A three-bedroom, two-bathroom home built in 1924 in an upscale San Francisco neighborhood saw its value drop after the property recently for sale hit a major snag.

The single-family home on North View Court in Russian Hill was listed for sale on Zillow two weeks ago for $488,000. That looks like a bargain considering other homes on the cul-de-sac are worth well over $1 million, with one nearly $3 million.

But any buyer would have to wait decades to move in because there is a tenant living there who is only paying $416.67 a month in rent and isn't going anywhere for a while.

“The tenant's current lease appears to grant tenants strict restrictions on the amount of long-term rent, unconventional methods of rent payment, and potential occupancy rights through 2053,” the Zillow listing states. “This is an “as is” sale and the seller hereby reserves the right to decline, counter, and/or accept any offer. Seller and broker do not guarantee access to the home and STRONGLY recommend buyers review the seller's disclosure package/addendums and consult with a San Francisco landlord-tenant attorney BEFORE making an offer.”

The previous owner of the house was over 100 years old and died of natural causes in the house, the ad continues.

Despite the home's “handsome exterior” and Edwardian architecture, its list price of $488,000 is well below Zillow's Zestimate of $526,500, according to the New York Post, and well below its $1.5 million valuation just last month, a drop of more than 60 percent.

Last week, the house was still attracting a long line of potential buyers, local television reports said. That may be because the listing touts the house as an “excellent investment opportunity for just the right buyer.”

Douglas Lee, a real estate agent at Compass, told the Los Angeles Times that the house was an opportunity to “save land” or postpone use of the property for a long time.

“You sit there and wait until the tenant either dies, moves out or the lease ends,” he told the Times. “Once that happens, you can realize a lot of your potential. This is a really good purchase for people with trust funds. If you buy it for your child who is zero or one year old, you know that in 18 years they will be ready for you to realize it.”

The comparatively low real estate prices contrast with the general housing market, which has become increasingly unaffordable, especially in areas like California.

Nationwide, existing home sales prices rose to a new record high in May, even as supply increased. In addition, buyers now need to put down about 35 percent, or nearly $128,000, to afford a typical home, according to Zillow.

The story goes on

Meanwhile, high housing prices are having a “feudalizing effect” on California as policies to limit urban sprawl have pushed up property prices, according to the annual Demographia International Housing Affordability Report, produced by Chapman University in California and the Frontier Centre for Public Policy in Canada.

This story originally appeared on Fortune.com

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In the first 10 months of Housing Bust 2 (now), the median price plummeted much faster than it did in the first 10 months of Housing Bust 1 (2007-11).

By Wolf Richter for WOLF STREET.

There’d better be a halfway decent spring sales season already underway in San Francisco and Silicon Valley, because it’s getting pretty bad pretty fast. But it’s hard to imagine how good the spring sales season can be amid countless reports of layoffs, working from home elsewhere, and big numbers on how many people have left Silicon Valley and San Francisco. The city of San Francisco alone lost about 56,000 residents, or about 6.3% of its population, according to census data from 2020 to 2022, despite the completion of about 12,000 new housing units during the same period.

The nine-county Bay Area median price fell another 8% in January, 17% year over year and 35% or $540,000 in 10 months after the crazy peak in March 2022. $1.54 million to $1.00 million US dollars, according to the California Association of Realtors.

Bay Area single-family home sales fell 37% in January compared to January last year. The slump in sales has been moving for months in a year-on-year comparison.

Seasonally, January is generally the worst month of the year for the median price of sales closed in January, reflecting deals negotiated in December. So there is hope that this will reverse during the spring sales season that everyone is praying for.

But where is this requested demand supposed to come from during the spring sales season? People are now worried about their jobs and buying a still ridiculously overpriced home with mortgage rates once again approaching 7% is probably not the top priority. There is also the fear of catching a falling knife. The area has lost population. And amidst layoffs and hiring freezes, not many people are now being hired from elsewhere with big salary promises.

But the 35% plunge hasn’t done much damage yet more broadly, because the price increase before that was so steep and so insane that not many people actually bought homes at those insane prices in 2021 and 2022. Most people who bought in 2019 or earlier — the vast majority of homeowners — are still afloat.

In other words, the 35% plunge didn’t even take down the entire top of pandemic-free money. But the illusions of sudden wealth vanished as quickly as they appeared.

As you can see from the jagged line on the charts, median prices are volatile and seasonal and can be skewed by the mix of what is actually selling, etc. etc. So they must be treated with care. But this slump is historic nonetheless.

Blast from the Past: Housing Bust 1 vs. Housing Bust 2. During the Housing Bust 1 that began in the Bay Area in mid-2007, the median price plummeted 59% in 21 months, from May 2007 ($789,250) to February 2009 ($321,110) when it bottomed out.

Ominously, the median price has only fallen 23% over the first 10 months of Housing Bust 1, compared to 35% over the past 10 months in Housing Bust 2. This chart is a blast from the past, Housing Bust 1 in all its glory:

The five major counties of the Bay Area.

San Francisco: The median single-family home price has fallen 33%, or $675,000, since its breathtakingly idiotic peak in March 2022, falling from $2.06 million to $1.38 million in 10 months. Year over year, the median price plummeted 15%.

The January median price was about the same as January 2019. The first time the median price reached $1.38 million was in February 2016. The spring sales season should be better:

Silicon Valley: San Mateo County: The median single-family home price has fallen 32% since its April 2022 peak, down $776,000 in nine months, from $2.40 million in April to $1.62 million in December. Year over year, the median price plummeted 19%.

This median price remained almost unchanged in January 2021 and was first seen in February 2018.

Silicon Valley: Santa Clara County (including San Jose): The median single-family home price rose in January, but was still down 22%, or $440,000, from its April 2022 peak, after falling from $1.97 million to April 1 in nine months .53 million US dollars had fallen. Year-over-year, the median price fell by 11%.

Alameda County (East Bay, including Oakland): The median price for single-family homes fell 31%, or $479,000, from $1.54 million to $1.06 million from the May 2022 peak. Year-over-year, the median price fell by 15%.

Contra Costa County (East Bay): The median single-family home price fell 30%, or $313,500, from its April 2022 peak of $1.05 million to $736,500. Year-over-year, the median price fell by 11%.

Median time on market in the Bay Area rose to 32 days in January before the property was sold or pulled from the market for failing to generate a deal. This was an increase from 28 days in December 2022 and 12 days in January 2022.

So a good spring sales season – or at least not a disaster – is what everyone is praying for. In January, mortgage rates had fallen to nearly 6% and the stock market had skyrocketed, but that’s over. The daily reading of the average 30-year fixed-rate mortgage rate is already back above 6.75% amid renewed inflation fears and dashed Fed Pivot hopes, according to Mortgage News Daily.

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