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March 26, 2009

The Be@Schermerhorn Price Cuts We've Been Waiting For

The price cuts we forecast in a post about be@schermerhorn last week are upon us. As of yesterday afternoon, 17 units had had their prices cut an average of 16 percent. The biggest whack job (no jokes, DIBS) on a percentage basis was at Unit 3C, a 910-square-foot two-bedroom, two-bath apartment that dropped 24 percent from $640,000 to $518,000. The floorplan's here. Look attractive?
What's Going On at Be@Schermerhorn? [Brownstoner]
Checking In On Be@Schermerhorn [Brownstoner]
Be@Schermerhorn Listings [StreetEasy] GMAP
Price Cuts at Be@Schermerhorn [Brownstoner]
Inside Be@Schermerhorn [Brownstoner]

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I walked by this past weekend, on the Livingston side. I don't get the appeal of that building in that area. I think there are better options around the area.

Maybe that's why they've slashes prices, maybe I'm not the only one that sees little to no appeal about the building...

Posted by: christopher at March 26, 2009 9:37 AM

to quote KC and the Sunshine Band...

" Keep it comin' love, keep it comin' love
Don't stop it now, don't stop it, no no
Don't stop it now, don't stop it."

They'll drop 20% more by Fall 09, then 100% rental.

Posted by: Prodigal_Son at March 26, 2009 9:40 AM

Condos ARE going to get the largest "whacks" of anything. Buyer beware.

For the entire lot of these units, the total price cut is only 14%...should probably be more if they ACTUALLY want to sell them.

I don't concern myself much with condos. Are these considered nice, well done, quality construction, or not???

Posted by: daveinbedstuy at March 26, 2009 9:45 AM

then the question remains perhaps it's a wise buy to buy a condo now at a steep discount with the hopes that you can sell it with a decent profit in 3-4 years when the market picks up and our job market situation is up as well
right?

Posted by: gemini10 at March 26, 2009 9:54 AM

> "The biggest whack job (no jokes, DIBS)"

- http://instantrimshot.com/

Posted by: SnarkSlope at March 26, 2009 9:55 AM

> "perhaps it's a wise buy to buy a condo now at a steep discount"

Buy a little later at a steeper discount.

Posted by: SnarkSlope at March 26, 2009 9:56 AM

"3-4 years when the market picks up and our job market situation is up as well
right?"

what confidence you exude.

Posted by: Prodigal_Son at March 26, 2009 10:01 AM

I just saw that the condo on the UES that i sold in Aug 2007 is back on the market for more than what they paid!!! Wonder what went wrong with their investment assumptions????

Good luck sucker. Your real estate agent misrepresented to you what that unit would fetch for rent. You should sue her.

ROTFLMMFAO

Posted by: daveinbedstuy at March 26, 2009 10:09 AM

Everyone assumes on the way down that there is always more room to drop just like when the market is on the way up that prices will continue going up. Smart people decide to buy when the price makes sense to them. These seem pretty reasonable. Efficient layouts. Livingston Street is not so appealing right now, but it could change. Not only that, you're convenient to Fort Greene and Boerum Hill.

Posted by: Shoots and Leaves at March 26, 2009 10:09 AM

gemini, my expectation is that market prices will be lower in 4 years than they are now. They may well be lower in 10 years than they are now. The market may have recovered somewhat from the bottom at that point, but the bottom may be two years from now and the recovery may be very slow. I would not buy into a new condo right now unless I got a price that didn't reflect any of the recent run-up. I would demand a much bigger chop than this before buying a new condo. Be very careful about jumping in too early in a bear market with the expectation that what is happening is some kind of aberration and things will come back as soon as everyone clears their head and gets their jobs back. The prices we have seen for the past few years are the aberration, and we are slowly getting back to normal.

Posted by: lechacal at March 26, 2009 10:12 AM

Unit 3C, a 910-square-foot two-bedroom, two-bath apartment that dropped 24 percent from $640,000 to $518,000.

This unit CAN NOT be more than a 600 sq ft 2 br? How does one calculate 910 sq ft out of this. Preposterous!

Posted by: PropJoe at March 26, 2009 10:15 AM

Joe
Have you ever bought real estate before?
Square footage is measured using the out walls, NOT actual livable space. This is true for a brownstone in Slope, a pre war co-op in UES or a condo in Boerum Hill.

Posted by: crimsonson at March 26, 2009 10:19 AM

If PropJoe is correct on that square footage than these prices do not reflect cuts from ask in a declining market that we are all discussing but the ludicrously unrealistic pricing that developers tend to engage in.

Posted by: daveinbedstuy at March 26, 2009 10:21 AM

Whatever happened to buying a home you can afford and you like instead of acting like a speculator?

Posted by: Shoots and Leaves at March 26, 2009 10:23 AM

Ok then, Crimsonsonsonson, you be telling me that the out walls are an additonal 300 + sq ft or 50% more? C'mon now!

Posted by: PropJoe at March 26, 2009 10:25 AM

Yes, but they used to get those ludicrous asking price. Now they don't. So the market is in fact declining.

Posted by: SnarkSlope at March 26, 2009 10:25 AM

I have never heard of any complaints or problems at 53 Boerum (same developer) so if these are comparable quality, prices seem to be closer to value. The area is not lovely by any stretech, but it is convenient and will improve with the next economic upturn. Too soon to buy? All depends on your situation.

Posted by: BH76 at March 26, 2009 10:29 AM

crimson, the premise of your post -- that someone who decides *not* to buy is "acting like a speculator" -- is simply ludicrous. A down market is full of incredible risks for someone making a huge and highly leveraged purchase. Not everyone has the luxury of buying something they can afford and like and stay in it for the rest of their lives. Many - possibly most - people have to move at some point for various reasons, and when that day comes any drop in prices frmo the time of purchase is greatly magnified for anyone who has a mortgage. All it takes is a 20% drop in the price of one of these be@shcermerhorn apartments to completely wipe out a young family. And you dare accuse that family of "acting like speculators" when they counsel patience and restraint to protect themselves? How dare you.

Posted by: lechacal at March 26, 2009 10:30 AM

sorry - my vitriol was meant for shoots and leaves, not crimson.

Posted by: lechacal at March 26, 2009 10:31 AM

I agree with prop Joe. Even generously calculated (if you beleive the floor plan dimensions and allowing for measure to the outside walls) this thing would not be even close to 900 sq feet. Probably closer to 650-700.

Posted by: newsouthsloper at March 26, 2009 10:33 AM

Unit 3C makes me feel claustrophobic just reading about it, and worse knowing sq.ft. is measured from outside walls. 2bd/2bath that's less than 1k sq.ft.!?

Posted by: goldie at March 26, 2009 10:33 AM

Joe is right the apt is closer to 700 sft and that is being generous. So being generous at 700sft and me thinking the market for new const. in DT Brooklyn is 500 sft I would pay 350 at most for this unit. But on the other hand who would buy anything from people that lie? What else are they lying about? No thanks

Posted by: brickoven at March 26, 2009 10:41 AM

Joe-
I don't know what to tell. According to my rough estimation of that unit, it has about 750 sqft of interior space. Counting the interior and exterior walls, yes it is possible to get 910 sqft.

MBR - 184
2ndBR - 95
LR/DR - 212
MBR's BR/closet - 120
Kitchen - 120
entry hall - 30
BR/2nd BR's closet - 25

Total - 786

Posted by: crimsonson at March 26, 2009 10:42 AM

It is about 900 -- looks about 30x30 -- you have include the total length not just what the room sizes are --look at the closets, baths, entrance.

Posted by: BH76 at March 26, 2009 10:42 AM

3C is a little odd. And it is clearly not 900 interior sq. ft (as the floorplan says) unless there is a missing room or the dimensions are wrong.

Not sure why they put in the 2nd full bathroom in a 650 sq. ft. apartment. It doesn't help.

Posted by: northsloperenter at March 26, 2009 10:43 AM

Lechacal
I wonder if what you say is true. If so, that might be scary then for all current homeowners,or are you targeting condo owners specifically?

Are you suggesting prices will drop steeper over the next 2 years and stagnate for about 5 years and maybe we will see a rise within 10 years?

scary!

Posted by: gemini10 at March 26, 2009 10:46 AM

lechacal:

Last week, the fed created $300B to buy US treasury notes as the interest rates are too low to attract foreign buyers. We are now officially in the print money stage of the government's attempt to reinflate the national asset bubble.

If it works, major inflation is just around the corner. We can't be certain at all about the future of prices for anything, especially mortgaged assets.

Posted by: Polemicist at March 26, 2009 10:46 AM

I'm not intrinsically a bear, but I just don't see who would have the cash to buy into this new, but terribly mis-sited building. Who wants to pay 16% off peak to live in such an odd and unattractive location?

Posted by: sam at March 26, 2009 10:51 AM

gemini: It's only scary for a homeowner who bought very recently and plans to sell in the next 5 or 10 years. For someone who can afford his home and doesn't plan to move, this shouldn't matter at all. But for someone who recently bought or is in the market now and might have to sell in the next 5 or 10 years, yes, it is very scary. And someone in that position absolutely should not listen to the old line about just going ahead and buying if you can afford it and you like it. There are plently of things I can afford and like, but I simply refuse to subject my family to the risk of an entire down payment getting wiped out in a market downdraft.

As for exact timing, of course I don't know exactly when the bottom will be and of course I can't predict the exact timing of the recovery. But I do feel confident that I will know the right time to buy when it when I see it, and I sure haven't seen it yet. After an big price cut this place is still trying to sell subhuman little cramped apartments in downtown brooklyn for more than half a million bucks? We're not there yet, that I can tell you with confidence.

It's all about risk. Risk means that you don't know. If you know what will happen, there is no risk. I see a lot of risk of decreasing prices right now, and I will not expose my family to that risk. At some point I will become comfortable that the risk has come down enough and will jump in the market.

Posted by: lechacal at March 26, 2009 10:54 AM

I find these interesting at this price. There would be a lot of people I think (like me) who might consider cashing out and, even assuming they sell very low, buying here to be mortgage-free. Hunker down for a while. Would I rather have this place and a nice weekend house? No, but close.

Posted by: Ringo at March 26, 2009 10:55 AM

again you folks sound like neophytes when measuring inside space of real estate. Not done here, not done anywhere.

Posted by: Petebklyn at March 26, 2009 10:56 AM

Those prices are still too high. I've been in there, and I think the place has too many negatives to ever make it as a condo. I'll stick with my prediction (as well as many others): rental.
Yeah, the floorplans (from what I saw) are really inflated- the spaces feel way smaller than their quoted size. The area is really a fringe 'hood, at best. Sure, Downtown BK butts up against a bunch of nice neighborhoods, but this particular spot is pretty ghetto. And, again, who is going to get (or give) financing on this project until it gets to 50% (or 70%) sold? It's not going to happen.

Posted by: broadwayron at March 26, 2009 10:57 AM

how can people lie about the SFT? I noticed some huge discrepincies on Zillow.com for brownstones in Brooklyn. Zillow would state that the public records showed 2400 sft and then the owner figure would be right next to it at 3600. Anybody have any insight on that

Posted by: brickoven at March 26, 2009 10:58 AM

"Yes, but they used to get those ludicrous asking price. Now they don't. So the market is in fact declining."

Snark;

Sorry, this is not true. I rememeber that Curbed had instituted their "Price Chopper" feature as far back as 1995, when the market was frothy. In particular,I remember that Boymelgreen had to cut his asking price on condos in Dumbo (that I had an eye on) in that time period.

I'll say it for the umteenth time: while it is certainly interesting to track cuts in the asking price, it is not indicative of the trends in the marketplace. I'm in sales and marketing (of industrial products) and I read market research reports out the wazoo on a daily basis. The only way to track the market is the statistical trend in the average or median sales price. Delusional sellers can ask whatever they want, but the market dictates what the actual selling price will be.

As a member of Team Bull, with a bogey of 20% declines in the average sales price, I am readily willing to acknowledge that events will prove me to be wrong, and Team Bear may be right. I won't, however, acknowledge anything on the basis of cuts in asking prices. We won't have a real debate here unless some ground rules are established.

Once again: asking prices are the sellers' wishes,and are not necessarily connected to reality and the marketplace.

Posted by: benson at March 26, 2009 10:59 AM

Polemecist is exactly right. Now that the Fed has decided to go into "print money mode", the specter of inflation is fully with us.

It would not exactly be an earth-shattering event if the Feds decided that we need to inflate our way out of this turmoil. In fact, it has historically been on of the favorite ploys of governments. This is a new wild card in the Bull vs. Bear debate.

Posted by: benson at March 26, 2009 11:05 AM

Benson, I'm pretty sure that Curbed did not exist in 1995.

Posted by: SnarkSlope at March 26, 2009 11:12 AM

broadwayron -- GHETTO? You are nuts. It is a block from the State Street townhouses which sold at $2+MM., 2 blocks form 110 Livingston, etc. etc. etc.

You clearly know nothing about the area.... stay where you are.

Posted by: BH76 at March 26, 2009 11:16 AM

Snark;

Huh??????? I'm looking for the pricechopper article in particular, but in the meantime, here is a thread from Curbed in April 2005:

http://curbed.com/archives/2005/04/04/monday_pm_linkage.php

Posted by: benson at March 26, 2009 11:23 AM

Snark;

Whoooppppssssss!!! I just realized that you were pointing out that I wrote 1995!!! I meant to write 2005, as my thread above shows.

Sorry for the confusion!! Please make the correction to my statement above.

Posted by: benson at March 26, 2009 11:25 AM

"Once again: asking prices are the sellers' wishes,and are not necessarily connected to reality and the marketplace."

And once again, they used to get those asking prices, and now they don't. It looks like there's a lot more price chopping happening now than there was in 2005.

Posted by: SnarkSlope at March 26, 2009 11:35 AM

It is an old New York tradition to lie though your teeth about square footage totals. It is the newbie (or the realtor) who tries to defend the numbers as having ANY basis in reality...("well, if you include a portion of the service entry and you per rata portion of the boiler room in the sub-cellar....").
I agree that these will make attractive rentals. Perhaps when the construction is complete and the street and sidewalk get fixed up, it will have a less of that Third World look it has now.

Posted by: sam at March 26, 2009 11:37 AM

Benson - so if everything gets "inflated" - does that mean US workers' pay gets inflated as well?

Sure I wouldn't mind my house being worth 2 million in 10 years as long as I too am making double/triple than what I am making now? and if that's NOT going to be the case - then we have a major problem in regards to inflation...
right?

Posted by: gemini10 at March 26, 2009 11:38 AM

Folks;

Sorry to send so many posts today, but I want to throw the gauntlet down to Team Bear on the issue of using a chop in the asking price as a definitive indication of a bear market.

Please see this link on Curbed:

http://curbed.com/archives/2005/12/05/curbed_pricechopper_every_damn_1br_at_107_ave_a.php

As you can see, the developer of this condo in the East Village cut his asking price by more than 10% in December 2005. If you think that this one data point is meaningless, then I invite you to go to Curbed, type in "pricechopper" in the search box, and see how many articles you pull up in the 2005 timeframe.

Question to Team Bear: based upon this link, do you believe that the housing market in the East Village in December 2005 was in bear territory? Once again: asking prices are meaningless in tracking a market.

Posted by: benson at March 26, 2009 11:38 AM

"You clearly know nothing about the area.... stay where you are."

Ummm... I use the Hoyt A/C all the time. Yesterday, I saw a guy taking a piss on Jay/Smith St at the parking lot which goes from Schermerhorn to State. Granted, he was facing the lot, as opposed to facing the street, but this was 6 pm in broad daylight.
I guess we have different definitions of "ghetto". (FWIW, I consider the Fulton Mall to be "ghetto".)

Posted by: broadwayron at March 26, 2009 11:42 AM

> "Once again: asking prices are meaningless in tracking a market."

Your anecdotal evidence is not going to disprove any anecdotal evidence that I provide, and vice versa.

So we'll just have to wait until you are inevitably proven wrong. ;-)

Posted by: SnarkSlope at March 26, 2009 11:46 AM

Gemini;

Hard to call how inflation would play out. In general, the big winners in an infaltionary cycle are those who have taken out big loans, as they get to pay them off in inflated dollars. The other big winner are owners of hard assets (precious metals, real estate, etc.) The losers are savers and those who have loaned out money (i.e bond holders).

Sometimes in an infaltionary cycle wages keep up, sometimes they don't.

Posted by: benson at March 26, 2009 11:48 AM

The largest outside measurements of the apartment in question are roughly 38x30 (I used CorelDraw and extrapolated from the width of the master bedroom). Granted, that includes some space that is outside of the apartment (right upper corner). Still, 910 seems believable.

I don't like how real estate is measured any more than any of you, but it seems to be the accepted practice.

Posted by: heck_of_a_job_brownie at March 26, 2009 11:50 AM

Benson, there may have been a development in the East Village that lowered asking prices in 2005, but that would have ben an outlier. Today, price cuts are going around new condo developments like a bad rash. I don't think I can name a development (other than the Meier OPP building perhaps?) that hasn't had price cuts.

You are absolutely right, it is actual sale prices that matter, not asking prices. But we are all trying to peer into the future, and asking prices (and price cuts) are one of the only ways we can do so).

Nice to meet you at Floyd by the way.

Posted by: lechacal at March 26, 2009 11:51 AM

benson, don't forget that we have already gone through an inflationary cycle in real estate. Wage inflation would be needed just to keep prices at current levels. I would not hedge against inflation by buying real estate right now.

I am currently looking at buying standing timber. I am also looking at buying truckloads of cherry lumber and storing them long-term. Also gravel deposits.

Posted by: lechacal at March 26, 2009 11:53 AM

there's an insert in the Post today page 23 from Corcoran. You can buy nice 2br in Chelsea for 799k ask. Brooklyn 2br condos going much much lower

Posted by: PropJoe at March 26, 2009 12:01 PM

Lechacal is right. Real estate in NYC is overvalued vs its historical relationship to incomes. Nationally it is around average, but there is an argument that it should move down further because of the economy.

As for this specific building, it has two problems. First it is a nondescript building in a nondescript area. Manhattan prices are falling faster than Brooklyn and this is the type of building whose only real selling point is that it's a Manhattan type building at lower prices. Second, the problems with buying in newbuild condos in general have been well documented.

Posted by: etson at March 26, 2009 12:09 PM

>Yesterday, I saw a guy taking a piss on Jay/Smith St at the parking lot which goes from Schermerhorn to State. Granted, he was facing the lot, as opposed to facing the street, but this was 6 pm in broad daylight.

A few weeks ago I saw a guy taking a piss on York Ave and 68th St in Manhattan, also in broad daylight. Guys taking a piss are not the barometer of a neighborhood.

Posted by: zgori at March 26, 2009 12:32 PM

I love the location. It's near the empanadas place. And Macy's. And everything. We wanted to move into a pre-war next door, actually, but there were lead issues.

Now that apartment, crumbling as it was was also a trillion times nicer than this one. I still don't get new construction sometimes. You could build anything. Why make it so small and crappy? Why? Why so many bathrooms? Why? Why does every kitchen need a breakfast bar to further take up space?

Posted by: Heather at March 26, 2009 12:51 PM

looks like an inland empire "office park" tower.

Posted by: jingle mail at March 26, 2009 1:06 PM

Those open kitchens allow the builder to comply with codes for ventilation. And give the illusion od space. It seems every new condo of any price is exactly the same layout.

Posted by: BH76 at March 26, 2009 2:00 PM

Inflation cannot take off while layoff and pay/bonus cuts are still happening. There is a lot of money circulating, but much of it is being restrained on bank balance sheets. There is no "Velocity" of money right now to drive inflation.

You can see that the price of gold and some commodities has edged up, meaning people are anticipating inflation. But I think it will be at least a few years before real inflation rears its ugly head.

If you truly believe we will have 80's like inflation, the best bet would be to stay liquid, hedge with silver or gold, and yes - real estate prices are typically a beneficiary of inflation.

Posted by: newsouthsloper at March 26, 2009 2:04 PM

Damn, its good to be a renter.

***Bid half off peak comps***

Posted by: Brownstones Half Off at March 26, 2009 2:49 PM

This building looks so much like a hotel.
What's in the base behind those big commercial-sized windows?

Posted by: sam at March 26, 2009 4:11 PM

UGLY LOCATION AND UGLY BUILDING. APARTMENTS STILL EXPENSIVE. I BET THEY WILL COME DOWN EVEN MORE. THEY MAY HAVE TO RENT THEM OUT, I CAN'T IMAGINE FAMILIES BUYING A PLACE IN BACK OF MACY'S. GOOD LUCK TO THE DEVELOPERS.

Posted by: CECILIA at March 26, 2009 6:53 PM

ONE MORE THING, I HAVE SEEN STUDENT HOUSING BETTER THAN THIS BUILDING. CHECK OUT BROOKLYN LAW SCHOOL STUDENT HOUSING ON STATE STREET. THAT IS BETTER THAN ANY APARTMENT BUILDING THAT HAS BEEN BUILT BY A DEVELOPER IN THE DOWNTOWN BROOKLYN AREA. THE TOREN IS A GOOD LOOKING BUILDING, DESPITE IT'S LOCATION.

Posted by: CECILIA at March 26, 2009 7:13 PM

I have it on good authority that this place is definitely going rental. Apparently, in order to avoid having to be rent stabilized once a rental building, they have to have a certain percentage of the units sold as condos. Thus the recent sales push/price cuts. I feel so sorry for the buyers in this building who will be vastly outnumbered by renters who will have no vested interest in the maintenance of the building or its common spaces (especially when even the laundry area is shared). I wouldn't buy here even if _I_ got bailed out by the government.

Posted by: joshneely at March 31, 2009 4:15 PM

im not sure why people seem to hate this place so much. the building is nice as are most of the be@ properties and the location seems perfect - a block or two from smith and court streets. and its located on a block thats not bad, just dead, but the hotel projects are starting up so it seems like an a great investment since the block will be rolling along shortly and most of the fulton mall is being redone by the city. aside from those on these message boards who seem to hate everything and think the world is coming to an end, does anyone actually know why be@scherm just isnt selling. and joshneely... are your sources reliable about it going rental or does that seem more like rumor, perhaps put out by the nihilists on these boards? i was thinking of putting in an offer for a place here. thanks.

Posted by: bbb at March 31, 2009 7:11 PM

bbb, my source is quite reliable, and not at all from this board. be@schermerhorn has cleaned house recently, switching law firms and real estate agencies (likely due to their new focus on the building's eventual rental status). This leaves a lot of people who know the inside scoop and are no longer under any obligation to keep it quiet. Luckily, I know one of these people. I was actually looking very closely at putting a bid in on one of the apartments in this building, which is why I was warned by my friend. Now there is no way I would ever go through with it. There are too many other great deals out there to take such a risk!

Posted by: joshneely at April 3, 2009 9:55 PM

thanks for the info josh. im curious if you, or anyone else out there, knows what happens if a building that is partly sold, goes rental. i assume that values of the apartments drop, but is it by a ridiculous amount? also does the building make an effort to go all condo once things stabilize or would that be on a condo by condo basis, and are there any other detrimental affects of part condo part rental other than a drop in value, etc? i guess im concerned about this happening to pretty much any of the new buildings in the area as even something like the oro is only 30 or 40% sold and im sure eventually the sponsor is going to want to fill up the place either by selling or renting. also josh, what other places do you know of in the area that are good deals, as ive looked at oro, toren (i just dont like the location of either of these), and a bunch of others and quite honestly i havent seen anything that is new and in as great a location as be@scherm? thanks!

Posted by: bbb at April 5, 2009 1:04 PM

« Open Thread Olive Park Condos to Host New Montessori Preschool »

March 26, 2009

The Be@Schermerhorn Price Cuts We've Been Waiting For

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