San Francisco: ‘Drive until you qualify’ (with a dope finale) [The Real Estate Economy]

A couple of weeks ago I made a little model around a creative-class worker earning $100K in San Francisco, and asked how far would he or she have to drive to afford a detached house based on their pre-approved mortgage? The answer was Pittsburg, CA, 40 miles deep into the East Bay.

I’m surprised someone hasn’t popped up and called me on that one because there’s an exception to the rule: Oakland. Every now and then a listing appears in Oakland for under $400,000, like the Victorian in the aerial shot after the jump once occupied by novelist Jack London.

"Jack London’s Queen Anne Victorian Home circa 1890 designated as an
historic landmark in 1979. This 2 story home has an eat in kitchen w/new cabinetry,
refinished softwood floors, soaring ceiling & 25′x140′lot. A developed loft-like basement and charming rear yard with a family orchard of fruit trees & EZ parking potential at the rear of the lot. Own an affordable piece of history."

But when I pointed out the listing to friends who already lived in Oakland, they weren’t interested. One of them, who covers some of the worst Oakland hoods for the local Fox affiliate, commented "a house for under $400k on Foothill Blvd in Oakland!?!?! No thanks.. could be shoot ‘em up ally."

He’s referring to Oakland’s notorious violent crime, and a murder rate 3x the national average. That’s not a problem in neighborhoods in the north part of Oakland like Piedmont but it could be in areas near the above listing.

Local real estate pros also told me that properties like this are discounted because another huge segment of buyers won’t touch that market: couples with young kids. They want to live near above-average schools, and here again parts of Oakland have a sketchy record. Money magazine’s latest stats  on student performance:

Even with those downsides, this Jack London listing was too good to be true. It was pulled off the market last week. I have no idea why, the listing agent wouldn’t pick up the phone or return my calls. But I did find this recent story from a Sacramento TV station tying the agent in question to eight grow-houses busted in dope seizures. Coincidence?

Here’s a related comment posted this a.m. by Jim, in a thread below. In his case, ‘drive til you qualify’ meant Rochester, NY:

"We
were renting a house in San Francisco’s Sunset district for $2,000 a
month: 900 sq. feet, 2 bd./1 ba. and a tiny garage. No updates or
improvements. The owner decided to put it on the market and gave us the
opportunity to buy. Asking price? $979,000! Even if we could qualify, I
would never be able to pay it off. We relocated to Rochester, NY and
bought a ranch house in the burbs for the staggering price of $108,000.
No regrets here, other than wondering why we didn’t get the hell out of
CA earlier."