Thursday, June 5, 2014

Closings of Note: Numbers Don't Lie

No fewer than 5 people reached out to us this week about their search for "a live-able fixer upper in Clinton Hill for a million".  Where are these expectations coming from?  Even 3-4 years ago after the financial crash, that only happened a handful of times a year.  Even 2 years ago live-able fixer uppers in Clinton Hill could command $2M, then last year sell out for a million dollars or more PER FLOOR (people!!) as condos, like 338 Clinton Avenue.  So what seller in their right mind wants to sell their entire house to you and only you for less than people pay for condos in the area?  Were you not there well over a year ago when 375 people showed up in the cold at an open house for 102 Gates Avenue for well over a million?  When one of those people got the house, did the other 374 people just stop looking?

How do we explain that even the off-market live-able fixer-uppers in Clinton Hill trade these days from $1.85M (like 123 Gates Avenue and 395 Grand Avenue) to well over $2M?  And the really special ones can go much higher.  Cue 53 Cambridge Place, a 22' wide beauty in Clinton Hill that needed work.  An off-market deal on Platinum Member radar for months that big brokers worked, closing for $2.575M last month to buyers from DUMBO.  You weren't there when that deal was worked off-market this year, and you weren't there when even the flippers who sold it to them had to spend $1.4M+ to get it last year (not $1M or less).  The property lasted 3 days on Zillow last summer with a $1.79M asking price.  This year it lasted a few months off-market before fetching 80% more than it sold for last year.  But at every step of the way, a $1M purchase had nothing to do with anything.  If you're holding out for that once a year short sale all cash that actually does trade in Clinton Hill for $1M or less (one is being flipped as we speak off-market for $2M+), make sure you've got the funds and the stomach for what that takes to pull off.  Or hop in the time machine and go back 4 years to the glory days when SRO's in Clinton Hill still went for under a million.  Now we have sight unseen cash offers on occupied SRO's in Crown Heights well over $1M, people.  The numbers don't lie.

What else trades for over $1.4M in Clinton Hill??  Even a generic new construction piece lodged between Fulton and Lefferts Place at 478 Grand Avenue.  Wasn't looking too pretty in 2010, but then the brownstone front & renovation helped it close for $1.425M in April.

When the first stab at making up a price and a neighborhood proves unfruitful, lots of buyers start naming other neighborhoods they're sure must be bad and therefore within budget.  "Crown Heights isn't gentrified" we keep hearing, but then you go to Crown Heights and see a renovated 4-story trade barely on market for $1.55M last month like 852 Park Place with $300K down to buyers from nearby.  Whether the commercial strip nearby is quote-unquote "gentrified" in your book or not, sure doesn't stop people from paying more than you expect the neighb' to cost.  Where were you last year when the seller got it for $600K as an SRO with tenants in need of a gut and would've gladly flipped it to you for just over a million?  We were in & out of it with Platinum Members who proudly passed.

Or for a look at what Crown Heights commands for vacant SRO's with Certificate of Non-Harrassment listed with a big broker, try your hand at 1082 Dean Street.  A no-brainer off of Franklin, that closed last month to buyers from Connecticut for full asking price of $1.599M.  Where were you when this bad-boy was showing last spring asking just over a million and closed last fall for a million?  We were in & out of it with Platinum Members who proudly passed.  So, while vacant SRO's with certificates in need of a gut trade for over $1.5M, people are still asking for live-able million dollar fixer-uppers in this neighborhood or better.  Go figure.  Makes the at-the-time shocking $1.7M number for the already-renovated & rentable neighbor 1062 Dean Street look like a total steal comparatively!  When the shockers become the steals in barely 6 months, you know you've got a hot market on your hands.

But let's take a look at where a purchase price of $1M actually DOES buy you a house, and in what circumstances.  Because the neighborhoods most people scoff at are pushing $2M now for the best product, and well over a million for the gut renos.  Renovated 3-story flips without permits in Bushwick are going for over a million now, with Corcoran brokers and lesser-marketed independent brokers.  But let's look at the data.  'Cause "men lie, women lie, numbers don't..."

195 Macdonough Street, a vacant SRO in Bed-Stuy, in need of a gut, delivered with C of NH, trades for $1.024M all cash last month.  On Platinum Member radar for months, 4 cop cars and 6 police offers showed up when we toured the vacant building on a snowy weekend day this winter, wanting to vet the broker and buyer and double-check what was going on.  And you still think Bed-Stuy is too dangerous!  Even a harmless real estate showing elicits a mini swat team.  With a Corcoran listing for $1.25M in the pipelines, the buyers who were balking pre-market got motivated and took it down.  It's not live-able fixer-upper in Clinton Hill, but this vacant off-market SRO in Bed-Stuy in need of a gut... that's a million!

Prepare to be underwhelmed by the generic renovation at 1080 Greene Avenue.  Not Fort Greene "Greene Avenue", or Clinton Hill "Greene Avenue", or even Bed-Stuy "Greene Avenue"... this is Bushwick's Greene Avenue.  Closed in April for $998K.  Even we can't sleep on Bushwick anymore, and a huge development site with ambitious expectations for condo price per square foot is going on around the corner.  If you want Bed-Stuy Greene Avenue for anywhere near this price, it's gotta be something like 413 Greene Avenue, off-market for $960K all-cash.

Or how about a generically renovated 3-story "deep in Bed-Stuy" at 124 Malcolm X Boulevard, which just closed for $999K?

You ready to see what $999K actually looks like in Crown Heights?  Hop on down past Kingston Avenue where Corcoran proudly brought you 1123 Park Place with an $800K list price and a hilarious listing at the end of last summer.  "PHOENIX...LIKE A PHOENIX RISING FROM THE ASHES, 1123 Park Place is waiting to reborn," they said.  Which only sounds absurd if it weren't totally true.  They even coined the hashtag #fixerupper!  A 3-story 2-Family fixer-upper for a million past Kingston?  No wonder the fixer-uppers off of Franklin Avenue want and easily command more.  While half you Clinton Hill renters still think your 'ish don't stink and you got no business having to go any further east, buyers from the Bed-Stuy end of Clinton Hill took this one down.  Albany projects at the end of the block included.

Or, try your hand past the highway where south Slope becomes Greenwood, for a vinyl-siding 3-story that sold barely over asking price.  289 18th Street closed for $999K last month to buyers from nearby.  This estate sale is certainly a far cry from that Clinton Hill brownstone for a million they keep scratching their heads looking for.

Another fixer-upper for over a million in Bed-Stuy?  That's just how Brooklyn's living.  378 Halsey Street listed for $1.13M and sold in a flash to a property group from Central Park South.  Why are you too good for Bed-Stuy again?  Right, because folks like the Central Park South crowd are so beneath you.  It closed last month for $1.075M.  If you didn't have the cash to buy it, or the cash to fix it up, of think you had to go this far east to get it done in this price range... then remind us why Bed-Stuy is beneath you.  As we've been saying for years, by the time the neighborhood looks the way you think you want it to look, it won't cost what you want it to cost.  It just is what it is.  The numbers don't lie.  Has it already been a year and a half since we warned, "By the time you realize that you're not too good for Bed-Stuy, Bed-Stuy might well be too good for you"??  If you want an even better deal that 378, just go right down the street to 304 Halsey Street where a similar house just went for $800K.  But don't try that on your Streeteasy, and don't think that was top market price.  That sale was kept within the family.  Not really a true market comp.

Or come on out even further into Bed-Stuy, past Ralph Avenue, where a 3-story like 541 Decatur Street with sick details soars way over asking price of $999K.  It closed for $1.175M, people!  And that's with over $250K down.  So gosh-bless ya when you call us with your $200K in the bank.  That is certainly an affluent chunk of capital to have at your disposal.  But remind us what it's got to do with purchasing a fixer-upper for $1M in Clinton Hill in this market?

Oh, here's something basically in Clinton Hill (or a block across Atlantic from it) for a million!  A new construction condo!  It's 925 Pacific Street, #401 which just closed for $995K to a buyer from everyone's favorite block in Fort Greene, South Oxford.  Almost $400K down?  Ouch!  $200K down isn't even moving the needle on condos in Clinton Hill, y'all!  This is why the fixer-upper just ain't in reach in that neighb'.

Everyone's salivating over 1388 Union Street in Crown Heights south, a no-brainer Corcoran listing for $1.695M, styled to the 9's for all to see and gush over.   But when that house was selling for $999K earlier this year, so was nearby 1348 Carroll Street, a nice single-fam that went for $1.165M.  Yet again, farther than the masses wanna go, no rental income, and more than that $1M budget.  Numbers don't lie.

Back on the north side of Crown Heights, 1290 Bergen Street was a 3-story barely on the market.  $999K cash closed it last month.  Another far cry from Clinton Hill, and not even "close to Franklin", but a totally nifty deal.  The latest thing to close near Clinton Hill for under a million was off-market, all-cash, 16' wide, on the Bed-Stuy end, and has a registered sex-offender at the premises.  Probably not what the masses had in mind.  But we're sure they'll pile in for 40%+ more when the reno's done and the open house trumpets blare. 

The crown jewels of Bed-Stuy just keep going higher and higher.  We told ya months ago that the stunning 260 Decatur Street was in contract above its asking price of $1.85M.  Well, the closing has been recorded for all to see.  It closed last month for $1.95M with roughly $600K down.  Yowza!!

"Oh, but the schools!"  - You think these people don't care about their kids?

"Oh, but the lack of amenities!"  - You think these people don't want or can't afford fawncy places to go?  Or that places that suit them won't strive for their business?

"Oh, but the crime!"  - You think you know what the crime is really like in neighborhoods you never even go to?

Here's a thought that occurred to us... what if your perceptions about crime & safety in these neighborhoods that you CAN afford are just as bologna, self-concocted, and unrealistic as your expectations for pricing in the neighborhoods that you CAN'T afford?  If you don't even know what live-able fixer uppers cost in your own hood, how the heck do you know what crime is actually like in the neighborhoods you never go to?  As the NYPD tweeted, someone was shot on our block a few nights ago.  Not a very savory welcome to the neighborhood.  But the next day, the sun was shining, grandmothers sat on their stoops with their grandbabies, bikers were on their bikes, children played ball, cops patrolled, students went to school, people went to work, hair was braided, loosies were sold, crack was dealt, apartments were rented, lattes & hamburgers & IPA's & jerk chicken & cuban sandwiches were cooked & consumed... life goes on.  If you want low prices and zero crime, you're in the wrong city, yo.  But feel free to tell us what city that is!

"Well, at least there's always Lefferts..."

Right, like the decked-out 219 Fenimore Street which listed for $1.175M and closed for $1.3M.  A 3-story in Lefferts certainly doesn't cost what it used to.  Buyers from DC, not known for being the safest or cheapest town in the country either, took it down.  With $400K down, this is a far cry from the Clinton Hill live-able fixer-upper for a million with $200K down.

Or maybe you're more of the detached Victorian type, where across the street 214 Fenimore Street listed for just under $1.6M and just closed for $1.475M.  Wanna-be's are huffin' & puffin' about nothin' with million dollar expectations in neighborhoods where that was barely barely possible during the largest financial crisis in our lifetimes, while buyers from Park Slope are putting $1M down on houses in Lefferts for $1.5M and up.

On Platinum Member radar months before it came out, 104 Rutland Road was asking the local rowhouse record of $1.85M.  A "mere" 18' wide, the house got full asking price last month from a buyer from Park Slope with $500K down.

But they don't hear us, though!


  1. 260 Decatur Street for 1.95mm was financed by yours truly.

    70% Loan to Value (we could have done 75%)

    Appraisal came in at 1.92mm which is great news for the high end Bed Stuy market.

    Adam Dahill
    Mortgage Loan Originator
    Mortgage Master Inc.
    135 West 50th Street, 18th floor
    New York, NY 10020
    Office: 212-351-8020
    Cell: 917-696-6010
    NMLS ID: 66099

  2. I decided to check your numbers, and lo - they don't lie. In Clinton Hill only 8 1-3 fam or store buildings sold for less than 1 million; 1/2 of those were under 500k so likely refi or selling to the kids showing up as sales. 24 went for 1-2 million, and 12 went for 2-3 mil. 3 went for 3+ fwiw