Sunset cracks list of overpriced neighborhoods

When one thinks of San Francisco neighborhoods for which people pay ghastly amounts to call home, perhaps the Marina, Pacific Heights or Nob Hill leap to mind.

But, in fact, it’s the quiet Sunset district that topped the list of overpriced ZIP codes in The City — and earned the title of sixth most overpriced neighborhood in the nation — in a study commissioned by Forbes.com and released this week.

The report compared the price of buying with the price of renting in neighborhoods across the nation. The places where mortgage payments were far higher than the neighborhood’s rental prices were deemed to be overpriced.

But the Forbes story was quick to point out that overpriced homes are not necessarily always bad investments: If they continue to appreciate in value, the payoff will come down the road.

Though the Sunset is far from the most expensive neighborhood in The City, its sales prices have far exceeded its rental prices in recent years. Its assets have made it attractive to homebuyers: It borders Golden Gate Park and Ocean Beach, two light-rail lines run through it, it hosts one of the world’s leading medical schools and it has a reputation for safety.

Between 2003 and March 2008, home prices have jumped from $560,000 to $771,000 — before dropping about 10 percent from its peak, the Forbes report said.

Certainly not everyone agrees with the study’s conclusion that the neighborhood is overpriced. Realtor Danielle Lazier, author of real-estate blog www.sfhotlist.com, said there’s far more that goes into home values than their ability to earn rental income.
Lazier said she recently sold a home at Ninth Avenue and Moraga Street that received five offers within two weeks and closed at $60,000 more than the list price.

“The Inner Sunset consistently has high demand — it’s a very stable residential neighborhood. We had absolutely no trouble selling this house,” she said.

She wasn’t concerned about the report stating that prices had dropped by 10 percent in that district.

“Even if that’s true, 10 percent is a lot less than what the majority of the country has seen,” she said. “I tell people, if your house is down by just 10 percent, go kiss your sidewalk.”

Teacher Elizabeth Craig, who lives on Judah Street near Funston Avenue, said she and her husband bought their home in 1996, “just before the prices went through the roof.”

She said she’s not worried about her home being overpriced because she plans to live in the neighborhood she loves forever.
“If we’d waited a year, we would have been priced out of the neighborhood for sure,” she said. “We were very lucky.”

kworth@sfexaminer.com

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