October Brighter Report: Let's Do the Time Warp, Again!

October 31, 2020

Buyers need to be reassured that they are not making a bad move.

 

Time: Cycles, Context and Relativity

Hello Loyal Readers.

Sorry to have kept you waiting until the last day of the month, but my 41st birthday was mid month and then Mercury Retrograde happened, and a couple of things I was waiting to report had not quite been finalized yet. Nevertheless, the show must go on, and Daylight savings time fits the narrative of the piece, so here you go. Still October.

Me? I have been busy showing buyers, listings, and renters; basically in these streets, subways, busses and ferries since whatever Phase they let us go back to work. It's been busier than normal, at times less efficient than I would like, but all that is to be expected in times of extreme uncertainty.

In most cases, buyers need to be reassured that they are not making a bad move, and sellers consoled that the imaginary profit they had their hearts set on was never real and the only reality ithat matters is the number signed on a contract.

Renters may have a lot of options, but the navigation of Net Effective Rent and the future "less-than-perfect" price once concessions have expired, makes intelligent, Dare I Say BRIGHTER, shopping a priority.

In any case, I hope you, your families and your businesses are well. There's still a ton of uncertainty with COVID-19 flare ups, the upcoming election, and general unrest, but you don't need absolute certainty to make the best use of opportunity, what is required is sufficient capital, realistic goals (with respect to return) and a relatively long tailed time frame.

I have spent enough time beating the drum about the opportunity represented in this current market, for the last year or so actually, so I will give a couple examples of what i'm working on, what I'm seeing, and then hold my breath until the Election Results are in.

If you are looking to sell, rent, buy residential or lease commercial space, pls drop me a line.

Live Brighter!
Peter-Charles
347 873 0616

Directly above, Times Square in the 80's. 
Central Park (1864) in the first picture.


So yeah, this isn't going to be a history lesson about the development of NYC over time, #YOUNGNYMPHO (see pic). As with the most contested and debated topics of discussion, in this information age, the receipts are easily obtained via Google.

NYC is not going back to the '20s, '70s, '80s, '90s, or even the 2000s. I'm really not familiar with NYC before the '70s, mind you, I was born in '79, and most NYC media that I have consumed has been set after the '70s.

For those of you who have been NYers since the 90s or the 2000s, I recommend you watch The Warriors, Style Wars, or The Deuce(HBO) to gain a stylized representation of what NYC was like before you could get an Aperol Spritz, hail a cab, or sit in a park virtually anywhere in the city without fear for your life, property, or epicurean sensibility.

NYC, when Times Square was more Pornhub and less Disney.com, may have been unsafe, financially unstable, and very unsavory (pre-Umami), but there was an immense opportunity for those with 30/40 years of vision, or at least those able to purchase property in the city and boroughs, who were unable to decamp to the suburbs.

Current reported increases in violence, drug use, and housing vacancy bear nothing in comparison to NYC of the '70s and '80s and are Y-O-Y increases from historic lows. So no matter what these unfortunate trends are being extrapolated, largely for political purposes, NYC will never get back to that point.

Remember Playland?


The NYC for sale in the 70's and 80's was not the cosmopolitan city, or even the cultural capital, in the commodified sense, that you remember Pre-Covid.

Current and expected discounts should also reflect the immediate value of a city with limited entertainment value, the varied number of institutions and sheer volume of people milling about, however, will return over time. We are not selling a post-apocalyptic NYC, but property valuation has implicitly been recalibrated to take the current socio-economic climate as a result of Covid.

In short, the lessons of those who bought buildings in SoHo for 30k in the 70's and brownstones for 60k in the 80's, can still provide useful, even if the scale of the numbers has changed.

While buying a home is more of a 7 year commitment nowadays as compared to the 30 year or multigenerational commitment it was 40 years ago, there is still value to be derived over a short hold, especially when the timing is right. Money is made on the acquisition of property, specifically as a function of time. If you buy at the right time, and sell at the wrong time, you can still turn a profit. Buying at the wrong time and selling at the "wrong" time, could still lead to opportunity, if you re-enter the "wrong time" market as a buyer.

As for "time," we can all agree that it's 2020, according to the Gregorian Calendar, anyway. Whether it is the right or wrong time depends on your priorities, but right now NYC (resale) real estate has turned back time to about 2017. The profits expected by speculative buyers and investors began eroding in 2018. The expectation of 6 figure profits for cookie cutter condos over a 6 year hold have all but evaporated.

However, buyers are now benefitting from a sort of real estate Daylight Savings Time, where the clock has been rolled back 5 years, in terms of acquisition price, and while the YOY profit rate may be slower, there is still opportunity to make high 5 figure profits for many properties, and 6 figure profits depending, obviously on price point, but notably individual market position.

Additionally, if this hasn't gotten Meta enough for you. A buyer who does not actively need a 4 bedroom townhouse looking to purchase a townhouse in 2020, at a 2017 price, is absolutely saving 6 figures, relative to the likely 2021/2022 price, when they will actually/actively need that 4 bedroom space.

Like most thing we base our lives on, Money, Race, Religion, Politics,TIME is still a social construct, perhaps one that is more universally accepted, but understanding of Context, Cycles, and Relativity are required to properly comprehend where exactly we are in the Time-Space continuum, especially as it relates to the market-defined subjective pricing of brick and mortar.

Here let's go all the way "weird."

Search for multiverse, quantum physics, and time for more advanced philosophical, scientific explanations of time, as an illusory concept.

Here are a couple of articles.

MEDIUM:Is time is an Illusion
EXPRESS: Time Not Real Everything Happens Same Time
NATURE: The Illusion of Time

Is time an illusion is a question asked even by ancient philosophers. But only physicists of the 20th century began to take the possibility of time being an illusion seriously. Albert Einstein with his general theory of relativity has shown us that time is fluid and is effected by gravity and velocity. Einstein is also known for his quote "The distinction between the past, present and future is only a stubbornly persistent illusion".


Admittedly, we are neither Quantum Physicists, nor Theoretical Philosophers. We are human beings who conflate shelter with status and identity --in addition to mere security from the elements-- a repository for our past successes, and future memories, which is how we actively measure time.

All this is to say, the only time is now, and the benefit of buying in a time when many are waiting is that you get a jumpstart on the next now, due to discounts based on a combination of 6-18 months of depreciation, 6 months of pandemic, and an 18 month expected window for recovery.

So yeah. Now is the Time. or better yet and less sales-y.
Time IS only Now.

Your interaction with time as a function of memorial past and expectant future, is largely personal and beyond subjective.

So I have a great property for sale in Gramercy Park. A development opportunity in Clinton Hill. A contract signed in Greenwich Village and a contract signed in Fort Greene.

Please let me know if you plan to enter the market in the Near-Present, Simple Future.

Live Brighter!

NEW LISTING: Coming Soon.
82 Irving Place, 2B (Gramercy)
$575,000, maintenance $1050
FOR SALE: $575k 1 BED 1 BATH
Prime Location. 3 doors south of Gramercy Park
 
Newly Signed, launching this week: This coop 1 bed property is renovated, the bedroom is large enough to accomodate a Queen Sized Bed , the living room can fit a Sectional Couch with room to spare and there is laundry in the basement. Most importantly, it is a 1 bed in the heart of Manhattan for under 600k. 

While you do not get a key to Gramercy Park, and the unit does not face the street, these features would cost you an additional 175-500k, for the same space. Location matters. 

Turnkey, move-in ready 1 bedroom in the heart of downtown Manhattan, enabling you to walk to work, and/or simply enjoy the amenities of one of the oldest neighborhoods in NYC. Gramercy Park. Union Square Park. Madison Square Park. Barbounia. Casa Mono. Pete's Tavern. L'Express. Within 5 blocks. 

For under 600k. FYI this directly competes with Bushwick. #IJS
230 Ashland Place 6B
**Accepted offer in under 30 days**.
CONTRACT FINALLY SIGNED!!!
FOR SALE: $792,000 720SF 1 BED 1 BATH
 
This bad boy was on contract in less than 30 days. Seller listed at1100psf, in line with other units in the building, and the market said, "nah sun." We adjusted quickly based on responsive comps, and dropped 5% to 749k. 

We got an offer that Monday, and signed contracts today after some Retrograde related delay!! There were and still are 3 listings asking 1100sf in the building listed well before ours.

Moral of the story is, sellers listen to the market. Buyers don't care about your bottom line. Think about why you are selling, and adjust accordingly for today's market. Time is Now.
Amazing Development Opportunity
Potential Condo Conversion.
Clinton Hill
8 Fam. a
11,356sf
$2.7M
This is not my listing, but it is an amazing opportunity for the right person. The broker is a friend, I have the full set up sheet and we can get this done.

While this deal has its challenges, being rent stabilized, it was originally listed for 5.4m, then rental laws changed, then covid and now it's 2.7m.

Your average reno is $250psf. Round up to 3m. Your average condo in this corridor is 1000psf. 11m. 2.7m acquisition. 3m renovation. Call it 6m inclusive of unforseen expenses, and you'd be spending 6m for 11m sellout or 5m profit. 

Obviously this is oversimplified, but I included half a mill in cushion. Lemme know if you wanna see the rent roll. This just jumped out at me when it hit my email. Somebody will buy it, maybe 1031 with no intention of developping. Lmk.
RENTALS

If you are a landlord looking to rent, drop your price or sit vacant thru winter. The other option? Keep your price and offer at least 1 month free. Unless you have top of the market, extra special, premium product, you are competing against 1-3 months free on gross rent reductions, with broker fee paid.

Below you have a listing I had for rent. Was $3100 2 years ago, now after concessions, net effective rent is $2500 and NO FEE. Bedford and Lexington. Ultimate lease price 1995 after concessions. Dropped below the search threshold and leased in a weeks time.

Renters beware, a smaller landlord won't be able to give you 3 months free, but then again, you will have less of a jump in year 2.

1063 Bedford Avenue, Brooklyn, NY, 11216
 

Rents have definitely rolled back. The glut of luxury product has doorman elevator buildings choking on inventory, offering months free, paying the fee etc.

When it comes to non-doorman property, (see above example) you may still find some trickle down concessions as these units go head to head against luxury units which are beginning to encroach upon their price point territory.

Get your paperwork together before you start looking. Employment/CPA Letter, past 2 tax returns, and be prepared to print two cycles of your bank statement.

Spend time learning what is important to you, as with anything, and then watch your specific market while extending your boundaries by one local train stop. Search $200 or 10% above your max price point. There is no guarantee that you can get such a hefty reduction, but you might as well try.

That's it for new content. Feel free to read below. it's still relevant.
Happy Halloween and don't forget to Fall Back.

Live Brighter!
Peter-Charles Bright
CONDO V. COOP

I had an investor client looking around 500k, now in contract. We focused on condo, because like most buyers, the horror stories of coops being inflexible, etc, made the investor skittish. Well, I originally advised that we look for coops with unlimited subletting rules. Coops generally retain value and are more stable than Condos. They are more centrally located, as many are built pre 1980, whereas a new development condo is generally in a "new locale" aka the cheapest attractive land the developer could find.

The thing with condos is that for so long they have been speculative investments that have appreciated nicely. There wasn't a glut of rental competition, resale competition, and tax abatements were in full force. This is no longer the case. Some condos are in prime locations, or have amenity packages and architectural design that speaks to a modern buyer, who intends to occupy for 7-10 years or more. Those are wins. Like my listing in Fort Greene, for example.

Comparing 50th street and 1st ave to 13th and 6th ave is something of a no-brainer. You just need to pay attention to flip taxes, carrying costs, and sublet policies.

If you are looking to occupy, please understand that all coops aren't on 5th ave or Central Park West, not all will have CRAZY criteria, you will most likely need to put a minimum of 20-25% down, you will in most cases have sublet restrictions, but the sticker price will be cheaper than a comparable condo, and it will appreciate over your longer hold, because, well, in most cases, you won't be able to sublet without limit. But that doesn't really matter so much if you intend to live there, does it?

Subset of coops are HDFC coops, which can be super affordable, but with more restrictions. Pls reach out for more details.

I have an investor client looking around 500k. We focused on condo, because like most buyers, the horror stories of coops being inflexible, etc, made the investor skittish. Well, I originally advised that we look for coops with unlimited subletting rules. Coops generally retain value and are more stable than Condos. They are more centrally located, as many are built pre 1980, whereas a new development condo is generally in a "new locale" aka the cheapest attractive land the developer could find.

The thing with condos is that for so long they have been speculative investments that have appreciated nicely. There wasn't a glut of rental competition, resale competition, and tax abatements were in full force. This is no longer the case. Some condos are in prime locations, or have amenity packages and architectural design that speaks to a modern buyer, who intends to occupy for 7-10 years or more. Those are wins. Like my listing in Fort Greene, for example.

Comparing 50th street and 1st ave to 13th and 6th ave is something of a no-brainer. You just need to pay attention to flip taxes, carrying costs, and sublet policies.

If you are looking to occupy, please understand that all coops aren't on 5th ave or Central Park West, not all will have CRAZY criteria, you will most likely need to put a minimum of 20-25% down, you will in most cases have sublet restrictions, but the sticker price will be cheaper than a comparable condo, and it will appreciate over your longer hold, because, well, in most cases, you won't be able to sublet without limit. But that doesn't really matter so much if you intend to live there, does it?

Subset of coops are HDFC coops, which can be super affordable, but with more restrictions. Pls reach out for more details.

BUYERS UNDER 600K AND UNDER 1M

I've been saying this a lot, so hopefully you hear me. There are tons of properties to be had. They are less expensive than they were prior. That almost never happens. They are still going to have nooks and crannies, and in some cases, shafted interior views, but they will go up in value. I guarantee that.

What you need to pay attention to, rather than whatever numbers are being tossed about without context in the news, is how that specific subset of the market is performing in terms of days on market, reductions, and number of listings entering contract in a given period of time. Then compare that to similar product a $10 uber ride away.

You can win pin the tail on the donkey by peeking, but only if you peek first.
LIVE BRIGHTER

BONUS CONTENT. SAG HARBOR FOR SALE!!
3 BED 3 BATH WITH HEATED POOL WELL UNDER 1M!!


New to market.
Vaulted ceilings crown the Great Room on 2nd floor
Living area with fireplace and half bath.
Downstairs, 3 bedrooms with 2 full baths.
Garage plus additional driveway parking.
Two second floor decks off Great Room.
Large deck in rear of home, perfect for bbq
Overlooking Heated pool

Less than mile to Long Beach at Noyac Bay and minutes to Village of Sag Harbor.

Msg me about this one, it's not my listing, so I can't link it.

I'MMA LEAVE MY TOLD YA SO'S HERE.
While I have stuck to the once a month format for the Brighter Report, we have been having bi-weekly office sales meetings to understand both the shifting terrain and orient ourselves of the best way to make productive use of lockdown and mirror some of the social changes espoused by the recent protests.

Trust me. Only Real Estate.  
Both sales meetings presented data echoing the sentiments contained in the May Brighter Report.

KEY TAKEAWAY
BRIGHTER: Do not expect 15-20% discounts, they are more likely to be 5-7% price corrections.

https://therealdeal.com/2020/06/18/covid-discount-condo-developers-are-barely-budging/

CORROBORATED
MACK: “If you had to answer, the Covid discount to date has only proven to be 4 percent,” Mack said, offering ballpark figures. “It’s far from the 20-something that some people expect when they walk in.” said Kelly Kennedy Mack, CEO of Corcoran Sunshine Marketing Group (responsible for roughly 1/3 of new development condo marketing)

BRIGHTER DISCOURSE CONTINUED
Most of Q4 2019 and Q1 2020 was spent advising people that it was a buyer's market. That waiting for the bottom would lead to missing the bottom and entering the market in a period of increased competition.

Post Covid, we have constrained supply and pent up demand, to the extent that it is a seller's market in pockets. Those who were waiting for the bottom, who are now waiting for 10-20% discounts will likely be twiddling their thumbs for a while. 

Being aggressive and opportunistic with respect to maximizing your discount, will definitely put you in a preferential position than those offering 10-20% under ask with no rationale. Being serious about your offer will get you the deal, those who overreach will be overlooked, as there are multiple qualified buyers for most properties.

In conducting research for several active buyers, I have found that their shortlisted properties quickly transition from available to "in contract" or "contract out." 

The early bird buyer is getting the worm, and the "stingy" seller who wants to wait for more clarity before listing, so as to maximize their price, will likely end up listing after a second wave lockdown, or in the inferior November to March Winter Sale Season. 

Sellers don't let that be you.

Sellers with properties currently on market are motivated dealmakers, and their properties are moving. Buyers, if you have the capital, have job security, and have a desire to stay in NYC, it's your time to make a move.

And if you want to leave the city, let me know, and I will refer you to a specialist in your target market nationwide.
 
How can I help you?
Buyers: 150k-15M. 
Sellers: 500k-5M. 
Renters: 1800-18k per month.  

Areas Served. 
All Manhattan.
All Brooklyn: accessible by train, 1 fare zones.
Queens: LIC/Astoria, Forest Hills, Jackson Heights
Bronx: accessible by train, 1 fare zones.

Property Types:
Rentals: Doorman, Walkup, Elevator, Loft, Townhouse
Sales: Condo, Coop, Condop, Townhouse/Brownstone
Commercial: Office Leasing, Retail Leasing, Investment Sales
 

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Brighter Real Estate Group
All rights reserved.


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