House of the Day: 15 Lefferts Place
Hey, this whole FSBO thing seems to be catching on! We were sent the link to the site for 15 Lefferts Place, a lovely four-story brownstone just East of Grand Avenue. The house, which is configured as a owner’s triplex over a rental simplex, appears to have a decent amount of detail. There are some…
Hey, this whole FSBO thing seems to be catching on! We were sent the link to the site for 15 Lefferts Place, a lovely four-story brownstone just East of Grand Avenue. The house, which is configured as a owner’s triplex over a rental simplex, appears to have a decent amount of detail. There are some more modern elements, including the kitchen, which appears to be very nice, and some new doors that are trying to look old but not cutting it (a little pet peeve of ours). The rental apartment has some charming original floorboards and the skylight at the top of the stairwell is one of those beautiful oval babies. The front parlor, with pier mirror and floor-to-ceiling wood windows looks like a winner. The price–$1.495 million–is exactly what we would have expected and we bet they’ll come pretty darn close to getting it.
Brownstone FSBO [15 Lefferts Place] GMAP P*Shark
“I just looked at the Lanixter yellow victorian – which is gorgeous on the exterior and looks to be well maintained on the interior. But the price? Come on. Why isn’t this house priced in the Ditmas Park range? It certainly should be.”
Like I said yesterday, the owner of 70 Lefferts is either looking to sell or has already sold to a developer. It’s a huge lot 65 x 120(16,000 sf under FAR) and lies adjacent to a vacant lot that’s 165 x 119 (50,000 sf under FAR). Though the house at 70 Lefferts is huge at 6,500 sf, only a developer would pay that price. In view of the available FAR, the property does make economic sense if you’re looking to build condos, otherwise it’s way overpriced.
If you factor in the development possibility associated with all three contiguous lots, then you looking at over 100,000 sf of available FAR to build one to four condo complexes. I think that without community opposition condos will be built on the lots and the Victorian homes (both yellow and blue) eventually get torn down. Though the blue Victorian house at 96 Lefferts is in terrible condition and the argument could be made that it should be demolished, it can and should be saved. The yellow house was in a equal state of disrepair but the owner took many years and spent a fortune to restore it into a grand home (which begs the question as to why would they sell to developers). The blue house just needs a little TLC.
“I’m noticing a softening in the market in some areas and would love to hear other peoples’ opinions.”
Someone cited in a previous post that PLG above the $1M mark is an example of a softening market. I would have to agree that PLG might be more prone than other areas given its single family zoning restriction. Other areas with multiple family buildings that generate good rental income should hold firmer than those without.
Jake,
I actually agree with you that RE prices could sharply decline in NYC, as they have done in the past. But keep in mind that Sept. 11 and the Enron collapse *did* happen almost simultaneously, and they depressed prices for maybe half a year. I’m not saying a future double whammy wouldn’t hit us worse, but we can’t assume it.
As for “forget about collecting rent” — in the RE crash and recession of ’89-’94, people were still writing rent checks. You seem to be describing some kind of Great Depression, Hooverville, collapse-of-society type scenario. Which may well happen, but if it does, it’s not going to matter if you bought or sold or rented or whatever: everybody will be screwed.
Plus, I just think it’s a mistake to look at home ownership like stock ownership.
Suppose I had the chance to buy the brownstone in my dreams, in 1989, for $600K. But if I had waited for the crash, I could have snapped it up in 1995 for $360K.
From the vantage point of today, or even a few years ago, would it have been better for me to have waited 6 years to buy? From a strictly $$$ POV, sure. But it’s not just about $$$. I’d have lost 6 years of living in my dream house. Either way, I’d be ahead in the long run. Are those lost 6 years worth $240K? Not to me. It’s just money. You can’t buy another 6 years of life.
Anon-Sloper,
You don’t seem to think property values could drastically decline. I do. An unpredictable catastrophe, likely business related, like the Enron debacle, could be the trigger. Or even worse, terrorists might strike again. This is not be pleasant to think about, but it’s very likely.
When prices plumet it will be much harder to “sit tight” than you claim. Did you “sit tight” when your tech stocks bit the dust? If you did, I’m sure you lost a small fortune — like I did.
Everything’s fine and dandy when you’re making the big bucks and your investments are doing well, but in a real big long term recession, when folks don’t have jobs — forget about even collecting rent. And your claim that you’ll have the “balls” to buy more property, maybe even that long coveted “vacation home” is laughable.
As the economy folds, you’ll hold tight for a while, but when things get really bad, you’ll sell like the rest of us, and move back to mom’s.
“If prices had gone down 50% instead of nearly doubling, would you still be happy about your investment?”
Let me answer this one for myself.
If my house had gone down 50% right after I bought, I’d be bummed — you can’t be unaffected by the paper price of your house. I’m guessing I’d have been about $50K underwater on the mortgage. But practically, it wouldn’t matter, since I haven’t moved since, and I now have a house in a neighborhood I love, for a monthly nut lower than renting it.
If my house went down 50% in value today, I’d still be bummed — again, the psychological paper-profit thing. But I’d still have about $250-300K equity in it, on an initial investment (on my co-op in the mid 90s) of just over $10K. (This doesn’t factor in improvements/repairs, but neither does it factor in savings on rent over a decade.) Plus, I’d still have the whole house-in-my-chosen-nabe thing. I’d have had several years living in the house I wanted, rather than several years waiting out the market in a rental I didn’t want. And I might start checking out second homes, as I assume the rest of the Northeast would also have tanked in price.
Now, a question for Jake the Snake:
Suppose you bought a house in NYC in 1989, the last peak, then saw it drop 40% (which I think was roughly the average).
(1) How would you feel at the bottom of the market?
(2) How would you feel if you still owned the house today?
The bottom line is, you can drive yourself crazy with regret and speculation and trying to time the market. But buying for the wrong reasons (e.g., with the plan of cashing out in a year or two) is always a dumb idea, whereas hanging onto a house tends to ameliorate the effects of even the worst timing.
By the way, I’m not claiming to be a genius — I bought because I wanted a home, not because I thought I was going to make a mint.
“IMO, I think prices will level off for nano second (just like after 9/11) and then take off again into the stratosphere.”
That’s drinking some serious kool-aid. Real estate prices took 10 years to rise to today’s levels, 3 of those to shoot to the ridiculous highs of 2005. And you think it’s going to take a “nanosecond” to level off and shoot up again? That’s just crazy. Fact is, whether Brooklyn brownstones all cost 5 million dollars in 2 years, which is essentially what you seem to be implying, they are a housing stock minority in NYC and most people cannot afford them. Most housing is unaffordable to the majority of people in NYC and it’s suburbs. Prices will come down. After all, if no one can buy them, who will sellers sell their homes to? And while there are many who will “hang in” there are as many if not more who won’t or can’t. Life happens.
And for the record, I’m in your little “club” of well off professionals, but I just don’t see that today’s housing prices are normal or sustainable.
THIS IS THE FURTURE, BROOKLYN !!!! SURE PRICES WILL SLOW DOWN IN THE NEXT FEW YEARS BUT WON’T DECLINE CRAZY, YOU BETTER MAKE SURE YOU HAVE A PLACE HERE NOW, THINK ABOUT PARK SLOPE …… AS SOON AS THIS HOOD WILL HAVE BETTER STORES AND A NICE CLEAN UP THIS PRICES WILL BE MUCH LOWER THAN WHAT YOU NEED IN PARK SLOPE….. TAKES A FEW PEOPLE FEW YEARS TO CHANGE A PLACE AND THIS HOOD IS GETTING THERE VERY SOON, FOLLOW THE CLINTON HILL SOCIETY MEETING AND YOU WILL UNDERSTAND WHAT I’M TALKING ABOUT.
No, West, we like talking about money. It’s more fun than working, watching tv, or shaving.
I agree with those who say you gotta play to win. I’ve done very well myself in NYC real estate, but it’s because I’ve been lucky, not smart.
Of course it helps to be smart, but luck is far more important. From day one, it’s all about luck. You could be born an orphan in the Sudan or the first son of a banker in Park Slope. It’s all about luck!
Okay people, can’t we all just get along 😉
Jake, First of all, thanks for the comp. To answer your question, it would take several things happening simultaneously to make me truly unhappy:
– A rapid drop in r.e. value
– A rapid drop in stocks
– A rapid drop in income
– A rapid drop in rents
– A sharp increase in costs
If r.e. values simply dropped by 50%, then assuming I had the same income, and my other assets were relatively stable, I would be a r.e. buyer. I’d buy income property, and I’d buy a second home. My quality of life would be the same, maybe even better, because now everything would be more affordable and I could now afford that weekend house I’ve been coveting.
And if rents held stable, conventional wisdom being that a drop in the sales market would actually increase rents, as a higher proportion of the pop sought rentals, then income properties would look extremely attractive at 50% off.
The anon poster @ 11:23 pegged me pretty accurately. All I really have to do is sit tight. We may be over the r.e. peak for now, but I now have a pretty good idea where valuations can go in the next peak, and each peak is usually greater than the last.
To the anon who thinks I am lucky, I’d say that I am fortunate. I would use the term “opportunistic” rather than “luck”. Luck puts you in the right place at the right time. Smarts allows you to recognize the opportunity. Balls allows you to act on that insight.
Can we please stop talking about how much money we make and get back to talking about houses? I’m noticing a softening in the market in some areas and would love to hear other peoples’ opinions.