Will the Euro-drop impact real estate in Bed-Stuy?
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Seems like a stretch to think how the trouble in Greece may lower the Euro and impact Bed-Stuy, but do you think it will? My partner and I have been looking for a multi-family in Bed-Stuy for the last few months. We are pre-qualed, have great credit, and our vision is broad, but we continually get out-bid, properties we offer on are pulled-off the market, and prices are continually sky-rocketing with numerous realtor bait-and-switches. This is not a “woe-is-me”, just background… Almost all sellers and realtors have told us that the market, specifically in Bed-Stuy, is out of control. They say that this is partially due to a number of foreign investors, including Europeans, throwing gobs of cash at brownstones, creating a viscious demand and inflated prices (still cheap by NYC standards, though). We have also seen huge amounts of supply, day after day, and all the gut renovations look exactly the same. Two days ago I read an article on Curbed which talked about how property sales in NYC were a great deal for Europeans, and showed on awesome graph comparing how great a deal the city was for the Euro, especially over the last few years, but as of late, the gap was closing. Today I heard on the radio that there was a very big chance that Greece will pull out of the Euro, freezing a lot of cash and repayments, and the Euro will most certainly fall. This was supposed to impact the Euro late this summer of 2012. My question again: do you think the Euro dropping will impact Bed-Stuy real estate demand, and if so, do you think we should wait until the end of the summer to see if prices begin to drop due to an overzealous (and pretty interchangeable) supply? Or am I just crazy?
putnam
in Real Estate - Sales 13 years and 1 month ago
10
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10 replies
housepoor | 13 years and 1 month ago
The financial problems in Europe impact the real estate market in two counter-balancing ways. First, the uncertainty in Europe makes investors there want to come here with their money. On the other side, the issues in Europe drag down the banking sector, which overflows to our stock markets. The Dow is down 11 days out of the last 12\. If you feel less wealthy because your investment portfolio just took a hit, you are less interested in leveraging yourself to buy a house. Some thing goes for your job: the less secure you feel, the more unlikely you are to buy. Having said that, there are two influences which are probably even more important. The first is demographics: households continue to form and absorb housing. People see the advantages of living in urban areas (and not fleeing to the suburbs when junior starts to walk) — and this creates demand for housing. Low interest rates help fuel this. The other issue is politics. The tax laws change dramatically in Jan. 2013 unless there is some sort of political deal worked out. Someone coined the term “taxmageddon”. Tax rates go up, government expenditures down. Economists have estimated, all things being equal, 3.5% to 5% of GDP will evaoporate. That is enough to create a very serious recession — and we know that pushes housing prices down. So if you think that the politicians will break out of the partisian gridlock that has been SOP for the last decade or so, then buying a house is a good idea. If not, then you might take a breath and wait until the economy reveals itself.
callalily | 13 years and 1 month ago
I wouldn’t give up just yet. Have you walked the streets yourself and looked at signs in windows? There is a lack of good inventory in Bed Stuy, but not a lack of inventory. This was also the case in 2008-2009\. What’s changed is that everyone wants to buy here now. There are a bunch of places on Decatur that have been on the market for a while, and they’re not flips. I wonder if the flips are selling? One I have been watching recently rented when they couldn’t sell it. It was well priced but lacking detail and the workmanship seemed dodgy.
daveinbedstuy | 13 years and 1 month ago
P.S. The EUR has alreeady dropped quite a bit, from 1.45 to 1.28\.
BSDOD | 13 years and 1 month ago
Very low interest rates are also keeping things high is well.
bklyngirl | 13 years and 1 month ago
I think that because the Euro (prior to the troubles there now) was outperforming the US Dollar and that gives many Europeans the feeling like they can come in and walk away with a steal. What they don’t know is that our lovely Brownstone neighborhoods are basically pots of gold and getting one; even one in poor condition is tough. YOU SHOULD ALSO KNOW THE PRICES IN BED STUY, CLINTON HILL, FT. GREEN, PARK SLOPE, PROSPECT HEIGHTS are on an upward trajectory with limited housing stock. So you have 2 choices (as I see it). You can be a pioneer and buy on a slightly rougher block and live with the homeboys and Section 8ers (no I am not putting them down just calling it like it is) or you can be prepared to come to asking price or go in above. Simple. Good luck.
daveinbedstuy | 13 years and 1 month ago
I’m 50% Scottish, 25% German and 25% Irish. No Greek. Well…never mind.
Augustiner | 13 years and 1 month ago
If anything then a falling Euro will contribute to rising prices in BK.
Europeans are cashing out their investments and buying real estate. That is why over the last 4 years real estate prices in Europe have been soaring (by european standards). Even at a significantly lower exchange rate, most of Brooklyn is still affordable compared to London and Paris. Real Estate is considered an Inflation hedge in Europe. the sentiment is “if everything goes down, at least I have something that really exists”
Greece dropping out of the Eurozone is not a problem for the Euro, it is already a reality.
A much bigger problem for demand will be when the banks system implodes once more within the next 2-3 years, maybe as a result of a collapse of Spain and Italy.
But then – look at it like a European – you still have a house.
daveinbedstuy | 13 years and 1 month ago
Seriously, putnam, my buyers had been outbid on a number of properties elsewhere. They loved my place and put in an offer less than 5% below ask. they were VERY well qualified financially. I think he’s a Manchester fan
daveinbedstuy | 13 years and 1 month ago
I never said they did. I brought up the Brit under the all encompassing umbrella of “Eurotrash.”
daveinbedstuy | 13 years and 1 month ago
LOL…in fact a British guy bought my house but he’s been living and working here. His wife is of mexican heritage if that matters. I’d never have sold to a greek. The block is calendared to be landmarked and I don’t think my neighbors want to see a house painted blue and white. The Euro has no effect on Bed Stuy prices.