far above market rate and designed to get Gelfant and Worrell to leave so that Lamas could sell the property.

That sale, [tenant-rights lawyer Joe] Tobener suggested in a trial brief that outlined more than $1 million in potential damages, was triggered by a battle among Shukry Lama’s heirs over the property he’d left behind when he died in 2012.

“Chuck Lama’s heirs were fighting over their share of the inheritance which demanded selling properties or having the heirs occupy them as residences,” Tobener’s brief says.

That alleged squabble also appears to have played a role in Nadia Lama’s dramatic increase of Deb Follingstad’s rent.

In September 2013, she filed a probate petition in Superior Court seeking to compel her sister Claudia, the overseer of several family trusts set up by [deceased family patriarch] Chuck Lama, to account for the family’s assets. Assets named in the petition and exhibits include a small Cortland Avenue market, Chuck’s Store, the store’s liquor license, eight residential properties in San Francisco, one in Burlingame, and unspecified real estate in Chile.

The court proceeding resulted in an agreement last Dec. 31 in which the three Lama sisters and their three brothers, along with some of their children, agreed to close the family trusts and distribute their assets.

The property Nadia Lama was to receive includes a 2006 Toyota Avalon; $25,000 to pay the legal bills she’d incurred; a little more than $750,000 in cash due upon the sale of two of the family’s properties; and finally, the Bocana Street residence occupied by Deb Follingstad and the $7,500 to hire a lawyer to evict her.

The agreement also requires Nadia Lama to vacate her current home, a couple of doors up from Follingstad and still owned by her siblings, by the end of April. If she doesn’t, the document says, she’ll have to pay $4,000 a month rent to four of her siblings who will continue as owners; and if she does anything to interfere with their renting out the home she’s supposed to vacate, she’ll owe her siblings $10,000 in damages.

Kudos to Dan Brekke and KQED for the excellent work following the paper trail. Read Brekke’s full report on the KQED website, right here.

PHOTO: Telstar Logistics

UPDATED: Bernal Resident Stunned by 315% Rent Increase

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Neighbor Deborah Follingstadt is a tenant at 355 Bocana. This month, she says, she was given notice that her landlord plans to raise the monthly rent from $2145 to $8900a month— a jaw-dropping 315% increase. Posting about it on Facebook, Neighbor Deborah says:

I guess I should say 1st – I need a place to live if anyone knows of anything please let me know, even if it is a temporary roommate situation or temporary sublet.

I am not sure if I can stay in the Bay Area for the “long haul”, but in the short term I have a job that I won’t abandon and a community I love. I will give it my best shot but it looks kinda bleak from where I am standing currently.

A lot of you know about this and that for the last two weeks I have been trying to find anything that can make this illegal. Because it looks so absurd when you read it seems that it must be illegal.

However, this is loophole that landlords have found in San Francisco to evict their tenants without actually having to pay relocation, do an “owner move in” or Ellis act. All of which carries a penalty to them and is costly.

So here is the short version of the story, 1st they transferred the title of the house to one of the 6 siblings, stripped the apartment downstairs (the one that Wayne lived in for close to 25 years before they bullied him out) took out the bathroom, and kitchen, put down some crappy carpet and now call it a “storage” space. By doing this it changed the title of the building to a “single family dwelling” which is not protected by rent control and raised my rent to $8900 a month with a $12,500 damage deposit a month. Obviously above market rate and obviously more than anyone would pay.

The few of us who still remain in San Francisco have no choice but to live in sub-par conditions like mold, windows that don’t shut, rodents and countless other issues because there is no other choice, because the rents are so high you can’t move so you don’t. And you know that one day the ax will fall and you will be kicked out so it is not surprising when this happens, but this is just gross and greedy and wrong.

So here it is this is page 5 of the 23 page document that I was served on Monday March 2 (feel free to share and no the typos don’t matter)

Here is the scan of the letter Neighbor Deb claims to have received, outlining the terms of the rent increase proposed by property owner [and Bernal resident] Nadia Lama:

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Owner Nadia Lama is member of the Lama family, which has been a presence in Bernal Heights for decades. (CLARIFICATION: Bernalwood’s understanding, not yet fully confirmed, is that 355 Bocana is owned by Nadia Lama alone, and not the entire Lama family. A recent ownership transfer indicates that Nadia Lama acquired the property from a family trust.)

Bernalwood reached out to Nadia Lama and her lawyer over over the weekend to verify the content of the letter and provide an opportunity to respond. We also reached out to Neighbor Deb to do the same. Thus far, Bernalwood has not received a response from any of the parties involved.

UPDATES: Lots happening with this story as it sweeps through the local mediasphere. Much of this is technical, most of it is confusing, and some of it seems somewhat contradictory. Plus, math is hard. Let’s begin:

>> Jeremy Pollock, an aide to D11 Supervisor John Avalos, reached out to Bernalwood to say this:

I’m a legislative aide for Supervisor John Avalos. I just wanted to add my two cents on the 355 Bocana case: it seems pretty clear to me that if the landlord did remove the downstairs apartment, they didn’t get a permit for it, which makes it an illegal merger. There’s no record of any merger permits in the Planning’s system. We’ve asked Planning Department staff to look into this.

>>But Planning approval may not have been required for the single-family conversion, according to some terrific CurbedSF reporting. Curbed was able to reach both Neighbor Deb and Neighbor Nadia Lama’s lawyer to confirm the basic facts presented by Bernalwood above. Long story short: Through a complex series of moves, it appears the property owner effectively reclassified 355 Bocana in a way that made the gobsmacking rent increase legal:

For most of her 11-year tenancy, Follingstad, 46, was protected from large rent hikes under the Rent Ordinance of 1979, because she was living in a multi-unit building (single-family homes and condos are treated differently under the Rent Ordinance). But by 2014, a tenant who had been living in the downstairs apartment moved out, after which, recalls Follingstad, the Lama family ultimately removed the stove, sink, and toilet from the vacant ground-floor unit. “They put down some crappy carpet and now call it a ‘storage’ space,” she wrote in her Facebook post. That change turned her building into a single-family dwelling and effectively dissolved the protection against large rent hikes, or what is known as rent-ceiling-limitation protection.

Normally when landlords want to take a unit out of service, they need to go through discretionary review with the Planning Department, Tobener explains. But because the downstairs unit was not on the books—city documents reflect just one dwelling unit at the address—the landlord needed only building permits to do the work, no blessing from Planning required.

>> Legal notices suggest Nadia Lama became the sole owner of the property at 355 Bocana in December 2014, after ownership was transferred to her from a family trust. (H/T: Neighbor Arno)

>> Nadia Lama also lives in Bernal Heights, according to rather cranky commenter GoldenGateShark. Bernalwood has not been able to verify this independently. Nevertheless, Nadia Lama shall hereafter be Neighbor Nadia Lama.

>> Fallout from the incident took the form of a sign taped to the door of the Lama family’s former store on the corner of Bocana and Cortland this afternoon. Neighbor Jim shared a photo:

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>> Further muddying the waters, it would appear that Neighbor Deb was sub-renting the apartment at 355 Bocana via Airbnb. It is unknown if the terms of her lease would have allowed this:

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The description of the space posted on Airbnb reads as follows:

I am being kicked out of my home of 11 years. Come celebrate my final months hosting wonderful travelers from all around the world, sharing interesting places to see, eat and enjoy in this beautiful city I have called home for 26 years. I have truly enjoyed my hosting experience and made many friends. My greedy new landlord wants market value for my home, and is forcing me to leave with some very shocking and unsavory tactics. But, I guess that’s life in the San Francisco BOOM town. Sadly, this not only means I loose my home but also loose my city, because I can no longer afford to rent here as an acupuncturist.

My rent controlled apartment has allowed me to have a guest bedroom for my friends and family to stay with me, have a wonderful acupuncture clinic and spa, host travelers who wanted a real San Francisco experience, and also have a place for my patient’s families to stay when their loved ones were in crisis. It has been a wonderful journey. Help make the end of this era a special and memorable one!

>> It’s an Official Media Frenzy! Cue the TV reporters:

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UPDATE 18 March, 2015: via the SF Chronicle, Denise Ledbetter, the lawyer representing property owner Nadia Lama, has released a statement on the matter:

The rent increase that has generated this controversy is actually an offer by the owner to rent a substantially larger home than was originally rented. In addition to the upper level (in which tenant currently resides), Ms. Follingstad will have access to at least 60% more space which can be used by the tenant to offset the rent increase through her existing Air BnB business. As interested parties are now aware, there are many sides to a story. Rent Control Ordinances create unreasonable expectations upon which tenants rely. In this case, rent control simply does not apply to this tenancy.

When a small property owner finally has an opportunity to increase the rent – via State law – the City gives almost no choice to the owner but to take the opportunity to increase the rent. If owners were allowed modest increases over time, we would not see this kind of dramatic rent increase required.

San Francisco’s promotion of Airbnb-type hotel use further reduces available housing to middle income residents. A comprehensive housing policy is required for San Francisco County residents – landlords and tenants. Commercial profit making use of a tenants rent regulated rental unit should be disallowed.

San Francisco County unfairly burdens small property owners with a societal problem that should be shared by all residents – not just those whose owners’ whose properties were built prior to June 13, 1979. Small property owners are not being subsidized by the government for what is truly a problem for all of society. An economically sound housing policy – fair to all – is required to avoid further displacement of our middle income residents.

PHOTO: 355 Bocana on March 15, 2015, by Telstar Logistics

 

Median Rent for 1BR Apartment in Bernal Hits $2800 (What a Bargain!)

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Time for a quick check-in on the state of Bernal Heights apartment rentals. The data geeks at Zumper just pulled together an overview of 1-bedroom apartment rental costs across town. Citywide, the rent is too damn high:

The San Francisco rental market continued to be the most expensive rental market in the country, reaching an all-time high of $3,460 for a 1-bedroom apartment. While prices in New York City remained largely flat at $3,000 last month, SF continued upwards, increasing 1.5% month over month and 3.3% over the last quarter.

That said, rental prices in Bernal are on the low-crazy side of totally insane, relative to many neighborhoods around us.

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Of course, the thing about Bernal is that it doesn’t have a lot of 1BR inventory. Here’s Zumper’s map of 1 BR rental listings in the neighborhood right now:

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MAPS: by Zumper

Bernal Architect Designs Affordable Housing That’s Beautiful

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San Francisco needs more affordable housing. Much more.

But affordable architecture gets a bad rap. It’s ugly. It’s too institutional. It’s too homogeneous. It’s visual blight.

Often, those generalizations are true… which has the very unfortunate effect of making San Franciscans (even more) resistant to new affordable housing projects. That’s super extra-bad, because San Francisco really needs more affordable housing. Much more.

Architect Owen Kennerly is a resident of Holly Park, and he was the co-designer of a new affordable housing project in Mission Bay that’s so gorgeous it makes San Francisco Chronicle architecture critic John King swoon.

The building is 1180 Fourth Street, and here’s as taste of what The John King has to say about it:

Architecturally, the six-story wedge of 150 apartments adds an assertive spark in a young district with too many boilerplate buildings. At ground level it’s engaging, a pleasure even before the generous retail spaces are filled. There’s a social payoff as well: The units are reserved for low-income families, adding youth to the neighborhood scene.

None of this is by chance, and it shows how planning priorities can translate to good city building — especially when determination and creativity are added to the mix.

The first step was the decision long ago to reserve the site for affordable housing. It’s a prime location fronting a park where Mission Creek is crossed by Fourth Street, the entryway to the 200-acre-plus southern part of the Mission Bay redevelopment district established in 1998. Setting it aside for lower-income residents was a symbolic reminder that economic integration should be pursued when and where it makes sense. But a well-meaning gesture isn’t the same as a well-done piece of architecture. That’s where smart design comes in.

The architectural effort was led by Daniel Solomon and Owen Kennerly, whose relationship goes back to the 1990s when the latter was a UC Berkeley student and an employee of the former. Kennerly now has one of the most visually inventive small firms in the city.

This is not Neighbor Owen’s first rodeo. He’s created several cool buildings around San Francisco, including a gorgeous house that got the sexy treatment from The New York Times. Neighbor Owen’s design for the affordable housing at 1180 Fourth takes his work in a wonderful new direction, and it shows that his architectural kung-fu is extremely versatile.

Great work, Neighbor Owen, and thank you. Oh, if you have some spare time, could you please pull together some sketches for a mixed-use housing and supermarket retail project to go on the site of our managerially blighted Bernal Safeway? Mmmkay? That’d be great.

PHOTO: San Francisco Chronicle