How do People Afford it?
This may seem very naive but I really don’t know… HOW do people afford the price of brownstones in some parts of Brooklyn? Are there really that many people who can shell out 2million dollars for a brownstone? Do buyers put all their money into their property to make it happen and hope for the…
This may seem very naive but I really don’t know… HOW do people afford the price of brownstones in some parts of Brooklyn? Are there really that many people who can shell out 2million dollars for a brownstone? Do buyers put all their money into their property to make it happen and hope for the best or are there truly lots of people out there who have the secure income to cover the mortgage and all the related expenses without maxing out? So many people we know seem to get help from family sources to cover costs. Otherwise, it seems impossible to buy a brownstone unless income is sky high.
I know rental income helps and I know prices vary by neighborhood, but I just don’t understand how so many of these 2 million dollar places get sold.
When I think of $2mm, I am also thinking of the people who buy below that but have to renovate and nearly reach the 2mm mark. Across Brooklyn, the number is low, but I bet those 190 sales are mostly in two or three neighborhoods, including mine where I’ve lived for a long time but am not sure I can afford to stay.
According to StreetEasy, there have been just 190 Brooklyn sales for greater than $2mm since their record keeping began in late 2006. That equates to fewer than 50 sales per year in a borough of 2.6mm people. That’s one sale for every 52,000 people.
Perhaps StreetEasy is not capturing all the market activity, but it gets a lot of it. I think there are not as many high-end buyers out there as you suspect.
http://streeteasy.com/nyc/sales/brooklyn/status:sold|price:2000000-?page=1
Bought a small co-op at what turned out to be the bottom of the market in the early 90s. Dumb luck and I’m thankful for it every day. That gave me a 40% down payment on a house. Add a good sized rental that I keep in good shape, some fiscal frugality and prioritization on my part – I’m happy paying a decent sized mortgage because I don’t have any other major bills – and hey presto.
Never mind $2,000,000–I wonder how people can afford the “cheap” $1.000.000 brownstones!
I’m glad I bought my house back when no “normal” person wanted a brownstone, or ANY inner city house 🙂
A lot of it is No. 2.
More specifically, people buy starter apartments/houses for $200,000 or less, and by some dumb stroke of luck they appreciate madly. People then sell, and use the proceeds to buy much more expensive houses. Still their mortgage (after down payment and rental and renovation) remains (barely) affordable on their (often dual) income.
For example, someone I know living in the Bay Area bought a hideous place in a marginal area for $200,000 in 1992, it more than doubled to $450,000 in two years, she and her husband then bought a place for $750,000, then sold it a few years later when they divorced for, I think, $1.3 million. She bought a condo, remarried, sold that, etc. etc. etc. and now she is living with her second husband in a place they completely rebuilt and I suspect it cost about $2 million.
It doesn’t only happen on the Upper West Side. I bought a very inexpensive coop in Queens which increased 40 percent in one year.
The thing is, there aren’t THAT many brownstones in prime brownstone Brooklyn. A few thousand, tops. And as Petebklyn notes above, not many of these turn over each year. It doesn’t take that many reasonably affluent people to support that market. And there are a lot of reasonably affluent people in NY.
I’m more shocked about the amount of 10, 20, 30+ million dollars sales in Manhattan than I am about a couple dozen 2 million dollar brownstone sales, personally.
Just read today about a penthouse in Soho being snatched up for over the asking price of 25 million.
how many $2m brownstone sales are there per year?
probably not as many as you think.
There is more family money in NYC than most people realize.
Or you have people like my old landlord who bought his Upper West Side townhouse in the 80’s for 450K and sold it for 7 million 20 years later.
His kids will probably inherit some of that money and then the cycle continues.