Saturday, April 26, 2014

Closings of Note: Altitude Sickness

The Brooklyn real estate market continues to baffle most, but it's a pretty simple equation.  Supply is at historical lows, demand is at an all-time high, so prices are breaking records.  Our city is filled with spectacularly wealthy people, so all it takes is a few to decide Brooklyn's suitable for them to drive these prices up ever higher.  It shouldn't be a mystery why its happening, but the result is prices that give even the most seasoned observers altitude sickness, including us.  $1,000 square foot condos are kinda scary for buyers to think about occurring consistently in brownstone Brooklyn, even though they're over $1,200/sqft in generic Williamsburg already.  But the $1,000/sqft townhouse??  That's even scarier!  Come on down to the 3-story 53 2nd Place - just 19' wide on just a 65' lot!! - which sold this month for $2.45M, or over $1,000/sqft for a townhouse.

Remember the innocent days of 2013 when a shell in prime Fort Greene asking almost $3M was actually a little suprising?  6 South Oxford Street wasn't just a fixer-upper either.  It needs EVERYTHING.  Like we've seen better interiors in the dungeons of the Saw IV movie...

The old Silvershore operation snagged it for $1.3M in 2013, and now they've sold it for $2.25M this year.  And just who was such a glutton for punishment to take on this massive project?  Why none other than savvy folks who bought 296 Dekalb Avenue in 2012 while wanna-be's were still trying to use 287 Dekalb Avenue as a comp over a year too late.

Given this activity, are you actually still surprised when Stuyvesant Heights gems listed for $1.25M "soar over asking price" to $1.5M??  The day it listed, we told Platinum Members to run (not walk) to the limestone trophy piece at 106 Bainbridge Street with its list price of $1.25M.  It closed for $1.5M last month.  Platinum Members passed on a similar house a few doors down pre-market around this price range, and now it's coming to market with a renovation and higher price tag - no surprise.  This house, unlike every other one in Bed-Stuy that claims it, actually IS next to Peaches, y'all!

And Crown Heights still offers value as another healthy 3-Family fetches its asking price.  1277 Bergen Street didn't even need interior pictures to close for $1.495M this month.  Still hard to believe people were trying to doubt limestone gems even closer to the train like 1134 Bergen Street for almost 20% less, while this 1277 Bergen was sitting in contract for asking price.

In the condo space, hop on over to Park Slope where a generic brownstone condo conversion at 482 7th Street sells another unit for over $1,000/sqft.  Buyers from Chelsea paid over $1.1M for one floor of a brownstone.  We told you about those million dollar floor-thru apartments.  Even at these high altitudes, there's still room for comparative value.  Some buyers from Chelsea opt to put their 20-25% down on a million dollar condo in Park Slope, others opt for the million dollar brownstone in Bed-Stuy.  The prices are expensive, but as they say, "It's a free country."

The 3-story Park Slope house at 408 9th Street isn't "fat", it's just "big boned".  Or so at least the brokers called it when listing for $2.1M, then $2M, then closing it for $1.9M with a just 20% down to buyers from 8th Street.  $700/sqft was no problem in this market.  And cash buyers aren't the only ones telling the tale out here.

Or if you want even more value in Park Slope, then cop a unicorn like 394 10th Street like we tried to tolja' almost 2 years ago now.  Nevermind that it's an occupied SRO and went way over initial asking price.  4-stories for under $1.5M is still gold in this market.  It took a long time, but it closed this month for $1.425M.

Or slide on over to Bed-Stuy where value still abounds.  But don't take our word for it, ask folks coming from Manhattan.  380 Herkimer Street looks like a gnarly location if you simply Google Map it.  And sure it's only 17.5' wide, 3-stories, and traded for a paltry $450K last year before undergoing a generic reno & restoration.  But that didn't stop buyers from Chelsea from picking it up for $950K this month with just 20% down.

Quick flips on the outskirts of Bed-Stuy being picked up by Manhattan buyers?  Yup, read 'em & weep again as 946 Greene Avenue goes to the developers for $410K last year and closes for almost $1.1M this month.  For those of you who are too good to venture out to Malcolm X Blvd, note that this buyer came from the East Village.

768 Hancock Street 'twas but an 18' wide, 3-story house all the way out in Bed-Stuy between Patchen and Ralph Avenues, near Bushwick.  Nothing special when it closed for $357K last year, but the quick & dirty renovation was underway soon.  It listed for $1.05M this year and cruised to a $980K closing last month to a buyer from Jersey City with 25% down.  Seen this movie before?

It's becoming rare to source houses that cheap anymore, even in distressed situations, as developers and their brokers have been complaining to us recently.  Take the tiny, well-situated, nothing special 616 Lincoln Place.  Rather than going to foreclosure, they sold off-market for $750K this month.  Right off of Franklin Avenue, the buyer's gotta be assuming there's enough meat on the bone here.  But don't try a purchase like this on your Streeteasy or NYTimes.

It should be no wonder that 332 Lefferts Avenue got over asking price with its refinished exterior, driveway, proper listing, and nice interior.  The house closed for $945K in February.  By the time this was in contract, the next round of finished two-families over here were in bidding wars all-cash over $1.2M.  So don't be surprised that small houses like this command into the $900K's and more in Lefferts Garden, and brace yourself for these prices to go higher as the money simply has nowhere else to go.

Case in point, perhaps you've digested Lefferts into the $900K's by now (even though there are $1.8M's there too these days, and the $900K's of a few months ago are the $1.3M's of today)... but don't look now!  Even Sunset Park comps are well into the $900K's too!  528 51st Street closes for $990K in January.

Asking $5M in 2012, which represented an incredible cap rate at mythical pro-forma rents, the prime time corner Cobble Hill location of 228-230 Court Street could not be disputed.  This funeral home poised for repositioning finally closed last month for $4.55M, an incredible 7.5% cap at projected rents.  But we're far from those projections yet.

And so many more closings to cover another day...

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