House of the Day: Stretching It in the Slope
Is it just us or does $1.8 million seem like a lot of dosh for a three-story house of nice, but certainly not extraordinary, quality? We’re sure the block is a good one as the ad says, but both the scale and finishes of the house look modest by Park Slope standards. Or maybe this…
Is it just us or does $1.8 million seem like a lot of dosh for a three-story house of nice, but certainly not extraordinary, quality? We’re sure the block is a good one as the ad says, but both the scale and finishes of the house look modest by Park Slope standards. Or maybe this is one of those cases where it would be worth it to hire one of those consultants to touch up the interiors–the Ikea furnishings certainly detract from the necessary gravitas needed to pull of this price (especially with the top two floors leased through the end of 2006!). Are you folks who know the Park Slope market with us on this one or is our lack of sleep starting to show?
10th Street [Corcoran]
No one can guess the top of the market for sure, but when it starts taking a sizable hunk of cash as a down payment and a $300K salary to afford a basic family home, how much more can it rise? Are salaries rising at the rate of housing? Mine sure isn’t. I also personally know WAY too many people who went for creative financing (3-5 year ARMS, etc…) in order to be able to afford a decent home. When these start coming up and the interest rates have risen two or three points, thus almost doubling their monthly payments due, how are they going to pay their mortgage? I doubt they will have doubled their salaries in the same 3 to 5 year period. They are just betting on the property value rising exponentially in that same time period so they can refinance or sell and cash out. I’m not so sure you can bet on that anymore. Who is their buyer going to be? No one making $600K a year is going to want a moderate 2300 square foot brownstone and there just aren’t as many buyers who earn this much. If you find the right house you will be happy in for years and you can afford to purchase it with a fixed rate mortgage, I still say go for it, but any other move right now is more than a bit risky. Just my opinion.
You said it Brownstoner! The Ikea furnishings just ruin for me.
Agree with Jamzer. When I hear people talk of a “bubble” in the real estate market, I immediately interpret that as either 1) an envious desire of someone who missed a chance to buy hoping for a collapse; 2) someone who may own a home, but wants to sound “cool” because, well, some people think it’s cool to poo-poo anything and everything of value; 3) someone who does not understand what drives markets and is admitting their ignorance, but doing so by spitting in your face at the same time. Bottom line, only ignorance causes people to use the word “bubble” to describe any market. And Greenspan is no exception to that rule.
Doesn’t look like a quality renovation either. For a traditional townhouse, there is way too much bare brick walls. It costs money to properly finish a wall after demolition. Costs more to put up sheetrock or to plaster it. Plus, the kitchens looks awful with the 80s rental unit kitchen cabinets. And what’s that above the red sofa? Are those waste pipes? Yikes! Can Beth Kenkel pull this off? She’ll definitely earn her commission if she does. Ha!
Do you know this is the top of the market?
People have been predicting a housing bubble for 5 years now. I think they are bitter that they keep on waiting for the “bubble” to burst and it hasn’t. I have news for you: real estate prices are a function of supply and demand. Some people might panic and pay more than they have to, but it is not intelligent to think that is what is driving this market. It also is not logical to expect a “burst bubble†to mean that prices will all of a sudden start a free fall. Stabilize or even go down a few percentage points temporarily perhaps, but don’t expect a comparable price reduction like you saw in internet stocks in 2001.
As long as New York City/Brownstone Brooklyn remains an awesome place to live and raise a family (i.e. does not go back to the filth and crime of the 70’s and 80’s) and people are buying a home, as opposed to an investment to flip in 6 months, these prices are sustainable and even make a lot of sense.
Anyone else watching interest rates. 30 year rates are up 5/8 since the beginning of feb. I’ve done some back of the napkin calculations that show that every 1% increase in rates will translate to a 10% decrease in House Price(Salary and lending guidelines held constant). BTW, tommorrow marks the 5 year anniversary of the S&P top… The lemmings bought at the top of the equities market when stocks dominated the ‘water cooler’ converstation. Now that RE has taken over the ‘water cooler’ chatter, are the lemmings again buying a top??
The point is that the brokers are trying to find people to pay these prices. They do not know yet if people will pay them, but they have the hubris to try instead of being decent about this. They are on the slippery slope doing that in my opinion.
Regarding people paying higher prices in the past, I think a lot of it stems from hysteria that if they do not make an aggressive offer and buy in the present, they will not be able to afford a comparable property in the future. This is fueled by the (partly) arbitrary rises in prices (I say partly because a fraction of the rise comes out the people overbidding out of hysteria and setting precedents … its a vicious cycle).
Some more background … a few times I have gone to openhouses lately and a week later there is no bid on a nice property and the broker called and asked for feedback and has the audacity to push for a bid on the property and is in total shock that they did not sell the thing in one day at the stratospheric price they set. When I say that I did not bid because the price was too high for the property and no longer care to be involved as a result, they act even more shocked (for lack of a better word) as though I am from another planet because properties should sell themselves no matter what the price… right?
Its called losing your shirt. That’s how cyclical markets work by buying at the top
I don’t think people actually are paying the prices that have been asked recently on many of these places and if they are, I feel very sorry for them. Market increase is one thing but when a similar house went for only a little over 1/2 the price 3 months ago in the same neighborhood (for example – the $1.6 million place in Fiske Terrace) buyer beware. Something is WAY off.