Co-op of the Day: 101 Lafayette Avenue, #17C

The studios in the Griffin range from 400 square feet (the ones with closet-sized kitchens) to about 520 square feet (the ones with eat-in kitchens and an extra closet). This one is in the middle of the range, with a decent kitchen and only two closets; I think it's about 450 square feet. A year or two ago, this might be worth $650-700 psf... so about $300-325k? Things are tougher for sellers, but prices of studios and 1BRs are holding up better than those of large apartments, and this building has some good parent-friendly intangibles, like 24-hour doorman and in-building laundry. (Not to mention, good resistance to fire!) I bet $275K would move it now.

By the way, the appraisal widget is in need of some tweaking. It's clear that some people aren't using it in good faith. $483k and $207k are completely unrealistic estimations. Why not adopt some simple measure like disregarding the five highest and lowest appraisals? I bet that would result in a much more accurate system.

Further, from the comments I'm not sure whether people use the widget to estimate what they would like to pay if they were in the market, or to estimate what they think the property will ultimately go for.

To the extent that it's not merely a system for wishful thinking, why not put it to the test? Just as we have follow-up "six month later" posts for open houses, why not put up posts comparing the Brownstoner consensus (such as it is) with actual sale prices. For that matter, why not compare sale prices with each user's estimate? If this sells for $275k on the dot, shouldn't people know that I got it right and the $207k guessers got it wrong, and respect my opinions that much more? Let people put their reputation on the line.

Posted by: sdrubbins at May 11, 2009 3:10 PM

Also: note that snarkslope's linked apartment has a very similar floorplan, so I think I'm on point with my guess of 450 sq ft. Personally I'd rather live in the Griffin than in a building near Central Park even at the same price, but of course I'm not everybody. Nevertheless, it's a nice comp: similar size, similar maintanence, in Manhattan but no doorman (I expect they would mention that in the broker babble)... what kind of discount do you think it's worth? 20% gets you to $280k, 25% gets you to $260k. I expect closer to 280 gets the deal done.

saminthehood, methinks you underestimate the difference between living in 300 sqare feet versus 450 square feet. Every apartment has at least 150 or so square feet in kitchen, closets and bathroom. So just for living space, we're talking twice as much space compared with your friend's UWS studio.

Posted by: sdrubbins at May 11, 2009 3:27 PM

snark, that's correct, larger multi-bedroom apartments tend to be more expensive on a per-square-foot basis than smaller studios and 1BRs. I didn't contradict that. My point is that prices of those large apartments swing more wildly with the market. In a pinch most people can downgrade by dropping a bedroom... but you can't downgrade below studios (at least not the people we're talking about, who can afford to drop a few hundred grand on real estate).

More relevant, the recent historic building boom has been made up mostly of large, expensive condos. And even now, they're still building more of them. They're not making any more studio and 1BR co-ops. So, in this particular downturn, the glut of larger apartments will cause prices of large condos to suffer more than prices of small co-ops.

And, if we're going to run numbers let's run numbers at 275k: with 50k down you could get a mortgage for about 1200/mo., making the total out-of-pocket cost about 1,850/mo. You then get to deduct about 14k/year, which would equal savings of about 400/mo.

This place would probably rent for 1400-1500/mo., which means the cost to buy is about equal to the cost to rent. Which means you build equity for free - not to mention any speculative returns on this nicely leveraged investment, some day when the market is better. Also note that mortgages are a nice hedge against inflation, which I understand might become rampant in the next year or so.

You don't have to like the price... I'm just saying this math is going to work for *somebody.* (That's assuming, of course, that the seller is smart enough to let it go for 25% below ask...)

Posted by: sdrubbins at May 12, 2009 12:48 PM

Snark, from your handle I gather that you like to argue. But I'm not trying to argue with you. I only suggested from my own experience/observation and from listening to many other people who are better-informed than me, that studios and 1BRs will do better in this downturn *relative to larger apartments* - not that either type of apartment will do *well.* Everything's getting hammered, there's no doubt about that.

On the other hand, how much things get hammered is the question of the day. You're basically suggesting 40% declines, which is pretty bearish. A 30% decline prices this apartment at about $250k. A 20% decline prices it at about $285k. It depends on just how bad you think things will get. Fact is, in 2010 rents will still be higher than they were in 1995. Fulton St will still have more restaurants and fewer prostitutes than it did in 1995. The Griffin's board will still be a lot better than it was in 1995. Etc. It means this apartment won't be seeing 1995 prices. Real estate trends are what they are, but the particular building and the particular neighborhood matter, a lot.

Anyway, even if we see 40% declines in this recession - certainly a possibility, I'm pretty bearish myself, I predicted all this back in 2004 - it's a slow slide to that point, and we're not at the bottom yet. So even if the price of this apartment goes to $220k, I bet the seller could unload it right now for more than that.

Finally: I and others are very interested in what buildings you're following. I'd love to find one of these desirable $220k studios...

Posted by: sdrubbins at May 13, 2009 11:49 AM

> "Sorry, but you are going to have to do your own research."

Booooooooooo

Heh heh

Depends on condition and views etc but yeah in '95 this place probably traded for five figures.

Posted by: sdrubbins at May 17, 2009 4:17 PM