Twelve Million Dollars for a House?

07/26/2021 English German

Edition # 139
San Francisco, 07-26-2021

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Twelve Million Dollars for a House?

Figure [1]: This house is on the market for twelve million Dollars.

Michael We're regularily watching the "Tagesschau", a daily German evening news show, and can't help but notice that it regularily shows politicians who can't stop complaining about the high cost of housing in Germany. Laughable! Compared to the irrationally fueled real estate market in San Francisco, houses in the most expensive German cities like Munich are still bargains. Granted, the bubble of the Bay Area's and especially San Francisco's housing market has shrunk a bit lately due to residents leaving in droves for more reasonably priced, safer, and more competently governed cities. Lots of tech workers are no longer required to come to the office every day and can work from anywhere, and many a coffee shop milk foamer expert no longer sees a reason for scrounging together exorbitant rent payments every month for a city which has hardly any entertainment options left to offer. That brought a stop to the hyperinflation-style real estate gains recently.

Figure [2]: This house was bought in 2006 by a recently deceased Dot-Com millionaire.

As a side effect, instead of decrepit dumps no one in their right mind would consider buying, there's now a whole lot of really interesting objects on the market. At exorbitant prices, for sure, and they're apparently saturating the market because some of them stay on the listings for months and months with no one willing to take a bite. After all, it'll take a bored billionaire with cash to burn a whole in their pockets to shell out ten million Dollars for such a house.

For example, there's a mysterious, dungeon-like and slightly ugly house at the corner of 21st St and Sanches St for sale now. It once belonged to a former mayor of San Francisco, who, according to rumors, purchased it back in the day for his concubine. I have no trouble believing this, because although the unusually large single family home features a vast dining hall, and plenty of bathrooms, it orginally offered neither a kitchen nor a garage to park a car.

Dot-Com millionaire Frederick Roeber had purchased the house in 2008 for a whopping $4.3M Dollars. The excentric computer nerd, who had worked at Netscape and Google in the early days of the Internet retired in his mid-fourties, and obtained San-Francisco-wide notoriety, because he once hoisted a swastika flag on the roof of his house, oddly, to protest Donald Trump's victory in the presidential election that year. This had in turn upset a neighbor with jewish heritage, and the whole story made the news. Of course the Rundbrief had reported on it back in the day (Rundbrief 12/2016).

Now, Roeber unexpectedly died in June 2020 under mysterious circumstances at the age of 52, and the somewhat crazy house is now on the market, Roeber's heirs are asking $11.9M Dollars. This seems a bit steep to me, but maybe a billionaire without a car who only orders takeout food will snap it up?

Figure [3]: Zuckerberg of Facebook fame bought this house on 21st St in 2014 for 10 Millionen Dollars.

While we're on the topic of real estate gossip in our neighborhood: Further down on 21st St, at the corner of Fair Oaks St, there's another building to recently change owners, it's called "Fort Zuckerberg". People here call it that because Facebook founder Mark Zuckerberg purchased the property back in 2014 for the (at the time) absurdly high price of 10 million Dollars (4 million over market price). Back then, local news reported about the subsequent year-long construction, with angry neighbors voicing their discontent about the non-stop construction noise and Zuckerberg's obnoxious 24/7 private security parking and patrolling in the small and otherwise quiet residential street. The article is worth reading, by the way, if only for the fact that the construction included building a "wine room" and a "wet bar".

Figure [4]: And to avoid arguing with the neighbors, he purchased the properties left ...

Figure [5]: ... and right of the house, and their renovations are still ongoing to date.

In the meantime, Zuckerberg seems to have gotten tired of fighting, to simply purchase the properties left and right of Fort Zuck as well, according to rumors at simililarly inflated prices. Likewise, these neighboring houses have been under construction for more than a year now, draped in plastic covers. If you follow along with the gossip on the neighborhood forum Nextdoor, his adjacent neighbors don't seem to mind, probably because their own property values rose abruptly as a ripple effect of Zuck's buying spree. Once the construction noise ceases, they can expect hardly any disruptions, as the Zuckerbergs are practically never in town, living in Palo Alto near the Facebook headquarters, where they purchased no less than four adjacent houses following a similar pattern.

Before you decide to plunge any money into buying an old house in San Francisco, make sure to do your homework and study the quirky process getting permits signed off by the city. According to home owner reports on neighborhood forums, the process can be murky and unpredictable with unexpected setbacks for strange reasons as far as regular Joe Homeowners are involved, yet the rich and famous seem to know how to express-track things in the desired direction. There's stories about home owners having trouble obtaining permits to do simple improvements like remodel the bathroom or fix a wooden deck. City bureaucrats seem to have the power to block any construction, and as a proud new owner of a property you might find yourself sitting on a protected ruin, requiring crazy amounts of money to turn into a livable space.

No such problems seem to have impeded the construction on the corner of 21st St and Sanchez St. According to the city register, the new owner purchased the majestic old building there for the whopping price of 10 Million Dollars, only to have it demolished completely soon after (Figures 6 und 7).

Figure [6]: Only a few days ago, an impressive old building was standing on this lot (Google Streetview).

Figure [7]: The new owner paid 10 million Dollars to tear it down.

Allegedly, the old house had some structural problems, despite looking okay from the outside. The bulldozers did a thorough job, completely flattening it, and now there's a big empty lot leftover for a spacious new house to be built. Word on the street is it's going to be a multi level monster house, your Noe Valley real estate gossip guy will keep you up to date on any new developments!