Have the Bears Descended on Brooklyn??: 374 Pacific Street

When the New York Times called us "bullish" on Brooklyn, we couldn't help but smile.  Is there any other position to take in this market?  But a recent contract signing in Brooklyn could spell doom and gloom for all those bulls out there.  Perhaps we were wrong all along, and it's the bears who are controlling this market.  The market must be cooling off, right?  A stunning 5-story brownstone, renovated from head-to-toe, drops its asking price one million dollars after flailing on the market for months.  Then, it goes into contract for a price that's over a million dollars less than its latest price!!  In Brooklyn, the land of buyers still searching for million dollar brownstones, a house has to drop its price by over $2M just to sell?!  Is this the canary in the mineshaft for the onset of the bear market??

374 Pacific Street is a killer house to be sure.  Feast your eyes on what 26' wide and the best natural light in a brownstone money can buy actually looks like...

The listing has the house "boasting almost 7,000 square feet of interior space", Smart Home technology, zoned central A/C, and a 35' atrium.  The list of bells & whistles goes on.  So why does a home this huge and this gorgeous have to undergo a 30% price cut to get a contract??

Well, like many things, it's all a matter of perspective.  Can we really say it's "bearish" when a house first listed just under $8M goes in contract for well over $5M?  Is the glass over $2M empty?  Or over $5M full?


Just what is a bear anyways?  "Contrarians" in markets pride themselves on taking a position opposite to everyone else's.  You can read lots of contrarian "investors" who hate on Wall Street's bull market cycles.  They're kind of like the proverbial broken clock.  They're basically wrong all the time, holding out for that one time every 10 years or so when they're actually right.  Take a look at the 100+ year chart on the Dow, and you'll see how rare the bearish times really are and how short they last...

The chart on real property in NYC in the past 100+ years doesn't look too different.  The fabled million dollar brownstone is becoming almost a thing of the past in New York, including Harlem and the rest of upper Manhattan, and of course Brooklyn.  That still doesn't stop novices from looking for them in the most no-brainer neighborhoods.  However, back in 2009-2010, you could actually find them.  Perhaps back then you were among the many watching their net worth evaporate by as much as (or more than!) half during the financial lows of 2009.  The financial crisis created opportunity for savvy buyers poised with the capital to pick things up in prime areas north of a million, and sell them for much, much more today.

Cue 374 Pacific Street, whose most recent list price of $6.95M reflects over a 500% increase from the $1.335M it was purchased for in 2010.  Many covered the story of neighbors receiving a million of that, from Curbed to The Real Deal and beyond.  We tend to focus on the fact that this is another house (as "far east" as Bond Street!) selling in Brooklyn for over $5M.  That's bullish activity in our book.  Although, don't over look, this house sells for closer to $10M anywhere in Manhattan.  And it's still just over $800/sqft for a huge, unique house in a neighborhood where condos sail above $1,000/sqft.  So let's keep it all in perspective, people.




Pro's:  curb appeal, size, totally renovated, immense price flexibility, unique width, tons of natural light, price per square foot almost isn't even shocking (comparatively), high-end end-users dream of this

Con's:  well over $5M ain't cheap, renovation isn't everyone's taste, certainly doesn't qualify as an "investment" per se, where were you in 2010??

Ideally:  not what we'd spend this kind of money on, but it still beats the Triangle Sports Building any day.  If you had this kind of money to invest, we'd lean towards buy & hold properties grossing well over $200K/year that still sell for less than this.  But there are $5M+ condos in Manhattan that would drool over this house.