The One That Got Away
Harvey Araton, a sports writer for the Times, penned an epic tale for the paper’s real estate section this weekend about making peace with his decision to sell low in Brooklyn Heights nearly 17 years ago. According to Araton, he wrote the article as a form of therapy, since he’s often kicked himself for selling…
Harvey Araton, a sports writer for the Times, penned an epic tale for the paper’s real estate section this weekend about making peace with his decision to sell low in Brooklyn Heights nearly 17 years ago. According to Araton, he wrote the article as a form of therapy, since he’s often kicked himself for selling his family’s co-op in the busted early ’90s market: “It has been 16 1/2 years since we sold a two-bedroom apartment in Brooklyn Heights, en route to the suburbs and the birth of a second child. Actually, I should say that we gave it away: We lost about $80,000 on a $240,000 purchase made in 1988.” The current value of the co-op is around $900,000. Araton gets in touch with other people who sold in the building—which Brooklyn Heights blog identifies as 157 Hicks Street—at around the same time. “After reconnecting with our old neighbors, the other thought I am left with—and hope to hang onto—is that as much money as we lost, judging a period of life by the bottom line is the road to existential ruin…I suppose, then, that the closure I have been looking for might be in the realization that the apartment was never just an investment. It was a place to live,” he writes.
A Brooklyn Apartment Sold Too Soon? [NY Times]
Photo from Property Shark.
“3. Capital Gains taxes….WRONG – they only would avoid cap gains on the 1st 500K (married)”
The 1st 500K leaves only 160K subject to Capital Gains:
900K – $240K = $660K capital gain.
You really wont conceed??? Dollar for dollar, you are talking about a $330K gain (590K – 160K) subject to captial gains vs. a 660K gain of which most is not subject to capital gains. Even if you use the $800K comp you insist on, the math is still clearly in favor of holding this particular house vs. selling it in 16.5 years ago.
newsouthsloper- Not really
1. Rent offset yes – but then you are missing the appreciation of the suburban home.
2. I accounted for taxes – I estimated approx 18K a yr in holding costs (which is way low but still…) and then figured 10K after taxes (again generous)
3. Capital Gains taxes….WRONG – they only would avoid cap gains on the 1st 500K (married)
4, Finally – I call total B.S. on the claimed “almost 900K” value today.
woulda, coulda, shoulda ……….
fsrq, You are also missing the comparable offset in rent that has already been mentioned, as well as the interest deduction on your taxes. In addition, there would be no capital gains tax, not true of an S&P investment.
Bottom line, although your S&P argument is probably true in many instances, in this case the seller clearly would have done better holding the property.
“As a brand new home buyer, I am guilty of this too. Did I make the right decision buying right now? We bought because we’re having a baby and really do need the space and need to stay in Brooklyn for our work, and our art, etc. And I hope we made the right decision and not loose our shirts in the long run. But, what are you going to do?”
This statement, with the exception of the mis-use of “loose our shirts” could have been written by me. Really, what are you going to do? You make the best decision you are capable of making given the circumstances and you move forward. This joker worrying about theoretical financial loss from 17 years ago is wasting his and our time with his navel gazing.
In re buy/rent tutorial, Lechacal why don’t you set up a seminar for financial-theory challenged people like myself? You could make a killing.
http://realestate.nytimes.com/sales/detail/185-1690700/Columbia-Heights-Brooklyn-NY-11201
Actually searching for comps – I say the apartment is worth under 800K realistically
DIBS – B.S.
Find me a BH 2BR coop thats maintenance over the last 16 years wouldnt average 1K a mo….find me a 2br coop whose taxes wouldnt average 6K a year! 1992 wasnt the depression, BH was expensive then and it never went down…..
And if he owned the place free and clear SO WHAT – he’d own his stock (as a comparitive investment) free and clear also (and it would be alot easier to sell)
Furthermore the article says the apartment is worth ALMOST 900K (if recent appraisals are to be believed) – well guess what – they AINT,
Its a 3rd floor WALKUP -100sq ft – Almost 900K in todays markey likely means 800K
agree with all above, but i also got out of it that he could’ve stayed in the city and laments leaving.