Brownstone Market: Trouble on the Fringes?
This month’s issue of The Real Deal has an article about the ramifications of a cooling real estate market in Brooklyn (despite the debatability of that assertion). TRD contends that the more “farflung” nabes are the most vulnerable, pointing not only to some price reductions in spots like Bed Stuy as well as signs of…
This month’s issue of The Real Deal has an article about the ramifications of a cooling real estate market in Brooklyn (despite the debatability of that assertion). TRD contends that the more “farflung” nabes are the most vulnerable, pointing not only to some price reductions in spots like Bed Stuy as well as signs of mortgage lenders becoming more stringent about appraisals and comps. One Brown Harris Stevens broker claims that houses in Bed Stuy that may have been selling for for around $800,000 a few months ago now have asking prices closer to $600,000. Maybe, but frankly we haven’t seen many examples of such a dramatic shift. Sure people are being more deliberate in the search and may be less likely to plunk down a million bucks for a wreck in a less proven area, but 25% decreases are the exception not the rule as far as we’re aware.
Doubts on Fringe of B’kln [The Real Deal]
Gloworm — I live in stuy heights on macdonough which is a really nice street and close to the A train, but there’s also nice properties on throop and thompkins, further north but they’re not as close to the express train. maybe babs can give you a more specific area. I can certainly vouch for stuy heights, the rent is not as cheap as the rest of bedstuy but for the price and space the houses are amazing to say the least my ceiling are ridiculously high (made very clear to me when installing 103 inch curtains 2 weeks ago) I have 2 working fireplaces and original hardwood floors. I love it, hopefully you will too.
I love it when people use ‘sound bytes’. They clip and re-organize your statements to provide a snapshot that proves their point. Here’s the most important part of what I said…
“People who buy homes do so with the awareness that values might drop. But they’re not about to day trade and sell instantly when the value changes. They’re in it for the long haul.”
You’re comparing real estate to stocks once again. They’re not equivalent.
I think today’s buyers are smarter….the worst of the frenzy is over….people are taking out less ARMs and doing lesss creative financing, thankfully due to media coverage.
I’m not saying prices won’t stabilize or even drop, I just doubt that it will plummet.
I agree with anon 11:22 AM that the best bet is to buy smart, anticipate a down-turn and hunker down for the long-haul.
And for those people who feel better renting….haven’t you read all previous posts about renters being priced out of dumbo and bushwick. One thing’s for sure…RENT WILL INCREASE. Real estate values might not go up, they may even drop, but make no doubt about it, as soon as this happens landlords will take advantage of the ‘crisis’ and raise rents.
There is an inverse relationship between the real estate sales market and the rental market. When the sales market is strong, the rental market languishes. What do you think will happen when the sales market weakens? Where will you be?…you definitely won’t be able to buy or rent in bed-stuy or bushwick.
Babs, I’m moving (back to) New York soon and you’ve inspired me to look for a place in Stuy Heights. Is there any special place to look for listings other than craigslist, etc.?
Amy, I’d sign up for a walking tour…
Okay..got to get back to work…but let see what changes the summer and spring brings.
Anon @ 11:49 -“Prices will stabilize evetually but I don’t see the drastic plummeting of values, circa 1989, that many people are predicting. I think what we’re experiencing is a radical shift in the evolution of home prices.”
That radical shift in prices is EXACTLY the justification used for equity pricing 7 yrs ago – it was said that a fundamental change in valuation occured resulting in a wider acceptable gap between earning and stock price. And yes RE prices did increase huge amounts since 9/11 despite predictions – so what – the only result is that the relationship between incomes and housing prices (the bedrock of pricing) is even more out of whack – To bring back the equities analogy, stock prices increased after Asian currency crisi/russian default/LTCM collapse – despite many contrary predictions, yet collapsed in 2000.
Anon 11:58 “People who buy homes do so with the awareness that values might drop…I think the speculative investors and flippers have moved on to other territories outside of brooklyn. It’s hard to find a ‘good deal’ these days”
Actually many people think that RE cant or wont drop in value (I think the expression is “theyre not making anymore land”) as for speclators moving on… Everyone who buys a house with the idea it will be worth more later is speculating – its just a matter of how much you are specultaing – those that buy at the very top of their means, using creative short-term financing and rental incomes to afford houses are in many ways bigger speculators than the quick flippers that you describe, and if you think those people have “moved on” you are sadly mistaken.
Okay, let me put it to you this way. Try going to the auctions/foreclosure sales over by the courthouse in downtown brooklyn. Then after all the properties have sold, try pulling one of those investors aside to get their analysis of the market. They’ve been doing this for yearrrrsssss. And many of them don’t even bother bidding on brownstones in bed stuy anymore because there no more ‘deals’ to be had. They’ve shifted their expectations to buying vacant lands and building on them. Either that or they have enough cash to buy a commercial property that they’ll rehab and convert to condos.
The active buyers of brownstones at these auctios are people who believe that they’ll get a better deal than going through the retail channels (i.e., brokers, fsbos). They have the cash and are prepared to do the renovations on their own.
The flippers have just moved on to the “fringe” neighborhoods, but they’re still around – if you think real estate only goes up and that prices in Brooklyn will continue to do so, a 600K brownstone is a good deal, right? After all, it will probably be worth 900K next year (or so thinks an investor).
It’s difficult to compare real estate to stocks because real estate is ‘tangible asset’. That’s like comparing apples to oranges.
People who buy homes do so with the awareness that values might drop. But they’re not about to day trade and sell instantly when the value changes. They’re in it for the long haul.
I think the speculative investors and flippers have moved on to other territories outside of brooklyn. It’s hard to find a ‘good deal’ these days.
“Remember ’99 when everyone thought Tech stocks couldnt fall to far b/c Tech is the future.”
You know what’s funny about this? The stocks fell even though it’s clear that technology IS the future. There’s nothing but new technology every day and it only keeps growing. The stocks just jumped way ahead of themselves.