San Francisco real estate has been hot since November 2011, but it’s even hotter this year. If you’re buying a single family home in San Francisco, the bell curve price range is $800k to $2m. That’ll get you a 2-4 bed, 1-3 bath home. Key variations impacting prices within this range are:
– All original condition vs. remodeled
– All original condition vs. key improvements like kitchens/baths
– Walkability to amenities
– Garage parking for 1-2 cars
For example, you could have a remodeled 3 bed, 3 bath home with sprawling views in Golden Gate Heights for the upper end of that range, but you can’t walk to coffee. If you want to do that from your view home, add about $1m. Or if you want to go from sprawling to panoramic views in Clarendon Heights just East, you have to add almost $1m and you’ll still have to drive to coffee.
THE HOME YOU GET FOR $10 MILLION
But what if you go way outside of the pricing bell curve? What kind of home do you get?
The short answer is this:
A 6,733 square foot, 5 bed, 5.5 bath, 3-story (with elevator, naturally), 3 car garage home with drop dead Golden Gate Bridge views, all of which is a short walk to San Francisco’s best food, stores, gyms, schools—and yes, coffee too.
The property is 2151 Green Street in a neighborhood called Cow Hollow between Pacific Heights and the Marina.
The list price: $9,950,000.
It was listed last month, had about 1,500 people through to look at it, got into contract within two weeks, and closed yesterday.
And the specs list above doesn’t even include the fun stuff: all pre-installed sound and lights are controlled from iPads on the walls in each room. Or you can also also control the whole house from your phone. Plus you get heated hardwood and concrete floors, theater, gym, sauna, steam room, 900 bottle wine room, two outdoor kitchens, and did I mention the elevator? Or the basketball court?
All this yet the home is not flashy nor museum-like. It’s quite cozy and really feels like a home.
And no wonder. The guy who rebuilt the traditional 1915 structure into a contemporary 2013 haven is perhaps the least flashy real estate guy I know.
WHO BUILDS HOMES LIKE THIS?
John Schrader, founder of Nova Designs & Builds, was happy to sidestep the glamorous opening party a few weeks ago to talk to me about his latest project.
“Before I got into real estate in 1985, I was a musician and performance artist and my goal was to impact people’s senses with lighting, color, sound, and space planning. It’s still my goal for designing and building homes,” Schrader told me.
Great back story too: he was about to be evicted from the apartment he had in a 5-unit San Francisco building and scraped together the money to buy it. He redid the floors and made some other basic improvements, then sold it for a $200k profit.
Art took a back seat to building, and he’s done 1000 residential projects since then. But $10m projects where he’s developer and lead investor aren’t the norm.
“In a hot market, about 50% of our work is developing and investing in our own projects. But it’s normally 70% client work and 30% developing with investors.”
Which makes sense because when times are good, developers may target returns up to 35% for investors on projects lasting 9-18 months, and if things go really well, it can be higher.
But the flip side is illiquidity. For example, Nova lost $1m on a single project in 2001 as the dot-com bust and 9/11 rattled San Francisco.
This would sink most smaller developers like Nova, but Schrader says their winning formula—for their own projects and for their client work—is designing AND building.
“If you’re not doing both, you simply don’t have control over the budget because things always change as you go from designs to builds.”
Even on 2151 Green, Nova went over budget by about $400k due in large part to a seismic upgrade that the city required.
This requirement actually gave them some design latitude that let them add value to the property, but if they weren’t designer and builder, the budget overage could have gotten very ugly.
HOW DO YOU GET A $10 MILLION HOME?
Normally you only get these properties off market by working with a realtor like 2151 Green listing agent Helena Zaludova who knows the sellers. To protect their privacy, sellers will tell their realtor to just bring buyers instead of listing it on MLS.
It’s a very involved process for buyers. However this trend could change if San Francisco buyer demand keeps spiking.
“Newly developed projects like 2151 Green are rare so it’s appropriate to go on the market,” said Zaludova, “We did so to expose it to a wider audience and to give the developer some exposure.”
The interesting outcome of her approach is that, of the handful of truly interested buyers, two couples (not including the actual buyers) came to the home without their real estate agents because they simply wanted to check out a new open house with no intentions, then became interested.
“It’s not common to just be able to walk into a $10m home and take a look around,” said Zaludova. “And people really appreciate the ability to do that casually to see if it interests them. That’s not possible with off-market properties.”
But more to the point: in hot markets, there’s a case to be made for high end sellers listing certain properties to get higher prices by exposing their homes to more buyers.
HOME BUYING/IMPROVEMENT ADVICE FOR THE REST OF US
In conclusion, it’s worth noting that Nova (and Zaludova) serves the broader market, not just the high end. I’ve seen the full slate of their projects over the past few years, from single room remodels to entire subdivisions to luxury homes like Green, and one theme prevails:
You must create financial and aesthetic value from whatever space you can afford.
Obvious, yes. But hard to execute. Schrader said he sees too many people overpay for fixers without proper plans or budgets, and when the remodeling headaches end, they end up with something that’s worth the same or less than an already-finished home.
Very tricky budget terrain to navigate, especially in a market where prices are rising quickly. And this is where the good realtors and builders are worth every dollar—because they’re watching every dollar, whether it’s a few hundred or $10 million.
– Nova Designs & Builds – Developer