In the past two months, two newly constructed luxury homes have come to market asking $3 million or above in Golden Gate Heights. At the end of April, 1769 11th Avenue came on asking $3.5-million for a four-bedroom, 4.5-bath home with a three-car garage, park and ocean views, and a sauna. And just recently 432 Moraga (featured in the gallery above) joined the new-build fray, asking just under $3 million for a four-level four-bedroom, also with a three-car garage and incredible views. The homes may be part of a trend of new-builds with record-breaking price tags coming to areas formerly known for their older, more-affordable homes.
To be sure, Golden Gate Heights was already a well-loved neighborhood with the price tags to prove it. In fact, the largely original 1923 home that formerly existed at the Moraga site sold for $1,220,000—well over the $889,000 asking price—back in 2014. (And at the time it was only about a third of the size of the new-build that took its place.) But even the neighborhood’s median sale price of $1,710,000 is still a far cry from the $3-million-plus these homes are asking.
“Builders took a big risk hoping that buyers would accept the $2.5- to $3-million price point,” according to Helena Zaludova of Paragon Real Estate Group. “There were no comps for this whey they bought in.” In fact, according to Redfin, only 20 homes in the neighborhood have sold on the open market for over $2 million in the last three years and only two sold for over $3 million. One was a new-build that went for $3,250,000 earlier this spring. (Interestingly, the highest sale during that three-year period was a remodeled but not rebuilt 1974 home at 880 Pacheco. The five-bedroom, 5.5-bath sold for $3,850,000 back in 2015.)
Could these outlier sales become more and more the norm? Is there a Noe Valley-ization of San Francisco taking place at the upper-end of the market? Dale Boutiette of Paragon Real Estate group thinks so. “We are definitely starting to see developers branching out into the less expensive, older neighborhoods. The methodology, in my opinion, is very similar to how it started in Noe Valley, Eureka Valley and Dolores Heights.” In those neighborhoods, Boutiette says, developers would buy homes or even empty lots with incredible views because view homes are a relatively safe bet. The buyer pool tended to be younger buyers who wanted “cleaner, modern and minimalist lines with open spaces,” he says. So that’s what developers gave them.
But as areas like Noe Valley and Bernal Heights run out of cheaper inventory, developers have set their sights on other neighborhoods with good views and access to neighborhood amenities—and it’s not just Golden Gate Heights.
Glen Park recently saw a record sale with a new build that went for $5.4 million last month.
Another record sale took place just last week, this time with a $1.9-million modern home in Bayview. Both had a streamlined design and terrific views. Boutiette calls these sales “seeds” that “get planted in the more established neighborhoods and then ultimately bring up the values of others in the neighborhood over time that don’t have the views.”
He thinks the next seeds are likely to be putting down their roots in Ocean View and Ingleside, where view homes near shops and restaurants are still a comparative bargain. “If a neighborhood has a vibrant, growing or buzzing commercial area, this will lead to higher demand for the real estate and consequently higher prices with developers coming in to take advantage,” he says.