House of the Day: 53 South Elliott Place
On the heels of last week’s 3.5 million listing on Vanderbilt Avenue, Jerry Minsky is back with another blockbuster at 53 South Elliott Place. The Italianate brick one-family has lots of original details integrated with a very tasteful modern update. It’s a great house but the asking price of $3,700,000 sounds nutso to us. The…
On the heels of last week’s 3.5 million listing on Vanderbilt Avenue, Jerry Minsky is back with another blockbuster at 53 South Elliott Place. The Italianate brick one-family has lots of original details integrated with a very tasteful modern update. It’s a great house but the asking price of $3,700,000 sounds nutso to us. The highwater mark for a normal-sized townhouse (this one’s 3,600 square feet) in the nabe has been set at $3 million—and that was in a better location. The east side of this block (where this house sits) falls within the Fort Greene Historic District (map here). The other side of the street is not landmarked; it also includes the Brooklyn Technical High School, not exactly an enhancer of real estate values. We’d argue that, despite how lovely its interior is, this place should fall well short of that number. A price of $2,700,000 seems possible but $3,700,000? Sheer lunacy. Then again, we’ve learned our lesson about doubting Minsky. Remember 369 Grand Avenue?
53 South Elliott Place [Corcoran] GMAP P*Shark
3:48 said:
“Several months ago I got a commitment for 90% financing (total loan was well in excess of $2mm) at an interest rate of 6.5%. Today, the same mortgage broker gave me a quote for max leverage of 80% (again north of $2mm loan amount) at 7.25%. This change in the mortgage markets means that I could have taken down the $3.7mm townhouse with $370k in May, but now would have to pony up $740k. So if you think there is a small group of people that have $370k in cash for a down payment, how much smaller is the group of people with $740k in cash for a down payment. Also, whereas the earlier 90% loan was interest only, the new loan would require amortization, resulting in a materially higher monthly mortgage payment.”
Of everything that this person so intelligently stated, one sentence jumps out at me:
“Also, whereas the earlier 90% loan was interest only, the new loan would require amortization, resulting in a materially higher monthly mortgage payment.”
This, to me, is the crux of the problem and maybe a huge reason why we’re in a whirlwind of shit right now: shouldn’t all mortgages require amortization? Especially loans of millions of dollars?
How could anyone, even in heady times of prosperity, take on an interest-only loan of 2 million dollars? That is absolutely wacked, IMHO.
I think a similar house on the upper west side, west village or upper east side would fetch close to 6 or 7 million so I don’t think for a second that some of those would be buyers would consider a place in Ft. Greene for half that price.
Brooklyn, in many ways is becoming preferable over Manhattan for numerous reasons.
I like using classic 1950’s modern furniture in an old brownstone but it may be a tad overdone here.
I think it looks like a nice conventional house with regular rooms. Nothing particualrly extraordinary except the price.
I do not think the house is worth 3.7 million, but I don’t think it is worth 2.7 million either, so I am not be on the required Clinton Hill wavelength here.
Houses in Brooklyn Heights go for this much, that’s crazy too, so who knows?
Wow, 3:48, I am also in iBanking industry (though I am back back office so I don’t own a house, nor am I one of the lucky one who gets a six or seven figure bonus) but I would agree wholeheartedly with what you said. I can’t imagine anyone is going to push back on what you have said. I guess it’s truly time for those of us who were priced out of the market a few years ago to sit tight and keep writing those rent checks.
I own a brownstone in CH and happen to work in the real estate group at a major Wall St. bank. I also tend to follow the neighborhood residential market pretty closely and think these prices are absurd. Kudos to Jerry for trying but I think the market is set for a correction, but the sellers and brokers are not yet prepared to believe it. In fact Mr. B., I think your estimate of $2.7mm is also too high by several hundred thousand dollars and might be like $800-$900k off the mark as the market resets over the next 18-months. Here are a couple reasons why: 1) Financial services and related industries are big drivers of residential real estate in NYC (Witness the significant price run up in prices beginning late last year when record Wall St. bonuses were announced). As a result of the credit crisis, much of the deal flow at the banks and private equity/hedge funds has come to a standstill. Query: How long does it take an investment bank to determine viability of paying guys multi million dollar bonuses when those people are not doing deals? Answer: Not long – layoffs are coming. Even for people that keep their jobs, bonuses will likely be down and the outlook for 2008 is not good. So, when people that made $1mm last year look to the future, unless they have lots of cash on the sidelines, most will not be thinking about dropping $3.7mm for Jerry’s very nice, but not especially extraordinary townhouse in Ft. Greene. 2) Mortgages are much more expensive and lenders are requiring larger downpayments. Several months ago I got a commitment for 90% financing (total loan was well in excess of $2mm) at an interest rate of 6.5%. Today, the same mortgage broker gave me a quote for max leverage of 80% (again north of $2mm loan amount) at 7.25%. This change in the mortgage markets means that I could have taken down the $3.7mm townhouse with $370k in May, but now would have to pony up $740k. So if you think there is a small group of people that have $370k in cash for a down payment, how much smaller is the group of people with $740k in cash for a down payment. Also, whereas the earlier 90% loan was interest only, the new loan would require amortization, resulting in a materially higher monthly mortgage payment. In sum, when you equalize the monthly mortgage payments, I could have paid approximately $400,000 more for a house in May with a smaller downpayment percentage-wise than I can today. Hmmm, it’s been a couple years since business school, but I think that the higher cost of financing and higher equity requirements will necessarily have an impact on value. I mean really, how many people have that kind of liquidity and would be willing to sink it into real estate in FG/CH?
I know, I know, there will be many who chime in that I am overreacting (remember I am also an owner so I don’t have an economic motivation to talk down values). Some will have to wait for the annual NYT article about Wall St. bonuses that prints over the holidays and you’ll wait until the WSJ and CNBC are all doing stories about the capital markets slowdown and the subsequent effect on residential real estate values in NYC. But by that time, your neighbors will have caught on and those that want to get out will rush to sell. As more supply floods the market, we all know what happens to prices if there is not enough demand to meet the supply.
Look, the bottom line is that I am closely plugged into the global capital markets and our neighborhood real estate scene and I honestly believe that the credit crunch which has resulted in more conservative lending standards, as well as negative near term economic prospects for finance-related jobs, will result in a reduction in our neighborhood property values. I don’t think there will be a disastrous crash because I do believe that there is adequate interest in our ‘hoods to sustain a reasonable floor. However, a 10-20% decline will bring values back to where they were a couple of years ago and that outcome seems fairly logical to me.
Anyway, best of luck Jerry. If I was willing to make my identity known, I would bet you a thousand bucks that this house doesn’t clear for anything with a 3-handle on it and would probably be willing to bet it sells for less than $2.5mm.
Firstly, how about Corcoran developing some accurate floor plans. The plans posted on their website don’t match the photos. With that said, I can’t believe what I see. The plans show 6 bedrooms and what appears to be 1 usable bathroom, barring the powder room off the kitchen. And contradictory to photo #11, the plan shows the tub in its original SRO configuration, which would have served as a shower. So is there a shower? Photo 11 shows a frees standing tub. Photo 11 also shows 2 windows and a fireplace so are we to assume this bathroom is actually one of the bedrooms, which means the bedroom count is 5 total. what gives?
That price is really insane. People, the house doesn’t come with furniture! And it’s tiny! But there’s a sucker born every minute so maybe it will sell for that.
the previous owner had owned it forever – he died in 2005 – there is a plaque with his name on the sidewalk in front of the house.
south portland is way better deal but its a 3 family and the top 3 floors need a lot of work to get into top shape so it has its issues but for 1mm less that is more than enough to get job done AND u have 5 floors.
I, too, am surprised (and a bit suspicious) that there are no pictures of the back yard. Are you telling me these stylists didn’t landscape their garden?