Open House Picks: Townhouses

The Long Island Business News from New York. “As Long Island’s housing market continues to soften, real estate executives refuse to utter the ‘b’ word: Bubble. But one area economist isn’t afraid to use it. ‘In the bubble areas, i.e. long island, things are really coming down quite quickly,’ said Irwin Kellner, a Hofstra University professor and North Fork Bank’s chief economist. ‘You don’t need me to tell you this.’”

“Inventory has soared by as much as 75 percent in some areas, Kellner told the group of Long Island’s key economic development players and real estate developers. ‘The housing market bubbled up in a way that it had not before,’ he said.”

Posted by: Anonymous at September 29, 2006 12:35 PM

Could the taxes really be $16,000 on the Brooklyn Heights house?

Posted by: Anonymous at September 29, 2006 12:36 PM

The Wall Street Journal reports on pricing a home. “As the housing market cools, one of the hardest decisions facing home sellers is how to price their properties. Bigger inventories of unsold homes also are making it harder for sellers to figure out how to make their house stand out amid the competition.”

“Some brokers are telling customers they need to underprice the competition. Sharon Baum, a with the Corcoran Group in New York, recently listed a two-bedroom, two-bathroom apartment for $3.7 million.”

“That was $100,000 less than the asking price for a similar unit five floors below, even though apartments on higher floors typically carry bigger price tags. ‘As buyers have more choices, you’ve got to make your apartment stand out,’ she says.”

Posted by: Anonymous at September 29, 2006 12:39 PM

For crying out loud, can we discuss the open house picks, that is the purpose of this section isn't it? What does LI real estate have to do with Brooklyn townhouse prices?

Now, about the houses this week, any thoughts????

Posted by: Anonymous at September 29, 2006 12:53 PM

this column has been about townhouse or - ehem - brownstones since the beginning.

Posted by: Anonymous at September 29, 2006 1:31 PM

Why did they only post thumbnail photos for 751 East 19th, I can't see a thing in those itty bitty pics. If the house is worth 1.5 M, shouldn't you have some nice big photos to show it off?

Posted by: Anonymous at September 29, 2006 1:39 PM

I'm liking the 2nd St. house. Not wide, looks like 16 feet, but the rooms are like well done. I think it only works as a 1-family since it would likley cost $$$ (on top of $1.6+ purchase)to convert and owner would have a very small duplex. Sort of a funny configuration for 1 family though. Bedrooms on the bottom and top floors with kitchen/dining/living on the middle floor.

Posted by: Anonymous at September 29, 2006 1:58 PM

I think the future of real estate depends more on perception than anything else. If buyers and sellers feel like the market has changed, its a self fufilling thing.

IMO, Brookly real estate was, is and always will be inherently valueable and more bubble proof than many parts of the country. There are simply so many people here with cash in hand and need a place to live. (and then need a bigger place in a few years, and so on)

I think its the slighly bitter people who didnt buy years ago and are now priced out that are talking so much about it and making people nervous. And they are doing a good job convincing everyone!

Is Bklyn real estate crazy expensive? Absolutely. But wall street bonuses are also crazy and that seems to be going strong. And buying a $6000 purse is also nuts but there are people out there that are getting on a waiting list to do it! When you consider all the insane stuff that people do with their mone, investing in a home, even while expensive, makes sense.

Posted by: Anonymous at September 29, 2006 3:41 PM

The house on 2nd Street has the outdoor sections for the restaurants Song and Comfort Zone one backyard away. 363 2nd Street was on the market for a long time last year just as Song was building their outdoor space. After several bids falling through it sold for $1,527,500. I can't recall the asking price. This house looks similar though that one had an extremely modern reno and a finished cellar.

Posted by: Anonymous at September 29, 2006 3:43 PM

i love the "wall street bonuses" argument. there are an infinite number of these people and every single year they buy another house.

Posted by: Anonymous at September 29, 2006 3:47 PM

"i love the "wall street bonuses" argument. there are an infinite number of these people and every single year they buy another house."

Someone has been buying these houses the past 5 years or so at ever increasing prices. If not the wall streeters, someone else with the cash.

Posted by: Anonymous at September 29, 2006 3:52 PM

There are many people on wall street (I know as I am with them everyday) that do not own. Regardless of income, most people who work in NYC rent from what I can see. Many of them only started to make real money in the past few years and have been waiting for the market to stabilize. Wall Streeters met stabilized market, market meet wall streeters.

Posted by: Anonymous at September 29, 2006 4:10 PM

I work on Wall Street and believe me, my bonus is not going to buy me a house. I'm STILL renting.

Posted by: Anonymous at September 29, 2006 4:38 PM

Besides, there may be other bets for your money in future like greentech IPO's...

Posted by: Anonymous at September 29, 2006 5:40 PM

"There are many people on wall street (I know as I am with them everyday) that do not own. Regardless of income, most people who work in NYC rent from what I can see. Many of them only started to make real money in the past few years and have been waiting for the market to stabilize. Wall Streeters met stabilized market, market meet wall streeters."

I think by "stabilize" these people mean "correct". Look, Brooklyn is great, one of the greatest places in the world, IMO. But does that mean that property there can only go up? Of course not. Nothing works that way.

We are at a point in the market now where it costs less to rent a place than own a comparable place...so why buy? The argument that you're paying yourself by owning is basically a lie. When you "own" a place, you are paying the bank (if you have a mortgage), maintenance (plumbers ain't cheap), insurance (post-Katrina these costs have gone up) and the government (tax man always gets his piece!). All of these costs are typically less than what it costs to rent in today's market...that's why the fundamentals just don't work and why appreciation will be very hard to come by , indeed.

As for market psychology, people lost their collective minds in the last few years as they jumped into real estate wiithout considering the risks or the costs... now we are starting to pay the price for a foolish misallocation of capital to an asset class that over long periods of time typically only appreciates at about the rate of inflation. Reversion to the mean will be painful for a lot of people.

Posted by: Anonymous at September 29, 2006 6:15 PM

"If you not looking to flip but to stay for a while you will not loose."

This is what real estate investors in Japan thought in the late eighties. Almost 20 years later, RE prices in Japan are much lower than they were then ....

Posted by: Anonymous at September 29, 2006 6:33 PM

There are a few factors at work which will keep prices at (or close to) today's level. First, wall street will always generate buyers as the firms go thru new employees, etc. Second, they are not building new 1880s brownstones/townhouses. There is an inherent supply constraint in that product and always will be.

Posted by: Anonymous at September 29, 2006 8:04 PM

"We are at a point in the market now where it costs less to rent a place than own a comparable place...so why buy? The argument that you're paying yourself by owning is basically a lie."

That is terribly incorrect. You must be a perpetual renter. The monthly cost may be better to rent, but... interest deduction is the best tax break we get in the U.S. AND renting is just giving your money to someone else. At least allow that money to go to equity in your house. Not to mention, you may get some appreciation in your house value...definately get appreciation over the long term. Renting is just throwing your money away.

Posted by: Anonymous at September 29, 2006 8:12 PM

"That is terribly incorrect. You must be a perpetual renter. The monthly cost may be better to rent, but... interest deduction is the best tax break we get in the U.S. AND renting is just giving your money to someone else. At least allow that money to go to equity in your house. Not to mention, you may get some appreciation in your house value...definately get appreciation over the long term. Renting is just throwing your money away."

So interest, maintenance and taxes all go in the buyers' pockets? I wasn't aware that all of these expenses were refunded to the buyer once paid. Pay the landlord or pay the plumber, bank, and tax man. Take your pick.

Tax deduction: If you want a tax deduction buy stock in a company that has lot of debt. Corporate interest is tax deductible, too. Oh, and all those well-heeled bankers running around with bonus money are subject to AMT, which limits their ability to take deductions (like mortgage interest) against their income.

The ease with which you cling to the idea that real estate is a great investment just because it's gone up a lot reflects why we're in a bubble. It reminds me of the overconfidence of tech stock investors in the late 90's....

Posted by: Anonymous at September 29, 2006 9:02 PM

OK, so you would rather give your money to a landlord...never to be seen again. I would prefer for there to be some hope of a return of and on that money.

Posted by: Anonymous at September 29, 2006 9:17 PM

Good point the Alternative Minumum Tax (AMT). A lot of people, including brokers run around touting the great tax savings to be had from owning a house. Guess what, what your adjusted gross income is over a few hundred thousand(most bankers) you get zero benefit from most tax deductions. The way I see it there is only one real benefit to owning a home. It is yours (sort of) so you have the pride of ownership and you do not have to worry about a landlord decide to sell the house from under you and your a make it your own. Sure people sometimes get the appreciation from home, but unless you plan to sell your house and live on the streets or move to some remote location most people usually re-invest the proceeds anyway. Anyone that buys a "owner occupied" property for investment purposes is a FOOL, plain and simple.

Posted by: Anonymous at September 29, 2006 9:56 PM

Lets not forget the primary reason people own their own home - it is a primary goal and mark of acheivement for most. Much like owning a sports car or having a white wedding, most people "dream" of a certain life that involves owning a home.

I dont think anyone would disagree the past few years have been crazy and the market is now correcting...but I think the people that are expecting real estate to stay down to flat for the next 20 years are insane.

History shows us there are ups and downs in the r.e. market. If you are living in your investment, bought something you can afford and a hurricane doesnt carry it into the Hudson, I think you won't be sorry come next cycle.

Yes, AMT sucks but in terms of capital appreciation, the tax man does give a nice braek on that when you do cash out. Not too many other tax loopholes 500K large.

Posted by: Anonymous at September 29, 2006 10:30 PM

Re the AMT, mortgage interest is one of the only deductions that is allowed under the AMT (unlike state and local taxes). I think the maximum deduction under the AMT last year was $58K. Assuming 6.5% motgage rate, you keep the deduction for up to about 900K of mortage. When you're a renter you get zero shelter. There are arguments to be made in favor of renting, but the tax code is not one of them.

Posted by: Anonymous at September 29, 2006 11:42 PM

To poster anon 11:02, that 30th floor high rise usually comes with a maintenance of $1000K a month, which is about waht I pay monthly for heat, insurance, taxes + maintenance on my house, so I don't so the beneift there. Taxes are usually much higher on condo (vs. houses) too.

Posted by: Anonymous at September 29, 2006 11:46 PM

I've lived in a rental, a condo + a house. It is not comparable. Living in a house is just better. How many rentals have a separate dining room, extra bedroom for guests, backyard, fire place, storage palce etc. What's the value of not having your house guests sleep on an air mattress.

By the way, what is the rental on a 30th floor 2-3 bedroom condo these days?

Posted by: Anonymous at September 29, 2006 11:55 PM

You people who doubt the coming impact of wall street bonuses obviously work far from the street. Bonuses will be up BIG this year. The brownstone market is going to go be out of control

Posted by: Anonymous at September 30, 2006 9:14 AM

Its interesting that there are a lot of pro renters on this site. Why would anyone read brownstowner if they didnt already own/have a plan to buy? Sounds like some of these posters protest too much.

Posted by: Anonymous at September 30, 2006 9:29 AM

you are right, Wall Street bonuses are going to be VERY big this year. But also, all the services to wall street, namely legal, have done very well this year. Watch out for January & February...here come the buyers.

Posted by: Anonymous at September 30, 2006 11:15 AM

There's a great quality of life factor in Park Slope that's not going away, and when people are ready to "nest" they WANT A HOME. Period. Bubble Schmubble. Not everybody looks at real estate as just something in their portfolio. There are so many very special and important associations we all have with owning a home. Nobody I know wants to raise their child in a rental. They all own. Those who are counting on all kinds of greatly discounted inventory on the market in 2007, think again. I know everyone in our Park Slope co-op building bought within the last 3 years and none of them could afford to sell for less than they bought the place for. Same with most of the residents of Park Slope - too many new residents are here now who CAN'T sell at a discount. The only people who can sell at a big discount are those who have owned their houses or apts for well over 10 years. And if they didn't sell at the height of the market last year, why would they sell at a discount next year? I just don't know what reasoning people are using when they think in 2007 they're going to score a brownstone for under a million, or a 2BR co-op for under $500K. Long Island prices are dropping because there are tons of new construction homes. TOTALLY different market. Totally.

Posted by: Anonymous at September 30, 2006 5:19 PM

I did not say there is no new construction in Brooklyn. I said the homes that are not selling in Long Island are the glut of new construction out there. Logically that means new construction in Brooklyn will have a hard time too. But prime Park Slope has very little new construction. Certain people will always prefer a brownstone or a co-op or condo in an older building.

I'm not saying prices don't drop. I'm saying who cares if they do.

People who buy a home to be a home will often be in that home for many years. So they shouldn't just be thinking "investment portfolio" they should be thinking about finding a place that makes them happy. IT'S YOUR LIFE and you'll spend a lot of time in your home, so find a place you're happy in! Hello. Quite logical.

Also anyone living somewhere longer than 2 or 3 years can ride out the ups and downs and in the end make some kind of profit. It's NYC after all.

All I'm saying is not everyone are flippers. In fact, most people are not flippers. It's only in the past couple years that suddenly everyone thinks of themselves as real estate experts. This whole thing is just like the frenzied day trading of IT stocks in the 90's. Amateurs. Stick to what you know and buy a home you love to raise your family in.

Posted by: Anonymous at October 1, 2006 2:52 PM

Let me set the record straight on a few things. I'm a bulge bracket Wall Streeter, I live in Bklyn, and I own a brownstone.

So here goes:

1) Bonuses are going to be huge this year. My coworkers are still buying apts., 2nd homes, etc. in the NYC area - even though they have to endure some ribbing about having bought at the peak. Were I in the mkt for a house, my bonus would quite nicely provide the downpayment. As it is, I'll probably use it for a 2nd home.

2) I am subject to the dreaded AMT tax and guess what folks - mortgage interest is one of the very few things that can be deducted under AMT. One more reason for high income NYers to own.

3) Even with a mortgage of close to $1mm, rental income, tax ded's, etc. bring my housing cost well below the cost of renting simlar quality space.

You gotta play long-term to win folks. Personally, I think prices will soften up in the condo market due to supply, but don't sit on the sidelines too long or you'll be sorry.

Posted by: Anonymous at October 1, 2006 4:25 PM

no one on Wall Street is buying Brooklyn brownstones for an investment at the current price levels it is a terrible investment. buying a brownstone to live in, now that's another issue. that is why the plethera of cut up 3 an 4 unit brownstones will remain on the market until the current owners spend the money to convert them to single family, or until the prices drop by 25 - 40%.

Posted by: Anonymous at October 1, 2006 5:10 PM

bwah! if you are waiting for brownstones to come down in price by 40% you will forever be a renter.

Posted by: Anonymous at October 1, 2006 9:07 PM

We bought three years ago because we needed a home for our growing family and were not the suburban types. Our mortgage for a 6 bedroom house plus taxes plus insurance is less than renting a nice one bedroom or OK 2 bedroom in Park Slope. I know that doesn't include maintenance, which can be steep on our woodframe Victorian. But I think there are lots of families out there like ours, looking to buy a family home first, make an investment second... Renting would have been ridiculous in our situation.

Posted by: Anonymous at October 2, 2006 8:37 AM

Hard to evaluate Anon at 8:37 without knowing where you bought your house. Also it has been three years and the discussion is about benefits of buying versus renting now. Obviously the house I bought 5 years ago for 290k on edge of Clinton Hill was a good deal even if the whores and drug dealers still abound. However not sure it would make sense to buy the house next door for 800k right now.

Posted by: Anonymous at October 2, 2006 9:25 AM

Who knows. It's like betting on the superbowl. When you have money or opportunity at stake you'll think and preach wishfully.

Posted by: Anonymous at October 2, 2006 2:12 PM

Nobody here said that prices never fall. I love the way the bitter types always throw that into the mix whenever the bubble talk gets going.

But see if you can comprehend this for a second. Even an average increase of 3% on a $2mm property over 10 years will deliver a gain of over $1.2mm.

Now, you might make the arguement that this equates to simply keeping up with inflation, but what do you think will happen to your rent over that period of time? Meanwhile, the homeowner has relatively stable housing costs, maybe even declining net costs if they have rental income, plus substantial equity.

People don't get rich by sitting on the sidelines. They take calculated risks and most of all they understand that it is more important to be in the game and let time do it's thing.

Posted by: Anonymous at October 2, 2006 2:46 PM

12:55- I hear ya. It's just that sanity doesn't inspire the exciting world of nasty comebacks and name calling and all of that. Too bad.......

Posted by: Anonymous at October 2, 2006 5:50 PM