To G or not to G

REAL ESTATE | PATRICK BARBER

A two-unit home for sale at 2905 Bush Street would be affected if Proposition G passes.

A two-unit home for sale at 2905 Bush Street could be affected if Proposition G passes.

A significant slowdown in the number of multi-unit building sales in San Francisco’s northern neighborhoods suggests that Proposition G may be having an impact on the local real estate market months before city residents cast their votes.

On the ballot for the upcoming November 4 election, Proposition G is designed to discourage property flipping by levying a substantial tax on homes with two or more units that are resold within five years of purchase. Essentially, the proposed legislation could force home sellers to pay up to 24 percent of the sale price in taxes — a substantial sum in a city where the median single-family home price has hovered around the $1 million mark for most of this year.

The uncertainty surrounding Proposition G appears already to have cooled investor interest in multi-unit properties. From mid-August to mid-September 2013, eight multi-unit buildings sold in the Cow Hollow, Lower Pacific Heights, Pacific Heights and Presidio Heights neighborhoods, while four went into contract. In that same time period in 2014, only two multi-unit buildings sold and two went into contract.

And since Proposition G applies to single-family homes with in-law units, its effects could be felt beyond the multi-unit property market if voters choose to approve it.

Patrick Barber is president of Pacific Union.

Not all square footage is created equally

2858 Vallejo Street

2858 Vallejo Street

REAL ESTATE | PATRICK BARBER

A pair of recent single-family home sales in Pacific Heights underscores that affluent San Francisco buyers will often pay a whole lot more for location and views than they will for size.

On the surface, 2858 Vallejo Street and 1948 Pacific Avenue are similar. Both were built around the turn of the 20th century, boast 5-plus bedrooms and sit on similar-sized lots. Both properties also needed substantial renovations. However, at 7,360 square feet, the Pacific Avenue property is more than twice the size of the Vallejo Street home. Yet 2858 Vallejo sold for $6.1 million — 30 percent more than the asking price — while 1948 Pacific sold for $5 million, or 6 percent less than the listing price. The Vallejo Street home’s stunning panoramic views and desirable location commanded a large premium.

The English Craftsman home on Vallejo stands west of Divisadero Street, a location that many Pacific Heights residents covet. It also sits about a block from the end of Vallejo, which adds privacy and seclusion. Importantly, the Vallejo Street home offers incredible vistas of the Golden Gate Bridge, Alcatraz and San Francisco Bay — a perk no buyer could ignore.

1948 Pacific Avenue

1948 Pacific Avenue

Patrick Barber is president of Pacific Union.

‘I don’t see anything to pull it back’

Patrick Barber

Patrick Barber


REAL ESTATE | PATRICK BARBER

WE’RE PLEASED to welcome Patrick Barber, a native of the neighborhood and president of the Pacific Union brokerage, as our new real estate columnist.

So you’ve lived in the neighborhood a long time. Yep, 48 years. I grew up on Clay Street not far from Fillmore. I went to Stuart Hall and St. Ignatius. It was quite a bit different than today. As parents, we’re so hard-wired to be worried about our children. In those days, there was a roll of nickels near where we kept the mail. We’d grab a nickel and walk up to Presidio to catch the 3-Jackson and go to school. It was a wonderful neighborhood to grow up in.

And you knew you wanted to come back after college? I went to UC San Diego, then moved back. I’ve been in real estate for 26 years. I started at TRI and was on the sales side for 9-plus years. Then I started Sotheby’s, their 11th office in the world, because I felt the local real estate companies weren’t offering clients enough marketing and reach. I was there for 12 years before we took Pacific Union back private and teamed up with Christie’s. I’m happy to have a local company with international reach.

What have you observed during three decades in the real estate market in this neighborhood? The old adage “location, location, location” has always held true and still holds true today. Houses in this neighborhood — Pacific Heights, Presidio Heights, Cow Hollow, the Marina — they’ve all held their values very well. Even in the face of adversity like the earthquake in ’89, most people held on through the rebuilding and reconstruction, and the values came back strong.

After the economic crash in ’08 there wasn’t a big decline. There certainly was a pullback and a slowdown. But it probably lasted only about 12 months in Pacific Heights. The way you make money in real estate is by holding it, not selling it. And many people in this neighborhood didn’t have to sell. We were fortunate. We also had interest rates trending down during that time.

The demand has been pretty constant. There’s been a lot of construction and reinvestment over the 26 years. People have sometimes invested well beyond what their home in the near term will ever be worth. They’re invested in building a place to live in one of the best neighborhoods in one of the best cities in the best country in the world. People often have built what they wanted, without concern for what price it would bring. It was intrinsic value they were building, not just an investment. We’ve seen that so many times, where people build beyond today’s property values. They’re doing it for themselves, particularly in this neighborhood.

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Paolo Shoes staying on Fillmore

Photograph of Paolo Iantorno, owner of Paolo Shoes, by Daniel Bahmani

Photograph of Paolo Iantorno, owner of Paolo Shoes, by Daniel Bahmani

By Chris Barnett

THE RANCOROUS LEASE DISPUTE between Paolo Shoes and its landlord has been resolved out of court, and the custom Italian shoemaker won’t be taking a hike from the corner of Fillmore and Pine for at least two more years.

The clash between the two San Francisco real estate dynasties was recently settled as Paolo Shoes and Webco Group LLC and their lawyers met in the halls of the courthouse awaiting a mandatory settlement conference of a lawsuit based on a disagreement that had dragged on for 10 months with neither side budging.

“We made amends and settled on a rent that is twice what I am paying now, but still below market,” says Paolo Iantorno, the tenant and owner of the store. Under terms of the agreement, he will pay $10,000 a month rent for the first year and $10,500 a month in the second year. Previously, he was paying $5 a foot for the 1,000-square-foot storefront at 2000 Fillmore Street.

Patrick Szeto, a member of the family that owns Webco Group and American Realty and Construction Co., did not return calls or respond to an email seeking comment.

“We met for four hours in the halls and we each had our lawyer with us,” Iantorno says. “The mood, to be honest, was fine. Very constructive. There was no anger or emotion and we talked everything out.”

Still, both sides were at an impasse and ready to go to trial until Iantorno’s father, Sergio Iantorno, showed up and acted as unofficial mediator. His son will not disclose what precisely brought the factions to an agreement. But he hints that his dad made certain amends and pointed out that Paolo had been in the storefront for 10 years and in the Fillmore neighborhood for 15 years and had been a good tenant during those years.

“For Patrick, I now understand that it was business and not personal,” says Iantorno. “We settled our differences — despite the fact that he had a prospective tenant ready to move in and pay $15,500 to $16,500 a month.”

The amiable resolution was a 180 degree turnaround from earlier this year when Paolo Shoes faced eviction on Valentine’s Day when his lease expired. Webco would not extend the lease, claiming Iantorno’s request in July 2013 for an extension did not meet a deadline in the existing lease.

Both sides hired lawyers and spent the fall and winter haggling.

These days, Paolo Iantorno, who has two other retail stores in Hayes Valley — including one called Duke et Duchess that sells its own line of jeans and accessories, — is spending most of his time working for the family real estate business, Realty West. He is doing hands-on renovations of apartment complexes and mixed-use retail and residential properties.

Iantorno says he is grateful his Fillmore Street hassle is behind him.

“My dad and I were talking,” he says. “Maybe there is some way our two families can work together on a deal. I would like that.”

EARLIER: “Getting the boot

Shell station may lose garage

The Shell station and garage at California and Steiner Streets.

The Shell station and garage at the corner of California and Steiner Streets.

PLANS HAVE BEEN UNVEILED to demolish the Shell station at 2501 California Street and replace it with a new high-end convenience store called Loop.

Loop is the next evolution in service station retail,” said Nick Goyal, one of California’s largest operators of Shell service stations, who now controls the local station and more than 100 others. During the past year he has opened six Loop stores at Shell stations in the Bay Area, with more on the way.

Loop stores offer groceries and fresh foods along with wine, espresso, smoothies, frozen yogurt, sushi and a soup and salad bar. “It will change your expectation of what you can purchase at your next fill-up,” Goyal said.

Shell Auto Repair would be eliminated and the fuel pumps reconfigured and rebuilt, if the project is approved by the city.

EARLIER: “50 years at the Shell station

Pacific Heights is cheap compared to Noe Valley

The views are better in Pacific Heights — and maybe the deals, too.

The views are better in Pacific Heights — and maybe the real estate deals, too.

By Nina Hatvany

SALE PRICES of real estate in San Francisco’s southern neighborhoods have taken off dramatically in recent months. Noe Valley, Potrero Hill and South Beach are especially sought after by people who commute to the Peninsula, but still want to live in the city, or couples in which one person commutes south or to the East Bay. The south side generally offers better weather, proximity to the burgeoning restaurant scene in the Mission District, and often better access to muni or bart for commuters. 

In contrast, the more established northern neighborhoods are still desirable, but aren’t experiencing the same surge in popularity, despite the views, the bustling retail streets and easy commuting to downtown and to Marin.  

Areas like Pacific Heights, Presidio Heights, Cow Hollow and Russian Hill will always retain their allure. They are what I consider to be “blue chip” quality in the long term. But at the moment, while attention is focused southward, the properties coming up for sale in the northern neighborhoods are often a comparatively better deal — either by dollars per square foot, or because there are fewer people bidding on them and buyers therefore don’t encounter quite the same kind of bidding frenzy. 

One could argue that now might be the time to buck the trend and revisit the traditionally more expensive neighborhoods, considering the southern craze.

But gut feelings on the real estate market have to be backed up with evidence, and in this case the evidence speaks volumes about how the southern neighborhoods are quickly catching up to — and in some cases surpassing — northern values, at least in certain price ranges.

For example, consider a typical search by a younger couple interested in both Pacific Heights and Noe Valley — arguably the most expensive neighborhoods in each of their geographies. Looking at recent sales results, I found that one- and two-bedroom condominiums with parking priced under $2 million were selling in the last three months in Noe Valley at an average of 13.2 percent above asking price and roughly $879.16 per square foot.

That’s hundreds of dollars per square foot more than prices in these up and coming areas just a few years ago. On average, the homes were on the market from the start of marketing to closing for only 22 days, meaning there was a high percentage of all-cash and preemptive offers.  

In contrast, similar Pacific Heights home sales were averaging only 8.9 percent over asking price (indicating less competition) and $880 per square foot.

That’s a difference of only 84 cents per square foot between the neighborhoods — despite the fact that historically Pacific Heights has been San Francisco’s most expensive neighborhood.

This evidence speaks volumes. The competition for first-time or mid-range home buyers has soared in the southern neighborhoods, and there may well be some competitively priced deals to be had by turning one’s gaze back toward the bay. I will be encouraging clients to join me in living on the north side
of town.

Nina Hatvany is a real estate agent with Pacific Union.

Mrs. Doubtfire’s neighbors move up

The historic Ellinwood mansion at 2799 Pacific Avenue.

The historic Ellinwood mansion at 2799 Pacific Avenue.

By Maria Marchetti

IN THE DEPTHS of the real estate crisis in 2011, the defaulting owners who had spent millions restoring the Ellinwood mansion at 2799 Pacific were removed and the home was put on the market as bank owned. In the same family for more than a century after it was completed in 1894 — and empty for half that time — the house has a rich and colorful history, with a basement billiard room that hosted at least one world championship and a side garden with a tree that was a gift from Queen Victoria, now replaced by a lap pool. The house sold in June of last year for $11.5 million — not much more than the price of the restoration.

The new owner — producer-writer-director Chris Columbus (“Mrs. Doubtfire,” “Home Alone,” “The Help” and several Harry Potter films) — is now selling his former home overlooking Alta Plaza Park at 2622 Jackson Street. It’s also a neighborhood landmark, designed in 1895 by Willis Polk in the Italian Renaissance style and constructed of sandstone, which is rare in San Francisco. For decades its classical rounded portico welcomed students and guests inside to the Music and Arts Institute. Now it’s a comfortable home with bay views — and a screening room, of course — listed for $13 million.

The historic square sandstone house at 2622 Jackson Street.

The historic square sandstone house at 2622 Jackson Street.

Maria Marchetti is a real estate agent with Sotheby’s International Realty.