Elliman Releases 3Q Market Report
The Douglas Elliman 3Q Market Overview for Brooklyn, prepared by Miller Samuel and available here, is out this morning and the numbers are decent. Here are the summary stats: – Median sales price increased 2% to $485,504 from $476,000 in the prior year quarter and increased 4.9% from $463,000 in the prior quarter. – Average…
The Douglas Elliman 3Q Market Overview for Brooklyn, prepared by Miller Samuel and available here, is out this morning and the numbers are decent. Here are the summary stats:
– Median sales price increased 2% to $485,504 from $476,000 in the prior year quarter and increased 4.9% from $463,000 in the prior quarter.
– Average sales price increased 7.2% to $583,790 from $544,676 in the prior year quarter and increased 7.1% from $545,110 in the prior quarter.
– Number of sales increased 1.7% to 1,879 from 1,847 sales in the prior year quarter but fell 2.7% from 1,931 units in the prior quarter.
– Listing inventory increased 18.4% to 6,630 units from 5,600 units at this time last year.
– Days on market was 109 days, down from 165 days this time last year.
– Listing discount was 5%, down from 5.6% in the prior year quarter.
Of perhaps special interest to readers is the news that the median sales price was $1,265,000, up 11.9% from the prior year quarter result of $1,130,000, and that the number of sales increased 95.2% to 121 units, from 62 units in the same period last year. Not too shabby.
“How much cheaper is your net monthly than it would cost to rent in percentage terms?”
Hard to know as I am not an expert on the triplex rental market. But I have three floors of a 20 foot wide rowhouse (2400 square feet) and it ends up costing me around 1500 per month after I collect rent. Then it would depend on whether a similar rental had utilities built into it or not etc. And for honesty’s sake it must be said that my professional situation is what makes this possible….most people do not have the flexibility to do what I am doing and I am very grateful for it.
“*Savings by renting instead: $147,720!”
And, if the price stays exactly even, you lose $40,000 by renting! (add back the $187,500 in depreciation that didn’t happen).
Plus the additional $40,000 in tax benefits and $30,000 in forced savings that buying would provide, minus the 80K in maintenance/HOA fees and closing costs, and you’re still about $30,000 richer spending the extra $500/month.
And that assumes zero price appreciation for five years in a row. Throw in a very reasonable 1% appreciation rate, and you’re looking at a very meaningful difference over a relatively short time period (5 years).
After ten years, well, the difference is enormous.
Long story short: If you don’t think the sky is going to keep falling and you plan to stay put for five years, the economics of buying make more sense than renting does.
“Couldn’t rent the situation I have set up for myself space-wise or price-wise.”
How much cheaper is your net monthly than it would cost to rent in percentage terms?
***Bid half off peak comps***
Alls I know is that my mortgage is highly manageable and therefore I am comfortable no matter what. Couldn’t rent the situation I have set up for myself space-wise or price-wise.
” then they realize that the neighborhood is overrated and is missing lots of the basic services that people who spend that kind of money want.”
Are you again referring to that friend of yours (who you mentioned in an earlier comment) who moved out? I don’t think that one persons opinion a great measurement of the overall consensus. I know plenty of folks buying two bedrooms and having kids. Not sure they plan to “flip” in 3 years. And as far as basic services, not sure when was the last time you were in the hood, but I don’t think its lacking much. You may just need to walk a little further than a 2 block radius.
“It makes more sense financially to pay $2500/month on the mortgage for a $500K 2br apartment in Brooklyn than it does to pay $2000 to rent a studio in Tribeca.” – novanglus @ 12:28
Apples and oranges. Compare to 500K/(16×12, today’s GRM) = $2,600/mo 2br in Brooklyn. Makes sense to buy only if prices appreciate before you sell as all costs would be recovered and maybe then some. The risk of your hand being forced to sell is always present (divorce, layoff, relocation, etc).
If prices depreciate, say by at least 37.5% as I predict (to 10x rental and 3x income, the historical mean or average), costs don’t get recovered but rather compared to the rent of a similar home over the same period.
Over a typical 5 year holding period and 37.5% depreciation…
*Buy for $500K: 2,500 + 0.375 x 500K/60 = $5,625/mo
*Rent raised 4% annually from $3,000/mo: (1.04)^5 x 2,600 = $3,163/mo
*Savings by renting instead: $147,720!
My simplification of merely adding depreciation divided by months of holding period to the monthly mortgage is more than valid because tax credits are more than offset by interest, maintenance, fees and other costs.
Most of you buyers/owners out there are relying on appreciation against the downside of mean historic fundamentals (10x rent, 3x income, 8% mortgage rates).
The market is on life support because the economy is on life support. Foreclosuregate might just pull the plug if it leads to criminal and/or civil rulings of fraud in mortgage securitization orgination.
“‘there are no buyers left.’…That has to be the most asinine phrase every uttered on this website. And that’s saying something.” – 11217 @ 12:59
Perhaps. But “NYC is different” is in line with the most asinine phrase EVER mentioned in capital markets throughout the history of mankind. NYC most certainly wasn’t different on the way up (without nobody-turned-down credit or the dot com boom, our prices would not have hyperinflated +200%).
“Just go away already, BHO.”
be rude! My man! Sorry, buddy. Can’t stop, won’t stop.
Yeah, I’m eating my YOY goes green theory because I slept on the biggest government intervention in modern history. That theory was from the 90’s bust when Bill Black convicted over 1,000 people, some of them former CEO’s, due to the fraud in the Savings and Loan crisis. Now, we have foreclosuregate. Will banks dodge this bullet? Maybe. My time will be up when the REAL economy recovers without bailouts (not the imbalances of reGOVery), QE, high frequency trading games, high equities on thin volume and 10% GDP spending by Washington as well as a suffocating deficit. Until then, I’m staying the course with my prediction.
Guys, this is your opportunity to sell or short-sell. Can’t take profits or minimize losses without doing so. If foreclosuregate and the threat of a freeze in title insurance allows it. (Adam???!!!)
***Bid half off peak comps***
“I’d much rather live within close proximity to Prospect Park than to Marlow & Sons. And that’s not to say that great restaurants aren’t important also, but when your neighborhood relies too heavily on those sorts of things, it doesn’t attract the kind of people who create a stable neighborhood.”
What ARE you talking about? Yeah, that’s what YOU value in a neighborhood. This is retarded – it’s like arguing what’s better – the UWS or the LES – they’re both fine, for entirely different reasons. People don’t choose where they live based on nightlife? Are you serious?
To try to state North Brooklyn’s stats in this report have ANYTHING to do with it’s desirability as a neighborhood is silly. Crappy, overpriced inventory? Sure. People still want to live here – look at the rents people are paying. You don’t think someone paying 4K for a 600 square foot one bedroom could live anywhere else?
Downtown Brooklyn, at best, could hope to be about as much as a neighborhood as the Financial District in Manhattan.
“Did you see the penthouse of Schaefer landing is for sale? ”
Schaefer Landing isn’t exactly the best barometer of the state of williamsburg. it’s closer to “prime” clinton hill than prime williamsburg.
“You don’t hear many people buying in Williamsburg who want to stay there long term.”
who are you talking to? most people i’ve met who own condos in the nabe aren’t planning on selling anytime soon.
” A handful of great restaurants and bars do not make a neighborhood.
Parks/green space, good schools and transportation do”
really? some of the most expensive real estate in all of NYC are in neighborhoods that don’t have much greenspace or great mass transit (even tho the L isn’t bad) – see Tribeca, Midtown, Soho etc. Greenpoint has great schools, so not sure what your point is.
Primary residences are by definition more than just an investment–they’re where people spend their lives.
However, it IS an investment. I think very few people would question anyone who would want to live in Williamsburg for a few years–in terms of lifestyle/features Williamsburg vs Park Slope or similarly priced places is a matter of personal taste and preference. The question is whether one would be wise to buy a place there instead of renting, factoring in transaction costs and future property values.
Williamsburg is a sexy date, but do you want to marry it?