Open House Picks 8/10/07: Six Months Later

All of the ones that sold went for well under asking price. Interesting.

Posted by: guest at February 1, 2008 11:17 AM

11:17...

so basically you are saying that the market is normal.

you all have the memory of a fly.

it ALWAYS used to be...here and across the united states that properties sold for under asking price.

that's why it is called an asking price.

it was only a few brief years of 2002-2005 where people paid asking, or over.

please try to be a little more informed, if at all possible.

Posted by: guest at February 1, 2008 11:22 AM

what's wrong with the Cheever property?

Posted by: guest at February 1, 2008 11:35 AM

From the original thread back in August:

Hm...31 Cheever Place had an open house on June 2 (over 2 months ago) at a much lower,
$1,790,000:
http://64.233.169.104/search?q=cache:yVmStPIQQCgJ:www.brownstonelistings.com/public/openHouses.do+%2231+cheever+place%22

It hasn't sold, and yet they raised the price to $1,850,000?

What gives?

Posted by: jeffrey at August 10, 2007 4:12 PM

So the price was $1,790,000 went up to $1,850,000 and is now down to $1,750,000

Posted by: guest at February 1, 2008 11:41 AM

The Cheever St property is only 19'5" which probably makes it too narrow for a condo conversion. I know of a 25' shell on Butler Street between Smith & Court that sold for over $1.8 that's now being condo'd.

That being said even at 19' I would have thought $1.6m would make it worth buying to make a triplex with a rental. Although maybe it's got some structural issues.

Posted by: guest at February 1, 2008 11:45 AM

Interesting = Snarky
We all know it, 11:46. And YOUR post is actually the most obnoxious on the thread.

Posted by: guest at February 1, 2008 11:50 AM

11:46am

Nice house, but it's listed for only 2.3. Are you saying sellers countered with $400,000 higher than list price?

PS -- still don't understand who buys these brownstones for $2+ million? We bought ours when the income from rents covered a huge portion of the mortgage, but now it seems out of whack. Even at $2,000 per apt (which is more than the ad says you would get), that's only about $1 million in mortgage covered -- so renting 3 floors (or 3/5 of the house) doesn't even cover half the mortgage. I'm just wondering how you do the calculation for wanting this kind of property.

Posted by: guest at February 1, 2008 11:57 AM

I agree with 11:22 (except that I don't recall from college biology whether Drosophila have good memories or not.) Time was, offers regularly came in at ten percent less than asking. In fact, it was almost so formulaic that it was assumed that the asking price was padded to result in buyers offering what sellers really wanted, the ask less ten percent. Then, as 11:22 points out, the market got hot, hot, hot, and you had situations like when people would show up at open houses with their checkbooks and offer the asking price PLUS ten percent.

Posted by: guest at February 1, 2008 11:58 AM

well then clearly you didn't want the house enough, 12:01.

i don't think you need to berade the sellers for them not accepting your offer. it happens all the time.

it's a little weird to announce it here on the site also.

Posted by: guest at February 1, 2008 12:03 PM

Thanks, forgreenest. So, if you are willing to tell us, how do people in the market for $2 million plus houses do their pre-buy economic calculations? What kind of work do you do? I guess I'm just curious about who buys these expensive houses in my neighborhood -- all my friends here who rent are completely priced out, even for smaller apartments.

Posted by: guest at February 1, 2008 12:05 PM

Hey 12:03, 11:57 here and I think you are wrong -- I appreciate getting this info (although of course, I take anything posted on an anonymous board with a grain of salt, for who knows if it is true). He didn't "berate" the sellers, just stated that they didn't accept a good offer. You should read the post again before you start berating someone else (unless you are the seller/broker and are bummed out having lost a sale.)

Posted by: guest at February 1, 2008 12:08 PM

Rents in Cobble Hill are now $2,300 - $2,400 per month for one bedroom + den apartments (700-800 sq ft). And speaking from my own experience last weekend renting one, there are no shortage of takers at that price point.

Posted by: guest at February 1, 2008 12:08 PM

11:17, it's quite an exaggeration to say that the sold properties went for well under asking. Granted the absolute numbers are large but the average percentage difference between ask and sale price was only 6%.
Doesn't smell like a meltdown to me.

FG: Ask - 1,899; Sale - 1,823; Diff(-4.0%)
SP: Ask - 849; Sale - 805; Diff(-5.2%)
BS: Ask - 790; Sale - 720; Diff (-8.9%)

The biggest 'ah hah' moment would be the comparison between pre-boom values to now. I suspect you will still find that the spread is significant.

Posted by: guest at February 1, 2008 12:10 PM

True, but are they as high in Clinton Hill? Cobble Hill 5 stories seem to list for over 3 million, so it's the same calculation -- even at high rents, it just doesn't cover that much of your mortgage. And there's no guarantee that rents will continue to rise steadily -- they stayed stagnant for quite a lot of years between 2000 - 2004 or so in those neighborhoods.

Posted by: guest at February 1, 2008 12:12 PM

Per Minsky, it just went into contract at 2.22.

Joking, but look at all those kitchens on the floorplan! Soooooo chopped-up.

At $2.3MM, it doesn't make sense as an investment property and to convert back to a 2-family (quadplex + garden rental) would be mega-bucks.

All-in basis of $2.3MM + closing costs + $600K reno = about $3MM+!!!!!

Posted by: guest at February 1, 2008 12:12 PM

Is this a good spot to interject a Carroll Gardens Corcoran bash?

Cuz I'm thinking....if any of these places were in Carroll Gardens...

Fuhgeddabouit!

Posted by: guest at February 1, 2008 12:15 PM

With rent of $2,400 per month and say your costs are $200 per month then that is sufficient to pay the interest @ 6% on $440,000 of debt. Say you have two rentals then paying $2m for a townhouse means you are effectively paying $1,120,000 for a garden and parlor floor duplex plus garden (and maybe a cellar as well).

Doesn't seem too expensive in the scheme of things.

Posted by: guest at February 1, 2008 12:23 PM

Some people don't care about the rentals.

You people still forget how much money some people in this city have.

Posted by: guest at February 1, 2008 12:29 PM

12:23, I may be missing something, but $2,400/month less $200 is $2,200 which, if you assume $600/$100,000 in mortgage payment only covers $367,000. Which leaves you paying close to 1.3 for a duplex (except for all the other contingencies of home ownership and dealing with tenants, etc.). But then again, I don't know any people in the market for 1.3 million homes anyway. My friends can't even afford $800,000 apartments -- I guess I just run with a poor crowd because in most places, $800,000 is a huge amount of money to pay for a home, and 1.3 million puts you in the elite category.

Posted by: guest at February 1, 2008 12:35 PM

12:29 as 12:12 explained, you are looking at an additional $600,000 in renovation costs to turn that into a 1 family. So why buy a 4 family if you don't care about rents. That's why I was curious about the calculation -- if buyer had said I wanted a whole house and it would have cost $3.2 million to buy one like this, so getting it for 2.2 and renovating it was worth it to me, I would have understood the answer.

Posted by: guest at February 1, 2008 12:37 PM

12:35 Treat the rentals as a business and pay interest only on the loan. $2200 per month is $26,400 per year and is the interest due on a $440,000 interest loan at 6%.

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

Also, you are not going to get $24O0 a month for those rentals in Clinton Hill.

Posted by: guest at February 1, 2008 2:44 PM

Yeah 12:05..who does buy these expensive houses?? How do they afford it?? Jobs, Trust Funds...??

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

1:09... does that mean you take out multiple mortgages to get financing to purchase the house? A home mortgage for the part you reside in and an interest-only loan for the rentals? Banks won't be too happy about such complications in this day and age...

(However, as it's tax season: that would indeed be the ideal way to purchase. Rent counts as income, and only mortgage _interest_ can be deducted as a rental expense. So if you're paying down principal on the loan for a rental apartment, you'll end up losing money. (Though, you can also (indeed, must also) deduct depreciation on the rental property, so maybe that would offset any such loss (at the cost of decreasing your basis cost).))

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

I bet 75% of those Morgan Stanley guys live in Greenwich.

Certainly not a one of them lives in Brooklyn.

You know...what we're talking about today...

Posted by: guest at February 1, 2008 2:53 PM

There are many, many people who work at morgan stanley and other banks that live in Brooklyn.

Posted by: guest at February 1, 2008 3:03 PM

Fortgreenest, thanks for sharing your information. I wish more people did that. I am in the market and find it very helpful and valuable to know what other buyers are doing and how sellers are responding. Thanks!

Posted by: guest at February 1, 2008 3:05 PM

Many, maybe, but MOST live outside the city 3:03.

Posted by: guest at February 1, 2008 3:27 PM

3:27 - its true that most bankers live in the burbs. But those bankers that live in Brooklyn effect market prices and layoffs at places like Morgan Stanley might slow things down. Even if you keep your job, but you watch 1000's of others loose theirs, you are likely to be far more conservative in your decision making... at least for the time being.

Posted by: guest at February 1, 2008 3:36 PM

not the same income level or people we are talking about here, but the new brooklyn ikea is HIRING 500 new workers right now.

so for every company that lays off people, there are people being hired every day in this city.

Posted by: guest at February 1, 2008 4:10 PM

ummm...4:19...i take ever single comment you make with a grain of salt.

i don't usually like what you have to say.

Posted by: guest at February 1, 2008 4:35 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 5:18 PM

5:18 = fucktard asshat

Posted by: guest at February 1, 2008 5:30 PM

Yeah and Polemicist is also a widely suspected chronic liar on Brownstoner, 4:35. This is the guy who a year or two ago would claim to own millions of dollars of real estate to add validity to his rants on one thread, but was clearly renting from what he'd say in comments on another thread.

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

"the new brooklyn ikea is HIRING 500 new workers right now"

The salaries of all of them put together will not pay for a single brownstone.

The race to the bottom continues apace.

Every time posters try to justify high prices, they trot out the well-paid banking sorts as an explanation.

Now that the pink slips are piling up, these same bankers suddenly live in Greenwich, and thus do not factor into the pricing equation.

Mr. Bubble has left the building.

Posted by: guest at February 2, 2008 12:30 PM

guest 12:30 does have a good point in that posters do claim that prices will keep rising because of big wall st. bonuses, so to claim that the downturn on wall street only affects Greenwich is a bit illogical.

None of us know whether brownstones will remain high in price. However, I personally wouldn't buy now because it's no longer possible to get a house with rental income that justifies the high price. Witness the discussion here earlier that 1.2 million for a duplex is a good price (which is what a 2 million dollar brownstone with 2 rentals means to the purchaser). The Sunday NYT real estate section just sold showed an 1800 squ ft Clinton Hill duplex (plus celllar) for $900,000. It may be worth the extra $300,000 to own your own place, but not for me.

Posted by: guest at February 2, 2008 1:18 PM

What I think is interesting about the buyer sharing what he says was his rejected offer on the house at 242 Washington Ave. is that he could either truly be a spurned buyer OR a plant by the sellers, putting out the word on what it will take to move the joint. Not to be cynical or anything.

It's a beautiful house, though, you gotta admit.

Posted by: guest at February 2, 2008 10:39 PM

If rents are $2400 a floor (which seems rather high for Clinton Hill), then it costs about the same to rent as to buy at about $1.9m for a four story. If you pay more than that, you are either paying for the privilege of managing the rental properties, or you are paying for future appreciation. If you think, as most economists do, that current housing prices are well above the trend line and there isn't going to be any appreciation, then you shouldn't be willing to pay even this much.

Here is the calculation:
Renting the duplex would be $57600/year. A one million dollar mortgage at 6.5% costs $65000 in interest (i.e., rent for the borrowed money), but if you are in a 40% tax bracket, the government subsidizes $26000 of that, so it is only costing you $39,000 -- $18,600 less than the cost of rent. I doubt that $18,600 will cover the costs of operating a 3 unit property, but let's say that it's enough. So, leaving aside future appreciation or depreciation, it'd be roughly equivalent to pay $4800 rent or $1m for a duplex you are going to live in. The rental floors generate $57600 in gross income, which will cover interest on another $885k.

I omitted renovation and repair costs, on the assumption that a $2400/fl house is in pretty good shape already. I omitted any charge for your managerial services, on the assumption that anyone who would buy a 3 family probably doesn't mind managing it for free. If not, reduce the income by how much you want to be paid. I omitted tax benefits from renting because if you make enough money to take out a mortgage on this house, you aren't allowed to claim passive losses anyway, and most likely you are subject to AMT as well.

I omitted downpayment and principal because that part is an investment, and renters can invest in alternatives. If you think that CH is likely to go up faster than your alternative, you should be willing to pay more than $1.9m. If you think that after the unprecedented run we've just have, it is more likely to lag your alternatives, you should be willing to pay less.

Posted by: guest at February 3, 2008 12:17 AM