iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
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Are Brooklyn Real Estate Buyers Insane?

Back in 2000, a good friend of mine who managed a small fund for a handful of clients came to my house in Bay Ridge, NY to show him his paycheck for the quarter. He was ecstatic to have made so much money at such a young age. Both of us were in our early 20s. Back in those days, the brownstones we were living in cost about $400,000, hardly a hot market.

With his small fortune, he bought 2 more brownstones, both to be used for rentals. A few years after that, he bought another home for himself, near the shore, and then a building on 5th avenue to house his business. Fast forward to today, he’s a rich man — all through his real estate holdings.

I grew up in Brooklyn, when it was a fucking shit hole. You could not travel to neighborhoods like Bedford Stuyvesant without getting robbed or shot. It was really that bad and I went to all of the worst neighborhoods — having grown up in East Flatbush.

I was perusing Bed Stuy’s real estate values this morning and was shocked to see brownstones fetching for $3 million, upwards of $900 per sq ft.

Across the board, Brooklyn’s real estate market is ebbing towards equanimity with Manhattan, by the square foot.

The best neighborhood has been Park Slope, a place of ill repute when I was cavorting there in the 90s. It was filled with gangs and people who wanted to punch you in your face. I recall being accosted by a lad with a group of 10, accusing me of being with a group of teens the week prior and beating up his friend. I was seconds away from being pummeled to death when I managed to convince them I was a man of extreme repute and honor. Then I bribed one of them with my 40 ounce of malted liquor and we quickly became friends. Back in those days, sharing a 40 ounce of malted liquor, with total strangers,  was something to be cherished.

Here is the real estate values of the now gentrified Park Slope.

Sandwiched between Park Slope and Bay Ridge is a neighborhood called Sunset Park. I spent much of my teenage years hanging out there, with most of my girlfriends domiciled in that locale. It is, without question, an interesting neighborhood, filled with drug dealers and people who run around at night beating up people for cash. It’s a mostly hispanic neighborhood with strong ties to the Puerto Rican community. It is vibrant and fun, providing you can avoid getting razor bladed to your face. I once recall being accosted by two gents who attempted to kill me with a mallet.

Real estate values for Sunset Park.

Juxtapose those values against where I live now and it’s not even a contest. Suburban and rural areas in the United States have been BTFO over the past decade, beset with stagnant prices. Aside from the elite zip codes, all of the appreciation has taken place in urban areas. I suppose there is justification for that, since that’s where the jobs are. But is the suburban dream of a 2 car garage, pool, and 4 bedroom house dead?

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12 comments

  1. wordofmaoth

    Fly, Sunset Park is no longer puerto rican….the chinese took over 8th avenue and revitalized the area. They moved in when everyone else was scared to. Now the park slope types are moving in….we have had a building there since the early 1920s. They used to break into our building almost nightly…was horrible. Now hotels and condos going up everywhere…Industry City development on the water and massive commitments to invest millions. I can’t believe the change here. I grew up in Bensonhurst/Dyker Heights. So glad all the pretend Sopranos italians got pushed out. The Mexican community is also large towards 5th avenue and they have revitalized that as well becoming owners in the community unlike their predecessors.

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  2. TheBigRagu

    Being born and raised in the great Garden State I know that any town that has a train station leading to NYC is extremely popular. A 100 year old home on an average lot within waking distance to NJ transit in say Westfield will set you back a million. Not to mention the 25K a year in property taxes.

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  3. bennyhill

    This is happening across the country, far more people want to continue to live in the city for as long as possible compared to just 10 years ago. Who really want a car dependent snooze-fest of a suburb with a long commute in traffic when you can have a vibrant, diverse and progressive where you can walk or bike to everything and get to work in 10 minutes? Suburbs are boring places for boring people, or people priced out of the city.

    The biggest change in the list 5 years where I live is that even when kids hit school age, families are not leaving. The schools are changing very quickly, and while higher income people used to flee to the burbs due to schools, now it’s the lower income people having to leave due to cost. One downside of gentrification.

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    • Dr. Fly

      Suburbs can be boring. It all depends where you live. For example, around here, there is lots to do — theatre, great food, nightlife, easy commute to Philly or NYC.

      While city life is certainly more vibrant, there is something to be said about being priced out here. At $1400 per sq ft, hardly any working class people can afford it.

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    • jsal56

      Saw a guy this morning take a dump on 25th Street close to 6th Ave, opposite the CVS, in front of the Chelsea Landmark, where a studio rents for $4K.

      Keep buying.

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  4. roundwego

    Time get some QID.

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  5. mongoosereflexes

    This is happening in Boston area too. All the jobs are in the city but people are getting priced out and you certainly can’t purchase a home anywhere nearby. Move to the suburbs which are still crazy expensive around here and have an insane commute? Conundrum for most people my age in their mid-30s and starting families…

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  6. mx2101

    If someone is an employee in NYC, how much salary per year is needed to own a house within train range? Or is the driving force behind prices investors?

    I’ve complained here before about my situation. 90 to 120 minute commute each way via car, unless I am willing to get up at 4 AM.

    Dumps 30 miles out are asking 250K as-is. Have to be nearly 50 miles out now, and even those prices are in bull market.

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  7. fryguy15

    I’m renting out my condo in downtown Chicago to a kid for a small fortune. Based on the pay stubs he gave me, he gives me about 45% of his take home in rent. Sure, the lad makes some good cash but I don’t get it. I know…. I shouldn’t argue.

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