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Space-Hungry Bay Area Homeowners Are Hiding Entire ‘Iceberg Homes' Underground

Candace Jackson | April 17, 2018 | Story Real Estate National

Editor's note: Take a look inside four subterranean iceberg homes across the Bay Area. And here's a FAQ about building them. This story was originally published in the April 2018 issue of San Francisco.


Take a stroll
down the 100 block of sleepy, residential Kellogg Avenue in Old Palo Alto and you’ll see what appears to be a smattering of modest bungalows, their lawns peaceful with playing children and fallen leaves. But there’s something deeper to Kellogg Avenue—much deeper. Like icebergs hiding their magnitude below the ocean’s surface, the humble street-level facades belie the size of some of these homes.

In Palo Alto, as in many other affluent yet zoning-constrained enclaves around the Bay Area, homeowners are going underground. Architects and contractors report that the once-lowly basement has become the hottest area in home design, resulting in a flotilla of square-footage-concealing iceberg houses. In an era when modest cottages routinely sell for well over $1 million, going big below street level is one of the most viable ways to add living space to a home investment. “The land costs are so expensive, if you don’t build down, it’s a waste,” says Gloria Young, a real estate agent and developer based in Palo Alto.

On a recent afternoon, construction crews were hammering away on two separate lots on Kellogg, shoring up siding inside deep pits dug into the earth. For one of the new iceberg homes, plans call for over 1,600 square feet of subterranean living space—more than half of the home’s total bulk, according to permitting data from BuildZoom, which connects homeowners with contractors and tracks local permitting data. Across the street, a new basement will be larger than the entire square footage of the home that was previously there.

In 2014, Young paid $3 million for a 992-square-foot single-story bungalow on Kellogg. To justify the astronomical purchase price, she tore down the bungalow and built the biggest house she could: a 4,423-square-foot, two-story iceberg Craftsman with a 1,600-square-foot basement. Three of the home’s seven bedrooms are belowground. “These days we think of the basement like it’s the first floor,” she says. Her spec home is currently on the market for $5.9 million.

Iceberg houses don’t just help chill some of the heat from city planning departments or opinionated neighbors. They also offer something Northern Californians are especially partial to: a luxury amenity so low-key as to be deceptive. (Think of them as the architectural equivalent of the business-casual hoodie.) In Pacific Heights, Gregory Malin, the CEO of luxury home developer Troon Pacific, is building a 4,500-square-foot basement beneath one 12,200-square-foot property he’s developing, complete with a nightclub, a wellness center, and an au pair suite with its own kitchen. “We’re blurring the line between what’s a basement and what’s not,” Malin says. To avoid a cave-like atmosphere, the developer is digging out the yard to create light wells and using open staircases, skylights, and a glass wall to let daylight stream downward.

Basements like these run counter to the typical California home for a reason: Our weather is too nice for burrowing. Historically, basements have been a necessity in colder climates, where a concrete foundation below the frost line keeps a building from shifting during freeze-and-thaw cycles. Such subterranean spaces have often been carved out from already-in-place structural walls. But Bay Area basements aren’t a response to harsh winters—simply harsh economics. Mike Nafziger, a senior engineer for Palo Alto public works, says that the majority of new homes being permitted there include belowground living spaces. And in response, the underground Wild West is getting some new rules. Palo Alto recently added regulations on building iceberg homes amid growing environmental concerns about groundwater removal; basement dewatering can now only occur during the dry season.

San Francisco–based architect Maurice Lombardo also sees a trend. He says that nearly half the homes he’s working on today in the Bay Area include significant underground spaces. “Clients want their home to be high-end on every level now,” he says. “The stigma of the old, damp basement from when we were kids is gone.”

Originally published in the April issue of San Francisco

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