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Last Chance to Buy Townhouses Under $1M in 'Hot' Brooklyn Areas, Many Say

By Amy Zimmer | January 13, 2015 8:34pm
 There are still townhouses to be had for under $1 million, but options are becoming more limited, brokers said.
Brooklyn townhouses under $1M
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BROOKLYN — After spending $610,000 on a two-bedroom 1,000-square-foot condo in Bedford-Stuyvesant about six months ago, a buyer decided she wanted a townhouse — something with more space, plus a rental unit for extra income.

So now she's planning to list her condo for about $800,000 in the hopes of buying a house nearby for a similar price, according to Corcoran's Brooke Safford.

"She's looking to do a quick flip and sees that this is her chance," explained Safford, who said the woman is interested in one of her townhouse listings. "You can still buy a nicely renovated house for [about] $1 million. But your options are going to be more limited. Savvy buyers realize there are things you might have to compromise. They see that the opportunity is about to disappear."

In "hot" neighborhoods like Bed-Stuy, Bushwick, Crown Heights and Prospect-Lefferts Gardens — considered on the periphery of the most desirable Brooklyn neighborhoods — it's still possible to buy newly rehabbed townhouses, often for two families, for under $1 million.

But the window of opportunity is closing fast, several brokers said.

For example, a Bushwick townhouse Safford listed last year for $895,000 went into contract for $915,000. Then the deal fell apart. Safford re-listed the home about six months later for $1.05 million. It closed for $1.06 million.

A house across the street that's the same size just went into contract for $1.25 million, Safford noted.

Soon Brooklyn townhouse buyers with a budget under $1 million will have to go deeper into the borough, to Ocean Hill, which is in the eastern part of Bed-Stuy, and East Flatbush, which borders Crown Heights and Prospect-Lefferts Gardens, many said.

Many buyers can now only afford homes at the edge of neighborhoods considered peripheral to the most desirable parts of Brooklyn, as Uma Thurman's brother learned when he was priced out of Bed-Stuy into East Flatbush — earning a headline story in the New York Post.

"When someone calls me and says their budget is $700,000 or $800,000, I say, 'You should be looking in East Flatbush,'" Safford said.

Bed-Stuy one- to three-family homes, for example, sold for an average price of $887,000 in the fourth quarter of 2014, up 37 percent from the year before, according to a report released Tuesday from the Real Estate Board of New York. Crown Heights homes went for an average of $733,000, up 24 percent over the year. Bushwick homes averaged $633,000, up 35 percent, and Prospect-Lefferts homes averaged $673,000, up 16 percent.

"If you're hoping to buy a townhouse for under $1 million, this is the last time you'll be able to in Bedford-Stuyvesant, Crown Heights and these other 'peripheral areas' where you can find them," said Aleksandra Scepanovic, managing director of Ideal Properties Group.

She based her prediction on the "trajectory" of what happened in the pricier townhouse markets in Brownstone Brooklyn and North Brooklyn, of which these areas sit on the periphery.

The firm analyzed nearly 300 townhouse sales over the past eight years and found that prices spiked sharply post-recession, with the number of properties over $3 million increasing 579 percent since 2009, according to a report released Tuesday.

The final quarter of 2014 saw the average price of townhouses in these areas hit record highs, up by 46.5 percent from the same time period of 2013, to $2.649 million, Ideal found.

Neighborhoods like Brooklyn Heights, Cobble Hill and Park Slope have long been in the $3 million club. Prospect Heights, Williamsburg and Greenpoint joined in 2013 and Gowanus saw its first townhouse sale cross the $3 million threshold last year, the report said.

Though not part of the Ideal report, Bed-Stuy saw its first $3 million townhouse sale in December, and a Crown Heights mansion just went for a record $2.9 million, according Brownstoner.

Even if more townhouses hit the market, their supply will still be limited since there are few such homes being built today, while on the other hand, Brooklyn's condo market is set to soon explode.

"2015 is going to be the full-blown return of the condo in Brooklyn," said Dave Maundrell, of aptsandlofts, which is representing 40 new buildings slated to open this year and next in areas like Bushwick, Bed-Stuy and Crown Heights.

"You're going to see a lot of condos come to the market, so people will have opportunities there," Safford said. "The townhouse inventory eventually caps itself. It's not something you can recreate. So with townhouses, it will be trickier to get something affordable."

Ocean Hill homes averaged $501,000, up 22 percent from the year before, according to the fourth quarter REBNY report. East Flatbush homes sold for $443,000, on average, up 3 percent from the year before.