Williamsburg-good investment?

Williamsburg is fine for renting -- particularly if you're under 30.

It's a terrible investment, however.

thanks, can you explain in depth your take on this...I've been hearing more negatives than positives for a while...In Brooklyn what would area would you recommend to live/invest in?

Fairly simple... if you're living in it, it is not a good investment.

Owner-occupied real estate doesn't even meet the definition of "investment". Not saying buying it is necessarily a bad idea, but it should be bought as housing. As an investment strategy, look elsewhere.

That being said, in terms of risks of certain neighborhoods versus others, WB had a LOT of inventory growth, not just from additional construction, but because of the functional borders of the defined "neighborhood" expanding. "Hot" areas with high activity in peak years usually bust the worst... and the bust may not be over yet.

If I had to pick neighborhoods, Sunset Park, then Ft. Green (second only because it caught on a while ago). I don't like Red Hook long term either, hot but never followed-through. The less-expensive "adjacent" parts near Cobble Hill / Carroll Gardens are not worth the $. I like CH/CG a lot, but the outskirts were cheaper for a reason, and should be even cheaper.

thanks for the insight...how do you feel about Clinton hill first then Buskwick as potential neighborhoods?

i have a signed contract for w'burg so my bias is bullish. i have been looking here for the past 2 years and felt now was the time to pull the trigger. open houses were getting busier, properly priced units were going into contract and even what i considered to be overpriced units were moving(NSP', The EDge, 80 Metropolitan). the area has enormous potential, particularly north w'burg. not so bullish on anything east of the BQE . it reminds me of the west village circa 1980-bohemian with a nice mix of people, good restaurants and bars. manhattan views are spectacular and it is one stop away. that said i think your time horizon should be a minimum of 5 years. my personal preference was a smaller building with no amenities. as tax abatements rescind all of us in w'burg will see our monthlies rise. the last think i wanted was a building with maintenance raising amenities i'd never use. in my particular case i am about 15 years from retirement and am looking to snow bird it between ny and miami. the price per sq ft in w'burg made sense to me.

I'd take Clinton Hill over Bushwick. Though I think the challenge is, you're now moving into neighborhoods slightly more removed from the "main" gentrification, with some possibilty for backslide.

Ft. Green, the development is in. The trend is there. It has "critical mass". Thats the way I think of it. It might slow down, but the key factors have been established. When things pick up, these should be among the first to see improvement. The challenges with going "deeper" in is that the gentrification might not reach. It comes in waves, and they don't always get that far in. This isn't 2-3 years ago, where there was a steady march. The tide is receding. And Bushwick suffers from this even more, you're talking about large neighborhoods of not so good next to a lot more neighborhoods of not so good. Yes, more upside potential, but some potential you're waiting a LONG time for it... maybe it never comes. Not every bad neighborhood will gentrify.

Clinton Hill is a little closer to "it" for me... and the Nacy Yard is improving... but thats a LOT of projects to overcome. Those can make gentrification very hard (which is why say the 103rd and 3rd is so challenged, even though its near the UES).

"it reminds me of the west village circa 1980-bohemian with a nice mix of people, good restaurants and bars"

Key difference being... this was priced in a long time ago. Think of stock investing. Good companies don't necessarily mean good investments. A good company priced GREAT is a lousy investment. A great company priced GOOD can be a good investment. Or even a so-so company priced as BAD.

So the "its a good neighborhood" is actually bad logic to work off of. As investments go, you aren't looking for good... you are looking for something that will end up being far above what it is currently priced for.

Good neighborhood <> good investment (necessarily). In fact, its often quite the opposite, if the neighborhood is hot.

Also, in terms of comparing it to W village.... remember that Williamsburg can essentially grow and grow and grow out. Not great for values.

Also, this isn't 1970s New York, when everything was "underpriced".

swe, I pretty much agree. My philosophy with real estate is a safe "investment" is better than one with potential for a huge upside. If I want to gamble, I'll buy stocks or go to the casino. I don't think it makes sense to gamble on the place you live. Why would I live somewhere I sorta hate while waiting for the neighborhood to turn around? Doesn't makes sense. My logic has always been to buy in established (but not ultra hot) neighborhoods where value is relatively stable and upside (or downside) is relatively measured. Buy somewhere that you enjoy the neighborhood from day one and of you want risky investments, look outside your home.

"In Brooklyn what would area would you recommend to live/invest in?"

Look at the map. Anything south and west of Flatbush Avenue is good. Anything north and east of it is NOT good.

somewhere: good points but the "nowhere left to build argument" is bogus. plenty of tear downs, garages and gas stations have made way for big condos, even in the west village.

we were going to go to wb but couldn't find a school for my elementary school age kids...and its not worth commuting to manhattan....we just stayed in manhattan...were able to sell last may thank god...and now wer are renting cheap in harlem to wait it out...probably buy in two years...or just rent for a while...it's so much more relaxing

Yes Williamsburg can grow and grow, but so is Brooklyn heights, Dumbo, etc. Your argument makes no sense. Sunset Park as an investment? BAD idea. The price is already much higher than it should be. Sunset Park will always be Sunset Park, just like how Bronx will always be Bronx. SP is filled with mostly illegal Spanish & Chinese whom will linger on for decades.

Bottom line is, if you can't afford manhattan, go to Williamsburg, Parkslope, NJ or borderline harlem

New construction in wmburg ranges from 600-700 for north williamsburg non-view, low amenity; perhaps 700-850 for non-view, higher amenity; 900+ if great manhattan views..

assuming that is accurate (refinement could be done), does the differential vs comparable in manhattan make sense?

you cannot compare manhattan to williamsburg....that is apples to steaks

ap2492 -- if you are correct that they are simply different products, would that not imply that those buying in wmburg are simply seeking a different experience?, and that manh prices are irrelevant; in such case, are you saying that wmburg is unique, or that there are other substitute products (somewhere in brooklyn?), and if so where?....

or...do you mean to suggest that wmburg is as special in its own way as manh?

p.s.: i get a lot more excited about a good apple than a good steak
(gee.. i wonder if that will get a response out of our resident macho buffoon....mr h)

"you cannot compare manhattan to williamsburg....that is apples to steaks"

More like steaks to Alpo.

Agreed with all who say it's housing first, investment second (if at all). As I say over and over, some people are owners, some are renters (As an owner, I think it's almost constitutional, and in a down market it's like a birth defect).

If you like WIlliamsburg - the restaurants, the bars, the music, the shops - and you are a buyer, there are some reasonable deals out there right now. No one can say whether or not they are good "investments," but they may make financial sense for you. And if you really like Williamsburg, there is absolutely no reason to look in some other neighborhood. Why make a long-term commitment to a place you don't want to be? Because you think it might have a better return when you sell in seven years? That's seven years of your actual life, lived somewhere you don't like.

If you're just looking for investment property, another neighborhood might promise more upside (but Fort Greene? What are you guys talking about?). But if you like Williamsburg, might as well keep your focus there. No matter whether you are renting or buying, there is no reason not to live where you want to live.

Tina
(Brooklyn broker)

if you are not particular in where you want to live, just be close to manhattan, you should be staying away from Williamsburg, DUMBO and LIC. there has been a lot of development in past 10 years and the prices are too high for the amount of inventory that exists and the inventory that will come into the market in the next year or two.

Sunset Park had it's prices inflated significantly due to the high prices in Park Slope. those prices will be taking a major tumble as there's really nothing good about the neighborhood. you're either surrounded by 95% Latino population or 95% Asian population. the immigrants will not be paying $900K for a 2 Br condo ever, especially when they can buy a house a block or two away for $500K.

if you're looking for value and an upside in Brooklyn, look at Kensington/Ditmas Park area. the prices are reasonable and the Corteloyu Rd strip is starting to thrive. most people didn't want to live there because there was nothing there. now with all the restaurants and bars that openned, it will have more upside then downside.

ab_11218 - I love Ditmas Park (Kensington less so, as it is too dependent on the F train) and Prospect Park South, but there are not a lot of condos in the area. Terrific pre-war co-ops (at good prices), and fabulous (but overpriced) suburban-style single family homes, but not a lot of condos.

If you're just talking about houses, Sunset Park has proven a smart investment for our clients. You dismiss the population of the neighborhood without acknowledging that the people who live in Sunset Park buy houses in Sunset Park. In the bleakest days of 2009 we had a bidding war on a house in Sunset Park, which sold for over its asking price.

Again I return to the question, where do you want to live? Because if it's just about money, the charming new restaurants on Cortelyou exert no market force compared to the established restaurants and businesses of Brooklyn's Chinatown.

Tina
(Brooklyn broker)

I'm tempted to start a new thread with the quote "if you are not particular in where you want to live..."

Who among us is not particular about where they want to live? We live in New York City! Ahhhhh! If we were not particular, we could live for nothing in Bridgeport Connecticut, or snap us some nice foreclosures in friggin Las Vegas.

I don't think that's what you meant. But I do think it's silly to imply that anyone reading this board is kinda "meh" about location.

Tina

"remember that Williamsburg can essentially grow and grow and grow out. Not great for values."

Agreed with most of what you wrote, but this is puzzling. What do you mean? Williamsburg in name has grown, for sure (though I don't think it will much anymore), but that doesn't do anything to values that were always in the better parts of the neighborhood.

"Look at the map. Anything south and west of Flatbush Avenue is good. Anything north and east of it is NOT good."

Obnoxious and misinformed is not a good way to go through life, Matt.

> Yes Williamsburg can grow and grow, but so is Brooklyn heights, Dumbo, etc.

Not really. You actually picked two of the worst examples possible. Outside of the vinegar hill bait and switch, DUMBO's boundaries are very well defined, and even if you include VH, its still fairly limited space. BH, again, very defined area, with well defined (and generally good) areas outside it.

"swe, I pretty much agree. My philosophy with real estate is a safe "investment" is better than one with potential for a huge upside."

In the investing sense, its about risk vs. reward. You can choose high or low risk investments, but you should be getting the appropriate return. Its the beta equation.

> If I want to gamble, I'll buy stocks or go to the casino.

Stocks would be less of a gamble here, unless you specifically go for risk (which you could do with RE, too).

You're likely taking a mortgage, so risk gets multiplied exponentially.
And buying one apartment on one block in one neighbohood in one city is the opposite of diversification.

And index fund would be MUCH less risky than what you're speaking of in investment terms.

If you want to talk about making crazy stock bets, you could do the same with RE... with MUCH more leverage.

> I don't think it makes sense to gamble on the place you live.

I agree with that, but I also think you don't "invest" with the place you live either. Not in actual investment terms. "invest" in that time/lifestyle sense.

But owner-occupied RE is just not a good investment....

hey bjw did u make it to the 70B open house? If so what did u think?

tina, i was specifically mentioning the Sunset Park condos that many people who could not afford Park Slope bought for well over $700K. those condos now are worth no more then $550K. that's more of a price drop then compared to any other neighborhood surrounding (Park Slope, Bay Ridge, Windsor Terrace).

as far as the Cortelyou Rd restaurants, Kensington was more expensive then Ditmas Park until about 5 years ago, coop wise (there were not many condos and still just a few available). once restaurants started openning up on Cortelyou, prices there went up faster. people will be drawn to the area more when there are more things to do there. it's the same as when noone wanted to live on the other side of 5 Ave, in PS, because it was bleak with 99c stores and bodegas. now it's a hot spot because of all the restaurants and bars. the same goes for Williamsburg. who would have wanted to live there, and pay these crazy prices, 10-15 yrs ago.

It gets said here ad-nauseum, but owner-occupied housing is really just consumption. Once you embrace that premise, it removes some (not all of course!) of the headaches involved in looking for a home (whether you choose to rent or buy).

"Outside of the vinegar hill bait and switch, DUMBO's boundaries are very well defined, and even if you include VH, its still fairly limited space. BH, again, very defined area, with well defined (and generally good) areas outside it."

I agree, but frankly, it's the exact same scenario with Williamsburg. "East Williamsburg" is the bait and switch here, in much the same way. Even with Brooklyn Heights, I've seen people label addresses below Atlantic as BH (it's technically Cobble Hill). Brokers and developers didn't help this, but most people who get to know the areas a little understand the distinctions - this city can very much be a block-by-block experience, and that's what people will see first when visiting a home or apartment.

moxie, couldn't make it but will try again this Sunday. I will report back on that thread afterwards, if anyone's interested in my thoughts.

Oh, an in terms of sunset park, I'm not talking about new condos. I'm talking about the older stock housing, some good stuff there.

"Sunset Park will always be Sunset Park, just like how Bronx will always be Bronx."

I don't think you know what you're talking about.... you clearly aren't following the waterfront development at all. They've managed to do an awesome job bringing in real commercial activity (including some cool stuff) to the Bush terminals.... and more is coming. You've going to have a good base of light manufacturing and some retail growing there. I'm amazed what they got there already. Physically, its just too good an opportunity to not use for the city. And that is going to have tremendous effect as it goes on.

Then, the bqe needs to be replaced. If they do any of the proposals to move it off 3rd ave, that could be HUGE for the neighborhood as well.

And, unlike the south bronx, its not across the river from the good neighborhoods, it runs up against 'em...

Somewhereelse,

You clearly have no idea of anything you are talking about.

Williamsburg is as well defined as any other neighborhood. IMO, WB is more defined than DUMBO or BH.

Sunset Park houses and properties are wayyyyyyyy too overpriced. All those commercial along the waterfront WILL NOT bring much retails to the neighborhood. Most are storage units, auto/tiles/etc shops which will likely stay for the next decade or two. I'd say Sunset Park has seen the least amount of growth compared to the other neighborhood in the past 10 years.

you are better off investing in Coney Island, Bensonhurst, Ditmas, etc.
Any strong (i mean like 99%) ethnic group residing in certain neighborhood can be devastating when 99% of them are supported by the tax payers.

Williamsburg may be well-defined, but it is larger than many Brooklyn neighborhoods. There are distinct areas within its borders which have different qualities, housing stock, amenities, etc. The Northside is, and has been for at least 20 years, considered the most "desirable" part of the 'burg. (But there are plenty of folks who prefer the Southside, or even East Williamsburg.)

DUMBO is about as big as the Northside of Williamsburg, and as such maintains a distinct flavor throughout its entirety. That's why most properties in DUMBO trade at apples-to-apples numbers.

Speculating on neighborhood development, especially in this city, is inordinately risky, and often way more long-term that you might plan. The better investment is usually a banged-up or troubled property from a desperate seller in an already-established neighborhood. JuiceMan is spot-on - you want to enjoy the neighborhood from day one, because that can take years to develop, if it ever does, in the way you desire, whereas renovating an apartment or even a townhouse, even if it's a gut-job, is a task with much less red tape and much more under your control. The problem with "investing" in Williamsburg is that most of the advertised (and available) housing stock is new condos. Those are rarely interesting from the pure investment perspective (that is, rental income wouldn't be appreciably more monthly carrying costs, and oftentimes lower - though I did find a notable example at 72 Berry a few weeks ago). But there are older units in older buildings that are suitable for that kind of purchase, though it does take a little digging around.

> IMO, WB is more defined than DUMBO or BH.

You can keep repeating yourself, but that won't make it any more correct.

Tina, right on, good post...

"All those commercial along the waterfront WILL NOT bring much retails to the neighborhood. Most are storage units, auto/tiles/etc shops "

Wow, you do not have any idea what you're talking about. The auto and tile shops are not the terminals.

Excellent thread.

Why do blog threads always end in arguments? I think of it this way. I wanted to live in Williamsburg but could only afford to live in Greenpoint. Greenpoint itself is a nice area with some nice restaurants but it's not Williamsburg so I proceeded under the guise of - it is close enough and it will be just like living in Williamsburg. It's simply not true. Just as everyone else with a full time job and a halfway decent social life, I am always in a rush so I go to the coffee shop nearest my apartment, order from the restaurants that deliver the fastest and plan to meander down North 6th on the weekends, but even then priorities and plans prevent me from doing so as frequently as I like. I get that we all want to get a return on an investment but you also have to live somewhere that you like because your everyday enjoyment should also be factord into that "return" that you are looking for, however hard it is to monetize such a payout.