Friday, August 9, 2013

Closings of Note: "No More Moneyball in Brooklyn"

If you live in NYC, you see some folks still fancy Brooklyn is their own little secret.  Meanwhile, it's actually an international brand with a brand new billion dollar stadium (which already happens to sell more tickets than any other stadium in the country, and ranks #3 in ticket sales worldwide) and a transplanted basketball team with a Russian billionaire owner who just consolidated the star talent core of an entire other city (Boston) into his team.  That's right.  Brooklyn can just gobble up Boston's stars like it's nothing.  But you still go more than 20 blocks in any direction from the stadium, and people start to get the jitters that you're off the beaten path.  What other city in the country is like that?

On Bill Simmon's recent podcast, your boy Nate Silver - noted cult of stats & intellect - mentions his move from Brooklyn to Manhattan and cites "the convenience upgrade".

Boston native Simmons chimes in, "Brooklyn does seem like it's over in the corner."

Silver adds, "The rents are comparable now in Brooklyn and parts of Manhattan...  There's no more arbitrage  - so to speak - in moving to Brooklyn."

Simmons asks, "So the value efficiency of Brooklyn is now becoming not as much of an efficiency?"

Silver says rents have caught up and, "There's no more 'Moneyball' by living in Brooklyn."

Simmons asks, "So what's the next Moneyball neighborhood?"

Silver says, "I think Queens."  With Brownstoner expanding into Queens now., Silver's not the only one who thinks so.

It's true that Manhattan-esque rents have been in Brooklyn for a while.  Manhattan-esque sales prices, as well as Manhattan buyers, are all over Brooklyn now.  199 State Street, #7C fetches asking price of $1.169M, over $1,000 sqft in downtown Brooklyn...

The tower at 1 Hanson Place sells another condo, unit #16G, for just over $1M last month, topping $1,000/sqft pricing with sales in that building for a few weeks & months in a row...


But just a few stops further east, you can still cop a fixer-upper townhouse for the same price, like 1067 Bergen Street, which closed in June for the same price as that condo, and just about $100K over asking price:

But besides the townhome vs. condo value, the inefficiency's still there too.  With huge segments of the market still operating like the Wild West, and no true comprehensive MLS for Brooklyn (or greater NYC for that matter), we see on & off-market deals all day that demonstrate the inefficiency.  Some $39 Billion in real estate traded last year in New York City, but much of it inefficiently.  As we like to point out, it's very difficult to buy something you don't know is for sale.  A broker in Brooklyn told us he doesn't market his properties because "there are too many B.S. buyers out there."  A broker in south Florida bragged to us that the MLS sends daily e-mails for him to all of his clients of basically everything on the market.  He sits back and waits until the buyers tell him what property he sent them that they wanna see.  To say that there's no more inefficiency in Brooklyn is a total mischaracterization.  If anything, Mahattan-type condo prices poking into Brooklyn makes townhomes still at comparable prices look even more attractive - in relative terms.  If you're looking for condo alternative townhomes in Brooklyn between $1M - $1.5M, they're scattered all over.

With much less marketing, just down the street, 991 Bergen Street sold for the exact same price as 1067 Bergen Street.   And with even less marketing than that, 886 Sterling Place goes for $625K!  Could the neighbor now asking under $900K finally be ready for their price?

We scoped the carriage house in Clinton Hill at 91 Irving Place early on.  It closed last month for $1.2M, $500/sqft.  We're told the owners are taking advantage of the buildable square footage and making a nice house out of it.  Another carriage house around the corner at 365 Waverly Avenue also trades last month at a similar level, $1.175M.  If this neighb's good enough for Vinny Chase (who was also priced out of Fort Greene), isn't it good enough for you?

A killer house in prime Bed-Stuy like 187 Hancock Street is worth a write-up on Brownstoner for its artchitectural merits, but you won't see that on your StreetEasy!  And you can't duplicate a purchase like this in Harlem.  Closed for $1.52M in June

A vacant 3-Family in Bed-Stuy at 531 Madison Street closes for $1.125M in June, right around asking price.

Even on a flip, 577 Jefferson Avenue was a beauty that still needed some work, and didn't last long on the market.  In our book, the closing price of $1.2M still beats anything you can find in Harlem AND beats the $1,000/sqft Brooklyn condo.  And if you can still get on the same block for even cheaper than this without Corcoran, well then how exactly is there "no 'Moneyball' left in Brooklyn"?

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