Digestible Real Estate News
^ like a moth to a flame…
We’re keeping this recurring piece to do a bit more for those genuinely interested in New York real estate and give my LinkedIn designation a little luster, so please enjoy some light real estate snacks so I can make this newsletter tax deductible.
1. Extreme home makeovers may become a relic of the past; home flipping has seen a significant decline in viability, plummeting at its fastest pace in 15 years, down 29% in 2023. Real estate data shows that 308,922 single-family homes and condos in the United States were flipped in 2023. That was down 29.3% from 436,807 in 2022 – the largest annual decline since 2008. In 2023, gross profits from typical home flips nationwide declined to $66,000, representing the difference between the median sales price and the initial investment made by investors. This marked a decrease from $70,100 in 2022, resulting in a 27.5% return on investment (ROI) compared to the original acquisition price. Factors such as rising property prices, increased competition, and a tightening housing market have contributed to this decline. What was once a popular way to generate quick profits in real estate is now more challenging, requiring more capital, expertise and patience to turn a profit.
2. The big, glaring issue behind why inventory is remaining paralyzingly slim with no sign of relief: the cost of upgrading while forfeiting a historically low interest rate is a LOT. The average homeowner with a near record-low mortgage rate would see their monthly payment shoot up 132%, or roughly $1,800, in order to move up to a 25% more expensive home. 88.5% of borrowers today have mortgages with rates below 6%. Roughly 59% have rates below 4%, and close to 23% of homeowners have rates below 3%, slightly lower than they were last year, because some people did choose to move in the last year, but it shows what the market is up against, especially given high and still-rising home prices. The U.S. now has a record-high 550 “million-dollar” cities, or cities where the typical home is worth $1 million or more. That is 59 more million-dollar cities than there were in 2023, when home values were weakening due to rising mortgage rates.
3. The one property type in the highest demand, the lowest supply, and quickly becoming the flying-off-the-shelf tease of the real estate market? The elusive three bedroom apartment. In NYC, the true three bedroom is rare and coveted. Most of what’s out there seems to be one- or two-bedrooms chopped up to accommodate a third or luxury new builds that have cramped living rooms and are excessively expensive. Several trends have brought us here. In terms of demand, the actual three-bedroom that offers more space and not just more rooms sits at a very particular nexus in the city’s real-estate hierarchy: highly sought after by families but a white whale for boomers who can’t afford an $9,500 Park Slope duplex or the interest on the $2 million fixer-upper uptown. The old pressure-release valve of the family exodus to the suburbs has also broken down: an extremely tight suburban housing market means that many who’d like to leave are staying put. All those areas of the housing market trickle into each other, largely leaving a glut of three bedrooms.
The NYT just ran an article how Millennials have the kids but Boomers have the house with twice as much space, which is sobering…
4. Ever wonder why your apartment is so dusty all the time? Curbed ran a piece investigating this phenomenon and I feel like Most New Yorkers who vacuum weekly and look in horror at what they dump out need to read this. In terms of air pollution, New York isn’t even close to the top of the list (Bakerfield, California takes that honor). But most of the fine particle dust in the city comes from pollutants like combustion from cars. And it’s not the amount of cars we have, but the proximity we live to them. Other contributors are – thanks to most buildings’ lack of new air-filtration systems – pollution from cooking and mainly human skin particles. They tested a dust clump for this article and it was mainly comprised of sulfur, calcium, and potassium – basically substances we as humans are made of. The next were metals like iron, zinc, and chromium, probably attributed to soil or car combustion.
And for the two homes I’m ogling this month…
…this jaw-dropping, almost unfathomable home at 48 West 69th Street for $85,000,000…
…this overwhelmingly mammoth Cobble Hill home at 435 Henry Street for $14,750,000…
