A three-bedroom, two-bathroom home built in 1924 in an upscale San Francisco neighborhood saw its value tumble after the recently listed property came with a major catch.
The single-family house on North View Court in Russian Hill went on the market for $488,000 on Zillow two weeks ago. That looks like a steal considering other homes on the cul-de-sac are valued at well above $1 million, with one approaching $3 million.
But any buyer would have to wait decades to actually move in because there’s a tenant living there who’s paying only $416.67 in monthly rent and isn’t going anywhere for a while.
“Tenant’s current lease appears to grant tenants strong long-term rent rate amount restrictions, unconventional method of rental payment, and possible occupancy rights until 2053,” the Zillow listing says. “This is an AS-IS sale and seller hereby reserves the right to reject, counter and/or accept any offer. Seller & listing agent do not guarantee access to the home and STRONGLY recommend buyers review the seller disclosure package/addenda and confer with a San Francisco landlord/tenant attorney BEFORE making offer.”
The home’s previous owner was more than 100 years old and died of natural causes in the home, the listing adds.
Despite the home’s “nice curb appeal” and Edwardian-style design, its $488,000 list price is well below Zillow’s $526,500 “Zestimate” and down sharply from its value of $1.5 million just last month, according to the New York Post, representing a decline of more than 60%.
The house still drew a long line of prospective buyers last week, local TV reports said. That may be because the listing advertises the home as “an excellent investment opportunity for just the right buyer.”
Douglas Lee, a real estate agent with Compass, told the Los Angeles Times that the home is an opportunity to “land bank,” or defer using the property for long time.
“You sit and wait until that tenant either dies, vacates, or the lease ends,” he told the Times. “Once that happens, you realize a ton of your potential. That’s a really good purchase for trust fund people. If you’re buying it for your kid who is like zero or 1, in 18 years you know that this thing will be about ready to realize.”
The relatively cheap property is contrast with the overall housing market, which has grown increasingly unaffordable, especially in places like California.
Nationwide, the price on sales of existing homes jumped to a fresh record high in May even as the supply increased. In addition, Zillow says buyers must now put down roughly 35%, or almost $128,000, to afford a typical home.
Meanwhile, high home prices are having a “feudalizing impact” on California, as policies that limit urban sprawl have raised land values, according to the annual Demographia International Housing Affordability report, which was produced by Chapman University in California and the Frontier Centre for Public Policy in Canada.