House of the Day: 202 Clermont Avenue

I visited this house. it's a nice piece of property and I was impressed overall. Personally I would ultimately completely gut the back yard, it's unfunctionally formal, but it works for now. Nice woodwork and a very nice kitchen.

But it is very far from mass transit—close to a 15 minute walk.

This said, $1.675M is not Fort Green-appropriate pricing in my opinion. No schools, late to gentrification party, much less services than more established nabes. And this is established nabe pricing.

Far more likely to sit as buyers are reluctant to jump into the hood (despite the awfully ncie housing stock) at these levels. Requires 400K+ minimum (25-30% down payment plus mansion tax and closing costs) to get started. A very risky proposition for a large capital outlay.

So it will continue to sit until it's a compelling value proposition vs the risk of deploying that sort of capital and mentally committing to private school and a long shlep to the train.

Anyone with this sort of scratch ready to go (I am one) isn't going to roll the dice on Fort Green holding value in the near term, or bounce back quickly. So why jump in. Sideliners like myself wither want value, or then a more established neighborhood given the economic outlook and cutbacks in services forecasted over the next decade.

Posted by: MoneyForNothing at July 15, 2009 4:51 PM

Oh, and the house is fully furnished now, which makes a difference. I believe they are renting it, because I can;t see why you'd shoot it unfurnished and then bring the furniture back in.

Other feedback is that the rental unit is pretty nice actually. Currently being used as storage by (the renters?). It's sort of a studio-plus sized thing.

All this said, again, most economic forecasts I've read (Shiller, Deutsche Bank, Talbott) predict 40% decline from current value to reach highest (least acceptable) level of affordability (no more than 40% of income going towards home payments)—a rate last seen in 1998 BTW.

So as lovely as the general property is (fixable style-points aside), who exactly that the payments, taxes and insurance included on this property equals 40% of total income is looking to live on Clermont St and assumedly use private schools (PS 20 Pricipal was just arrested for assaulting a teacher in March...)

Not many is my take. They're looking in Park Slope and Brooklyn Heights.

Posted by: MoneyForNothing at July 15, 2009 5:10 PM

It's not just Deutsche's view though. We can thrown UrbanDigs in for what it's worth as a local expert (N Rosenblatt), and you can read John Talbott and others for similar views. But sure, DB hardly infallable. But the chorus generally seems to agree.

Realize, none of these studies even factor in possibility of over-correcting on the downside, much like the stock market did. Just takes longer, but a completely reasonable scenario.

I'd argue we're nowhere near capitulation b/c anecdotally we have not started to hear brokers really cry about the pain and futility. Maybe we won;t get there, but the difference between the ask/bid spread is so great on NY real estate, it's hard to believe the Bidders are going to be the ones who trend upwards to close the gap.

The simple fact is that anyone with capital to deploy and a squeaky-clean credit profile, is likely in no hurry to catch a falling knife. Even if DB and others are only half right, we're 350K off on the price of this place. Going to take a LOOOOONG time for sellers to come to grips with that.

So what happens? Market deteriorates around them as they wait and they are potentially further beind the curve, and the BID side of the A/B spread has drifted further away from them.

Maybe doesn;t happen, but a bottom in RE takes a long time to occur, and is very, very slow to pick up. So anyone with capital deploy and interest to purchase, like myself, is likely very very content to sit on the sidelines and wait. It's by far the more conservative approach, and I'd argue that most normal people w/ this sort of scratch who view RE as something they want to buy now got that way by being conservative and risk adverse with their cash in the first place.

So we will wait.

Posted by: MoneyForNothing at July 15, 2009 5:39 PM

M4L:

Regarding the schools, I totally agree w/ you. But in PS 20's case, you should read on InsideSchools.org. There are multiple complaints about the culture of the school (led by the recently arrested principal) proactively discouraging and blocking parent involvement in the school.

So you can do your best to raise your kids right, but here, I worry specifically b/c parents have pulled their kids out of PS 20 because they were frustrated about being blocked from helping to improve the school.

have a friend who lives there, 2 young girls. He loves the hood. But both girs are in private school. he'd prefer to use them, but in his words, "they're sh*t".

Recently he was mugged in front of the school picking up his daughter, and they broke his jaw, he had to have it wired shut.

So safe to say, the schools in FG are a little sketch no matter how involved a parent you are. It's a risk you have to factor in.

Posted by: MoneyForNothing at July 15, 2009 5:43 PM

Isty,

It's not grouchy. it's just being real. I'd rather talk about macro-situations than dissect and try to price brownstones. Just kinda pointless.

What makes me tired is listening to people discuss the plusses or minuses of wrought-iron sink pedestals and laminate flooring or squares on walls and fugly back yards and whether they like victorian details or modern decor—and what that is ultimately worth.

Really, who cares? Find the place you like, at a price in line with economic fundamentals, and buy it.

Posted by: MoneyForNothing at July 15, 2009 6:01 PM

Denton:

picking bottoms is for monkeys. Agreed. Contrarian call on chorus. I get that.

But real estate is not a small cap stock. Your chance of missing the bottom significantly is much lower.

In the meantime, just based on common sense affordability we all see with our own eyes? Prices are way to high for many buyers.

Typical RE bottom: 5-7 years to occur. And that's typical.

Hey, but that's just my opinion.

Posted by: MoneyForNothing at July 15, 2009 6:19 PM

Antidope: tells me bear market rally

Posted by: MoneyForNothing at July 15, 2009 6:22 PM

No one's going to come back and read this a day later, but I couldn;t be more happy we moved from talking about floor finishings to talking about the value of property.

While Itsy says it's not the place for it on "brownstoner", there is a pretty honkin pricing widget that encourages everyone to be a junior economist and try and apprasie property on the fly.

So I think it's not that off base.

Posted by: MoneyForNothing at July 16, 2009 12:54 PM