Open House Picks

Dean Street really would be a pick if that were the price!

Posted by: guest at February 1, 2008 1:30 PM

No kidding. I'll take 7 bedrooms in Boerum Hill for $649,000. Once it's on this site the price is binding, no?

Posted by: guest at February 1, 2008 1:32 PM

Dean Street is: $2,595,000

Posted by: guest at February 1, 2008 1:32 PM

The typo on the Dean street price just highlights how absurd the other prices are!

Posted by: guest at February 1, 2008 1:32 PM

Ha ha ha ha. too funny

Posted by: guest at February 1, 2008 1:34 PM

404 Stuyvesant should have just sold it when he got all those 1.3-1.4 offers two years ago...

Posted by: guest at February 1, 2008 1:40 PM

Can someone estimate what we should expect to offer for a 4-floor "regular" townhouse in prime Fort Greene that needs a real reno? Basically, by “prime” I mean “prime commuting walking distance and decent shopping”--anything south of DeKalb and west of, say, Clermont.

We have looked at a couple of places and don't want (can’t afford) the really big houses like on South Portland and the park. And we don’t like the smaller ones on Carlton between Greene and Layette…saw one and its “garden” floor was really only a cellar with windows. We’re more in the market for an in-between sized brick rowhouse like on Lafayette or something.

Are all prices of decent sized houses, 750 to 800 sq ft per floor in prime FG near the trains well north of all going for 1.6 for even if they need a real reno?

Also, what’s the opinion out there (aside from “After AY…”). Is it worth dropping 1.75 to 2m on a basic double-duplex or owner-duplex-plus-two-rentals in prime FG? Is the nabe going to remain “golden” or at least stable through this downturn?

Feedback please!

Posted by: guest at February 1, 2008 1:40 PM

IGNORE THE FAKE POST AT 1:40. IT'S BEING CUT/PASTED EVERY OTHER DAY.

Posted by: guest at February 1, 2008 1:55 PM

"Anyone know anything about it?"

besides that it's grossly overpriced?

bed stuy is not too hot right now.

even though this is the nice part.

Posted by: guest at February 1, 2008 1:56 PM

These picks are terrible. This site has become so boring; we need something better.

Posted by: guest at February 1, 2008 1:57 PM

i think more park slope news would help, 1:57.

also i think people really like the new store/restaurant opening stuff.

Posted by: guest at February 1, 2008 2:03 PM

1:57 it's the middle of winter not exactly primo time for people selling their property. And also it seems that there isn't a huge number of townhouses in prime areas were the owners are needing to sell for financial reasons.

But instead of complaining about the listings why don't you come up with a Open House list yourself?

Posted by: guest at February 1, 2008 2:05 PM

The price on the Albemarle Terrace house is astounding!!! I would find that price very high for an identical house on Midwood Street in Lefferts Manor. But for a house on Albemarle Terrace it is simply mind-bogling! What is BHS thinking?

Posted by: guest at February 1, 2008 2:09 PM

The house on Lex is in Clinton Hill and is too narrow.

The house on Stuyvesant is a little overpriced, but the sellers are greedy so they refuse ot budge on price. This has been on the market for a looooooong time with various brokers.

The Dean Street house price is a typo. BROWNSTONER, PLEASE FIX!

Posted by: guest at February 1, 2008 2:13 PM

I'm winning the lottery tonight and buying the
Albemarle Terrace place, simply for the recording studio!

Posted by: guest at February 1, 2008 2:28 PM

Please, it is a basement - you can use it for whatever you want, or nothing but storage(which is all I'd use a basement for.)

Posted by: guest at February 1, 2008 2:31 PM

How can they call the Stuy owner a "motivated seller" in the listing? A motivated seller (or anyone really interested in selling at all) would have sold at what the market was willing to pay for the house! Fake sellers like that waste other people's time!

Posted by: guest at February 1, 2008 2:34 PM

Maybe they figure that with all the dust kicked up from the ginormous contruction site at AY, you'll need a live-in housekeeper.

Posted by: guest at February 1, 2008 2:37 PM

A soundproofed basement is cool. Makes a great TV screening room and child's playroom.

That Stuyvesant house certainly has been on the market forever. Possibly over a year. It's also been a HOTD before too. I remember that strange shower door with the etched deco lady on it. The decor is too frou frou and not anybody's taste under the age of 90. They'd do better showing it empty removing all the "staging" elements entirely. Which allows people to envision modern furniture in it. Right now with the ornate furniture on top of the ornate interior details it creates mind block. You can't see it being anything but the set for the Magnificent Ambersons.

Posted by: guest at February 1, 2008 2:42 PM

Funny, I assumed that the work done to create the studio was probably like, practically nothing, the ad just broker hyperbole, thinking (incorrectly) that hypebole about it would help sell the house. Sometimes they wierdly focus on the stuff that one should minimize in writing copy. Common sense tells me I'd clean up if I were a broker competing with most of 'em...

Posted by: guest at February 1, 2008 2:46 PM

That shower door is another example of brokers calling attention to things in their ad that they just should ignore. That one shot makes you think the whole house is going to be nothing but a tacky reno.

Posted by: guest at February 1, 2008 2:48 PM

"I'm intrigued by the Stuyvesant house... pics don't seem to be working on the broker page. Anyone know anything about it?"

See previous Brownstoner threads about this house. It has a long history on the market:

http://www.brownstoner.com/brownstoner/archives/2006/10/paddle_time_404.php

http://www.brownstoner.com/brownstoner/archives/2006/10/details_on_the.php

Posted by: guest at February 1, 2008 2:49 PM

Aren't brokers smart enough to realize that unless they find someone who is, say, shopping for a house complete with a recording studio, that no one else is gonna pay a penny extra for this reno of the basement?

Posted by: guest at February 1, 2008 2:59 PM

I think the dean st house is lovely and priced very fair for a very nice area. as for the other houses not my taste.

Posted by: guest at February 1, 2008 3:10 PM

1:40,

You should only buy if you're wealthy and don't mind taking a real loss, for the rest of your life. You are unlikely to ever see 2008 prices again in real terms before you die. Did you see this graph...

http://tinyurl.com/ynrman

We're going back to 110 at best and will probably stay there for 50 years. This housing pyramid scheme is slowly collapsing. Purchasing a brownstone right now at prevailing prices is like buying a Lamborghini. Not a financial investment and most certainly not a responsible purchase for someone of humble means. For more information on this housing pyramid scheme, see...

http://tinyurl.com/3dx9jv

But if money is no object, by all means you should bid ask and prepare to go to war. Otherwise, these brownstones can be purchased in the near future (God knows exactly when) for significantly less. Good things come to those who wait. Renting is underrated.

Posted by: guest at February 1, 2008 3:10 PM

"IGNORE THE FAKE POST AT 1:40. IT'S BEING CUT/PASTED EVERY OTHER DAY."

I've been duped. Oh well, better that then paying these asking prices.

Posted by: guest at February 1, 2008 3:15 PM

It may not be fake, but it is certainly rude. Instead of asking the question on every other post, why don't they just start their own? And, sheesh, there is no such thing as a "regular" brownstone - there are lots of differences among 'em.

Posted by: guest at February 1, 2008 3:19 PM

Purchasing a brownstone right now at prevailing prices is like buying a Lamborghini. Not a financial investment and most certainly not a responsible purchase for someone of humble means. For more information on this housing pyramid scheme, see...

I don't believe anyone dropping 3 million is of humble means. Your post makes zero sense. People are buying these homes because they love them and want to live in them.

Not quite the same as a car, but who knows...by the sound of things...you might be living in yours pretty soon if you don't buy something.

BTW, that housing graph and scheme has never, nor will it ever apply to NYC.

Posted by: guest at February 1, 2008 3:21 PM

That graph is interesting. Guess I inadvertantly timed the market OK - bought just a couple years too late; sold maybe only a six months too early, given the current market. Wonder if I will buy again, or invest in something other than real estate. Agree renting is underrated.

Posted by: guest at February 1, 2008 3:24 PM

Look at 3:10. It's The What in disguise! His compulsion to post links, and all! At least now he knows how to use tinyurl.

Posted by: guest at February 1, 2008 3:24 PM

'A soundproofed basement is cool. Makes a great TV screening room and child's playroom.'

or a torture chamber for Corcoran brokers.

Posted by: guest at February 1, 2008 3:41 PM

Wow, the real estate site for the Dean Street house sure is deceptive. The house is near Nevins Street, which puts it square in Boerum Hill. When you click through to schools you get a listing of about 70 schools with uninformative "data points" like pupil:staff ratios and average spending per child. (It turns out all the public schools are "blue ribbon" schools, whatever that means.) Buried in the middle of all that data is the actual zone school for the house: PS 38.

PS 38 was given an 'A' by the Board of Ed this year, by which you can reliably estimate that it sucks. And it does.

Posted by: guest at February 1, 2008 3:55 PM

Suck it, PS 38

Posted by: guest at February 1, 2008 3:59 PM

Coen Brothers Torture Corcoran Brokers in "No Country for Old Houses"

Posted by: guest at February 1, 2008 4:04 PM

Why do I think that anyone who purchases Dean Street for $2.6 million might be thinking about sending their kids somewhere other than PS 38?

Posted by: guest at February 1, 2008 4:09 PM

The Stuyvesant Heights house is lovely but it is really set up for being a one family. I am want to buy in Stuyvesant Heights area or the prime areas in Bedford Corners. Hancock and Jefferson are streets that I really want to be on if I can't get into SH... Seems like the prime street homes never go on the market.

Posted by: guest at February 1, 2008 5:02 PM

Wow whats the catch with 404 Stuyvesant it looks like the homes you see on PPW.

Posted by: guest at February 1, 2008 5:04 PM

"Wow whats the catch with 404 Stuyvesant"

It's in Bed Stuy....

:-(

Posted by: guest at February 1, 2008 5:09 PM

very interesting new data:

Over the past year, condo inventory levels have exceeded co-op levels as new developments (nearly all condo) continue to enter the housing stock at a steady clip. Residential development permits dropped sharply in 2007 and the expiration of the 421a abatement program on June 30th may choke off the high level of supply entering the market in 2009. So far, the elevated level of demand has kept inventory at modest to low levels.

The total number of listings has increased 9.9% from the end of December 2007 to the End of January 2008 (yesterday). Inventory tends to rise at the beginning of the year as sellers anticipate the upcoming spring market. The same period in four of the past five years has seen an increase in the number of listings:

1 Month Change (Dec-Jan)
2003, +2.3%
2004, -10.8%
2005, +16.9%
2006, +4.2%
2007, +9.9%

Clearly condo inventory is higher than it was two years ago, but co-ops are near the six-year monthly low since I began to capture this data. In fact, co-ops are 39.9% below their high in March 2003 (Just as the Iraq War broke out) and condos are 23.5% below their recent high in September 2006. Currently, overall inventory is consistent with levels seen in 2002/2003, which is contrarian to the increase seen in many metro area markets around the country at this time.

Posted by: guest at February 1, 2008 5:17 PM

I kinda like Bed Stuy... I would never look at the place 5 years ago but it is winning me over slowly

Posted by: guest at February 1, 2008 5:17 PM

404 Stuyvesant is in the historic district of Stuyvesant Heights. I can't remember the architect of the building, but he was well know and is the reason houses on this strip of the avenue fetch a higher price than others in the area. In addition, teh square footage on these houses is larger than other housing stock in the area. Of course, this price is still too high.

5:09 - Don't be hating Bed-Stuy!

Posted by: guest at February 1, 2008 5:22 PM

The Bed Stuy house is a beauty in a great area. If it's about 5000sf, that would relate to 295 per sf. Priced at about 245 per sf would be a reasonable buy (I paid that for my home, and believe it was a very good buy for what I got).

Posted by: guest at February 1, 2008 5:39 PM

5:04/5:17/5:39 = owner of bed stuy house.

if you really want to sell it, LOWER the price instead of trolling bstoner, please.

Posted by: guest at February 1, 2008 5:44 PM

believe it or not 5:44 not everyone has heard of this site.

Posted by: guest at February 1, 2008 5:48 PM

5:48--those with houses in Brooklyn have. And so has every single broker in Brooklyn. And actually, the owner's relatives DID post on the auction thread last year, so why wouldn't they now?

Posted by: guest at February 1, 2008 6:09 PM

i don't understand what that means, 5:48.

please go back to propping up your bed stuy property.

Posted by: guest at February 1, 2008 6:10 PM

Hey, anyone else think that could be a pool in the backyard of the Dean St. house?

Posted by: guest at February 1, 2008 6:19 PM

There are no identical houses on Lefferts. That's the whole thing about Albemarle Terrace. It's a one of a kind, or architectural importance on a national level.

I'm not sure the price is on target, however, given the location of this gorgeous little oasis. Although it is in Flatbush and considered to be one of the Victorian Flatbush neighborhoods, it is not contiguous with the other neighborhoods, is not as large as homes found in those neighborhoods. I think around the million mark is more accurate. Houses on Albemarle and Kenmore in good condition but in need of updating have sold for around the $800K mark in recent years.

Posted by: guest at February 1, 2008 7:59 PM

Oh, it's also not really Victorian, built more than a decade later than the other Victorian Flatbush and are an early exponant of the British Garden Suburb (which is why they're of such architectural importance).

Posted by: guest at February 1, 2008 8:01 PM

If I had a recording studio in my basement, and I wanted to sell my house, I'd either rip it out so it just looked like a ready-to-finish basement, or I'd make no mention of it in the ad. Then, I'd offer to either rip it out or leave it in, whatever a buyer preferred.

Featuring it in the listing, in this location at that price in this market, is just a red flag to buyers. Although maybe you could use it as another income stream...

Posted by: guest at February 1, 2008 8:58 PM

The listing last summer for a similar house on Albemarle Terrace was 850K, but it was not as nice as this one. There's one on Kenmore for sale at 950K with a garage. These houses are amazing little gems, but the surrounding area isn't that great.

Posted by: guest at February 2, 2008 9:01 AM

Interesting, 5:17. That's what I had anticipated would happen, that the tons of new condos in Brooklyn would lower the value of coops. It made me anxious so we sold our coop to get a house sooner than we initially had planned.

That said, I think the coops in limestone and brownstone buildings on pictureque, well-located landmarked brownstone blocks of Park Slope won't lose value. A slower appreciation maybe with the flood of condos. The brownstone coops' real competition are the condo conversions in neighboring brownstone buildings, not the big new construction buildings on 4th Ave and the like.

Posted by: guest at February 2, 2008 9:34 AM

From the owner of the Albemarle Terrace home: The homes that sold recently needed considerable work. The price here appears high because the renovation is exhaustive. Every bathroom is basically brand new as is the kitchen. The steam-room bathroom was done in slab marble with matching seams. The Mexican bathroom has Talavera (google it!) painted ceramic sink toilet and accessories and stone tile on the walls. All of the lighting has been replaced. The doors and door hardware has been updated, repaired or replaced. The roof has been replaced. Boiler and Hot water heater are new. Some work has been done in the back yard and it is beautiful. The exterior of the house has been newly and appropriately serviced and maintained. While a considerable effort and expense was spent on the basement it could be quite useful in a non recording application. The studio was designed to be modular, so there is no hidden permanent wiring except for generous AC. The insulation is remarkable. There are many more features, but for now I hope that answers the questions that were raised.

Posted by: guest at February 2, 2008 10:17 AM

Owner, thanks for posting. Your house does look beautiful.

One comment -- since you are using Brown Harris Stevens as your "exclusive" broker, you really should demand a far better website from them. I'm assuming they want 6% -- how about posting a floorplan?

Also, as someone not familiar with Albemarle Terrace but who thinks the house looks beautiful -- there is no map nor directions to the open house -- the link doesn't work. So, I have no idea where your home is in relation to other points in Brooklyn. If I want to attend the open house, I have to go through mapquest. Yes, I could do this myself, but for the huge fees brokers charge, they should be making it easy for potential buyers.

(If I missed the floorplan and directions, I'm sorry, but either link didn't work or there was no link at all for me.)

I'm not another broker, nor am I advising you to change brokers, as BHS seems like a fine place for attracting potential Manhattan buyers, but I do advise you to demand more services from them. Otherwise, you might as well do a FSBO.

Posted by: guest at February 2, 2008 10:34 AM

We used a BHS broker and got a floorplan immediately as well as professional photographs. It's not about the realty firm, it's about the individual broker. And everything the owner of Abermarle mentioned should be on the listing description.

Posted by: guest at February 2, 2008 10:51 AM

Albemale Terrace owner: The house looks nice, so congratulations on a good renovation. But, with all due respect, I think your price is crazy. I've seen two houses on AT that were lovely and in good shape and which were asking in the 800's. Your renovation does not justify an extra $400,000--in my opinion. Most of what you've done is standard stuff, and the few "extras" aren't to everyone's taste or needs. Personally, I can't see it going over 1M. But, as always, we'll see what the market says...

Posted by: guest at February 2, 2008 10:58 AM

This was a bad thing about the low cost home improvement loans and all the pressure to do high-end gut renovations all at once right way - sometimes the location of a property isn't worth a huge investment. I'm not dissing Abermarle. I'm just pointing out the old rule of real estate which used to be to never do renovations that weren't on par with where the neighborhood and similar houses were at. You can see this example in other parts of the country when someone builds a mansion in a modest town or neighborhood then someday tries to sell it for all they put into it and the kind of buyer they want doesn't show up. Sincere good luck wishes though, owner of Abermarle. It's a lot of work you did. Hope it goes well.

Posted by: guest at February 2, 2008 10:58 AM

Gee, I was a kid in Brooklyn and never saw Albemarle Terrace. Just Googled it. It's a beauty! And this house is sweet, with or without the music studio.

Neo-Georgian houses are special in Brooklyn. There were several around Brower Park in Crown Heights, where I was a boy, and there are a very few in Park Slope, where my family's lived for four generations.

Less dark than brownstones, and cozy with brick, they always said "house" to me.

At the right price, this one should go in a flash!

Nostalgic on Park Avenue

Posted by: guest at February 2, 2008 11:22 AM

10:58am -- I had a very similar thought when I looked at the home. It absolutely is beautiful, but I also remember being advised years ago, long before getting into the NYC market, that you shouldn't buy the nicest home on the block, or a renovation doesn't pay off if your home is renovated much more than your neighbors' homes.

Posted by: guest at February 2, 2008 11:52 AM

"At the right price, this one should go in a flash!"

REALLY??? is that the way it works????

too bad this one is far from the "right price"

Posted by: guest at February 2, 2008 12:18 PM

12:18:

That's right, that's the way it works. The market will help determine the price.

But there's also emotion in real estate, and someone may just love this place and pay the asking. (My own parents' house, for example, sold well over asking -- a big surprise for me -- because a young couple had been admiring it for years and started a bidding war.)

The "right price" is in the eye of the potential buyer. For you, the house on Albemarle isn't there yet. But for somebody else -- who knows?

NOP

Posted by: guest at February 2, 2008 2:04 PM

Absolutely agree about with NOP about emotion being an important factor in real estate transactions.

Posted by: guest at February 2, 2008 2:26 PM

"But, how many people would ever want/need their very own recording studio? "

I know lots of people that have a recording studio set up in their place, so it's not that farfetched.

Posted by: guest at February 3, 2008 1:41 AM

"BTW, that housing graph and scheme [http://tinyurl.com/ynrman] has never, nor will it ever apply to NYC."

You are absolutely wrong. 4-story, 3-window wide Clinton Hill brownstones purchased for $500K in the 90's are now purchased for $1.5M. After inflation, that's probably about double and therefore a direct application to the graph. The 80's/90's boom/bust is pretty consistent with NYC as well. Sorry, nowhere is immune. This housing pyramid scheme is a national franchise with additional locations abroad.

"The most deadly phrase in the market is 'this time is different'!"...

http://tinyurl.com/2aw9g6

Posted by: guest at February 3, 2008 8:26 AM

Demographic changes -- NYC's increase in popularity -- are the reason why NYC rents are so high. Rents reflect supply and demand.

But sales prices can reflect other things as well -- in particular, the bubble mentality. If you think that housing is going to be even more overpriced next year, it is tempting to overpay this year.

In the last 4-5 years, rents and sale prices have gotten completely out of whack. It is wildly cheaper to rent than to own (unless you think that housing prices are going to keep going up far faster than rents and so you will make up your monthly losses by capital gains).

This a sign of bubble, not demographics.

And it looks exactly like Schiller's graph. From the '50s through the '90s, rents went up and down with the local economy and fashions, but sales prices were consistently between 8-10 times annual rental value: for taking the risk of buying, you saved a little bit. Now the ratio is triple that in the prime areas: to buy, you must pay an enormous part of future rent/price inflation to the current owner.

Current price trends can only continue so long as buyers are willing to pay an ever-increasing premium to buy rather than rent. Even if you think that people are always going to be willing to pay double to own rather than rent, do you really believe that they are going to be willing to pay triple?

Moreover, for everyone who is wedded to Brownstone Brooklyn, there is someone else who, at the right price, will discover that there are lots of other attractive places to live in the world. How long can brownstone prices go up while the rest of the country is going down before some of them decide to cash out?

Posted by: guest at February 3, 2008 7:25 PM

Think tulips.

Posted by: guest at February 3, 2008 9:48 PM

Yes, but what about home equity? Let's say you want to buy an apt that would rent in the vicinity $4K/month (let's say a 3BR/2BA in a prime area, which might even rent for more), and it costs close to 1 million to buy these days. Given how slow the market is to respond to economic shifts, it might take 2 years or more before there are significant declines in prices i.e. 10-15%. So, in that time frame, you would have paid nearly $50-100K in rent, only to buy a similar apartment 1-2 years down the road at a price that may or may not be reduced by the amount of rent you've paid while waiting for prices to decline. Plus, you have not received tax advantages, nor have you been able to invest in the space to make it the way you want it to be, since doing so (i.e. any renovations, even minor ones) would be even more money out the window. Plus, you are at the mercy of your landlord.

I don't disagree that prices have risen at unsustainable levels in recent years. Clearly, some properties are currently overpriced. But the ones that seem the most overpriced on the ones that try to piggyback on the prices in prime areas, even when those properties are themselves NOT in prime areas (i.e. that beautiful Townsley & Gaye house on a crappy 14th St block). It seems likely that the softening of the market will disproportionately affect fringe areas that sped up too fast (out of line with the neighorhood amenities, let's say) whereas prime areas that have solid value will hold their value better. It does seem unlikely that prices will continue to go up as they have in recent years, but it also seems unlikely that they will drop precipitously. As long as many people want to live in these prime areas and pay high rents, it still makes sense to buy a property that in those areas as long as it's not outrageously priced and is truly a quality property. Second-rate renovations in fringe areas, or totally crumbling old buildings may suffer, but the great ones in great areas much less so.

Posted by: guest at February 3, 2008 9:48 PM

Huge, rolling fields of lovely tulips.

Posted by: guest at February 3, 2008 9:55 PM

9:55 - I literally just calculated the cost of buying the kind of apt 9:48 alluded to (3BR/2BA in prime area, selling for close to 1mil) - after tax deductions, the monthly costs are about $3,500-4,200 (exact amount depends on maintenance fees). How is that similar to the tulip craze when in fact, this would be a reasonable rent for a large apt in great area? Granted, you've tied up nearly $200K of downpayment in the property, but where else are you going to put that in the next few years - is the stock market or bonds going to do any better? And, you have a place to live.

Yes, there are properties that are really crazily priced - maybe those are the "tulips" out there. But it's a strange market since there are some properties that are not so crazily priced. I guess each buyer has to do their own math and evaluate each property themselves, but as a prospective buyer and seller myself, I am looking hard at the different scenarios out there, and I don't think it's as simple as saying "NYC will never go down" nor saying "everything will crash". The truth lies in between - overpriced, lower-qualities properties will most likely come down, but quality properties in prime areas will hold their value, even if they don't appreciate very much in the next few years.

Posted by: guest at February 3, 2008 10:08 PM

In which "prime" neighborhood are 3BR apts selling for $1m and renting for $4000?

Posted by: guest at February 3, 2008 10:44 PM

to 9:48: If prices go up, then you will build equity. If they go down, you will lose equity. If you put 20% down, and prices drop 10%, then you've lost half your equity.

If you put your 20% into a bank account, you'd make 5% for sure.

If you pay more to own than to rent (after-tax, and remembering that the mortgage deduction caps out at $1m, and that real estate losses are not deductible for anyone who can afford a brownstone today), that extra charge is the price you pay for (1) the right to renovate, (2) the privilege of paying for your own maintenance/repairs and managing your property, tenants, etc, (3) taking the risk that your highly leveraged investment in NY real estate will either go up or down -- and due to the leverage will do so quite dramatically.

Usually, investors want to be paid for taking on risk -- they don't usually pay for doing that.

So it seems unlikely that the gap between rental and purchase markets will remain long term.

Posted by: guest at February 3, 2008 10:57 PM

9:48 here - I'm really thinking of apartments, not houses, so I'm still factoring in the mortgage deduction which is for mortgages under 1mil. If the property goes down, yes, equity will be lost, but if you are buying a place to stay for a long time, then isn't it a wash and/or a better investment to buy since eventually prices do go back up (certainly they did in NYC after the last slump...)? And isn't there a risk in continuing to rent for many more years, waiting for the market to go down enough that you can afford to buy? At least then, you lock in your mortgage, whereas if you rent, your rent is going up. It seems that fewer people "rent" brownstones - and they are so much more expensive, perhaps they really are a tulip craze. (Then again, as long as they are as scarce as they are -no one can really build a new turn-of-the-century brownstone - will they really crash? Isn't that the difference between the rest of the country, where there is so much sprawl and newer construction, versus prime brownstone brooklyn?)

As for 10:44's question, I can tell you that in prime Park Slope, rents for a nice 3BR ("true" 3 bedrooms, not a closet)/2BA apts can easily be $3500-$4000 (esp if there is outdoor space, W/D in apt, storage, details, good school, etc.) and those apts are also the ones selling in the million dollar range. So I think, if the monthly maintenance costs are not too high, buying such an apartment is in fact not so different in terms of expense than renting - and it's yours.

Posted by: guest at February 3, 2008 11:23 PM

Dean St is $2.6m. If you can get a bank to give you a $2m mortgage at 7%, this costs $140k / year in interest. Plus taxes, repairs, heat, etc, which will be at least 25k. You can offset this with rent for two floors -- say 4500/mo or 55k/yr. And the government will subsidize the first $1m of your mortgage -- if you are in the 40% bracket, that's worth 28k. So you are paying, after taxes, roughly $82k/year -- $6800k/month -- to live in half the house, while your tenants pay $4500k/mo.

But that isn't quite right. You also have 600k that could be earning you something elsewhere. If you could make 8% -- less than long term stock market returns -- that's another 48k/yr = 4k/mo. (You also have a certain amount of unpaid labor as a landlord, but I'm going to ignore that.)

So, for this to make sense, you need to be willing to spend an extra $6300/month for the privilege of being a landlord, or you need to believe that Dean St will increase in value by more than that.

So maybe you think that it will go up more than that -- it's not a very high percentage of $2.6m, after all. But do remember that for the price of the house to go up faster than rents, a buyer has to be willing to pay an even bigger premium to own. Already, the homeowner is paying $10,800 to live in an apartment renting for $4500. How much bigger will the gap get before prospective owners decide that maybe there aren't going to be more increases?

Note that if Dean St drops in value by 10% in the next year, that means the owner living in a duplex would be paying $6800 cash, $4000 in lost investment income (opportunity cost) and $21,000 in lost equity per month, for a grand total of $31,800 per month.

If you plan to live in the whole house, the numbers look a little better (since you aren't paying for the privilege of having tenants). But the basic picture is the same: you'd be much better off renting a full house in Brooklyn Heights for $12k/month and investing your downpayment somewhere safe. $600k at 8%, after all, will cover 4k of that rent, so you'd be saving about 24k / month -- enough for a really nice vacation house, or for an investment banker spouse to stop working.

Posted by: guest at February 3, 2008 11:47 PM

If you rent, you take the risk that rents go up. They will: heat, taxes, repairs go up. And the city gets more popular. But they can't go up faster than incomes for long, or there won't be anyone to rent.

If you buy, you take the same risk of higher heat, taxes and repairs. You also take the risk that housing prices will go up faster or slower than rents.

If prices go up faster than rents, owners win. Vice versa, renters win. In the long run, though it is hard to see how one can beat the other for long.

It is hard to build brownstones (although not that hard to build comparable apartments in brownstone neighborhoods), but it isn't that hard to convert rentals to ownership or vice versa. So if the market gets out of whack, in NYC as everywhere else, sooner or later the developers will figure out how to increase supply and bring prices down again.

Fourth Avenue, Flatbush Avenue, conversions downtown, DUMBO, the former Witness buildings, and, of course, the gradual conversion of rent stabilized apartments to coops/condos -- supply is increasing rather rapidly. Owners have had a good run, but it's not likely to continue forever.

Posted by: guest at February 4, 2008 12:01 AM

11:47....your numbers are all bogus.

you just think people are dumb enough not to check your work.

doh.

buying is always better than renting.

unless you like throwing money down a toilet.

Posted by: guest at February 4, 2008 12:07 AM

to 11:23: if your million dollar apt drops 10%, you've lost 100,000. That's the benefit of "it's yours" in a down market. Owning only makes sense if you think the price is going up. Otherwise, rent and buy later. Your income goes up, prices go down, and you are better off all around.

Posted by: guest at February 4, 2008 12:08 AM

12:01 - Actually they just released a report last week. Supply is still at historic lows in NYC. No noticeable increase in supply has taken place.

You are incredibly misinformed.

Posted by: guest at February 4, 2008 12:09 AM

yes, 12:08....great idea...buy later!!!

why not wait till you're 65 to buy when you want to retire??!!!

people need about 30 years to pay off their mortgage. most of us would like to buy something and pay it off while we are still in our most productive earning years which peaks at around 40 or so.

if you haven't gotten into the real estate game, by that point in time and you don't make a ton, you are going to be screwed, because time is NOT on your side.

30 years puts you at paying the place off at 70, max.

most people would like more stability as they age.

not less.

Posted by: guest at February 4, 2008 12:12 AM

12:01 this is for you:

Over the past year, condo inventory levels have exceeded co-op levels as new developments (nearly all condo) continue to enter the housing stock at a steady clip. Residential development permits dropped sharply in 2007 and the expiration of the 421a abatement program on June 30th may choke off the high level of supply entering the market in 2009. So far, the elevated level of demand has kept inventory at modest to low levels.

The total number of listings has increased 9.9% from the end of December 2007 to the End of January 2008 (yesterday). Inventory tends to rise at the beginning of the year as sellers anticipate the upcoming spring market. The same period in four of the past five years has seen an increase in the number of listings:

1 Month Change (Dec-Jan)
2003, +2.3%
2004, -10.8%
2005, +16.9%
2006, +4.2%
2007, +9.9%

Clearly condo inventory is higher than it was two years ago, but co-ops are near the six-year monthly low since I began to capture this data. In fact, co-ops are 39.9% below their high in March 2003 (Just as the Iraq War broke out) and condos are 23.5% below their recent high in September 2006. Currently, overall inventory is consistent with levels seen in 2002/2003, which is contrarian to the increase seen in many metro area markets around the country at this time

Posted by: guest at February 4, 2008 12:16 AM

Yeah, ll:47 completely screwed up the calculation for someone who is living in the whole place.

It would be almost 12000/mo cash, plus the $4000 /mo opportunity cost, plus the lost equity. So using her numbers, you'd save $29000 per month by renting.

If you throw that much money down the toilet, you'd definitely better budget for a plumber too.

Also, the assumptions are wrong. You can't get a $2 million dollar mortgage at 7% unless you are making so much money that you must be able to make more than 8% on your investments. These calculations are too low.

Posted by: guest at February 4, 2008 12:19 AM

12:12-- you'll pay off your mortgage faster if instead of overpaying, you wait and save. It takes seven or eight years to pay off 10% of a 30 year mortgage. Knocking 8% off an inflated price is much quicker.

But if buying is always better, I have a ten million dollar studio I'd love to sell you.

Posted by: guest at February 4, 2008 12:37 AM

"money down the toilet"
pay the landlord - rent
pay the bank - interest
pay the toilet - ???

Posted by: guest at February 4, 2008 12:43 AM

"aren't there real demographic pressures on NYC that do make it different than other places?"

Nope. The population remains unchanged. We're still 8 million. There's only been a class change - an outflow of lower class residents and an inflow of "middle" class residents. The REIC is trying to soak up an ever-increasing inventory with the same population figure. The notion that inventories are at all time lows is a smoke-and-mirror myth put out there by broker/bagholder propaganda. Total bullshit. Take a look around you.

Take another look at Shiller's graph. You will not see 2008 real prices again in your life-time. Say bye bye.

Posted by: guest at February 4, 2008 12:54 AM

Do people buy places anymore because they like them as places to live?

I bought at the height of the market in 1986, watched values dive in 1987, and didn't recoup my cost (accounting for inflation) until a few years ago when I finally sold.

In the meantime, I enjoyed nearly 20 years in a beautiful place in a great Brooklyn neighborhood.

Now I live in a new, bigger place that's more than doubled in value in three years, but I fully expect another cycle that will wipe out this gain. But I plan to live here for another twenty years, so the ups and downs of markets mean little to me, at least not against the pleasures of being at home.

Remember what John Jacob Astor said (a man who rode out the market swings of 19th-century New York and died the richest man in America): "If I knew then what I know now about New York real estate, I would have bought all of it!"

Buy and hold. Meanwhile, enjoy a place to live.

Posted by: guest at February 4, 2008 1:07 AM

I agree with 1:07am, buying makes sense if 1. you found a place you love and are willing to live in it 20 years and 2. You can afford the monthly mortgage payments.

What disturbs me are people who think the real estate market will always go up, or at least are convinced it will never decline. It's those comments like "buying is always better than renting" which are so idiotic.

Right now, buying is fine IF you are willing to buy and hold and wait many years while your property declines in value and then increases. Hey, you might be lucky and NYC will not suffer a big downturn, but please go into this intelligently with the understanding that there is a good possibility you will have to hold on to your property for years.

Posted by: guest at February 4, 2008 10:25 AM

"Nope. The population remains unchanged. We're still 8 million."

No we aren't. Latest numbers are not at 8.25 million.

Up from 8 million in 2000.

Posted by: guest at February 4, 2008 10:56 AM

Sorry....should have said latest number ARE AT 8.25 million.

oops.

Posted by: guest at February 4, 2008 10:57 AM