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September 11, 2006
As Market Shifts, A Flight to Quality
Broad statistics sure aren't painting a very clear picture of the market dynamics these days. A couple of recent examples illustrate the flight to quality that's happening right now. Close readers of the comments may know already that 191 Washington Park, an Open House Pick on August 25th, went into contract within a matter of days of its first showing at the asking price of $1.9 million. Other, more marginal properties, have been languishing for months. Take, for example, 52 Irving Place. Back when it was a House of the Day on March 6th, we were surprised to see a house in Clinton Hill for under a million bucks. It had recently been cut from $999,000 to $975,000. Clearly that didn't do the trick and the owners are getting antsy. It resurfaced last week on Craigslist for $700,000. Now, we've seen some price cuts in our day, but this is one of the most drastic. Think it will move quickly at this price?
Open House Picks [Brownstoner]
HOTD: 52 Irving [Brownstoner]
Reduced: Clinton Hill One Family [Craigslist] GMAP P*Shark
Comments
Isn't that technically Bed-Stuy?
Posted by: Anonymous at September 11, 2006 10:12 AM
I think it is an sro. When I looked at it it still had one tenant. Would have to change the c of o. Nice quiet street, ubfortunately marred by a few guys selling drugs across the street.
Posted by: Anonymous at September 11, 2006 10:15 AM
HOUSING MARKET DOWN IN
THE DUMPS
By TOM BAWDEN
--------------------------------------------------------------------------------
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September 8, 2006 -- The nation's once rip-roaring housing market is facing a one-two punch of potentially rising interest rates and the first drop in home prices in 13 years.
"The outlook is extremely bad," said Euro Pacific Capital Chief Executive Peter Schiff.
"House prices are going to experience an unprecedented collapse, falling by as much as 70 percent in some areas, erasing all of the gains in the last six or seven years.
"They can no more stay at their current levels than the Nasdaq could stay at 5,000."
The fall in house prices could plunge the economy into a recession as the consumers who have fueled economic growth by borrowing against their properties attempt to build up their savings, Schiff said.
"Sales are slowing, homes are plentiful and sellers are negotiating," said National Association of Realtors' chief economist David Lereah. "Under these conditions, we'll probably see prices dip temporarily below year-ago levels."
Lereah's statement came hard on the heels of profit warnings from Beazer Homes USA and KB Home. To compound the gloom, Federal Reserve Bank of San Francisco President Janet Yellen warned that inflation remains "uncomfortably high" and may prompt "further firming" of the federal funds rate.
The S&P 500 fell 6.24 points to close at 1,294.02 and the Dow Jones industrials sank 74.76 points to 11,331.44. The Nasdaq composite index declined 12.55 to 2,155.29.
The last time the median price for an existing home fell to below the year-earlier level was in February 1993, when prices dropped by 1.1 percent.
Yellen's comments about inflation come just one day after rising prices returned to the economic agenda.
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Posted by: Anonymous at September 11, 2006 10:18 AM
It should be for free in that drug dealing nabe
Posted by: Anonymous at September 11, 2006 10:19 AM
I think the thrust of your argument makes sense re quality houses still selling well, but the example of Irving is probably an example of an extreme. Irving had been on the market for about a year on and off before it became HOTD a few months back. Irving is also small and narrow (two windows wide and only 3 stories, including the ground floor) - plus it lacks historic details or decent finishes and the block is not the most desirable in the area. They were delusional with the price they asked originally and are feeling the pressure after more than a year on the market.
Another one of your HOTDs closed back in July. The FSBO at 15 Lefferts Place in Clinton Hill. I think it was your HOTD near the end of April. It was listed at 1.495 million and from the city records, went for 1.49 million. The owners never had an open house because they had an accepted offer pretty much at asking within a week or so of listing their place in the NYT. The offer had already been accepted before you put it up as the HOTD if I remember correctly. 15 Lefferts Place is a really nice house on a nice block, so I suppose it is another example of a good quality building still going quickly.
Posted by: Anonymous at September 11, 2006 10:34 AM
Although property prices maybe a bit softer contruction costs are increasing.
So properties needing extensive renovation will need to priced at even greater discount to move-in props.
House is only 2160 sq ft but at $700K should sell. And probably would have sold if handled by more prominent real estate agency.
Posted by: Anonymous at September 11, 2006 10:59 AM
2160 is an especially small rowhouse/brownstone. Many in this area are twice that size.
Posted by: lp at September 11, 2006 11:08 AM
It moved quickly because the owner is smart enough to take the first sucker's offer. In June 05, the neigboring house(190 Washington Pk) sold for $2,351,500.
What's so different about these 2 properties to warrant a 20% discount?
How does a 20% YOY decline in value support your 'flight to quality' theory?
Posted by: Anonymous at September 11, 2006 11:08 AM
exactly 5 years ago to the day, i stood on the roof of 56 lefferts place and watched the towers collapse. i paid $640 a month for my one-bedroom apartment in that building back then. granted, it wasn't in a brownstone, but still. i can't believe how expensive that neighborhood has gotten.
Posted by: sylvia at September 11, 2006 1:50 PM
56 lefferts place is an apartment building, nice looking from the outside, with about 25 or 30 units, right?
Posted by: Anonymous at September 11, 2006 2:19 PM
i don't know if it has that many units in it, but yes, a nice-looking stone apartment building. rent-stabilized, of course.
Posted by: sylvia at September 11, 2006 2:22 PM
Looked it up, 27 units. Rent stabilized explains a lot.
Posted by: Anonymous at September 11, 2006 2:27 PM
Looks like the stock market is setting to tumble to:
http://www.newyorkbusiness.com/news.cms?id=14702
Where oh where can I put my money?
Posted by: Anonymous at September 11, 2006 2:56 PM
It is still technically Clinton Hill. I have friends who rent on Irving. They often acknowledge the drug dealers, but are young women who walk home at night without incident. It's an odd little stree with potential. If I had 700k, I'd buy it!
Posted by: lesterhead at September 11, 2006 4:28 PM
I live on Irving Place and my partner and I were woken up on July 3rd to the sound of gunshots. Originally we thought it was some pre-July 4th revelry until we found the .38 shell casings on the sidewalk the next morning. We've lived on this block for two years and I have mixed feelings about how 'safe' I feel here. It's fine during the day but late at night and wee hours of the early morning feel a bit off to me.
Posted by: lizzieb at September 11, 2006 4:49 PM
Yeah we really need to put some pressure on the drug dealers on Irving. Quite frankly the buildings the operate out of are much smaller, and perhaps more susceptible to pressure on their owners. The interaction between the prositutes, their johns, the runners and the dealers is quite a ballet from 9 pm until the morning hours.
Posted by: putnam-denizen at September 11, 2006 6:50 PM
Not surprised that 191 Washington Park sold for asking. Even if someone wanted to put $4-500k into it (or more), the price still looks good for a 20' 4-story brownstone on the park. Quality.
To Anonymous at 11:08, regarding the house next door (190), I didn't see the inside, but the exterior is much more impressive, with unusual curved windows, etc., so I'm not surprised it sold for more. Plus, it has an extension, while 191 does not.
If I were not already in contract for a 5-story house nearby, I would have seriously considered 191, although I have to say it felt narrow to me (I'm buying at 22'er).
Posted by: fortgreener at September 11, 2006 8:57 PM
In Pricing 191, I seriously considered the sale of 190 the prior year and used it as a benchmark as to what I could possibly hope for in selling 191. Professional broker’s opinions as to listing price varied from less to more by about 5% either way. 190 is far more finished on the interior, has a legal 2 family status, has better details and layout, and does not require anywhere near the amount of work that 191 would require to convert to a single family dwelling. It is as a single family dwelling that these houses can maximize price vs square ft. Furthermore, 190 was sold as a result of a sealed bid contest, and was originally under priced at 2 million. It is my belief that both buyers got great properties that they wanted and at a good value.
Posted by: 191 at September 11, 2006 10:13 PM
the block of the clinto hill house is crappy. if it was like 2 blocks over closer to washington would be a good buy.
Posted by: Armchair_warrior at September 13, 2006 9:27 AM
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