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]
David,
Do you know what studios are selling for in manhattan. On average, maybe around $350-400K.
Do a search of the nytimes real estate section for studios in brooklyn. Then call those brokers. Chances are they’re all already under contract.
Rent is going up…people are stuck between a rock and a hard place. The stock market is still volatile. For many people the option of purchasing a studio is still the smartest choice.
It’s mind boggling but we all have to learn to continuously adjust our expectations in today’s market.
I read somewhere recently that the American Dream has morphed from the single family bungalow with the picket fence to a 2-bedroom, 2-bath condo with views.
I think that underneath it all people are just trying to either build equity or protect savings by investing in real estate. I’m not saying that I agree with it all, but I expect that prices in Brooklyn will continue to increase for the next year or two.
The ‘priced-out’ and disgruntled hipster who complain about the prices in Bed Stuy represent a small segment of the current prospective home-buyers. There is a ‘lot’ of money flowing into the city…from retirees moving back to the city, to international buyers who want to establish a pied-a-tierre in nyc, etc., etc.
Get over your disdain for Bed Stuy, Bushwick and other ‘economically depressed’ areas. Four years ago I could have bought a 4-story brownstone on the border of Clinton Hills for $300K but I balked. I think many buyers who balk in todays market will find themselves full of regret a few years from now.
The reality is, 100% gains over the span of 1-3 years are totally unrealistic. The housing market is headed for a steep precipice no matter how much people want to deny it. When an upper-income person cannot afford to buy a home, there’s something fundementally wrong with the market.
This correction is going to hurt, a lot.
I think what changes from frenetic market to a ‘more normal’ one is that inferior properties no longer get snapped up or can be priced nearly as high as nicer properties. And what I mean by inferior is undesirable block (not a whole ‘hood), house with major problems or needing $100k’s of work.
Just because a house sold for over $1m block or so away does not mean that my house – needing lotsa work, no orig detail left, next to grocery that is front for drug dealing is worth almost as much.
But in crazy market people will buy almost anything.
I think thats what happens in BedStuy. People hear ‘BedStuy is hot’ – but some buyers don’t know the nice parts with outstanding homes from very rough parts. Some delusional sellers think that they can command same prices as StuyHts.
A lot of people consider Clinton Hill and parts of Ft Greene and the South Slope as “farflung”. But, if a reduction in prices are on the way, it is usually the areas that went up last that tend to fall first. As a homeowner, I hope prices remain flat or go up. But as a realist, I suspect that Bed Stuy is not the only “farflung” area that will drop first
Face it people, the rules of gentrification has changed. Property owners are more informed of the value of their house in comparison to other neighborhoods. They are no longer willing to ‘give it away’ just because the neighborhood is ‘questionable’.
I would love to buy a house in Bed Stuy also but I’m not about to join in a bitter gripe about prices just because it’s out of my range.
I’ve often read comments here that ‘poorer’ people (i.e., renters) who are priced-out of their neighborhood should look elsewhere once their rental lease expires. Well, by the same token, buyers who would looove to buy a brownstone but find themselves priced-out out should likewise look at other neighborhoods or adjust their expectations (maybe buy a studio instead).
Anon @ 10:11
Could you cite any supply/demand factors (outside of psychology) that would justify a studio apartment doubling in price in 1yr.
cheers, amy. i’ve lived in nyc for 15 years (midtown manhattan, battery park city, fort greene). i’ve never felt safer or better recived than i have here on macon street. it’s so quiet here it’s practically rural.
mrs. smith across the street gives me updates on construction when we’re away, tomar rings my bell to warn us our car is about to get ticketed. joe the fireman comes over to give gardening tips. mr. rogers never had it so good.
BTW: renovation is everywhere in this area, and not the flipping kind.
Stuy Heights prices are not dropping to $500k to $600k. Anyone in the market knows that. Yes, Bed-Stuy is huge, and must agree that a questionable property on Van Buren is not exactly a meter for the neighborhood as a whole.
I think all this talk of a bubble is a big ‘hype’. It’s often propagated by people who don’t own any property or would like to own property in areas like, say bed stuy, but feel priced out. Real estate envy I would call it. A studio apartment in my building just closed for $250K. A year ago, it would have sold for $125 (at best). Brooklyn remains an affordable option from prospective home-buyers who can’t afford property in Manhattan.
Bed Stuy is still one of the most affordable nabes in Brooklyn. So, even though many of us react to the continuous surge in property value, the fact is Bed Stuy still remains at the lower end of the spectrum.
Areas such as Park Slope, Brooklyn Heights, etc. are becoming so expensive that buyers who want to remain in an urban environment have no choice but to look at areas outside their comfort zone (i.e., Bed Stuy).
Supply and demand still rules and will continue to do so for some time.