60 Hoods Point Way

60 Hoods Point is in an absolutely spectacular location, with one of the best views in the Highlands. The view didn’t disappoint, but the house definitely did. It’s not the house’s fault. Someone hacked it up and remodeled it in a manner that left it looking schizophrenic and uncoordinated. The style of the interior lacks cohesion and has some odd choices, like glossy tile in master bedroom, and a first-floor bathroom with a picture window. And while appear large on a square-footage basis, the living area is split up. There’s an upstairs unit that could be used as an in-law apartment or a rental, but that brings certain compromises as well. While the house is certainly livable, it left me a little perplexed that what could have been a true gem was turned into something so utilitarian.

On the other hand, the views are great and the house is livable and move-in ready, so I’m sure it will work out for someone. The asking price has already been reduced by $100k to $1,898,000 from the initial price so perhaps potential buyers have the same reservations.

Note: I’m just a guy who lives in the neighborhood with no particular expertise in evaluating houses. If you’re interested in buying this house, get your own home inspector!

60 Hoods Point Way, San Mateo Highlands
3 bed/2 bath, 2 car garage (main floor)
2 bed/1 bath in-law unit upstairs (accessible from a separate stairway outside)
3,090 sf including both units
10,000 sf lot
Asking price: $1,898,000 (down from $1,998,000)
Redfin listing: https://www.redfin.com/CA/San-Mateo/60-Hoods-Point-Way-94402/home/2048598

Pluses:

  • Staggering, 180-degree view of the Peninsula and SF Bay
  • Quiet, cul-de-sac street which lies off another quiet street
  • It’s on the warmer, less windy side of the Highlands
  • Swimming pool and spa
  • Home theater addition with multiple screens would be great for movie buffs sports addicts
  • Remodel is still in good condition and the house is move-in ready
  • In-law unit that can potentially be used as rental space

Minuses

  • The original modern lines of the home’s exterior were rendered almost unrecognizable by the addition of the theater room and second story, which leave it looking chunky and unbalanced. You can tell they tried to keep it somewhat in the style of the house, so as additions go, I’ve seen worse, but that’s not saying much. Without these additions this house would have been a showpiece. Unfortunately that ship has now sailed unless a buyer is willing to invest a lot of money to reverse the changes.
  • The interior is a mish-mash of different styles, as if different parts were done at different times. It’s uncoordinated and schizophrenic, kind of like wearing plaid pants with a striped shirt. The tongue-and-groove ceiling has been drywalled over.
  • There are a number of design decisions that struck me as odd. For example, the toilet in the master bath looks through a picture window to the pool, leaving you no privacy if you need to use the facilities while you have guests in the back yard. A window covering might be possible if it weren’t for the tub/shower, which has no shower curtain.
  • Although the house measures out to almost 3100 sf, I wouldn’t say that’s all “usable space” for a single family because the in-law unit is only accessible from outside by a separate stairway. The main living space on the first floor is essentially a standard 3/2 Eichler, so probably 1600 sf, plus another 400 sf or so for the theater room.
  • As an in-law unit, the upstairs space has some limitations. The steep stairway could be problematic for older people, and the roof deck off the living area has no railing. The same concerns would apply to using it as an expanded living area for a family with kids. It could work as a rental (assuming the zoning allows it) but I wouldn’t want to hear footsteps above me all the time either.

View from the street. Eichlers shouldn’t have second-story additions at all, but at least they *tried* to get the style right. Unfortunately the second story plus the white trim on the windows make it look more like a SoCal beach house than a mid-century modern home.IMG_7097

Continue reading 60 Hoods Point Way

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Teardown Economics

Recently there’s been a lot of angst in Palo Alto (read more here, here and here) over the potential teardown of several Eichlers, to be replaced with contemporary two-story homes. There have also been cases of small homes selling for astronomical prices — such as this 1300 sf Eichler that sold for $2.8 million — which cannot be justified by comparable property values. What’s driving this behavior?

In a hot real estate market, it’s simple math. Let me give you an example.

This Palo Alto house is not an Eichler but it will work to illustrate our point. 3910801_3

Key specs:
258 Middlefield Road, Palo Alto, CA
Single-family detached home, built 1925
1356 sf, 3br/1ba, 7500 sf lot
Asking price: $1,498,000

It’s a small, decrepit house in unlivable condition, on a busy street corner, in a flood zone. In its favor, it’s in North Palo Alto, which is a desirable neighborhood, and it’s on a 7500 sf lot, which is good-sized for that area. Asking price seems high? Well let’s take a look at the economics of this property.

According to the listing, the largest home you could build on a lot of this size is 2438 sf (based on Palo Alto zoning requirements). So, if you buy this dump and build a new house, what will it be worth?

I looked at a few comparable listings nearby on Middlefield and people have recently been paying $1000-1500/sf in that area. Let’s take the midpoint, $1250, to calculate what a new house would be worth.

$1250/sf * 2438 sf = $3,047,500

So that’s the approximate value of a new house on the property. What does it cost to build that house? Let’s say construction costs are $500/sf (just a guess, but not far off what my insurance agent told me). The cost to build the house would be:

$500/sf * 2438 sf = $1,219,000.

So now we know what the house would be worth, and what it would cost to build. If we subtract the construction cost from the final market value, we can figure out what the underlying property is worth.

$3,047,500 – $1,219,000 = $1,828,500

So if you paid $1.8m for the property you could build a new home there and come out even. (UPDATE 10/26/14: When this property was officially listed on the MLS on 9/24/14, it was priced at $1.8m, so clearly I’m not the only one doing this math.)

The lesson here is that when property values are very high, the value of the property is driven by lot size rather than the structure itself. While $1.5m may seem like a lot for a decrepit house on the corner of a busy street, in this case we’ve seen that it would be rational to pay even more than that for this property, assuming market values hold. The smaller and junkier a house is, especially on a larger lot, the more likely it’s going to be a teardown.

A few additional “real world” notes to this model:

  • Math and rational thinking aside, the sales price may end up being significantly higher than $1.8m. The Palo Alto market is full of buyers who are flush with stock option cash and most buyers are frustrated, having been outbid on many other houses. The winner will probably have to make an irrational overbid in order to beat out all the other desperate bidders who are also making all-cash offers significantly over the asking price.
  • Construction costs could easily end up being more than $500/sf. Being flush with stock option cash, the new buyer may be undisciplined about their construction budget and overrun it with expensive materials and custom details.
  • Expenses breed more expenses. On top of all these up-front costs, the new buyer’s property tax will be about 1% of the value of the new home, or about $30,000/year, and will increase up to 2% per year from there.

Mid-century cinder block screen

One of the unusual features of our house is the cinder block wall that screens off the front door from the view of the sidewalk and street.

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At the time we bought the house I didn’t think much of it (as long as it wasn’t falling down I was fine with it). It’s not original, but it’s definitely the correct vintage (more on that below) and we’ve since warmed up to the look. One of the cool things about it is that it has different personalities depending on how it’s lit by the sun.

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Continue reading Mid-century cinder block screen

60 Trenton Place

(UPDATE 9/22/14: 60 Trenton Pl. closed on 9/14 for $1.6m on the nose, a premium of $202,000 or 14.4% over the asking price. At 1820 sf that comes to $879/sf.)

The Highlands hasn’t had many houses on the market this summer and this one has never been listed before, so I was interested to see what was likely to be a time capsule. Note: I’m just a guy who lives in the neighborhood with no particular expertise in evaluating houses. If you’re interested in buying this house, get your own home inspector!

The stats:
60 Trenton Pl., San Mateo Highlands (Redfin listing)
4 bed/2 bath, 2-car garage
1820 sf
19,000 sf lot (but not all usable – more on this below)
Asking price: $1,398,000 ($768/sf)

Pluses:

  • Nice curb appeal
  • Quiet cul-de-sac street, in a sunnier, less windy part of the Highlands
  • Atrium model with a good-sized floor plan for this neighborhood
  • Radiant heating appears to be updated
  • Many original elements still there: kitchen cabinets, closet doors, doorknobs, unpainted T&G
  • Clean garage
  • Potential (if unlikely) for view
  • House is ready to be lived in, if you’re willing to put up with some older/funky items

Minuses

  • Blocky/flat-roof design is one of the least dramatic Eichlers
  • Short distance from back windows to edge of hill
  • Original paneling is textured and painted (only a minus if you’re into paneling)
  • Globe lights all gone
  • Flooring is unattractive
  • Wall between kitchen and living room obscures view
  • Bathrooms are older and could use an update
  • Lack of landscaping or irrigation in the rear and side yards
  • No visibility from kitchen/living room to main yard area
  • Price is at the higher end of the range on a per-sf basis, and Eichler enthusiasts will likely want to put more money into it

The details:

The house has great curb appeal in my opinion and the cedar shingle siding is somewhat distinctive. Eichler did build some homes here with shingles so that may be original (though clearly refreshed recently). The garage still has the original carriage-style garage doors and they appear to be in good shape. I’d repaint that vertical garage support post the color of the house, but that’s just me.

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Continue reading 60 Trenton Place

Garage sale find

A neighbor is moving after many years in the Highlands and had a small moving sale. I picked up this nice-looking Regal coffee pot with Bakelite knob and walnut legs. I really bought it for the great mid-century look – although all the parts are there and it probably works, these types of pots never really made great coffee anyway!

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Small computer table

Like many families, in addition to having computers for work we have a “family” computer (an old Mac Mini in this case) that we all share. In our old house we had a spacious eat-in kitchen so it lived on a spare table there. No such large kitchen in the Eichler, but there’s a little space in the living room so the computer’s been there on an old drop-leaf dining table. It wasn’t really ideal though, because the table surface was big enough to attract a lot of clutter, plus we’re going to start using that table as an actual dining room table (more on that in a future post). I didn’t have a big budget for this item, but I wanted it to fit the style of the house. Soooooo…you guessed it, off to ikea.com.

The space for this desk was pretty small, so the desk that caught my eye on their website was the MICKE desk. It was sized right at 29×20 and while not beautiful, it was white and simple so at least it wouldn’t look out of place. It would do the job, and hey, it was only $50.

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The problem is, this desk doesn’t look great in person. It would work for kids but that’s about it. The materials look cheap (of course they ARE cheap, you just don’t want them to LOOK that way) and the white looked more like a very light gray than the bright white I expected. Definite no-go. I didn’t have a second choice in mind but shopping at IKEA is such a hassle that I didn’t want to leave empty-handed either. Unfortunately after looking around, it seemed that none of their other office or home-office desks fit my style and size requirements.

Enter the IKEA “Desk Bar”. Rather than having fixed designs in two or three finishes, at the Desk Bar you can create your own design from a bunch of different desktop and leg combinations. I quickly found a glass top and some inexpensive legs which, while not winning any design awards, look perfectly respectable in our house and fit the space perfectly. $40 later…voila:

desk

 

The Eiffel-base arm chair looks great with it too. Bonus.