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February 13, 2009

Open House Picks: Six Months Later

Comment: So-so.
Open House Picks 8/8/08 [Brownstoner]
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Will Quinn be buying the WT places if they can't sell them?

Posted by: dittoburg at February 13, 2009 12:41 PM

I really enjoy reading the posts from when these were the open house picks. This was posted by Lechacal regarding the Berkeley Place house:

"When I commented earlier that I thought 108 Berkeley would go for at least 90% of asking, I was making a bunch of assumptions that turned out to be dead wrong. I went to the open house, and am now of the view that the asking price is hugely aspirational (I am trying to be as generous as possible in my words). I don't care how hot Brooklyn brownstones are, there is just no way they find someone stupid enough to pay anywhere near asking. Buyers picked that place up for $1.3 million in 2004 and have clearly done absolutely nothing to the place since then. Now they are trying to flip for $2.65 in a softening market? This is a 50' lot, which means the lower duplex can't even be turned into a proper 3-bedroom (i.e., a decent-sized family needs to take over the third floor too, leaving some meager income from the top floor to offset costs). There is a ton of money that need to go into the place before it is worth even close to asking.

Anyone else go to the open house who disagrees?"

Posted by: 11217 at February 13, 2009 12:44 PM

I also enjoy reading the original posts, butt mostly because I was right about the two WT properties being overpriced.

Posted by: SnarkSlope at February 13, 2009 12:56 PM

Whoops, extraneous "t" in that last post. I must have been thinking of yesterday's open thread.

Posted by: SnarkSlope at February 13, 2009 12:57 PM

I thought the extra "t" was on purpose.

But in any case, you were correct, Snark. And looks like they are still overpriced, if you ask me.

Posted by: 11217 at February 13, 2009 1:00 PM

So the PS/WT price differential is getting steeper. There's trouble brewin' I tell ya. Mobs with torches soon.

Posted by: dittoburg at February 13, 2009 1:02 PM

It's fun reading the comments 6 months later. I think lechacal has a perfect grasp of math, but an imperfect understanding of psychology.
It is surprising that someone would pay so much more to own then they would to rent, if you really care about every dollar, but clearly some people made so much money, so fast, it's play money.

Posted by: Maly at February 13, 2009 1:03 PM

Problem with WT is it's a nice neighborhood but the subway access suh-huuuuucks.

Posted by: cwbuecheler at February 13, 2009 1:09 PM

Agreed, I think the WY houses still need to drop a bit.

Bringing them down to $1.2m and $800k should do the trick.

I don't think the subway access is that bad. Sure, all you have is the F train, but it's really no worse than any other line in my experience.

Posted by: SnarkSlope at February 13, 2009 1:18 PM

> "There's trouble brewin' I tell ya. Mobs with torches soon."

Tiki torches? Let them please be tiki torches!

Posted by: SnarkSlope at February 13, 2009 1:19 PM

Well 11217, what can I say -- I continue to be shocked by the sale price, which made no sense given the state of the property, comps, school district, etc. The sale price certainly doesn't change any of my views about the market generally or about this place in particular (of course other than my view that no one would be stupid enough to pay anywhere near asking, which clearly was wrong).

Posted by: lechacal at February 13, 2009 1:30 PM

Gee, that little East Flatbush house looks like a deal. I didn't see it six months ago. Is it cute?

The top and bottom are doing well, not so the ones in the middle.

Posted by: mopar at February 13, 2009 1:31 PM

I still think the WT houses are overpriced even with the price chops
At least the Berkley Place got close to asking...

Posted by: gemini10 at February 13, 2009 1:33 PM

I wouldn't think it would change your views, Lechacal. Nor should it. I think what Maly said is correct...you seem to know your stuff, but I'm not sure you realize that some people just walk into a house and fall in love.

I never saw that house in person, but I really liked it from the photos. I also think the location can't be beat if one digs Park Slope.

Posted by: 11217 at February 13, 2009 1:33 PM

lechacal, PT Barnum has a phrase for your use.

Posted by: dittoburg at February 13, 2009 1:35 PM

Look at the sellers, for example, who bought the house for 1.3M and sold it 4 years later for 2.4M. They probably walked away 1.3M, quintupling (mm make that) multiplying their initial downpayment by 5.
They could turn around and buy a smaller 1 family house in Carroll Gardens with a minimal mortgage. What do they care if it is overpriced?

Posted by: Maly at February 13, 2009 1:41 PM

Maly, I have no idea what point you are trying to make.

Posted by: dittoburg at February 13, 2009 1:55 PM

The logic of Maly's argument breaks down pretty quickly in a falling market, and has never kept a bubble from popping in all of history as far as I am aware.

Posted by: lechacal at February 13, 2009 1:56 PM

that's OK, I don't think I had one. Just musing about why people buy houses for crazy prices.

Posted by: Maly at February 13, 2009 1:57 PM

Dittoburg - I'm having a slow day. What is the PT Barnum phrase?

Posted by: lechacal at February 13, 2009 2:01 PM

Lechacal, I wasn't making an argument about bubbly prices, just trying to explain why pricing is somewhat disconnected from pure economic arguments. The Park Slope house is a crazy purchase at that price. Why would someone pay $10,000 a month for what he could get for $4,500? It makes no sense yet, someone did purchase it anyway.

Posted by: Maly at February 13, 2009 2:04 PM

Well considering that a house on Berkeley Place sold last year for 3.4 million or something like that, perhaps the new buyer thought they were getting a deal. Granted the one I just references was an incredible home, from what I saw.

You never know. I'm not justifying the price, just sayin'.

Posted by: 11217 at February 13, 2009 2:07 PM

I think it's relevant that the Park Slope contract was signed Sept 2 ("pre-Lehman"). In other words, in a very different time.

Posted by: Paul C at February 13, 2009 2:10 PM

lechacal - I assume ditto is alluding to the "There's a sucker born every minute" phrase.

Posted by: SnarkSlope at February 13, 2009 2:13 PM

"sucker born every minute" (whether he said it or not). There's also a HL Mencken quote along the lines of "no-one every went broke underestimating the intelligence of the American public"

Posted by: dittoburg at February 13, 2009 2:14 PM

I have stopped viewing the Lehman bankruptcy as a bright line event for the NYC real estate market. The slide has been gradual and is ongoing.

Posted by: lechacal at February 13, 2009 2:17 PM

Yes, NYC real estate prices have proven very resilient. There seems to be a supertanker-heavy downward momentum now though. Slow, but difficult to stop. Or turn around in a less than 20 mile radius.

Posted by: dittoburg at February 13, 2009 2:23 PM

lechacal-

I'm beginning to think the same thing about Lehman. I think there is some desire we have for things to unfold, whether they be for good or ill, quickly. If the sh*t is really going to hit the fan, I think most of us would prefer that to the sort of slow burn that seems to be happening in NYC real estate. At least that would give some clarity to the situation and make us feel like we could make decisions with some confidence. Or maybe that's just me.

Posted by: 2br_or_bust at February 13, 2009 2:23 PM

dittoburg, I'm picturing the trucker in his rig in Harry Chapin's "30,000 Pounds of Bananas". Scranton, Pennsylvania is just up ahead.

Posted by: Biff Champion at February 13, 2009 2:26 PM

Snark -

I agree the F isn't THAT bad, but it's a local train that doesn't have any good express transfers until you're into Manhattan, and there are parts of WT that are pretty far away from it.

Depending on where you live and work, the commute from Windsor Terrace to, say, the fashion district (I work on 36th and 6th) could take as much as an hour. If I catch the Q and don't have to wait very long for a train, it takes half that.

Don't get me wrong - I'm looking at houses in Kensington right now, because sometimes you gotta sacrifice if you want to own. I'm just saying that the reason WT is sliding faster than Park Slope may be at least in part because of the commute.

Posted by: cwbuecheler at February 13, 2009 2:34 PM

Lechacal - I do think of Lehman bankruptcy (Sept 15) as a bright line event. More accurately, the bright line event was the subsequent stock market collapse in early October.

I think this because I am in contract (signed in April), and late Sept / early Oct is when a lot of the money I had set aside for the down payment, closing costs, furnishing and landscaping simply vanished into thin air. Sure, I should have been more in cash, less in stocks, but I was slowly liquidating toward that point when the bottom fell out. In addition, a big chunk of my compensation is in equity, which fell to 1/3 of its former value. Now, they say there will be no raises this year. And I am seeing friends get laid off. While the real estate market may have been drifting down throughout 2008, it wasn't until Sept that I personally experienced financial free-fall.

Which means the deal that was ambitious in April, suddenly became not only unwise, but essentially impossible.

And I don't think I am the only one whose financial picture was radically altered in one terrible month - it was a very bright line event for many would-be buyers.

Posted by: Paul C at February 13, 2009 2:37 PM

I used to live in WT, and I absolutely hated the commute - for the reason that the F is local and there are no good transfers. It was 19 agonizingly slow stops to my office in midtown. Ugh.

Posted by: Paul C at February 13, 2009 2:40 PM

I would disagree that lechacal knows anything about math, or at least finance. Take a look at this gem (I'm going to go out on a limb and suggest PS real estate has fared better than his brokerage account):

FatLenny: The assumed rate of return for down payment opportunity cost is subjective. Some people are very conservative investors, and for them maybe the current short-maturity treasury yield is the right rate (after-tax yield of, say, 3%). The rate of return for an experienced investor with a balanced portfolio of stock, debt and cash (such as myself) will be higher (I should be able to comfortably hit an average after-tax rate of return of 7% - I used 6% in my previous post to be conservative). The rate of return for someone with a successful and growing business that is starved for capital is much, much higher.

The point is that everyone is giving up *some* return when they put cash into a down payment, and the after-tax return that is being given up should be analyzed as an expense when deciding whether a particular property is priced appropriately.

Posted by: FatLenny at February 13, 2009 2:48 PM

I hear ya, cwb, oh yeah. The Q is definitely preferable to the F to me as well.

In addition to the commute factor, if prices are falling faster in WT than PS, it might be due to some of the following:

1. WT prices were drive up to a certain extent by Park Slope overflow/proximity.

2. WT has only about 10 blocks that I would consider to be particularly nice looking.

3. There are far fewer amenities such as restaurants and the like in WT compared to PS.

Posted by: SnarkSlope at February 13, 2009 2:53 PM

Can't wait 'til May, June...

***Bid half off peak comps***

Posted by: Brownstones Half Off at February 13, 2009 3:10 PM

BHO...you keep putting the date off. Whats with that????

Posted by: daveinbedstuy at February 13, 2009 3:16 PM

BHO--my response to your lame defense of cyber-role playing...

"You are a two-faced poseur."

We all are. It's a blog.

I'm not. I have put myself out here honestly and told people about the process of buying my house. It is hard to be honest sometimes, and I expressed my concerns and my hopes etc honestly and featured pictures on this blog. That is being oneself, something you could learn a bit about. Sitting on a blog and pretending to be something you are not does not make you tough. It makes you pathetic.

Posted by: wasder at February 13, 2009 3:29 PM

why would you care dibs? You made a great speculative investment in the ghetto...

Posted by: cornerbodega at February 13, 2009 3:34 PM

And when I become bored with it and want to move in 5-6 years, bodega boy, I'm sure I will make money on it. And your rent will have increased.

Posted by: daveinbedstuy at February 13, 2009 3:41 PM

wasder, that's great that you revealed in detail to the world what a very bad decision looks like...

Posted by: cornerbodega at February 13, 2009 3:43 PM

wasder, please ignore him. As we've said many times, if you love your home, can afford to carry it and expect to live there long-term, you made a very good decision.

Posted by: Biff Champion at February 13, 2009 3:52 PM

Thanks Biff. If just buying a house, any house, makes one an idiot than I am guilty. Otherwise I think I did pretty well given the price I paid and how much my monthly costs have gone down compared to what I was paying on a two bedroom coop. If cornerbodega had bothered to read what I wrote before giving his oh so informative opinion he would see that I put a lot of thought into the selection of the house and the various financial considerations there-in. But of course, cornerbodega doesn't bother with such niceties, which is why his/her opinions are almost universally worthless.

Posted by: wasder at February 13, 2009 4:13 PM

FatLenny: I stand very much behind everything in that statement. If you don't understand opportunity cost, feel free to ask questions. As far as rate of return, I expect to obtain that rate of return over time. I just put $3k in the market today, priced as of market close. I expect that my return on that particular piece will, over time, far exceed the rate of return in my old post you quoted.

Posted by: lechacal at February 13, 2009 4:22 PM

"wasder, please ignore him. As we've said many times, if you love your home, can afford to carry it and expect to live there long-term, you made a very good decision."

Thats all nice, except most people think its a bad decision to buy a long term debt ridden asset that will be considerably cheaper...

Posted by: cornerbodega at February 13, 2009 5:32 PM

"And when I become bored with it and want to move in 5-6 years, bodega boy, I'm sure I will make money on it. And your rent will have increased."

dibs timeline: "real estate only goes up, I'll get some in the ghetto", "nyc is immune", "manhattan crash? who wants to live over there, Brooklyn is immune", "in 5-6 years I'll make money", ...

Posted by: cornerbodega at February 13, 2009 5:37 PM

"Thats all nice, except most people think its a bad decision to buy a long term debt ridden asset that will be considerably cheaper..."

Considerably cheaper when? Next year the house will likely be worth less than what I paid but who knows what it will be worth in a decade. You said I made a bad decision but that is impossible for you or anyone else to say as so many factors go into the success or lack thereof of this kind of decision.

Posted by: wasder at February 13, 2009 5:45 PM

Not sure if it can be said that prices are falling faster in wt than in ps. From just a quick sample of four houses currently fs in ps and on the market for a few months, the asking prices are down ~ 20% and that's before deal. In any case, judging by history, prices haven't hit bottom yet. it's not a question of percentage, just a question of time. when the time factor plays out, houses that sell will sell for less than they have recently just because it is the nature of the cycle that the people who sell towards the end of the cycle will be more willing to do so at any reasonable price that moves the property. predicting future price or debating absolute value is a fools game, but the cycle has to play out and that is something you can know.

As for wt, its attractiveness as a neighborhood and subway access, it is a common thread here to bash wt and for there to be a debate as to whether wt is a neighborhood worth living in. For one thing, wt today has something of the character of ps twenty - twenty five years ago, but less densely populated. twenty years ago, the choices of shopping and restaurants in ps were pretty bleak. As the neighborhood built up and became more wealthy and the average age declined, services sprang up to take advantage of that fact. There are many charming blocks in wt, and some of them aren't really any farther from some of the nice restaurants in the south slope than one would be in many parts of the slope. The subway debate is part right, part wrong. the part that's right is that if you live in ps and use the f, then you are just one more stop away in wt, big deal. part wrong, b/c if you use one of the other lines that come in the edges of ps, you have more choices of line to take. Consider though, that if wt were served by five subway lines, it wouldn't be as quiet as it is, it would be built up more, it would be more crowded. In other words, it wouldn't be wt, it would be ps, which is not what attracts people to wt. So there is something for everybody, but in my view both neighborhoods are perfectly nice, and both have families who have occupied their house for generations and have no intention of leaving.

Last point: the 1604 tenth avenue house was a wreck a couple of years ago, when it was bought and renovated. If the owner manages to get out whole, with the cost of purchase, the cost of development and credit, the value of time spent, and time value of the money invested - that person will be one lucky ducky.

Posted by: raphael9 at February 13, 2009 5:50 PM

Well this trend looks pretty realistic to us and will continue for a while: PS house sold for a quarter million less when just 2 short years ago it would have sold for about that much more what with the bidding wars from that long gone era.
WT which is not the blue-chip neighborhood PS is ( albeit a nice place) has homes with significant price reductions and still appear very expensive for a possible sale...
Summary the top hoods will drop in price but not as significant as the emerging or "fringe" neighborhoods.

Wasder a word of advice my friend: enjoy your house and be happy you have a great pad. You should come out fine since we believe you are in it for the long haul right?

Paul C sorry about that dude...we want prices to be more affordable but on an individual human scale what happen to you is tough and difficult especially since you weren't some speculative greedy flipper...good luck.

Posted by: pierre de taille at February 13, 2009 6:06 PM

"Wasder a word of advice my friend: enjoy your house and be happy you have a great pad. You should come out fine since we believe you are in it for the long haul right?"

Thanks Pierre. I am in it for the long haul yes, as long as I can foresee anyway.

Posted by: wasder at February 13, 2009 6:42 PM

the "differential" between PS and WT hasn't changed...it's just that the brokers in WT are on craaaaaaaaack

Posted by: Ppark at February 14, 2009 10:58 PM

"BHO...you keep putting the date off. Whats with that????"

What date, dave? I'm talking about 'Open House Picks: Six Months Later' from after October's stock market collapse, say November/December. That puts it at May, June.

"Sitting on a blog and pretending to be something you are not does not make you tough."

I AM tough, dammit!!! Respect my gangsta!!!

"It makes you pathetic."

I'm not alone. You forward your unanswered comments from other threads, try to convince yourself that you paid a good price by telling your long-haul story over and over again, and need people to tell you "wasder, please ignore him...you made a very good decision" (like they have your balance sheet in front of them).

Dude, if you're secure with your purchase and can afford it (you and only you know that, regardless of what I or anyone else tells you), then it should reflect in your comments, if any. Fuck what BHO says about the market. If you're not secure, leggo the bag (overpaid-for-declining-asset) while you still can (or minimize loss if you can't). Otherwise, enjoy it and laugh at my comments if they deserve any attention at all.

Regards,

The Two-Faced Poseur - Online Thug, Offline Bitch Ass

***Bid half off peak comps***

Posted by: Brownstones Half Off at February 15, 2009 5:52 PM

"Dude, if you're secure with your purchase and can afford it (you and only you know that, regardless of what I or anyone else tells you), then it should reflect in your comments, if any. Fuck what BHO says about the market. If you're not secure, leggo the bag (overpaid-for-declining-asset) while you still can (or minimize loss if you can't). Otherwise, enjoy it and laugh at my comments if they deserve any attention at all."

As you know my issue with you is not that you predict the market is crashing. Plenty of people around here do that and I end up agreeing with them on plenty of the particulars. I have said on several occasions when I have thought you were right about something. My issue is with the way you communicate your points (unnecessarily malicious) and with what seems clear to me to be a phony style of speaking (you said it best yourself-Online Thug, Offline Bitch Ass). Its lame and strikes a discordant note for me. Such is life though. What would it be without the obligation to suffer through the machoposturing of anonymous douchebags on the internet?

Posted by: wasder at February 15, 2009 11:47 PM

"My issue is with the way you communicate your points (unnecessarily malicious) and with what seems clear to me to be a phony style of speaking (you said it best yourself-Online Thug, Offline Bitch Ass)."

Please. I'm no more malicious than many others on this blog and elsewhere in society. It's just a colorful way for me to express myself about the market and the truth in general (what you say is far more important than how you say it). I think your underlying issue is insecurity with your purchase. If you were so secure, you wouldn't take my comments so seriously and wouldn't go back and forth with me about how I communicate (I thought I was the only loon here as dave puts it). Why are you so delicate and sensitive? I thought you grew up in Brooklyn. Toughen up!

"you said it best yourself-Online Thug, Offline Bitch Ass"

That's what you wanted to hear, right?

Go ahead - get that last word in.

***Bid half off wasder's comp***

Posted by: Brownstones Half Off at February 16, 2009 10:40 AM

Here's the last word: Y-A-W-N.

Posted by: SnarkSlope at February 16, 2009 12:25 PM

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February 13, 2009

Open House Picks: Six Months Later

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