We're on Vacation!...In Red Hook?

It's the dog days of August and even our normally persistent quest for entertaining downtown real estate tidbits is slowing down as we are finally getting around to taking some vacation! So, you might ask, what does a downtown real estate blogger do on vacation? Well, in addition to going to the beach, we go see real estate in other areas of course!

If you read this blog regularly, you know that we are looking to buy a Lower Manhattan apartment but are completely horrified (yes, still) by the price point of many apartments that we've seen. Ground floor studios for $500k? Check. 1BRs for over $1 million? Check. 6th floor walk-ups for almost $900k? Check. New construction without washers/dryers in the unit? Yep, check. So...given this ummm...pricing situation, we thought that while we had a bit of time on our hands, we'd try to answer the age old question that we (and many other Manhattanites) ponder at least occassionally: Exactly how much is our Manhattan location worth to us?

Or alternatively, is the amount of space that we can get in say Brooklyn or New Jersey for a lower price actually worth leaving Manhattan for? We'll post about our experiences in the outer boroughs semi-regularly, but we thought we'd kick it off with the most interesting one.

A couple of weeks ago, we finally visited Red Hook, an area of Brooklyn that was the location for The Real World: Brooklyn (yes, this turns us on), is home to Ikea (we can't believe it was so close all this time), a huge Fairway, and a warehouse-y but cute waterfront area. Granted, there are maybe like 6 bars and restaurants in all of Red Hook, but it seems promising and doesn't have a glut of new construction (are you listening FiDi?) or really, any new construction at all. We were surprised therefore, to come upon a listing for the King Richard Carriage Houses, a set of five brand-new townhouse-like units at the intersection of King and Richards (gosh, just like William Beaver) in Red Hook.

Instead of just trying to get Curbed to link to our articles for a change, we actually used the site (isn't it so great?) to find out that the carriage houses were converted by an area resident from a single story garage to four four-story homes (and one smaller, three story residence). Priced between $699,000 - $899,000 (yes, the previously reported price chops have been, well, further chopped) and boasting 1,200 - 2,000 sq feet, ample outdoor space and attached garage parking (did we win the lotto?), these seemed umm...super duper given that for a similar amount we can purchase a tiny 1BR dump without a W/D in that 311 GreenwichTribeca building surrounded by McDonald's and a Subway. Of course, this is Red Hook (not Tribeca) and even though Tribeca just welcomed Manhattan's first Checkers (and is already home to a Taco Bell and a Subway), Red Hook is how shall we put this? comparatively still quite gritty. PBS actually has a very good account of some of the history of Red Hook and the unfortunate divide that still exists in the neighborhood today. While off of the waterfront area, the King Richard Carriage Houses are located within walking distance of Red Hook's main strip (really folks, it's just like three blocks) of quite friendly local bars and restaurants (where we're pretty sure everybody knows your name).

Anywho, on to the houses themselves. We started with the most expensive townhouse (which is also the model unit). Listed for $899,000 (down from more than $1.1 million originally), the unit has an attached garage (basically, imagine a garage in your living room) which actually gets the best light in the entire living area via picturesque glass and iron doors. The house also features four (very steep) floors of living space. In fact, we couldn't believe how vertical this residence is as we climbed and climbed the four full stories from the living room to the master bedroom. The finishes in the unit are decent - a nice open kitchen, attractive bathrooms and decent hardwood flooring.

We never thought we'd say this, but there is so much outdoor space in this unit that there's almost no point to it. All three of the bedrooms have their own large (rubberized) balconies and that is in addition to a huge roof deck. Unlike other townhouses however, these units do not have a garden, we think because the plot is too small to support both a large living area and ground-level outdoor space. $0 in maintenace plus around $2800 per year of property taxes (take that Battery Park!) made us start fantasizing about actually building equity (instead of throwing money away on worthless ground rent, property taxes, and common charges for things like an outdoor rain shower that we don't give a hoot about). Overall though, although we liked the houses, they're just too darn vertical for us (who the heck wants to climb all of those stairs, which are btw, an obstacle to kids, parents and even, like an aging pet) and we really, really don't want to make food in the kitchen and then have to climb 40 feet to serve it outside.

But we liked Red Hook. Even though it's far from any subway stop, the closest of which is 7 minutes by car, we can take the ferry to Wall Street and we think the neighborhood has real character and an extraordinary amount of potential.

Quick Hit: Funny Google Search of the Week

We don't know if we'll keep posting these (guess it depends on the content that we get) but occasionally we get some truly funny Google searches that result in people visiting Downtowny.

This week's funniest:

"What does it mean when someone calls you a truffle?"

We truly have no idea, but we're pretty sure that they're not trying to say that you are a pajama-clad supermodel hanging out in some rental residents' lounge, as per the Truffles Tribeca shot above.

60% of Homeowners Think Their Home's Value has Decreased in the Prior Year

We were fascinated by this Zillow survey done once per quarter, asking homeowners what their perceptions are of the housing market.

Shockingly (really), just 60% of homeowners believe that their home prices decreased in the prior year, when in actuality, 83% of homes declined in price duh. In fact, the Zillow blog notes that "For three quarters in a row, homeowners have effectively called a bottom, with the majority thinking their home's value will not decline any further." Oops....

It's amazing to us that homeowners are STILL not caught up on the reality of this market. Will the market come back one day? Yes, of course. Is it going to be next year? We personally don't think so and most analysts agree with us with consensus seeing another 10-15% nationwide drop in housing prices before we hit a bottom.

But then again, it's not like anybody is trying to sell a 6th floor walk-up for almost $900,000 here in Lower Manhattan, right? Oh...wait.

Downtown Manhattan for Under $600 per sq foot?

We found ourselves pondering the sub-$600 per sq foot price chopper question when we noticed yesterday that a couple of Battery Park one BRs have quietly drifted down to this attractive price range in the past couple of weeks. So what can we get for less than $600 per sq ft in our typical neighborhood (real estate) haunts? Not much, it turns out. Although a StreetEasy search returned 56 downtown (south of 14th Street) properties priced at $600 per sq foot or less, a full 39 of those (or almost 70%) were located in the traditionally cheaper, older and grittier Lower East Side, with most units located in the Co-op Village complex of Soviet-era apartments .

What about the other 17 listings? In most neighborhoods (including Tribeca, which has 5 listings for under $600 per sq foot), these cheap-o units are either full-building residential development opportunities (creepy horror houses that you can convert to condos), flat out commercial units or mixed use (fulfill your dreams of selling handmade jewelry and Statue of Liberty tiaras right out of your apartment). There are however, a handful of legitimate residential units for under $600 per sq ft. Here are some highlights:

Financial District: We were quite surprised to discover that much maligned (but currently In Contract) 55 Liberty St., #PH, the attic-like 3rd floor walk-up penthouse that we visited twice in the spring is the only unit in FiDi that's listed for less than $600 per sq ft ($599 to be exact).

Battery Park City: Battery Park is home to three pretty cute 1 BRs, all listed for less than $600 per sq ft. Of course the maintenance on these places is enough to make you pee in your pants take pause. We were surprised that the 2BRs in BPC were not yet in the $600 per sq ft range, since the higher priced market is worse and the common charges in many BPC buildings are allocated at a higher percentage for 2BRs.

East Village: Nada. Nothin' doin' in the East Village in this price range (except for three pseudo-commercial units). Were we surprised? Well, actually yeah. StreetEasy.com considers Alphabet City don't you have anything better to do than sit outside on your plastic chair and comment on my sweater? as part of the East Village and we were certainly thinking that some of those units around Avenue D would be cheap as sh*t priced to reflect the current market.

Where Can You Get an FHA-Approved Loan in Downtown Manhattan?

There was a whole lotta buzz today about this WSJ editorial that warns of huge impending risks at Ginnie Mae, the organization that bundles and sells loans backed by the Federal Housing Administration. The editorial argues that the FHA, which claims that it "costs the taxpayer nothing" ha ha ha ha is on the hook for $560 billion worth of mortgages which have a default rate of 7% very, very high and a delinquency rate of 13% ditto. By this measure, the FHA is leveraged at 33 to 1, similar to the pre-collapse Bear Stearns and clearly staring into the abyss of yet another f*ing housing crisis. So what exactly is the FHA?

Well, the FHA does not itself originate mortgages, however it backs mortgages originated by a variety of "FHA-approved" lenders. FHA loans (which kind of became an anachronism during the do I really need an income to borrow $1 million credit boom) were originally intended to help increase American homeownership, at a time when just 4 out of 10 Americans actually owned their own homes (today that statistic is closer to 7 out of 10). Like many government anachronisms, the FHA is still around today and offers borrowers with less-than-perfect credit and only 3.5% down the opportunity to own their own home Countrywide worked on a similar model except there it was 0% down and no income verification.

For single-family homes, FHA evaluates only the lender and the borrower - as long as the buyer qualifies for an FHA-backed loan from an FHA-approved lender, the mortgage is good to go, regardless of the property. For condos, the situation is different. The FHA must actually approve the underlying condo building itself. You cannot get an FHA-approved loan in a building that is not itself FHA-approved. So...can you get in on this racket in downtown Manhattan?

Well, it turns out that unlike every other mortgage or regular broker scheme to get you into any darn unit whether you're qualified or not, the FHA-approval route mostly escaped the attention of downtown condos. In fact, in all of Lower Manhattan, there are just two FHA-approved buildings, one in the Financial District, and one in "Two Bridges" which we only sort of recognize as a legit neighborhood anyway. The Two Bridges condo is affordable housing and the FiDi condo is 330 Pearl Street, a tiny 10 unit building that we actually visited and saw an FSBO in several months ago, although it appears that the unit never sold. 330 Pearl currently has no units on the market according to StreetEasy.com.

Stay tuned though, lots of stories out there about developers just itching to get in to the FHA pipeline, although none so far in Lower Manhattan.

What Happened to NYT's "Residential Sales Around the Region"?

We have twice poked fun of the New York Times for the strange inaccuracies in some of the "sales" that are listed in the "Residential Sales Around the Region" column of the weekly "Real Estate" section. This section profiles (by region) sales in various price ranges. We have never quite been able to figure out what the New York Times means by "sale" since sometimes these sales are verifiable in ACRIS and other times, just seem to be pulled out of a broker's press release thin air. For example, we still haven't seen a city filing for the supposed sales at 60 Beach Street and 101 Warren that we previously wrote about.

So, even though we thought the section was sometimes blatantly inaccurate (such as the reported $745,000 sale of a 20 Pine 2 bedroom, 2 bath isn't there like, an intern that could have checked that out? that was actually a small 1 bedroom), we kind of liked the section and are surprised that it seems to be gone from the New York Times. In the era of ACRIS and Streeteasy, you might argue that publishing residential sales isn't really necessary anymore, however we tend to agree with this poster on Streeteasy who notes, "I'll miss seeing the sales I'd never otherwise see...[like in] Rockland County." (touche, touche)

New York Times, 'sup? Are you guys done with this section for good?

An Alternative to Floor Plans: Grainy 1960s-era Broker Headshot!

We just had to do a quick post on this new Nestseekers listing at 120 Greenwich , which features a blurry headshot of (we imagine) the lead sales agent as the "curb appeal" photo of the mystery unit.

Oh well, we guess the retrolicious photo featuring the cute as a button broker with a "flip" hairdo and a sensible blouse might be worth a shot to get traffic into the door at this building that has sold all of one unit this year.

Our Very First Viewing Just Sold...Quite Fittingly for 24% Less than the 2006 Price

As we noted in a prior post, 120 Greenwich Street, #12F is the first apartment that we ever saw in our quest for a downtown Manhattan residence. We still remember like it was yesterday our sweaty palms as we walked up to the doorman, hearts beating, not quite knowing (yet) what exactly to say to gain entry to our first open house. We remember looking down at our nice shoes, manicured fingernails, and expensive handbags thinking that we "looked the part" of serious buyers, which we thought was important back then. We remember making sure that we didn't look too sweaty in the lobby mirror as we entered the elevator on our ride up to meet the seller's broker, whom we envisioned as a mix between the cheerleader that never liked us in high school and that craigslist guy that ripped us off in 2004.

We found ourselves wishing that we had a buyer's broker. Someone who would appear knowledgeable on our behalf, a Harry Potter-like Patronus, if you will, that when conjured would appear in deer form (or whatevs) and protect us from the seller's broker who we bet can speak with snakes.

We remember the elevator doors opening. We "looked cool" we thought as we headed down the hallway, not knowing quite what to expect from a $719,000 one bedroom in an area of the Financial District that we'd never quite been to. As we opened the door to the apartment, we were met by the realtor, who looked kind of like Severus Snape, with a sensible purse instead of a wand.

"How long have you been looking?" Snape said as we wandered around the shockingly tiny space. "2 minutes" we wanted to blurt out, but instead said "oh, for a little while" as we took in the strangely shaped living room attached to an ample kitchen. We had no idea what to ask. As we stared at the floor plan, we wondered whether $1,034 was high or low for common charges. "It's tax abated!" Snape said brightly, breaking the silence in the air. "Expecto Patronum!" we wanted to yell, as we struggled to figure out exactly what "tax abated" meant and how we should appear to digest this information in order to maximize our appearance of seriousness and knowledge.

We continued into the bedroom, which was light-filled and tiny. Snape pointed out the decent closet space while we looked at the bathroom and wanted to scream "Are you kidding us? $719k? For this???", but instead, we just nodded blankly and moved back into the living room. We wanted to see the private outdoor space that came with this unit (located fascinatingly on the roof but not attached to the actual apartment), but were too afraid to ask the busy looking Snape to show us. On our way out, Snape asked us to sign the sign-in sheet and as we were doing so, we were informed that there were "multiple offers" on this particular unit, which we were too inexperienced to identify as insane lowballs, which would be why the unit was having an open house duh.

After this experience, we became ever determined to figure out how to navigate open houses (and everything else for that matter). We started Downtowny shortly thereafter to help other buyers do the same.

So...whatever did happen to 120 Greenwich #12F (our seminal apartment)? Well, it turns out that the little bugger did in fact sell, in mid-July as a matter of fact, for a mere $610,000, or about 15% less than it's listing price when we saw the unit back in February. Even more interesting, the $610,000 selling price represents a 24% reduction from the apartment's purchase price in October of 2006. "Expecto Patronum" indeed we murmured.

2006 Pricing Continues at Battery Park's Millenium Tower

After we first wrote about the lowest sale ever at Battery Park's Ritzy get it? Millenium Tower, where a 1BR sold in June for 22% less than it's mid-2007 sale price, we started watching this building for further discounts. We now have a brand new sale, a high-floor "C" line 1,150 sq ft. 2 bedroom, 2 bath which sold at the end of July for just $987,000, or almost 20% off of the most recent ask of $1.225 million and about 18% off of the Q1 2007 sales price. The earliest "C" line sale occurred in December of 2006, with #7C (a lower floor unit) selling for $975,000.

To us, this apartment really brings home what every broker has been telling us for months, "just make an offer" people - you never know what's going to stick.

Is this a Hallway or an Apartment?

When we looked at this Alphabet City Fringe East Village listing today, we were kind of curious about the dramatic series of price drops that this ground floor, 575 sq ft. studio has seen. Originally listed in January of 2008 for $600,000, this apartment is currently on the market for just $459,000, a 24% decline in asking price.

Although $459k is still too high for a smallish studio between Avenues B and C, we were intrigued by the listing photos, which show beautiful flooring and two types of exposed brick. It was only when we clicked over to the floorplan that we realized that the apartment has the approximate dimensions of a hallway, with a large chunk of the space measuring at just 8'2" wide (huh?). Don't forget to check out the weird bathroom that's off of the kitchen (we're not sure the hallway fridge really counts as a "kitchen" anyway) and how you have to walk through the "sleeping area" to get to the kitchen AND the bathroom. This all combines to make this layout one of the strangest that we've ever seen in this price range.

And Speaking of Buy vs. Rent Analysis...

After we did our own little buy vs. rent analysis on a typical Battery Park one bedroom, demonstrating that sales prices need to fall dramatically for buying to make economic sense, we read this Curbed piece by Jonathan Miller, featuring rather doomsday graphs which should both have a caption reading:

"If you look at our own damn charts, the sales price/rental price ratio is still at historical highs. Until this situation corrects itself, buying an apartment is hard to justify. Duh."

Instead, the commentary from Jonathan Miller is how do we put this nicely?...cryptic, to say the least, leading us to conclude that a real estate appraisal firm isn't just going to come out Jim Cramer-style and say "Don't Buy! Don't Buy! absolutely nothing from these findings.

Even the 50 paying renters at the Curbed (love) moderated panel on Thursday featuring Jonathan Miller and Prudential CEO Dottie Herman, were having trouble getting unbiased advice. Billed as an event to help people navigate the rental market, the Tribeca evening deteriorated rather quickly into yet another sales pitch discussion on how now is the time to buy zzzzz.

Asked one (we imagine) frustrated renter hoping to actually learn something about rentals for his $12 entrance fee - what if I just can't buy? Dottie actually replied that "buying with friends" is a viable option. Charming.