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March 5, 2009

This Is Not the First Bear Market in Brooklyn Real Estate

A reader sent along the link to this Times article about another down market in Brooklyn real estate--only, this one took place 131 years ago. Endlessly entertaining. A few excerpts from the piece titled "Lower Rents in Brooklyn: Last Year's Prices Reduced":

A residence in Central Brooklyn, which comprises the two eligible neighborhoods known as the "Heights" and the "Hill," and through which runs the principal thoroughfare, Fulton-avenue, is, of course, more desirable than one in the other districts. There is a great demand in this part of Brooklyn for small houses, and as there are not more than enough to supply the demand, there will be slight reductions in there rents this year. In the lower part of Brooklyn, houses which rented last year for sums ranging from $200 to $700 will generally be let for the same figures this year. But on all other houses there will be very considerable reductions, and owners of houses which have been rented for more than $1,000 will have to make reductions amounting to 25 per cent., or even more, if they want tenants.

There's some other great bits about pricing in Clinton Hill and Brooklyn Heights: $2,000 a year for a house at the corner of Remsen and Joralemon while a house at Dekalb and Adelphi went for $1,000 and those on Prospect Place and Park Place went for between $700 to $1,000. In the last paragraph, they finally get around to the sales market:

Many new houses have been erected in Brooklyn during the last year, but mostly in the newer neighborhoods. These are now in the market for sale, and, as has already been said, many persons are looking about for houses to buy, but as yet very few sales have been made. All the Brooklyn real estate agents do not believe, with the one already mentioned, that bottom prices have been reached. One of them with whom a Times reporter talked emphatically said that he believed affairs would get worse rather than better. Prices now asked for houses and lots, he said were lower than last year's prices, and he could see no prospect of improvement.

Lower Rents in Brooklyn [NYT Archives]

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Comments

wow. seriously tho, im surprised those rents ARE that high for that time period. more expensive than manhattan at the time right? most of the giant limestones and brownstone mansions, were they originally built for the wealthy back in the day? im assuming yeah but wow still expensive for the time.

*rob*

Posted by: PitbullNYC at March 5, 2009 9:08 AM

rob....you know those are rent prices for the WHOLE year, not a month!!!

Posted by: daveinbedstuy at March 5, 2009 9:10 AM

Interesting...did remsen and joralemon cross at some point? otherwise they run parrallel!
am i reading this article correctly?
"There's some other great bits about pricing in Clinton Hill and Brooklyn Heights: $2,000 a year for a house at the corner of Remsen and Joralemon while a house at Dekalb and Adelphi went for $1,000 and those on Prospect Place and Park Place went for between $700 to $1,000. In the last paragraph, they finally get around to the sales market:"
Is this recent or is this also from the archives? cause $2000 a month NOW us very low for a house and $2000 a month 100 years ago is bizarre

Posted by: oohlala at March 5, 2009 9:12 AM

If I'm not mistaken this was caused by the great Ostrich hat-feather bubble collapse.

Posted by: dittoburg at March 5, 2009 9:14 AM

quote:
rob....you know those are rent prices for the WHOLE year, not a month!!!

d'oh. nevermind then hahahah

*r*

Posted by: PitbullNYC at March 5, 2009 9:14 AM

when was proper electricity invented? i think that makes a huuuuuge difference. and lol'ing at ostrich hats ditto. as long as they aren't peacock hats, im good to go.

*r*

Posted by: PitbullNYC at March 5, 2009 9:16 AM

As DIBS pointed out, the quoted rents are for the year. Not the month.

$2,000 a year.

Rob, to a point yes, the brownstone and limestone "mansions" were exactly that, mansions built by/for the wealthy.

There is a great picture in one of those coffee table books about Brooklyn that shows the Columbia Heights mansions with the stepped backyards that ran almost down to the water. Before the city annexed the land for the BQE (and Promenade) those mansions were for the uber wealthy with sprawling grounds.

Posted by: christopher at March 5, 2009 9:18 AM

That was a great read. Good to know even in 1878 all real estate articles had to include this quote from a realtor:

"in my opinion, this is the time to buy"

lol

This section sounds depressingly familiar:

"This part of the city was built up precipitately by speculators. New-York insurance companies were beguiled into lending large sums of money for building purposes; churches were erected and row after row of brown-stone-fronts built. Finally, the insurance companies were obliged to foreclose the mortgages and take the property, which, after a little while, they were glad to rent for whatever they could get. The handsome stone houses were hired for $20, and even $15, a month, and all rents within the radius of a mile fell accordingly."

Posted by: northsloperenter at March 5, 2009 9:23 AM

What constitutes "a score of rooms"?

Posted by: Biff Champion at March 5, 2009 9:27 AM

corner of Remsen/Joralemon? that wasn't how the article read..just what was written here. Articles said houses on Remsen and Joralemon and also discussed a house on a corner of Henry.

Posted by: Petebklyn at March 5, 2009 9:29 AM

"One of them with whom a Times reporter talked emphatically said that he believed affairs would get worse rather than better. Prices now asked for houses and lots, he said were lower than last year's prices, and he could see no prospect of improvement."

Back when estate agents told the truth...

Posted by: the chicken at March 5, 2009 9:32 AM

Petebklyn, nice catch. You're right; the article mentions those streets, but not the intersection of them, which is impossible given they both run East/West.

Posted by: Biff Champion at March 5, 2009 9:32 AM

This is great. Its nice to get some deep historical perspective on the housing market. I did some research on my house from the Brooklyn Eagle in the 1870's and 1880's and saw it advertised for rent. Also saw that there was a wedding held in the parlor which is now my production office. Pretty cool stuff.

Posted by: wasder at March 5, 2009 9:34 AM

For a history of the Panic of 1873 that led up to this situation, read this...

http://en.wikipedia.org/wiki/Panic_of_1873

Posted by: daveinbedstuy at March 5, 2009 9:37 AM

Biff, "a score of rooms" means 20 rooms.

The term "score" was a commonly-used Middle English word, from the Old English "scoru," which meant "twenty." More than likely this, in turn, came from the Norse skor.

Posted by: Shahn Andersen at March 5, 2009 9:38 AM

i bet you people have some serious ghost problems in your homes hahahah.

*rob*

Posted by: PitbullNYC at March 5, 2009 9:39 AM

Shahn, thanks! I suppose I could have been less lazy and Googled it, but your explanation was nice and concise.

Posted by: Biff Champion at March 5, 2009 9:40 AM

Christ Biff, didn't you memorize the Gettysburg Address as a child?

"Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

We are now engaged...."

Every school kid learned that score back then was 20 and that four score was 80....

Posted by: daveinbedstuy at March 5, 2009 9:52 AM

Biff - have you heard of the Gettysbrug address....

Posted by: dittoburg at March 5, 2009 9:52 AM

oh, my bad. it did read a yr..i'm conditioned to see those numbers and then see a month! but it was transposed to read corner of remsen and joralemon when it should have read on remsend and joralemoan streets

Posted by: oohlala at March 5, 2009 9:56 AM

DIBS - you must have beat me by a second.

Oh well. What about a baker's dozen?

Posted by: dittoburg at March 5, 2009 9:57 AM

DIBS and ditto, yes, I realized that after my embarrassing posts. My lame excuse is I'm not from this country and was never asked to study the Gettysburg address. However, I still should have known better. Mea culpa.

Posted by: Biff Champion at March 5, 2009 9:59 AM

DIBS, thanks for the link. I was particular concerned about one cause being "the outbreak of equine influenza in 1872", spooky how history repeats itself.

Posted by: dittoburg at March 5, 2009 10:00 AM

Just for a bit of perspective on cost of house rentals, 40 years ago, my lease to rent an entire house on Dean St. near 5th Ave. was $525/mo. (Of course, those who are old enough will remember that the neighborhood was a red light district at that time.) Baker's dozen: 13 (a dozen, plus one on the house).

Posted by: vinca at March 5, 2009 10:02 AM

Another foreign-born eh?
There must be three people on this site actaully born in the US, and one of them is the xenophobic what.

Posted by: dittoburg at March 5, 2009 10:07 AM

HEY. I was born here. I'm a true American.

Posted by: daveinbedstuy at March 5, 2009 10:10 AM

"HEY. I was born here. I'm a true American."

Not necessarily something to brag about ;-)

Posted by: Biff Champion at March 5, 2009 10:13 AM

So thats two so far.

Posted by: dittoburg at March 5, 2009 10:13 AM

dittoburg- who said he was born here? He comes from the planet Xenon- which is located in a galaxy far far away.

Posted by: bxgrl at March 5, 2009 10:13 AM

Ok- I also want to add the being born in the Bronx still means I was born in this country too.

Vinca- do they still do bakers dozens anymore?

Posted by: bxgrl at March 5, 2009 10:16 AM

I think you could have gotten a bakers dozen of those controversial cookies we were discussing back around the time of the Inauguration.

Posted by: daveinbedstuy at March 5, 2009 10:18 AM

I was born here too, but that begs the question: as if North Americans, Central Americans and South Americans are not true Americans? Bxgrl, you'll still find
(or I still find) baker's dozens at the old mom-and-pops, and I think many bagel shops (though I rarely find myself in one). More likely that the mom-and-pops will throw one in for regulars, but not advertise the baker's dozen.

Posted by: vinca at March 5, 2009 10:20 AM

Interesting discussion. DIBS, nice post on 1873. There's a detailed discussion of the panic and Wall Street's role and the panic's aftermath in the book "Our Crowd."

Regarding RE speculation in Brooklyn during the period, I know from our title history (early South Slope frame) that there appears to have been lots of speculation throughout 1850s-70s. Our property went back and forth among the same two or three owners during that period.

Posted by: slopefarm at March 5, 2009 10:23 AM

Does that mean Red Hook in no longer the in part of Brooklyn? Ikea is going to become a soup kitchen for all the unemployed looking for free food. Anyone know what the prices of the lemonstones is doing in Carroll Gardens?

Posted by: hannible at March 5, 2009 10:25 AM

I did not read all the comments, s forgive me if this ahs been stated already...

Don't you think that "The Hill" refers to Cobble hill, not Clinton?

Posted by: shillstoner at March 5, 2009 10:34 AM

Shillstoner,

"The Hill," in the late 19th Century was today's Clinton Hill AND Ft. Greene. The new money lived there; the old money in Brooklyn Heights.

Posted by: Bob Marvin at March 5, 2009 10:40 AM

FWIW I live in a house built by W.A.A. Brown in 1899. Browne built the first large-scale development of spec rowhouses in Lefferts Manor, on Midwood I in 1898 [4 stories, priced at $11,000] and three stories [$7,250],on Midwood II, in 1899 and 1900. He maintained an office on Flatbush Avenue for years, trying to sell them. I have a 1901 ad that sounds kind of desperate--something like today's condo builders--"Brooklyn Office open Sundays and Holidays all day. Evenings until 9."

The houses did eventually sell and other developers successfully built lots more houses here, but they didn't start until about 1909.

Posted by: Bob Marvin at March 5, 2009 10:51 AM

This is a great time to mention: Big fire sale in the West Village! Brooklyn more appealing!

I went to the hair salon yesterday and the colorist told me she is moving from her rental in Boerum Hill to a rental in the West Village this weekend. And I was like....um, how did you get a rental in the West Village?

She said there are crazy bargains in the West Village right now. She went to a broker and saw a bunch of places. She signed for a very tiny studio renting for $1300, supposedly reduced from $1800. She said some places were offering the first month's rent free. She said places were going quickly.

I said why? Did everyone living in a studio apartment in the West Village lose their job? She said everyone is moving to Brooklyn.

She said she hopes she doesn't regret the move. She says shops, restaurants, and nightlife are better in Brooklyn.

Posted by: mopar at March 5, 2009 10:54 AM

Correct, there was no "Cobble Hill" at that time, it was just the northern edge of South Brooklyn. (Maybe some shady real estate agents would have called streets like Pacific, Amity part of the Heights but from the beginning, Atlantic Avenue was the dividing line of the Heights from the rest of the old town of Brooklyn - hence it's original name, Division Street.)

Posted by: NorthHeights at March 5, 2009 10:55 AM

Then she came back from downstairs and said they were surfing Craigslist and found a two bedroom in midtown West for $2300 a month.

Posted by: mopar at March 5, 2009 10:55 AM

NorthHeights is correct. As I posted here before:

"The neighborhood was given its name in the 1950's by a real estate agent who sought to increase the market potential of the brownstone-lined streets, which were then included in a larger area known as South Brooklyn. ''Somebody ran across an old map of New York in which this area was called Cobleshill,'' said Dennis Holt, a senior editor of The Brooklyn Heights Press and Cobble Hill News, who recently wrote a series of articles about life in Cobble Hill during the 1880's. ''Everyone has forgotten who that person was.''"

Posted by: Biff Champion at March 5, 2009 11:03 AM

it's pissing me off right now what i pay in park slope when things in lower and mid manhattan have gotten so much cheaper. :( grrr. i love where i live so i dont plan to move until my roommate decides to kick me out or not renew the lease.. grrr im just getting pissy seeing all these people get sweet deals on rent lately.

*r*

Posted by: PitbullNYC at March 5, 2009 11:15 AM

could be worse, rob. You could have bought a house for far more than what it is worth now. Maybe the landlord will go down a bit when the lease renewal comes up.

Posted by: bxgrl at March 5, 2009 11:25 AM

The "lower" Manhattan prices reflect the effects of DECONTROL. When the apartments are no longer controlled (and you have massive debt to pay on the buildings) - you lower the rent cause you cant afford to have vacancies (may not even be able to hold on with full occupancy depending on the debt load).
Ahh but have no fear our State Legislatures are working on this problem....they are going to expand rent control laws so that more luxury apartments remained controlled - which will of course keep those apartments off the market and keep rents artificially high

Posted by: fsrg at March 5, 2009 11:26 AM

Well, maybe this article can at least solve one ongoing dispute: it describes the boundaries of the "Hill" as going from DeKalb to Atlantic, and from "Portland" to Franklin (not Classon!!!).

Posted by: Park Sloper at March 5, 2009 12:06 PM

> "the great Ostrich hat-feather bubble collapse."

Then, as now, investors had their heads in the sand.

Posted by: SnarkSlope at March 5, 2009 12:20 PM

What the heck are you talking about fsrq? Rent control does not force tenants to stay in high-priced apts.

Posted by: mopar at March 5, 2009 12:32 PM

$2000 a year 131 years ago is about $8000/month in today's dollars if you assume 3% annual inflation. Would that be about right to rent a house in the Heights?

Posted by: trudylou at March 5, 2009 1:01 PM

If you don't learn your history you are doomed to repeat it.

***Bid half off peak comps***

Posted by: Brownstones Half Off at March 5, 2009 1:07 PM

very true. I'm worried about the romans re-invading England and enslaving my mum and dad.

Posted by: dittoburg at March 5, 2009 1:24 PM

Let's see here...according the Minneapolis Fed Inflation Calculator $700 in 1913 (the earliest date available for calculation) equals...$15,442 in today's currency

Posted by: bridges at March 5, 2009 1:33 PM

you could move them here, dittoburg and they can help with the recolonization of the States- are they Pilgrims?

Posted by: bxgrl at March 5, 2009 1:49 PM

I would but mom's worried about injuns

Posted by: dittoburg at March 5, 2009 2:00 PM

As well they should be. My dubious indian ancestors never wanted any of you here in the first place.

Posted by: Heather at March 5, 2009 2:10 PM

I can understand. I've always been afraid to go to England because of saxons.

Posted by: bxgrl at March 5, 2009 2:14 PM

In that case I think they'll have to move up North behind Hadrian's wall, just to be safe.

Posted by: dittoburg at March 5, 2009 2:15 PM

Hey, I come in peace! (Or pieces depending)

Posted by: bxgrl at March 5, 2009 2:19 PM

mopar - yes it does - if your "high-priced" apartment is under market ( lets say your rent stabilized rent is $2200 but it would be $3000 if it were market rate) then you are going to stay as long as possible.....which reduces supply and keeps market rate apartments artificially high.

Posted by: fsrg at March 5, 2009 2:25 PM

Afterall, what did they Romans ever give us eh?

Posted by: dittoburg at March 5, 2009 2:27 PM

apart from the sanitation and the medicine

Posted by: dittoburg at March 5, 2009 2:29 PM

and education, wine, public order, and irrigation

Posted by: dittoburg at March 5, 2009 2:29 PM

and roads, the fresh-water system, and public health.

Apart from, that, what did they ever bloody give us eh?

Posted by: dittoburg at March 5, 2009 2:30 PM

supply is what it is. There's a glut of market rate partments now because prices are too high and I don't think that can realistically be blamed on rent stabilized or rent controlled tenants.

That said, I think people above a certain income level should not be allowed to have a rent controlled/stabilized apartment (Mr. Rangel are you listening?). And the new laws they are considering are grossly unfair to landlords. It's in no ones best interests to do for one at the expense of the other.

Posted by: bxgrl at March 5, 2009 2:31 PM

what are Romans? (Have you never heard of Egyptians? How about those Babylonians? And MY people- we gave you gefilte fish!)

Posted by: bxgrl at March 5, 2009 2:42 PM

I don't think they invaded England. But my hisotry is a bit spotty.

Posted by: dittoburg at March 5, 2009 2:44 PM

Maybe luxury decontrol allowed the landlords to jack up rents to ridiculous levels, and people decided they'd rather live in Brooklyn or just aren't interested in paying those prices any more. So now the prices are dropping again.

But prices on a given apt don't fall when it becomes decontrolled. They go up.

Posted by: mopar at March 5, 2009 2:51 PM

Very true, mopar. I always ondered where that argument of prices will drop with decontrol came from. Never found it to be true in my experience.

Posted by: bxgrl at March 5, 2009 2:59 PM

"very true. I'm worried about the romans re-invading England and enslaving my mum and dad."

Excellent. You've learned that piece of history. That's why it hasn't repeated.

Can't say the same about the overwhelming majority of near-peak property buyers with respect to NYC RE.

***Bid half off peak comps***

Posted by: Brownstones Half Off at March 5, 2009 3:30 PM

BHO- what's your view on what happens next?

Posted by: bxgrl at March 5, 2009 4:19 PM

bxgrl...we've got a hell of a way to go before BHO even gets to BHO!!!!

Posted by: daveinbedstuy at March 5, 2009 4:56 PM

dave- if I had money I swear I would give it to you to invest. Maybe someday :-)

Posted by: bxgrl at March 5, 2009 5:26 PM

so a whole house on 5th and dean 40 years ago was $525 a month. according to the inflation calc that amount of money is roughly $3097. If the area was a red light district I dont know if thats really that great of a deal.

Posted by: Santa at March 5, 2009 6:20 PM

Well, Santa, if they were letting rooms by the hour, think of the rent they could pay!

Posted by: mopar at March 5, 2009 6:36 PM

patience dave. patience.

Posted by: jingle mail at March 6, 2009 12:16 PM

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March 5, 2009

This Is Not the First Bear Market in Brooklyn Real Estate

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