105 West 122nd Highest Sale Since Crash – $2.85M, $670/sq. ft.

Posted on October 20, 2011 by BeatingUpwind

Well, the high end of the Harlem townhouse market is certainly doing well – especially in Mount Morris Park. First 30 West 120 sold for $2.5M ($568/sq. ft.), now 105 West 122 just sold in less than 3 months for $2.85M – a whopping $670/sq. ft. Those sales aren’t outliers – The Wall Street Journal is even writing articles about the rise in prices in Harlem.

Admittedly there’s a lot to like about 105 West 122nd Street… It was recently converted to single family and prices for single family townhouses are typically higher than multi-family. Single family homes are luxuries and people pay good money for luxuries. The place is also a generous 19 feet wide with about 4,256 sq. ft. (including exterior walls) – 1,064 sq. ft. per floor, which is big.

The interior renovation appears to have been pretty much perfect. This bathroom is beautiful…

The kitchen looks like it might be European modular ($$) of some sort…

And you can see there’s a wonderful blend of traditional elements and contemporary living – which is what buyer’s want…

That said, at $2.85M and $670/sq. ft I expect perfection and there are things about the exterior that I personally find a little disappointing… Case and point is the newel post you see in the picture to the right – they didn’t restore the original ornamentation. The sister townhouses on either side have their detail intact – there were examples of what it should have looked like, but the previous owners didn’t take the time to do the work. Not a big deal, but at this particular price point I’d expect it to be done (30 West 120th’s façade work was impeccable). Also the façade is painted – which is something you do when you’re cutting corners to stay on budget (like we are with our place).

Then there are the windows – they’re just inexpensive aluminum windows (see picture below). They’re in good condition, but at this price point I expect better quality.

All in all it’s a great place with an excellent renovation (at least inside). It shows that if you spend time to do a good renovation it will come back to you when you go to sell. I get the sense that some people think we’re being a bit fussy about some of the details in our renovation, but a slightly higher budget and attention to detail really do pay off in the long run.

With the high end going up, the question is what will happen to the low end? Restrictive lending is holding down the prices at the low end for now… It’s a great time for all and mostly cash buyers to be buying and renovating…

Good Day: 243 W 120 Sells, Our Windows Clear Customs

Posted on October 1, 2011 by BeatingUpwind

It was a VERY good day yesterday. Our windows had come arrived in port Thursday morning, and managed to clear customs in a single day. Given all the other delays on our project I was half expecting to hear that there would be a 3 or 4 week hold for customs inspection. They’ll probably be delivered on Tuesday morning. Getting the building closed up will be a major step for us…

But the really big news is that 243 West 120th Street closed yesterday – just in the nick of time – it was the last day before the loan limits dropped over $100K – so things went right down to the wire.

I feel a bit of accomplishment with this sale… I had done a blog post ages ago (April ’10) about how I thought the place was an excellent opportunity. Location is just incredible – it’s just steps from everything that’s new and exciting on 8th Ave / FDB, and it has a really high FAR for anyone who wants to add space. It took about a year for the blog post to get noticed, but early this year I started hearing from blog readers that they saw the post and were interested in the house. One contacted, me, then another, then another…

In the end it was a bit of a battle between two of those three blog readers to get the house. One of them was working with the real estate agent we used when we sold/bought, the other went directly to the owner through a social contact. The one working with our agent contacted me on June 20th saying “…so it looks like we got the house…”, then on July 10th the reader who had gone directly to the owner contacted me and said “we signed a contract on the house on 120th last week”. I was a little flabbergasted that two people thought they had it and I knew both of them. Turns out the listing agreement had just expired so the seller was able to sell the place without paying a commission.

For those of you who are curious – the sales price was $620K plus a few thousand in other concessions to the seller. That works out to about $182/sq. ft. The place is possibly in worse condition than ours was when we bought it since demolition has not been done yet. But it did have a certificate of no harassment and it had approved plans with active permits to convert to single family – so it was pretty much ready to go.

You can see from the pictures I took nearly 2 years ago that needs tons of work…

Given the location and the fact that shells south of 125 are getting very hard to get, I think the new owners got it for a good price. They could do a $1M renovation and not over-invest.

It was a nail-biting closing. It turns out there was a lien on the property that was rather sizable and when push came to shove there wasn’t enough money to pay off the seller’s mortgage. No one was expecting it to be a short sale and people had to scramble to get the seller’s bank to approve the sale in time for the buyers to get their loan before the loan limits went down. It almost didn’t happen, but after a 5 hour closing on the last possible day, it did finally go through.

And after all that the new owners went to the house last night to check things over and left covered in fleas! So job #1 is to get rid of the fleas…

30 West 120 Sells For $2.5M – $568/sq. ft.

Posted on September 14, 2011 by BeatingUpwind

Less than a month ago I was a little worried about the lack of high end sales in Mount Morris Park. Well, there’s no longer a need to worry… 30 West 120th (across the street from Marcus Garvey Park) sold on August 29th for $2.5 million. That breaks just about all the sales records since the downturn in the economy 3 years ago.

The house is “just” 18 feet wide (narrow for a house selling over $2M), but it’s roughly 60 feet deep so it has approximately 4,400 sq. ft. That means the new owner paid about $568/sq. ft. – so not only was the $2M barrier broken, but the $500/sq. ft. barrier was broken as well.

Curiously, for such a high price, there’s a rental building on one side of the house and a shell on the other side. And with all the 5th Avenue traffic going around the park it’s not a particularly quiet location. This is good news for some of the 20 and 25 footers on more the coveted blocks just off the park – they should be able to go for even higher prices.

However, the house does have a rather good provenance… It was purchased by Kareem Abdul-Jabbar in 2002 for $525K. Between 2005 (the filing date) and 2009 (the sign off date) he did a gut renovation. The estimated cost of the renovation was $375K + $7,500 for sprinklers, but that was the estimated cost – the actual cost may have been substantially higher. Given that he was renovating at the height of the market it could very well have been a $1M+ renovation.

You can see from the pictures below that the renovation was pretty conservative – no daring architectural features or anything, but still quite nice. They say townhouse buyers like original detail. There isn’t all that much original detail left in the house, but the traditional nature of the renovation must have resonated with the buyer…

Another thing to note is that the house was single family. That means the owner was buying a degree of luxury – a 4,400 sq. ft. home. We’ll also have a quadraplex when our renovations are done, but it will only be about 3,200 sq. ft. – definitely a nice size, but not nearly as luxurious as 30 West 120. I’ve seen this in the comps before – single and two family homes often sell for substantially more than 3+ family homes.

This sale should solidify the top end of the market and hopefully it will get hesitant buyers to pay a bit more. I’ve always thought Harlem townhouses were undervalued in comparison with Brownstone Brooklyn – let’s hope that changes 🙂

After I finished this post I started thinking about the effect on shells (like the one next door). If 30 West 120 can sell for $560/sq. ft. subtract $250/sq. ft. for a nice gut renovation, then subtract say $100/sq. ft. to reimburse the new owner for the trouble of going through renovation and you still have a value of $200/sq. ft. – and that would be if it were a total shell (like ours was). The shell next door doesn’t seem like a total shell, so it could go for even more.

Of course one comp doesn’t make a trend, and rehab mortgages are getting harder and harder to come by, but as the high end prices go up so too will the prices of shells – and the changes on the low end will seem even more dramatic since renovations are a somewhat fixed cost. $200/sq. ft. is about 50% higher than the $125 to $140/sq. ft. I would have thought was an average shell value in the past (for a shell needing a total gut including structural work). 50% is a big jump.

The Manhattan Avenue Historic District

Posted on August 24, 2011 by BeatingUpwind

There’s a little historic district just south of 125th Street that it seems no one knows about – the Manhattan Avenue Historic District. The buildings in it are not landmarked by the City, but the area is on the National Register of Historic Places. What that means is up to about $100,000 in tax credits for owners who renovate shells in the area or up to $50,000 to fix up ones that just need some work but aren’t shells.

Now, the sad part is that Wall Street Journal editor Julia Angwin got a public reaming in the comments on her blog when when she decided to rip out most of the original details in her house (because they were covered in lead paint and she was worried about her kids). It’s sad because I don’t think she even knew she was in the Manhattan Avenue Historic District. The $50K to $100K she could have qualified for would have more than offset the cost of keeping her original details and removing the lead paint. Instead, her house was essentially stripped of its original details.

There is a bit of a question about the actual boundaries of the historic district. According to the National Park Service’s web site the addresses included in the district are:

242 to 262 West 120th Street (numbers seem wrong)
341 to 362 West 121st Street
341 to 362 West 122nd Street
344 to 373 West 123rd Street
481 to 553 Manhattan Avenue (West side)

Problem is the addresses on 120th street don’t make sense. There aren’t really a set of buildings that match those numbers. Mind you, I’d love for the addresses to be correct since I know the people who are in contract for 243 West 120, but something tells me the 120th Street addresses are wrong. At first I thought they probably meant 342 to 362, but those numbers don’t make sense either – they include a modern school building. The numbers that would make sense are 351 to 369 – but those aren’t the numbers.

In terms of buildings in the historic district that are for sale – there’s not much… 533 Manhattan qualifies, but apparently the contract is out on it.

Not A Great Time For High-End Mount Morris Park Townhouses

Posted on August 23, 2011 by BeatingUpwind

57 West 119 - Top sale in Mount Morris Park

I was just pulling comps for the Mount Morris Park area and was shocked to see there have been very few high end sales in the past year. Of the 30+ sales in the past year…

Only 4 sales were $1.5M or more

57 W 119 sold for $1.75M in September ’10
195 Lenox sold for $1.525M in June, but it’s large building so the price per square foot was quite low (around $230 / sq. ft.)
148 W 120 sold for $1.525M in January
64 W 119 sold for $1.5M in January

Only 1 sale was over $450 per square foot

57 West 119 sold for approximately $495/sq. ft.
Four others sold for between $400 and $450 per square foot

That means there was only one really good sale (57 W 119) and in a few weeks it will be more than a year old and off the radar. At that point the highest comp will be 148 W 120 which sold for $440 per square foot ($1.525M).

That’s sorta sad. As much as real estate agents like to get listings, I don’t know how much the agents with the high end listings are enjoying all the work and advertising expense right now when not much of anything is selling north of $1.5M.

The problem is when there aren’t many high-end comps the banks ay be reluctant to lend on high-end properties because there are no comps to support the price. But the comps aren’t just a problem for high-end properties. Rehab mortgages are based on estimated future value – which is based on high-end comps. So if you bought a shell for $180 / sq. ft. and you want to put $200 / sq. ft. into it, you have to hope the bank’s appraiser finds just the right comps. If they’re lazy and pick the wrong comps you could have a serious problem. (Hint: meet the appraiser in person and hand him/her a list of comps you think are appropriate – and don’t forget rental comps! so they appraise the rental value correctly as well).

What is selling pretty actively are low end properties that need rehab. Quite a few properties have sold in the $125 to $250 per square foot range. It’s great that people are interested in rehabbing blighted and derelict buildings. Ultimately that’s the best thing for the neighborhood – especially if they’re homeowners who have a sense of investment in the community. But we really could use some properties selling in the $1.8M to $2M+ range to anchor the high end…