We read with curiosity today the headline article from the New York Times Real Estate Section advising readers on "How to Spot a Good Deal". Although the article is certainly
When we saw this unit back in April (it's #E607 at 575 Grand Street, the East Village Co-op Building), we thought it was an "ok" deal. Priced at just $425,000 for 800 sq ft (not including a good-sized balcony), the well-maintained unit certainly seems reasonably priced, especially when compared with similar units on sale at any of the four Co-op Village buildings and certainly when compared with the rest of lower Manhattan. If you poke around a little though, you may notice that Gary purchased his 1BR unit in 2004 for just $350,000, a price that does not seem unreasonable today given that housing prices on average in the US are at mid-2003 levels. Add to that the recent discussion on Streeteasy regarding the impending financial problems at the Co-op Village boards, including the recent decision to raise the "rental tax" (the amount apartment owners must pay to the board if they sublet their units), to a shocking 150% of maintenance per month. Still a deal? Looks less so, no?
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There may be another hurdle for a buyer there: According to the comments in the UrbanDigs thread linked below, the Coop Village board has been known to exercise its right of first refusal and buy apartments that they think have sold for too little. As I understand it, Coop Village is a condop not a true co-op- an important distinction as co-ops do not have the right of first refusal, while condos do.
http://www.urbandigs.com/2009/06/armageddon_price_discovery_to.html
You're all wrong. This apartment is in East River. The 150% sublet fee was in Seward Park. The co-ops are completely unrelated. There is no such thing as "co-op village" anymore. They are independent co-ops. Anyway, since this posting, the new co-op board at Seward Park overturned that 150% sublet fee at their first meeting. Incidentally, Seward Park has just about the lowest maintenance in the city, about 70 cents per sq. ft. East River is pretty low as well though they may be closer to $1/sq.ft. by now. So any sublet fee must be looked at in context. If your maintenance on a 2 bedroom, 1,100 sq. ft. apartment is only $680/month, you're sitting kind of pretty even after tacking on a sublet fee.
As for East River being a condop, I don't know where that is coming from. It has been a co-op for over 50 years. The reason that person purchased his apartment for only 350k in 2004 was because prices were still rising at that point from when the co-ops deregulated back in I think 2001. There used to be a cap on how much you could sell your apartment for. That cap was lifted, and the market was flooded with apartments for a while, so prices stayed relatively low. They gradually climbed to market-rate for the neighborhood until they hit their peak in 2006 and have slid back to about 2006 levels since.
So that's the real story of that apartment and the neighborhood that the ignorant person writing this article calls "co-op village."
Hi Anon - thanks for commenting. You're right! The 150% sublet fee was at Seward Park and not East River - we misread the comments and the linked blog on Streeteasy.
I'm not so sure we're that ignorant...although we do form opinions pretty quickly. The buildings known as "Co-op Village" sell for significantly lower than any other buildings in Lower Manhattan on a per square foot basis, even in neighborhoods that have similar glitches. Whatever the reason for that (whether it's the supply shock that you discuss, the co-op boards or something else), the apartments are nowhere near "market rate" for downtown Manhattan, particularly given their low monthly costs. In Battery Park for example, where many buildings are almost as far from the subway as the East River building and is also a neighborhood considered to be free of restaurants and other perks, an apartment similar in size to the one in this article would cost at least $100,000 more in today's market and would carry more than three times the monthly cost. Even in the eastern reaches of Alphabet City, also very far from the subway, similarly sized apartments in amenity-free walk-up buildings that carry slightly higher maintenance payments will trade at higher prices than Co-op Village. To be honest with you, we're not entirely sure why. Perhaps it's things like the 150% sublet fee/concerns about the boards that turn buyers off, the dismal external architecture, the gloomy hallways or just the depressing feel of the neighborhood. We're not really sure.
That's why we started down the path of questioning whether a unit in one of these buildings is really a "good deal" or whether there are issues (co-op board oriented or otherwise) that keep the prices here so low.
It sounds like you know a lot about and like this community. If you have further thoughts on why you think it's undervalued, shoot us an email - we'd be happy to let our readers know.
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