Inside the Crumbling Shack Selling for $2.5 Million on San Francisco's Potrero Hill

"It's ridiculous," said one neighbor after hearing the asking price for an old, decaying cottage that hasn't been lived in for at least a decade.

Set far back on a lot that's become overgrown with tall grass and shrubbery run amok, the tiny square house at 863 Carolina St., covered in rotting cedar shingles, is the latest piece of real estate to raise eyebrows in a city where rent and housing prices continue to rise.

"Years ago, no one wanted to live up here," said Potrero Hill resident Michelle Sheehan. "Now we have shacks going for $2.5 million. Who knew?"

Though this cottage is selling for an asking price of $2.5 million, prospective buyers can't walk inside to tour it. It's been deemed unsafe to enter. - Spherical Image - RICOH THETA

Though this cottage is selling for an asking price of $2.5 million, prospective buyers can't walk inside to tour it. It's been deemed unsafe to enter.

—

Realtor Anne Laury, who's the agent selling the property, said the owners bought it for $1.5 million two years ago. At the time, there were big questions about what they'd be able to do with it.

"The City of San Francisco protects its architecture," Laury said. "So if you buy a piece of land like this ... it's a gamble. You don't know if you're going to be able to actually demolish that structure."

Inside the house, an old stove and refrigerator remain, as do a bright green carpet and the stairs to a loft that overlooks the front porch. - Spherical Image - RICOH THETA

Inside the house, an old stove and refrigerator remain, as do a bright green carpet and the stairs to a loft that overlooks the front porch.

—

Neighbors had thought the cottage was an "earthquake shack" — the miniscule, one-room houses built by union carpenters after the earthquake and fire that ravaged San Francisco in 1906. Known as the "original tiny homes," the shacks were carted out into the city's neighborhoods just in time for winter, where a precious few still remain to this day.

The cottage features laundry and kitchen appliances — many of them left behind when the property was abandoned 15 to 20 years ago. - Spherical Image - RICOH THETA

The cottage features laundry and kitchen appliances — many of them left behind when the property was abandoned 15 to 20 years ago.

—

"It was found out that it wasn't an earthquake shack," said neighbor and architect Julie Jackson. "So the person who bought it got an entitlement to build a very nice, big house, much bigger than any of the surrounding houses."

In the backyard, where the weeds are several feet tall and a large tree has begun growing into the back room of the cottage, Laury pointed over the weathered fence to the skyline on the horizon.

The backyard — and the back of the house — have been completely taken over by nature. A tree has grown into the house, and the back wall has fallen away. - Spherical Image - RICOH THETA

The backyard — and the back of the house — have been completely taken over by nature. A tree has grown into the house, and the back wall has fallen away.

—

"It's gonna be amazing, with views from every single floor," she said. "Toward the bay, the Bay Bridge, downtown — it's a 360-degree view."

Though some neighbors including Jackson remain skeptical that the property will actually sell for $2.5 million, others argue a pre-approved demolition permit is the "golden ticket" for a hilly neighborhood with no more land left to develop.

The real value of the property is in the view. Here, you can see the San Francisco skyline peeking over the fence. - Spherical Image - RICOH THETA

The real value of the property is in the view. Here, you can see the San Francisco skyline peeking over the fence.

—

"If you look at the properties going down the street, they're homes that were all built 60-70 years ago, if not longer," said one neighbor who's also a real estate agent. "They're all one story above a garage. And it just doesn't lend itself to the way people want to live now."

Potrero Hill has a mix of old and new homes, with some built in the same ultra-modern style as the architectural renderings posted in the shack's front yard — a stack of squares and rectangles of wood, metal and stucco, made to maximize the use of space on the lot, showcase views, and bring in passive heating and cooling from the sunshine and the breeze — both of which are plentiful in San Francisco's hilly southern neighborhoods.

Pay no attention to the overgrown lawn. The real selling point here in the front yard is the poster with architectural renderings of the 4-story house that's already permitted to be built here. - Spherical Image - RICOH THETA

Pay no attention to the overgrown lawn. The real selling point here in the front yard is the poster with architectural renderings of the 4-story house that's already permitted to be built here.

—

"Oh, that's 2 million for sure," said neighbor Logan Steinberg, who was out for a walk.

"It will have spectacular views," Jackson said, "until the neighbor decides to build their 4-story house next to it."