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Category Archives: My 2 Cents

My 2 Cents: Bubble, Bubble, Toil and Trouble?

By Donald Brennan | Published: July 9, 2012

Note: This update went out to our exclusive clients the week of May 7th. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealtyservices.com

If you follow the national housing market you are bound to come across data and opinion generated by Robert Shiller (co-author of the S&P/ Case-Shiller Housing Indices).   In a recent piece for the Financial Times titled The Property Predicament he questions the societal benefit of the dramatic increase in home prices.  The theme is one he has based his newest book on – Finance and the Good Society. Here is a passage from the FT piece:

“Note that in the latest bubble home prices in the US and the UK rose rapidly relative to the cost of renting. It was not a rental boom. It was thus financial in origin, not caused by a rise in the real scarcity value of housing services that people want to consume. It was instead a change in the investment demand for ownership of a claim on a stable flow of rents.  Before we can answer what would be the effects of large future home price increases relative to rents, we would have to ask why those increases would be happening. Let us consider why they increased the last time, in the early 2000s. The reasons are basically the same in both the US and the UK.  Price increases were related to a loosening of credit standards (continued…)

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My 2 Cents: Heading in Different Directions on the Same One Way Block

By Donald Brennan | Published: May 24, 2012

Note: This update went out to our exclusive clients the week of March 12th. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealtyservices.com

It’s hardly ever an apples to apples comparison when it comes to Brooklyn brownstones. But in the case of two nearly adjacent properties on Garden Place in Brooklyn Heights you would think you would have the chance to net out the typical handful of variables and end up with identical fruit. Not the case however with 26 Garden Place and 36 Garden Place. 36 Garden has only been on the market for a few weeks so it is too early to say how the market will view the opportunity but its asking price of $10,000,000, or $1,820 per sq ft, is in stark contrast to 26 Garden at $4,950,000, or $1,100 per sq ft. I have not been inside both properties but according to the broker blurbs both homes have been renovated and have at least grade-A kitchens. What gives? 26 Garden set out a little over a year ago to test the higher end of the price range but has had to retreat in search of a price floor that will attract attention. Five houses north on the same side of the street 36 Garden is in search of a hyper local record, on a dollar per square foot basis anyway. “Unique” and “rare” they are indeed as no one is making anymore brownstones and demand is stable, and possibly increasing, so we will have to wait and see who is headed in the right direction.

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My 2 Cents: An Elegant Solution – The Lamb Institute in Thirds

By Donald Brennan | Published: May 21, 2012

Note: This update went out to our exclusive clients the week of February 20th. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealtyservices.com

355 Henry Street (aka one-third of the Lamb Institute, 110 Amity Street) was recently brought to market as a single-family home – not quite a townhouse, but vertical townhouse type living nonetheless. The division of the entire building into three townhouse type properties is an elegant solution that eluded many that had previously tried and failed over the past 6 years to redevelop the property. Today it was reported that 355 Henry is in contract. The 4-story 3,200 sq ft recently rehabilitated property is listed at $3,850,000, or $1,200 per sq ft. While the home appears to be configured appropriately for “family” use the property has no yard and the entrance is on the rear of the building. And while it has three exposures its corner location on Amity and Henry Streets is not 100% residential. These less than favorable attributes do not appear to have negatively impacted the sellers ability to achieve what may work out to be a strong sale price. More evidence that the local townhouse market is out of balance with demand continuing to exceed supply.

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My 2 Cents: The je ne sais quoi of Sackett Street

By Donald Brennan | Published: May 17, 2012

Note: This update went out to our exclusive clients the week of February 11th. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealtyservices.com

473 Sackett Street is in contract after only 25 days on the market. Seems like only yesterday I was tweeting about my visit during the broker preview on 1/25. Property showed very well – ie no clutter, well lit naturally and artificially and was decorated tastefully. The asking price is $1,695,000, or $807 per sq ft for this 3 story 2,100 sq ft 2-family (20’ x 35’ x 3 floors). The comment I made on Browstoner the following day, 1/25, sums up my view on price – “asking is a slight premium over 452 Sackett on a per sq ft basis, which sold last year. I would say this property is in better condition than 452(I’ve looked at both properties). The gross asking price on this is in the same ballpark as 70 2nd Street, on market this time last year – had multiple offers and traded above ask. In case anyone forgot.” The takeaway: Limited supply still supporting appropriately priced properties. Tweet from the broker preview – “Just walked through 473 Sackett Street. Tastefully decorated and thoughtfully rehabilitated. 2bd duplex over 1bd garden rental.”

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My 2 Cents: The Curious Case of 319 DeGraw Street, Cobble Hill

By Donald Brennan | Published: May 14, 2012

Note: This update went out to our exclusive clients the week of February 6th. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealestate.com.

This townhouse + vacant adjacent lot combo was brought to market in July of 2011. The then listing broker priced it at $3.2M, or $1,070 per sq ft, if applying solely the house square footage of 3,000 sq ft to the asking price. If you back out approx $600,000 ($175 per buildable square foot (price of land in that neighborhood) x 3,400 sq ft (allowable building square footage on vacant lot) you are left with $2.6M, or $866 per sq ft. The average comparable home price for closed deals in that location is approx $700 per sq ft (as of late fall 2011). So the original listing price overshot the market by about 20%. That makes it easy to understand why it lingered when other properties were in contract within a matter of days of being listed. So after a broker switch in November 2011 the property (house + lot) is now listed at $2.6M, or $866 per sq ft. And if you reduce $2.6M by the same $600,000 used above to approximate the value of the vacant lot you have an asking price of $2M, or $670 per sq ft, which is 5% below the average comparable. The property has been on the market a total of 218 days from its original listing date and 85 days since its last price adjustment. Average days on the market for the comparable set is 57.

What gives? The property was obviously not priced appropriately from the start. In this day and age of greater transparency, properties that are priced inappropriately have the potential to be deemed undesirable by the entire buyer pool if interest is not immediate for reasons other than price. More days on the market have always resulted in discounts to the original asking price but now the “undesirable” stigma may be putting more downward pressure on the perceived discount.

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My 2 Cents: Going Ground Up – The Price of Land?

By Donald Brennan | Published: May 7, 2012

Note: This update went out to our exclusive clients the week of February 1st. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealestate.com.

There are two vacant/un-built residential lots for sale near the corner of Hoyt and DeGraw Streets in Boerum Hill. 411 DeGraw Street is a 20’ x 80’ lot with an allowable building envelope of 3,200 sq ft, asking price is $835,00. 259 Hoyt Street is a 20’ x 60’ lot with an allowable building envelope of 2,400 sq ft, asking price is $565,000. The current asking prices on a buildable square foot basis are $261 and $235, respectively. These prices are a 30% discount to their original asking prices and need to go lower to make a ground up project feasible. The price of land varies from neighborhood to neighborhood and I believe the appropriate price for land is this location is $175 per buildable square foot. This would be a good starting point to undertake a single family project. Let me know if you are interested in a ground up project in this or any other location and we can provide you with all the insight necessary to carry-out such a venture

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My 2 Cents: Not All Townhomes Should be Priced Equally

By Donald Brennan | Published: May 1, 2012

Note: These posts are a part of our weekly email updates that we send to our exclusive buyer and seller clients, weeks in advance of posting them here. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealestate.com.

Not All Townhomes Should be Priced Equally
The Elliman Report for the 1Q12, prepared by the appraisal firm Miller Samuel, was published this week. The numbers for brownstone* Brooklyn reflect what our team at Brennan Realty have been observing first hand (and mentioned on our blog over the past few months) – average sales price increased year over year by 54%, from $1,120,733 to $1,730,000, and the median sales price for 1- to 3-family homes increased 41%, from $950,000 to $1,342,500. Inventory is tight – number of sales decreased from 95 to 70, or -26%, year over year.

The lack of inventory and strong demand are exerting upward pressure on pricing and sellers and their brokers are trying to ride the wave in hopes it continues to swell and not crest. This is no surprise – human nature on display. So it comes with a bit of a surprise that a couple of homes we are tracking have quickly adjusted their respective asking prices downward. 94 Bergen Street – after only 32 days on the market – has had its asking price adjusted downward by 9%, from $2,195,000 to $1,995,000. 122 2nd Street – after only 30 days on the market – has had its asking price adjusted downward by 6%, from $1,695,000 to $1,595,000. We interpret this as a sign of a motivated seller. So since we have been in both of these properties we understand why the asking prices have been adjusted down. If you would like to discuss these two properties or any other property on the market don’t hesitate to contact us.

*Miller Samuel defines brownstone Brooklyn as – Boerum Hill, Brooklyn Heights, Carroll Gardens, Clinton Hill, Cobble Hill, Cobble-Hill West, Downtown-Fulton Ferry, Downtown-Fulton Mall, Downtown-Metrotech, Fort Greene, Park Slope, Park Slope South, Prospect Heights, Red Hook and Windsor Terrace.

The entire Elliman Report for 1Q12 can be found here: Elliman Report PDF.

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My 2 Cents: The Bridge to Somewhere…

By Donald Brennan | Published: April 18, 2012

Note: These posts are a part of our weekly email updates that we send to our exclusive buyer and seller clients, weeks in advance of posting them here. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealestate.com.

I was out with a buyer client last week looking at some properties in the Gowanus catchment area and found myself standing on the very quaint and small-townie Carroll Street bridge. What a fantastic structure! The mechanism that makes it swing out of the way so water borne traffic can make passage is clearly visible from the walkway of the bridge. The cables, wheels and spindles are both brawny and simple. I’m not sure how long the bridge will remain in its current form, but one thing I do know is that this area is on a one way path that will see the replacement of light industry and commercial use with residential uses sooner than one might think. If your housing needs are anything but short term and you are looking for hidden value I would suggest taking a look at buying opportunities in or adjacent to this neighborhood. Care does need to be taken though as some sellers and their brokers are getting a little ahead of themselves with regards to pricing. That said there are properties that are priced right and give you room post-acquisition to invest in the necessary improvements. Let me know if you would like us to bring opportunities we feel might be worth pursuing to your attention, if you are not receiving them already.

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My 2 Cents: Days On Market – Trending Down?

By Donald Brennan | Published: April 10, 2012

Note: These posts are a part of our weekly email updates that we send to our exclusive buyer and seller clients, weeks in advance of posting them here. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealestate.com.

Just about a year ago I observed strong demand (in advance of the lagging quarterly reports) for 2-family properties. I blogged about it here. Now, 12 months later at the front end of the listing season, demand is as strong and possibly stronger than it was back in March 2011. A sample of recent listings supports my observations:

355 Henry Street, asking $3,850,000, or $1,400 per sq ft, this half completed project entered contract after only 28 days on the market and is now reported to be closed.
455 ½ Henry Street, asking $2,695,000, or $1,123 per sq ft, reported to have an accepted offer after only 7 days on the market.
208 Warren Street, asking $2,950,000, went into contract and closed after only 4 days on the market.

This is obviously not great news for buyers in general, but it should provide you with confirmation that while making a commitment to a brownstone purchase is indeed intimidating, there is follow-on demand that should support your purchase price and necessary improvements. If not immediately after your purchase then soon thereafter. It is my opinion that while supply may increase due to the price points being achieved by current sellers it will still remain constrained as it relates to overall demand. So while there may be a few more homes to choose from there appears to be less time to make your decision. We are here to help you get comfortable with opportunities that meet your needs and provide you with enough information to act with confidence. Don’t hesitate to contact us now via email: dbrennan@brennanrealestate.com or telephone: (917) 568-6525

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My 2 Cents: The Price of College [Place] Goes Up

By Donald Brennan | Published: April 2, 2012

Note: This update went out to our exclusive clients the week of March 4th. If you would like to be put on our exclusive distribution list, please send me an email:dbrennan@brennanrealtyservices.com

While the market is very warm to almost hot for townhomes located in the more desirable brownstone neighborhoods delivering unfinished vanilla boxes is something I haven’t seen since the heady Manhattan warehouse conversion days of the late ‘80’s. Now comes this – listed just 20 days ago 14 College Place had a price increase of 20% on March 3rd from its original asking price of $5,125,000 (or $1,350 per sq ft). Currently. 14 College Place and 12 College Place (a rebuilt commercial building adjacent to a line of charming carriage houses) are currently being marketed for $5,950,000 (or $1,565 per sq ft) and $5,125,000 (or $1,348 per sq ft), respectively. While I am bullish on Brooklyn real estate as much as the next guy, and of course wish the developer and listing agents for these properties all the best, these prices certainly seem aggressive. Especially when considering that at least another $50 per sq ft will need to go into these buildings in order to finish the kitchens and baths (at the buyer’s expense). I guess we’ll just have to wait and see!

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