Are Home Values in Russian Hill Influenced by Location or Earthquake Risk/Liquefaction?

Since becoming a realtor, I have continuously advised clients to avoid buying homes in heavy liquefaction zones in San Francisco. Explaining the effects and problems of liquefaction could be done simply in relation to unstable soil and frequent California earthquakes. However, when making the decision to invest in a home, it is always better to have more information than less. Thus, it is necessary to delve deeper into my reasons for warding clients away from properties that reside on liquefaction. In neighborhoods such as Russian Hill, a location in which prices might not be impacted but safety could be, this reasoning airs on the side of caution. Feel free to reach out if you need help with home purchases and listings in liquefaction at team@atlasa.com.

Liquefaction relates to the status/composition of the soil and ground on which various counties, cities, and neighborhoods reside. Generally, liquefaction is a natural hazard that is triggered by the occurrence of larger earthquakes. The levels of liquefaction range in intensity. In a particular area, liquefaction levels can be very low, low, moderate, high, or very high. As liquefaction levels rise on the scale, the ground/soil becomes increasingly susceptible to falling or sinking in the face of a high-intensity earthquake.

At the end of the industrial boom, the San Francisco coastline was populated by many bay, marsh, and creek areas that made structural development near-impossible. In the mid-1800s, the United State Federal Government adopted the Arkansas Swamp Lands Act of 1850. The Swamp Lands Act legalized the State of Arkansas and other states reclaiming swamp and overflow lands. This reclamation would include claiming a title of the lands.

According to the California State Lands Commission, beginning in 1855,

California received over two million acres of swamp and overflowed lands, which was loosely defined as lands that required drainage or levees in order to be cultivated.

Following the receipt of these lands, the State of California used foreign fill to expand the San Francisco coastline for building and development, and to fill marsh and creek areas around the Bay. This artificial/foreign fill was created using rock, rubble, soil, or even mud pumped from the bottom of the Bay and left to dry. These lands, due to their man-made nature, are highly susceptible to shifting and sinking.

How much of Russian Hill is affected by Liquefaction?

The level of liquefaction in a particular area varies from region to region.

Source: Temblor.net

Russian Hill is in a very desirable location in San Francisco. Not only does it feature panoramic views of the Bay as well as iconic landmarks, most of the neighborhood is primarily on bedrock, making the location more seismically sound. Over 80% of the location is not susceptible to liquefaction.

To determine whether liquefaction affects pricing, we took a data-driven approach by observing condos and single-family home sales from the start of 2015.

Out of 652 sales, we found that:

  • 85% or 555 properties are not affected by liquefaction
  • 15% or 94 properties are found in moderate liquefaction
  • Less than 1% or 3 properties are affected by heavy liquefaction

Taking it a step further, we continued to break it down by property type. Out of 554 condo sales:

  • 86% or 478 condos are not affected by liquefaction
  • 13% or 73 condos are found in moderate liquefaction
  • Less than 1% or 3 condos are affected by heavy liquefaction

Out of 98 single-family home sales:

  • 79% or 77 single-family homes are not affected by liquefaction
  • 21% or 21 single-family homes are found in moderate liquefaction
  • No single-family homes sales are found to be affected by heavy liquefaction.

Unlike its other close counterparts, the Marina District, and North Beach, Russian Hill is primarily in low liquefaction with only small areas on the borders being located in moderate to high liquefaction. This is due to the fact that most of Russian Hill is a part of the original San Francisco coastline. However, the bordering edge of North Beach is noted to be in high liquefaction. This is because that is where their old coastline or the Barbary coast was originally located.

How much does Liquefaction affect Home Prices in Russian Hill?

Based on our findings, we have found that there is no relationship between pricing and liquefaction for condos as shown in the price charts below.

Please note that properties sold in low and very high liquefaction were excluded in this pricing analysis as there were not enough sales to accurately assess value.

Given that the location of the moderate liquefaction areas are different enough compared to non-liquefaction areas, we needed to investigate further.

We compared median condos on a case-by-case basis. Despite the size of median condos between the moderate and non-liquefaction areas being roughly the same, they have different features that affect their price point.

  • Non-liquefaction condos in Russian Hill generally have views, which gives them a significant price premium. Geographically speaking, these areas are on hills. However, view condos in large mid-to-high-rise buildings tend to have high HOA dues, which puts downward pressure on prices in many cases.
  • Moderate liquefaction low-rise condos are located primarily in the more urban sections of Russian Hill, namely Polk Street. Because of the flatter geography and shorter buildings, condos generally do not have views here.

We see a different story when observing single-family homes in Russian Hill.

While price per sqft metrics are similar…
Sales prices are significantly higher in non-liquefaction areas compared to moderate areas.

Why is there this disparity?

The same reason why condos were priced similarly despite having different features: micro-locations, views, size, etc.

When comparing the median single-family home in Russian Hill, we found that:

  • Non-liquefaction homes are nearly 50% larger than homes in the more urban and flatter moderate areas.
  • Homes north of $3.5M can have panoramic views of the Bay, Alcatraz, Coit Tower, and Bay Bridge from multiple floors, which gives them a huge price premium. These homes are also located in the most coveted parts of Russian Hill as well. And because they are not condos, they are not bound by HOAs.

In general, if possible, homes that sit in very high liquefaction areas require a necessary amount of caution and consideration, as the danger of being in a liquefaction zone in an earthquake-frequent state such as California is not one to be overlooked.

The final decision for whether a home is the right one for you will always come down to you. If liquefaction matters a great deal to you as a buyer, then Atlasa will diligently find properties to fit your desire. On the flip side, if you want a home and are not bothered by its presence in a liquefaction zone, Atlasa will aid you in the purchasing process in equal capacity. What matters most is that as a buyer you are thoroughly informed so as to make the best possible decision. At Atlasa, we are the only team that will help clients to actively avoid properties hyper-vulnerable to earthquakes by analyzing the structures and their integrity along with the quality of soil beneath the home.

If you are looking to buy a home, please feel free to contact us at team@atlasa.com.

More than anything, it is important to remember that you have many options and opportunities to sell your home, even if it is in a moderate to very high liquefaction zone.

If you would like to explore your options, please reach out to Atlasa Real Estate at team@atlasa.com so we can get the conversation started.

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Deniz Kahramaner

Deniz Kahramaner

Founder and CEO at Atlasa. Big Data Realtor. Email: deniz@atlasa.com Website: www.deniz.io LinkedIn: www.linkedin.com/in/kahramaner/ Company: www.atlasa.com