Does Manhattan real estate not appreciate anymore?

If RE isn't appreciating, is it because of the increase in real estate taxes and monthly costs?

I don’t think in almost every market prices have gone up 50% prepandemic. In San Francisco this is certainly not the case. Trust me, if you bought a one bedroom condo in San Francisco in 2018-2019 and had to sell now, you would lose money. In general, in West Coast cities like LA, SF and Seattle, prices are definitely not increasing since there was so much increase prior to the pandemic. I also feel for studio and smaller one bedroom condos in cities, there is very little price appreciation since the pandemic made people want more space to work from home plus outdoor space. Many one bedrooms don’t have enough space for a decent home office.

There's traditionally a smaller segment of buyers for one-bedrooms.

GeorgeP, I don’t think the situation for 1BR coops is particularly different than anything else in Manhattan. The broad SE index of all same home resales has been going sideways for around 15 years now with some modest ups & downs:

https://streeteasy.com/blog/data-dashboard

personally, I believe it's the increase of tax and monthly cost, and the expectation that is will only go up, which is pretty scary to own.

Well it is hard to say about the future but here are a few reasons for last 10 years of underperformance

1. Brooklyn prime has greatly expanded in size (area as well as new construction supply), prices and amenities vs say 15 years back. Many well-earning families (call it $300k-$1mm range) who wouldn't have considered BK are much more open to it. BK also has much lower taxes in general.

2. Other factor is relative decline of large cities in blue states vs large cities in red states as meaured by home prices (possibly population). The reason are very complex and in a large part driven by who the voters elect and the resulting priorities/policies.

3. The cities and states with growing population have less pension liabilities relative to people supporting them. Mean lower taxes. No politician can change that fact.

4. Recently, well-known phenomenon of WFH but that can only explain last 3 years of underperformance in NYC.

5. Ultra-luxury NYC is simply overbuilt relative to demand despite 30-40% price declines in some buildings.

I am sure Nada has a couple of other factors to add.

>> Do people just buy because they want to be in NY and accept that there won't be much, if any, appreciation?

It obviously depends on the person. I’ve hear from many, many buyers over the past 15+ years. If I were to characterize the archetypical buyers’ view of expected appreciation, it depended on the era:

2005 buyer: 7%/yr, compounding to 100% after a decade

2010 buyer: 5%/yr, compounding to 65% after a decade

2015 buyer: 4%/yr, compounding to 50% after a decade

2020 buyer: 3%/yr, compounding to 35% after a decade

For current buyers, I can’t say — I haven’t conversed with enough (any?) to be able to have sense for the archetypical buyer.

Obviously, nothing close to any of these expectations were met. And if you asked the same people today what their original expectations were, I’m sure many would shade the number down to sound more in line with the outcome. Such is human nature.

But in any case, I think it’d be a mistake to characterize buyers as buying under the presumption of no appreciation. Most expected robust, and in some cases unrealistic, appreciation. But their expectations were not met.

6. Stastistics show that NYC popuation has outpaced the housing supply in the last 10/20 years. While I do not have the income breakdown, I suspect that population growth may have come more from lower income (inclusive of homeless junkies; people seeking public assistance) residents, who aren't buying Manhttan coops, vs middle-upper middle income residents (say $150k-$500k) who would be buyers of Manhattan adjusted for Brooklyn effect.

Thanks for the feedback. Markets where we're seeing 50% bumps in the last year include Tucson, Santa Fe and Seattle. I assume Tucson and Santa Fe will come back to earth at some point. Not sure about Seattle.

It's just odd to look at Manhattan going back ten years and seeing such flatness. I grew up in the NY area and had thought NY real estate always went up. At least for 1br co-ops that doesn't seem to be the case. The other concern is exit strategy in say 10 years, when a co-op may be a white elephant and the board won't let me sell at market price so I'm stuck.

>> I am sure Nada has a couple of other factors to add.

0. Fundamentals, fundamentals, fundamentals.

A dozen years ago, cap rates in Manhattan were generally in the 2-4% range, depending on product, against a backdrop of 4.x% 30yr mortgages. 2% was typical for a (say) $10M high-end home, 3% for the $2M mid-end apt, and 4% for $400K on low-end studios. Pretty unreasonable from a fundamental perspective, IMO.

Fast-forward a dozen years, and rents increased in line with inflation at 35% total (OMG, who coulda guessed that from a component that comprises a third of CPI!) while prices increased 15%. So cap rates improved to 2.4-4.8%, against a backdrop of 3% mortgages (putting aside if/when recent 6% mortgage trends work their way into it).

Those same dozen years ago, I considered investing in AZ real estate with a friend who had connections there. The cap rates we found ranged between 5% at the high-end to 10% at the low-end. Of course, the low-end and high-end there were fractions of Manhattan’s, but that was the range. In the end, we decided against investing: the friend’s interest in managing it all at my scale of capital faded, which was fine because I thought I could do similarly well elsewhere, but without the time cost & hassle of playing RE tycoon.

Fast-forward a dozen years, and Case-Schiller puts AZ real estate as having tripled. If we assume rent inflation works the same in AZ as it does in the rest of the country, rents would have increased 1.35x. That means cap rates shrank 3.0x/1.35x => 2.2x, meaning they range 2.7-4.5% now. So not that different than Manhattan.

Point being, maybe Manhattan was overpriced a dozen years ago and AZ was not.

Yes, after the Great Recession Arizona was underpriced a dozen years ago, or maybe right priced, but I'm focused more on the last 3 years where it's gone up 50%, like most places.

I see your point about maybe Manhattan being overpriced 12 years ago causing it to be relatively flat since then. I wonder if the market for 1br co-ops ever goes up. With expenses increasing so high in NY it looks like the sales price may stay flat, or worse.

AZ appreciation is very much time frame dependent. It got crushed after the great recession. For example, I saw lots of properties like this in Tuscon: new construction starter home sold for $200k at the peak of the bubble, later sold for $90k at the low in 2009, then zestimate slowly moved towards $160k by 2019, house was sold again for $180k in mid-2020, current zestimate is $260k (and that's the going price in the average, non-prestige, but decent neighborhood. So depending whether you count long term appreciation from the $200k or the $90k mark, you would get very different answers.

Rents have increased a lot in Tuscon, much more than in rest of the country, and while they stopped growing in the last 12 months, they are unlikely to reverse in my opinion as the city fundamentals are good, even increased rents are still inexpensive, and population is still growing at 1% a year. There is some infill in the center of the city with apartment buildings targeting university students, but otherwise the center is mostly built up. Average rent for a starter 3br house is probably around ~$1,300, so an average HH would be spending less than 25% gross income of ~$65k.
House prices are down slightly this year, like 3%, and current cap rates are about 4.5-5.5% (thanks to low RE taxes and inexpensive insurance). Not great, but much better than Manhattan.

Phoenix is a harder to analyze in my opinion, as it is very big and there are too many factors pulling in opposite directions.

>The other concern is exit strategy in say 10 years, when a co-op may be a white elephant and the board won't let me sell at market price so I'm stuck.

That is a concern.
To me an even bigger concern is transaction costs. There is a transfer tax on sales (1.4% I believe), broker fees (6%), legal fees (~$3k), and coop flip taxes (1-2% in many buildings). They all add up!

In Tuscon, for example, there is not transfer tax, the realtor takes care of legal paperwork, and houses don't have flip taxes.

I think Manhattan prices not increasing in 10 years means it is a better buy now vs. then.

Unless you think the city becomes Detroit, and will deteriorate from here. I personally think it won't, because it is too special and unique to be caught in downward spiral, but the pensions and budget situation is certainly a concern, along with pandemic overhang.

>> I grew up in the NY area and had thought NY real estate always went up.

That pretty much sums up the core reasoning behind the archetypical buyers’ expected appreciation rate, as I described it. A resolute grasping onto historical hope over reason, IMO.

>> I wonder if the market for 1br co-ops ever goes up.

Sure it does. Where’s 30yrs to tell us war stories of 10-year outcomes from buying these sorts of things between the late 70’s and the late 90’s?

>> I wonder if the market for 1br co-ops ever goes up.

>Sure it does. Where’s 30yrs to tell us war stories of 10-year outcomes from buying these sorts of things between the late 70’s and the late 90’s?

70s and 90s were good buys, but what is the expectation now? Prices should increase in lockstep with rents, unless expenses increase even faster. Given the budget situation, are expenses going to increase even faster?

Good points inonada, particularly about late 70s to late 90s, which is also my reference point. Maybe more accurately I should have asked, "Will it go up again?"

I think the "Manhattan RE only goes up" narrative were all the buyers who bought the 1997-2007 run up. The sales volume then was huge, and a lot of people have long memories. Further I think post-GFC returns are dampened as a result of there being no real GFC price drop like the rest of the country. Much of the country saw RE crash 50% and then slowly recover over 15 years.

In Manhattan even people who have costs basis from say 2005-2007 don't necessarily have that great of an annualized return, even if it is positive.

Ex- I know someone with a $2M cost basis from pre-GFC. Tried to sell for $3M during COVID bubble no takers. Had put in a $400K reno recently as well.
So let's say about 25% down (possibly more as it was a result of multiple RE flips rolling up equity).
So $3M sales -> $2.8M ex fees -> $400K profit on $500k down. 80% return in 16 years on 4:1 leveraged cash?

Note of course the cost of carry, upkeep, purchase transaction costs, and the inability to actually sell for $3M have not been factored in.

Let's Mark to achievable $2.8M sale, add in some purchase transaction costs and upkeep and it quickly looks more like a $100K profit on $500K down or 20% return in 16 years..

Numbers get even worse if the $400K reno was done with any cash vs purely loan based.
That is - if it was fully cash, then you make $100K on $900K of your cash invested?

You an find plenty of listings with similar price histories across flips & renos now.
10 year hold & substantial reno (walls moved) to try and sell for 20% above purchase price, on&off market 2 years - https://streeteasy.com/building/40-west-24-street-new_york/3e
Half of that 20% is going to cover transaction costs. The other half will not cover the renovation.

George, Stuffy coops decline has been worse than others barring ultra-luxury. There are just more housing choices in NYC in terms of condos in Brooklyn at somewhat comparable prices. If you don't mind stuffy coops and can get in, they are good value relative to other NYC properties.

I think 300mercer's point 1 is a lot stronger than given credit for

Brooklyn and its never ending shtetls to gentrify and redevelop has stolen a very large pool of Manhattan buyers, for the past decade.

Then throw in working through Zoom for the rest of the country creating a whole lot of other "brooklyn" markets

>Good points inonada, particularly about late 70s to late 90s, which is also my reference point. Maybe more accurately I should have asked, "Will it go up again?"

That's how I interpreted your question.

Fundamentally, need to understand three things to answer:
1) Will rents go up? (as prices should follow rents)
2) Will taxes and operating expenses go up faster or slower relative to rents?
3) What will happen to interest rates? Right now cap rates are lower than mortgage costs. It makes little sense to rent money at 7% to purchase an asset that can be rented at less than 4%

On 1) there are some factors pointing to demand possibly going down: city shedding some higher earning population (maybe because we have highest taxes and some of the highest cost of living in the US), tech and finance layoffs, WFH, Brooklyn becoming more attractive and pulling some of the demand away from Manhattan, etc
Also supply could potentially go up if rent control law is dismantled, as 30yrs pointed out in another thread, but I am not sure how real this possibility is.
Counterpoint is that rents in Manhattan have increased a lot post-covid, so we know there is demand still. I personally know people that WFH and moved to Manhattan from Nowhere recently because they always had a dream of living in the city and enjoying walkable neighborhoods.

On 2) the city is milking real estate for $$$, and with decline in commercial, may have to milk residential more and more considering aging infrastructure, pensions and other entitlements; also housing stock is aging and needs constant maintenance which in NYC is very expensive (and aside from strict building codes, I do not understand why, considering relatively high unemployment in NYC)

Construction and maintenance costs have been huge headwinds to price appreciation. In 2005, $1/ft maintenance was typical. Now it's $2.50-3. Unemployment may be high, but costs are rising because many of these jobs are unionized, many buildings are overstaffed, many unemployed people are incapable of doing the jobs (in part because every job has crazy licensing rules), and NYC is full of rules and red tape and an arbitrary DOB that all inflate costs. Don't forget that certain trades such as garbage haulers are still mob-influenced and priced accordingly.

It's hard to empty a coop and demolish it to erect a more functional building in the way often seen in places like Las Vegas. Even many condos are 40+ years old now and are at the end of their useful lives. It's almost as hard to get a bunch of elderly and absentee owners together to fund required overhauls of buildings, and buildings self-impose ridiculous constraints on renovations.

New construction is so expensive that new buildings are mostly for billionaires to park money not for people to live in.

Hence Manhattan has a deteriorating and aging housing stock that's expensive to maintain and doesn't provide even basic amenities that are expected even by entry-level buyers elsewhere like in-unit W/D, central air, and modern layouts (bigger bathrooms and closets). It became incredibly expensive to buy, maintain, and pay taxes on Manhattan real estate, and people like me threw in the towel and bought in Nowhere.

what is the useful life of a condo?

Brick/concrete Residential building life can be more than 100 years easily if the exterior is maintained. And exterior is maintained by law every 5 years in NYC. Those Hausmanian buildings from 1870s are still going strong in Paris. I live in a building built around 1900 and it will easily last another 100 years.

There are also many townhouses in nyc well over 100 years old and some over 175 years old. Of course, they all needed extensive structural repairs at least once and facade work every 20-30 years during this time to be in good condition right now.

But finishes and appliances will olook dated after m

But finishes and appliances will look dated after about 20 years. So if you are doing $500k renovations, some of that will be depreciated by then.

Depends on what finishes and they quality. Wood floors can be good for 50-100 years. Electrical and plumbing life is 50 years plus. Fixtures people change whenever due to taste.

For example, 16 year old reno. Depending on the taste of the buyer, very minor work needed as in - I don’t like black countertop in the kitchen.
https://streeteasy.com/building/15-central-park-west-new_york/14l?context%5Bcontroller%5D=%23%3CBuildingController%3A0x000055a591125818%3E&context%5Bcurrent_user%5D=1004028&hide_if_empty=true&section=sales&separate_sponsors=false

Here is a 20y old condo. Finishes seem original. I understand if some buyers want to change dark brown vanities ($5k at most) or orangish cabinet door in the kitchen ($10-$20k). But the rest of that is pretty good.
https://streeteasy.com/building/the-park-imperial/54e

I got very curious and did a little more research. Here is a 30y old basic doorman condo. Finishes, which were never fancy to start with, seem original. While it is perfectly functional and livable, I would think some one may change kitchen cabinets/countertop from Ikea and bathroom vanity. If you are changing more, it likely would be an enhancement vs what it was originally 30 years back.

https://streeteasy.com/building/richmond-condominium/4a

I think one of the reasons for flatness relative to other locations is that post GFC we didn't take the price corrections they did. The $780 billion Wall Street bailout got disproportionately spent in NYC. The price corrections we saw were short lived. A lot of the rest of the country didn't make it back to 2007 price levels until recently.

I agree with 30yrs that TARP money kept us from getting hit too hard by the great recession, so Manhattan never crashed the way some places did, and with George (miracles do happen) that Manhattan's upside has faced the headwind of maintenance increases that have been greater than expected.

I'm going to throw in the political point here that latter is by design; it's driven by constantly rising property taxes -- heaven forbid people in that cohort that 300 mentioned, making, say, three quarters of a million dollars a year, pay greater income taxes!

That said, we bought our oversized one-bedroom/convertible two in 2009 (against Nada advice, for which we are quite sorry) and if we were to sell today we'd be up about 33% -- so that's what, 2% compounded? Not what we would have earned on our down payment in the stock market, by any means, but our alternative was renting, and rents for what we're living in have certainly gone up at least 2% per year as well. So the opportunity cost on our down payment bought us the stability of a co-op community vs. the uncertainty and transitions of a rental one.

ali r.

"We're looking at a few locations around the country to retire."

First of all, if you're planning on dying here (or there), what exactly do you care about the future value? This is of interest only to your heirs. If you are looking to transfer intra-generational wealth, there are probably better ways to do this. If you need to live here now, yet conserve asseets, there are definitely better ways to do this (nada has well made the case for rental!).

Secondly: I own a house that is coming up on it's 200th birthday. It is well built (some evidence that the original builder was a carpenter, back when that meant something), and even without many later improvements would be ok. I was motivated to help it make it to it's 300th birthday, so did a lot of expensive work that will get it there. Will I recoup that in my lifetime? No. Will my heirs? Sure. They had no cash outlay, and will get the cash from the sale.

What, exactly, is the problem you're trying to solve here?

> I'm going to throw in the political point here that latter is by design; it's driven by constantly rising property taxes -- heaven forbid people in that cohort that 300 mentioned, making, say, three quarters of a million dollars a year, pay greater income taxes!

I'll play devil's advocate. Firstly, income taxes for NYC residents are already higher than anywhere else in the U.S. (higher than California), so I don't think incomes are undertaxed here :-) RE taxes as % of property value are on the other hand are not that high compared to the rest of the country, kind of middle of the pack (although the dollar amount is quite high due to high property values).

Secondly, economists generally prefer real estate taxes as a means for raising revenue, because unlike earners, properties do not have legs, and even if an owner decides to sell and move to FL, the next owner will pick up the tab and continue paying taxes.

Finally, there are a lot of foreigners / out of state rich people that have parked money in NYC real estate. These people do not pay any income taxes in the city (or even the state), because they don't live here. There are also people so rich that they don't have to work for a living, and as a result, their taxes are highly optimized and much lower relative to their net worth than mine, a W2 worker. So by taxing their real estate, the city is able to get something from the kinds of very rich people they otherwise wouldn't be able to get.

One other practical thing to note is that RE taxes are usually up to the locality, and require no sign off from the state (but income taxes might).

@300mercer
These are very good examples of renovations that aged well. I have seen some stuff built or renovated in early 2000s that now looks really poor and dated. So I guess it all depends on how good your taste is and quality of materials used. :-) I am looking at my engineered wood floor that was put in 1.5 years ago, and I think there is no way it will last 50 years.

>I think one of the reasons for flatness relative to other locations is that post GFC we didn't take the price corrections they did. The $780 billion Wall Street bailout got disproportionately spent in NYC.

Other locations had corrections due to a large number of foreclosures on risky mortgages (1% down variable rate or interest only). There were fewer foreclosures in Manhattan because coop buyers were pre-screened. Also those risky mortgages might not have been available for properties at Manhattan price points.

Steve>> Let's Mark to achievable $2.8M sale, add in some purchase transaction costs and upkeep and it quickly looks more like a $100K profit on $500K down or 20% return in 16 years.. Numbers get even worse if the $400K reno was done with any cash vs purely loan based. That is - if it was fully cash, then you make $100K on $900K of your cash invested?

If it couldn’t find a buyer willing to negotiate off $3M at the 2021 peak, then a $2.8M mark at that point in time is best-case (meaning it was just shy of meeting market). At this point in time, it’s more like $2.6M best-case given the drop we’ve seen. So I’d take at least $200K off your estimate of $100K profit.

>> Brooklyn and its never ending shtetls to gentrify and redevelop has stolen a very large pool of Manhattan buyers, for the past decade.

Stolen is a strong pretty strong sentiment…

Call me crazy, but even the most basic of studios — not recently renovated, in a non-descript 1960’s coop with low ceilings, in a low-demand area — costs ~$400K plus ~$1000 in maintenance. Mortgages, or forgone interest in t bills, runs at 6%. Meaning $2000/mo interest.

So for the cost of $3K/mo, you have the privilege of owning the most basic of housing in Manhattan. Rather than forcing buyers to stay on the island and pay double that amount, developers had the audacity to build something nicer across the river, thereby stealing Manhattan owners of their birthright to ever-increasing prices for ever-deteriorating RE.

I know that’s not how you meant it, but I found the word “stolen” too juicy a target to ignore. ;)

Regarding the aging of the housing stock... we've had the debate before that the useful life of a typical building is 40 years, after which it should be razed. The poster child of this is Carnegie House on Billionaire's Row.

Those Hausmannian buildings in Paris were of extraordinary construction quality because they were built for rich people (with servants quarters in the attic) and have been extensively renovated over the years. Tastes change. In the 1880s, even a 300 square meter full-floor flat had just one bathroom -- you remember Pepé Le Pew. Countless others were razed over the years, replaced with hideous 1960s and '70s vomit, or were gutted on the inside and rebuilt, keeping only the facade.

Lots of Manhattan townhouses had the same gut renovations - essentially a new building with an old facade. Anyone who's renovated a shell in Harlem would say it's far easier to start over.

Unfortunately a lot of the construction in Manhattan, even recent construction, is flimsy rubbish and won't last beyond 40 years. It will become expensive to maintain, gradually deteriorate, and eventually end up not really appreciating in value, to the point GeorgeA was making. Too much of NYC's residential stock is like Third Ave office between 42nd and 57th - old, dark, uninspired, bad floor plans, but still a little too valuable and a little to occupied to tear down.

>> RE taxes as % of property value are on the other hand are not that high compared to the rest of the country, kind of middle of the pack (although the dollar amount is quite high due to high property values).

Krolik, Don't forget NYC income taxes which most other places in the coutnry don't have. One really has to add to local income taxes (not state) to the real estate taxes to compare to other locations.

And what do you get for real estate taxes in Manhattan? Sub-par school system despite paying some of the higher $ amount of real estate and NYC income taxes combined?

I have emphasize below when I read Ali's comment. Ali does not realize that she is getting fked too in terms of schools for her kid relative to taxes she pays as she is not on public support.
2. Other factor is relative decline of large cities in blue states vs large cities in red states as meaured by home prices (possibly population). The reason are very complex and in a large part driven by who the voters elect and the resulting priorities/policies.

>> I'm going to throw in the political point here that latter is by design; it's driven by constantly rising property taxes -- heaven forbid people in that cohort that 300 mentioned, making, say, three quarters of a million dollars a year, pay greater income taxes!

What is the right rate? The top marginal rate for NYC residents is currently almost 15%, not counting Federal and whatnot. As it stands, moving to Florida means a high earner gets to keep 63% rather than 50% (say). That’s a 25% after-tax raise to the person. You already see how much outward pressure that creates, increased by recent WFH trends. Add 10% to NYC tax rates for such earners, and it becomes 63% vs 40% take-home. A.k.a., a 58% raise for relocating to FL.

My point here is that from a policy perspective, you can end up reducing total income tax revenue by increasing tax rates. I’m pretty sure our friends in Albany study this extensively and optimize just exactly how much they can squeeze.

Your idea might work better if it was accompanied by a “jail the rich” component. If you make three quarters of a million or more, you are instantly arrested and confined to a high-tax NYC condo where you will toil for 25 years, paying crazy property tax as well as paying 25% income tax to NYS/NYC, after which you are free to leave and enjoy your exile in the Sunshine State.

Another point on raising Real Estate taxes:
AFAIK it's the only tax that NYC can decide to increase the revenue from without asking permission from someone else.

Krolik,
At the height of the foreclosure crisis there were substantially more foreclosures from strategic defaults on prime mortgages than those risky subprimes.
https://www.nber.org/digest/aug15/us-foreclosure-crisis-was-not-just-subprime-event

Aaron2>> What, exactly, is the problem you're trying to solve here?

That is a great question!

Another problem is that high end properties pay a substantially lower percentage of value in Real Estate taxes than lower end homes. It's a regressive tax. Certainly more affluent should pay the same percentage of value on an ad valorem tax, no?

33 Year old Vintage aging just fine. Don't think it is was renovated. So 40 year useful life claim of George is just plain BS.

https://streeteasy.com/building/the-corinthian/9j

>>> Your idea might work better if it was accompanied by a “jail the rich” component. If you make three quarters of a million or more, you are instantly arrested and confined to a high-tax NYC condo where you will toil for 25 years, paying crazy property tax as well as paying 25% income tax to NYS/NYC, after which you are free to leave and enjoy your exile in the Sunshine State.

+1 to that.

>Krolik, Don't forget NYC income taxes which most other places in the country don't have. One really has to add to local income taxes (not state) to the real estate taxes to compare to other locations.

Oh, as a W2 worker with almost no deductions (with just one tiny deduction on his/her way :-)) I cannot forget how much taxes I am paying. My point was that there are some really good arguments why real estate taxes (potentially with some abatement for seniors or primary residents) might be the right way to raise revenue, vs. income taxes.

One real estate broker couple of years ago after looking at my financials (to evaluate me for a coop application) asked me "you make quite a bit of money, how come you have so little saved? do you have a gambling problem?"

Taxes, man. And student loans. And not even a tax deduction for student loans.

Let me add, when you pay high $ real estate taxes in burbs, they stay within a small location which does not have that much disparity in real esate prices. Call it 1 ($500k) to 2 ($1mm) from 10th percentile to 90th percentile. That means the school quality is generally in line in with the taxes you pay. But in Manhattan below 96th street, real estate taxes go to fund schools in areas which pay very little $ amount of taxes as the disparity in real estate prices is probably 1 to 5. So basically, your real estate and city taxes are funding a lot of poor areas vs what would be the case in the suburbs.

>> Regarding the aging of the housing stock... we've had the debate before that the useful life of a typical building is 40 years, after which it should be razed.

George, So Corinthian should be razed in 8 years? Carnegie house is 1962 (60 years) and residents still fighting to keep it. I don't know of a single residential building in NYC which should be razed after 40 years.

On townhouses, I renovated one which lasted more than 100 years with only cosmetic renovations. Systems needed to be fully redone after that. The structure was still solid including foundation. Cost of full reno (facade, windows, all systems etc) after 100+ years only 30-40% of full new build when you factor in difficulty or time needed for DOB approvals for new build, neighbors permissions needed, risk of new construction and foundation on a wall shared with the neighbors etc.

And George don't be telling 740 Park Avenue residents that the building should have been razed in 1970.

>> Maybe more accurately I should have asked, "Will it go up again?"

Certainly! But you might be dead by then…

The future is uncertain, and many things can happen. But I look at cap rates today, and they’re 2-4%. I look at mortgage rates, and future expectations on mortgage rates, and they’re 6%. Those rate conditions are not conducive to long-term price appreciation. If it were the other way around, then rate conditions would be conducive to high rates of appreciation. And if the rates are close to each other, I’d expect modest rates of appreciation.*** All with lots of uncertainty, of course. So take this rubric from the viewpoint of “Would I be willing to lay down a bet given the odds” rather than “This will happen.”

*** 2020-2021 created an interesting situation for me. During this period, mortgage rates did drop down to the ballpark of cap rates. So according to my rubric, it should have been conducive to moderate appreciation. But nevertheless, I concluded it not a good bet to lay down because of the engineered one-way nature of mortgage rates. Normally, mortgage rates can go either way — down you win, up you lose. That is an uncertainty, but in expectation the two offset. Win some, lose some, whatever.

The problem with 2020-2021 was twofold. First, at mortgage rates that low, the bidirectionally of the bet was lost. Rates couldn’t go down, they could only stay flat or go up. So the 50/50 flip had become “Heads, I get nothing; tails, I lose.” Second, some degree of tails was virtually guaranteed to occur. Mortgage rates got that low because the Fed was buying trillions per year, whether directly through MBS or indirectly through Treasury bonds. ZIRP alone, even with massive-pace QE, only got mortgage rates to 3.x% after the GFC. To get to 2.x%, the Fed had to layer on an epic, unsustainable pace of QE. The Fed could not keep that up indefinitely: a few more years of buying at that pace would have vacuumed up every last piece of debt outstanding in the US. It’d create huge distortions to get there, and once they got there, then what? The buying had to stop soon enough, even if the inflation was not a thing. And once they stopped buying, mortgage rates would have increased. My rubric is based on then-present rates being available, average-case, to future buyers.

>And what do you get for real estate taxes in Manhattan? Sub-par school system despite paying some of the higher $ amount of real estate and NYC income taxes combined?

I was excited about universal 3K given my situation, but that was the program that got cut first... so I'll just have to pay $3700/month out of pocket to the local day care until the kid is 4yo.

I still get Central park, I guess, just a 20 minute bus ride away. And I get to subsidize the rest of the city...

Apparently 4.4M of NYC residents are on Medicaid, the government's health insurance for the poor.
https://www.health.ny.gov/health_care/medicaid/enrollment/historical/all_months.htm#

Not sure if the city is paying for that, or just federal and state gov't, but the number of people in the program is just shocking.

>> Not sure if the city is paying for that, or just federal and state gov't

Federal > state > local

https://uhfnyc.org/our-work/initiatives/medicaid-institute/dashboards/new-york-medicaid-expenditures/

> But in Manhattan below 96th street, real estate taxes go to fund schools in areas which pay very little $ amount of taxes as the disparity in real estate prices is probably 1 to 5. So basically, your real estate and city taxes are funding a lot of poor areas vs what would be the case in the suburbs.

I get it, but schools in poorer areas is one thing I really don't mind paying for! Afterall, these are future workers who will pay taxes when I am retired. I want them to be well-prepared for their careers, and earliest education matters the most. Plus, school funding does not introduce any adverse incentives.

There are so many things funded besides schools. What I do mind paying for is endless subsidies for adults (that are also frequently abused).

Response to @Aaron2. We're 60 so looking at potentially NY for the first phase of retirement, say 10 years, before moving on to someplace else. So we'd hope for some appreciation at that point when we sell.

It's hard to make serious changes to a system (taxes and gov't programs) once people have made life plans around it. The only fixes are additive (more taxes or new tax breaks/loopholes). The whole thng becomes sclerotic and irrational

>> We're 60 so looking at potentially NY for the first phase of retirement, say 10 years, before moving on to someplace else. So we'd hope for some appreciation at that point when we sell.

Your adult life coincided with an epic decrease in interest rates. Over a ~40-year stretch, 30 year bond yields went from 15.x% to as low as 0.99%. Think about that — given the “opportunity” to lend money at <1% for the next 30 years (!!!), billions of dollars said “That sounds great, sign me up!!!”

Mortgage rates went from 18.x% to 2.x% in this same timeframe. And for a lot of people, that translated to being willing/able to pay a lot more for housing. That tailwind has now reversed.

So while I empathize with your hope that prices appreciate over the next 10 years, why should we expect it, Manhattan or otherwise? That is the more relevant question, which I know you’re asking.

Poll question for the peanut gallery here. What is your expectation for Manhattan price change for the next 10 years? By expectation, I mean the line at which you’d be equally happy taking either side of a bet. The payout of the bet is proportional to the degree to which the outcome is higher vs lower than the line.

@Krolik
> Other locations had corrections due to a large number of foreclosures on risky mortgages (1% down variable rate or interest only). There were fewer foreclosures in Manhattan because coop buyers were pre-screened. Also those risky mortgages might not have been available for properties at Manhattan price points.

Let's not flatter ourselves TOO much here. Yes there were riskier mortgages made elsewhere. But unemployment for white collar Manhattan jobs & government austerity never approached the devastation seen elsewhere in the country. Do not discount how much the industry and therefore the city was propped up.

@nada
>If it couldn’t find a buyer willing to negotiate off $3M at the 2021 peak, then a $2.8M mark at that point in time is best-case (meaning it was just shy of meeting market). At this point in time, it’s more like $2.6M best-case given the drop we’ve seen. So I’d take at least $200K off your estimate of $100K profit.

Agreed, they very well may be UNDERWATER on a 2007 buy.

>> against Nada advice, for which we are quite sorry

I apologize for having failed in my powers of persuasion. :(

FWIW, looking back on decisions from the lens of the outcome can be overly harsh and misdirect a person. The better question to ask, IMO, is whether a decision was good given the information at hand, not the outcome. I’ve certainly made my share of boneheaded choices, from the perspective of making ones whose outcome was significantly inferior to another one. That is life under uncertainty.

But in aggregate, I *think* I’ve decided decently on the many, many such choices that have come my way. There is no big single great choice that led me to wherever I am today, just dozens & dozens of smaller good or decent ones, along with my share of mistakes. I try to learn & course-correct on the choice, which correlates to the outcome, but not to the degree that others might attribute.

It is not really a relevant comparison to look at appreciation in geographically unrelated markets in some snapshot in time. The reason these other markets have so far to run is that they were so far behind, and much of the middle of the country had little, no or negative real estate appreciation for decades. 60 years ago, the price difference of a house in Brooklyn or Columbus Ohio was probably negligible. My parents paid $7500 for a house in the outer boroughs in 1963 that was sold for $200k in 1993, and now worth probably $600-700k. So, the first 30 years return was 27x, the next 30 years is 3.5x. The 3.5x is not bad. 27x is a lot better.

Pricing appreciation in major cities is below the general trends all over, and not just in the U.S. There are probably lots of reasons for that, and the tax burden and cost of ownership is certainly one of them, but the strong dollar and lack of interest of foreign buyers is likely another, as well as more complicated socio-political trends. And, I can't say I have checked, but I seriously doubt that the real estate tax burden is similar in other urban centers, whether on a gross or percentage basis. Plus, with the other worst tax offender in California, your real estate taxes go up in only miniscule amounts while you own the property. My taxes have almost tripled in 20 years.

>We're 60 so looking at potentially NY for the first phase of retirement, say 10 years, before moving on to someplace else. So we'd hope for some appreciation at that point when we sell.

Manhattan is a weird market. Seems that it does not move with the rest of the country (GFC: country down, Manhattan mostly sideways; COVID: country up, Manhattan slightly down, then sideways). Forecasting this city, one needs to think about Manhattan-specific factors. Boom of certain industries (finance, trade, law, media, tech, tourism), urbanization vs. de-urbanization trends, budget issues and taxes, foreigners wanting to park money here, politics etc... there are also gentrifying trends by neighborhood. This is way more complex than forecasting trends in the rest of the country. One thing to consider is appreciation of an area relative to other neighborhoods. Outside of Manhattan might be your best bets. Pick an area that is still well priced, but is adjacent to a recently gentrified, much more expensive area. It doesn't sound like you might want to live outside Manhattan. In Manhattan, I could hypothesize that Lower East Side, areas adjacent to Hudson Yards, and some areas of Harlem are most likely to appreciate.

But in your shoes, I would instead ask the question, what is the way to spend least/get most for your buck on housing in Manhattan in the next 10 years.

Options to consider are:
1. Buy luxury condo (very overpriced, objectively the worst deal in Manhattan right now)
2. Rent luxury condo (one of best for your buck deals in Manhattan, if you are able/willing to spend a lot on really nice housing. People with the kind of money to afford to spend a lot on housing are often not considering rentals, creating a market inefficiency)
3. Buy coop or older condo (better deal, with something like 4% cap rates, but you need to get approved by the board, unless it's a sponsor unit)
4. Rent coop or older condo (can be a decent deal, but need to get approved and might have to move after 2 years as boards in most buildings don't like apartments rented for a longer period of time)
5. Rent from professional landlord in non-luxury rental building (market price, decent services from landlord, typically landlord happy if you renew indefinitely)
6. Qualify for gov't program. (Lowest price for housing. There are HDFC coop apartments and various subsidized new construction apartment lotteries for buy or rent. These are typically perfect for retirees, because there are usually income caps, but no asset caps. These are more prevalent in boroughs or Harlem, but there are occasionally some in other areas of Manhattan. If you buy HDFC, you might not make too much on the sale, but for 10 years you would spend very little on RE taxes as these buildings have special deals with the city. Need to do a lot of research and get lucky to find something that works as there is a lot of competition to get these)

@Nada

"I know that’s not how you meant it, but I found the word “stolen” too juicy a target to ignore. ;)"

Yes I thought as long as long as the word stolen wasnt followed by the word election, it would be acceptable hyperbolic use. :)

On the property tax issue, as it is the darling for NYC revenue.
If I recall, it is around 50% (if Im misremembering Im sure someone will correct) of NYC's income portfolio.

A well oiled machine that relies on rental data for so called equivalent property. The beauty of this machine is the more tax goes up, the more the rent goes up.....the more the rent goes up, the more the city assesses next year's tax increase.....
The monkey wrench now is the decimation of the commercial real estate sector both retail store and office buildings. I really dont know how they'll fix that. Converting office buildings to residential can be a nightmare, particularly the plumbing comes to mind.

But there's been a longstanding issue in this city that needs a fresh look. The one, two, three family townhouses in manhattan are grossly underpaying property taxes in comparison to their midrise and hirise neighbors.
Further, the city loses countless property tax dollars on "underbuilt" townhouses with 1 thru 4 floors built that have air rights for sometimes double their size.
A neighboring midrise with the same footprint but near max FAR built is providing full tax income potential to the city while the townhouse is both inefficient use of lot size and is likely housing those super high income earners so many want to tax more.

I think air rights......should be taxed. :)

>> But there's been a longstanding issue in this city that needs a fresh look. The one, two, three family townhouses in manhattan are grossly underpaying property taxes in comparison to their midrise and hirise neighbors.

Truth, It is a bigger issue in BK. Manhattan townhouse taxes are not so low as a percentage of their market value. But agree, as a minimum the tax increase cap on 1-3 family should be the same as condo/coops.

Air rights taxation is tricky as in many cases, landmark regulations and DOB rules will not allow you to build up despite having the FAR. Only complex zoning analysis combined with a building design can give precise answer.

In addition, one would think if the unused air-rights make a property more attractive to live in without using the air-rights, it would be reflected in the property price. But then the current system has plenty of holes even for known property prices.

I like your idea for full-FAR taxation. That should encourage building as much as 421a tax breaks, no?

I'll admit my hidden agenda is to also get rid of eyesore vacant lots. As long as we're at it, scaffolding (a.k.a. sidewalk sheds) should be taxed at double FAR. One level of FAR for the building, its blocking of light, etc., and a second level of FAR for encroaching on the public sidewalk and further blocking light / creating dirtiness & ugliness.

Here is example of Manhattan 1-3 family taxes. Roughly 1% of Market Value. A little less than what it should be but not so far out of whack vs BK townhouses where for $5mm townhouse, the taxes may only be $10k.

https://streeteasy.com/sale/1656757

>>I like your idea for full-FAR taxation. That should encourage building as much as 421a tax breaks, no?

Empty lot taxation is not so low. I looked at a lot in prime Harlem. Empty lot was taxed more than other existing building next to it on the same lot size. It is really the underbuilt taxation which may be low.

On Scaffolding. NYC facade repair requirements are fairly stringent. It takes a long time before a building does the repair design, DOB approval, actual repairs, inspections of repairs and then approval from the city of the final approval. This basically results in minimum 1 year out of every 5 years scaffolding in any building older than 10 years.

Then I have seen building with scaffolding for multiple years with no work being done. That really should be punished heavily.

truthskr10,
If you think Class 1 properties are undertaxed you should check out the highest of high end apartments
https://www.bloomberg.com/news/articles/2015-05-11/why-billionaires-don-t-pay-property-taxes-in-new-york

As far as air rights NYC has been giving away for free what it should be getting paid for. All of the upzonings are a windfall for property owners and greatly increase the value. It is my opinion that upzonings should be an opt-in item where owners need to pay for all the extra FAR. And they would obviously do it. Example: NYC has already sold developers air rights from the High Line
https://ny.curbed.com/2018/2/28/17063150/nyc-high-line-air-rights-sale-price-city-planning-commission-vote
At $625/sf! Think of the billions and billions of dollars given away with free upzonings.

As far as sidewalk bridging
A) I lived across the street from this for 17 years
https://patch.com/new-york/west-village/scaffold-covers-west-village-block-22-years-residents-say

And
B) https://abc7ny.com/sidewalk-scaffolding-eric-adams-get-sheds-down/13541432/

This one clearly undertaxed at appx 60bps of MV.
https://streeteasy.com/sale/1648574

But this one in BK is really undertaxed.
https://streeteasy.com/sale/1667749

inonada,
-25%

"Let me add, when you pay high $ real estate taxes in burbs, they stay within a small location which does not have that much disparity in real esate prices. "

I'm not so sure about that. Take Great Neck/Kings Point (same school system) you've got little shitbox houses for $600k up to $40 million mansions. Same in Westbury School District.

>Poll question for the peanut gallery here. What is your expectation for Manhattan price change for the next 10 years?

0% for 1br

">And what do you get for real estate taxes in Manhattan?"

For one thing the biggest most expensive police department with a $6 billion budget (and the actual spend runs north of $10 billion)

Some of it spent on military equipment and training, as well as foreign offices which duplicate what are clearly federal tasks and are largely patronage jobs. And certain offices which clearly abused their mandates (like the counter terrorism bureau which surveiled many Muslims even without cause which led to multiple lawsuits costing more money).

Another is the outsourcing of governmental tasks to non-profits. Like the $500 million that went to Brad Landers' wife's clients.

Let's not forget the last budget under Bloomberg was $69 billion. 2024 is $107 billin

NYC RE tax is incredibly inconsistent, sometimes expensive, but arguably generally too low.

My house in nowhere, priced at 33% my BK newdev condo has RE taxes of about 66%, so price-to-tax is 2x. Further, my nowhere is an older area with lots of second homes, so the there's arguably far more homes for the level of supporting services (schools, cops) than in BK or NYC generally.

Manhattan condos probably pay 2x per sales price $ as BK condos, so they may actually be roughly in line.

However we know single family homes, townhouses, Manhattan co-ops and basically BK/QNS/BX/SI are all artificially low.. so that's probably 80% of NYC housing stock?

I supposed NYC tries to make this up on CRE tax & income tax, but this may also explain why despite all the taxes NYC still has a large budget deficit.

And speaking of tearing down old buildings, Spitzer properties (yes, that one) is filing an application to raze 985 5th Ave (1969, 70 units, rental). No aesthetic loss, and the proposed new building (condos, forget the # of units) looks quite handsome. (came up at recent CB8 meeting).

And there was that co-op on Park in the 50s that sold itself to a developer a few years ago, which has been razed (15 units?).

@GeorgeP: I don't see prices increasing much in the next 10 years (<2%/yr) so given entry/exit costs, I'd rent if there were only a 10 year timeline.

Aaron2. That's good advice about renting. We've been looking into that. The only problem right now is that the rental units we see in our budget are substandard compared to the co-op units. On the flip side, we have no interest in dealing with a financial proctological exam from a co-op board and having our future fate on a sale in their hands.

GeorgeP, Are you saying that buying a 1 bed room coop is actually cheaper than renting a similar unit despite the current high mortgage rates? Will appreciate an example.

>> The only problem right now is that the rental units we see in our budget are substandard compared to the co-op units.

300_Mercer We're cash buyers so it's just the opportunity cost on the purchase price that I calculate, not the current higher mortgage rates. While it may not be cheaper to buy, when comparing apples and apples the units are nicer than the rentals.

What opportunity cost are you using for cash purchase if property prices do up by inflation (say 2% per year) while you own?

do=go

If you are really thinking of being in NYC for only 10 years, given the high interest rates, I would rent rather than buy. You can be earning 4-5% in Tbill or CD, absolutely risk free. I have purchased quite a bit of real estate in the last two years in NYC, SF and LA. I do a mix of living on both coasts and renting them out. While I’m happy with my decisions, had interest rates been as high as they are now and I could have parked my money in a 5% CD, and I certainly would have purchased less real estate, if I wanted to be in either NYC or LA for several months, just do Airbnb. Don’t forget when you own, you are going to have to pay for any repairs and maintenance and assessments. The nice thing about renting, your landlord is responsible for most of that. I agree with one person said, try to find a “Mom and Pop” landlord who will be responsive, and when the lease expires, will value having a good tenant and not be unreasonable with rent increases. My experience with big corporate landlords is they don’t give a sh#t about their tenants and will almost always try to jack up the rent and exorbitant amount. You can always move but that’s a pain….

@300
"Here is example of Manhattan 1-3 family taxes. Roughly 1% of Market Value. A little less than what it should be but not so far out of whack vs BK townhouses where for $5mm townhouse, the taxes may only be $10k.

https://streeteasy.com/sale/1656757"

Excellent, lets use you're example for what I was speaking to. Id like to compare a manhattan underdeveloped townhouse to a midrise on the same block. This way the comparison is more apropos. Comparing a Manhattan townhouse to a Brooklyn townhouse of equal value has its merit in a different argument, but the main factor there is as property tax assessment is lagging, Brooklyn is a developing market compared to Manhattan and it takes considerable time to even remotely catch up.

Your example for a townhouse that has (as per lavamap) 3456 sq ft of interior space on a ***1817 sq ft footprint(lot size) of land.

It also has 3815 sq ft of unused air rights
This $4379 a month($52,548) taxes = $15.20 per built sq ft

***It is also $28.92 per coveted footprint(lot size) manhattan sq ft.

Lets use google map street view to walk down the block for any midrisers.
I tried but unfortunately its only townhouses and highrises.
But I'll be a sport and run with it

I had to go to 226 east 70th st for a midrise with no commercial units
A 6 story, with 41,898 sq ft of interior space on a footprint of 10,042 sq ft
Yearly tax bill for this building is $619k =$14.77 per sq ft
(Do note that 4 out of the 52 units are rent stabilized but I wouldnt expect that to effect tremendously)

So here is an example where the price per interior sq ft is the same. When Ive done these comparisons for some buildings in Chelsea, I have found that not to be the case and the townhouses were paying less per built sq ft.

But more the point remains

That is ***$59.40 per per coveted footprint(lot size) manhattan sq ft. income to NYC on the fully built midrise
vs
***$28.92 per footprint sq ft for the limousine private jet townhouse :)

And isnt a townhouse a luxury and not maximizing space? Are we not living in a world where we are now charging for excess?

Charge for unused air rights like carbon credits.

@30 years
"If you think Class 1 properties are undertaxed you should check out the highest of high end apartments
https://www.bloomberg.com/news/articles/2015-05-11/why-billionaires-don-t-pay-property-taxes-in-new-york"

I dont know
this article tells half the story. This occurs in new developments only and once your in year 6 of the 10 year tax abatement, you're paying a respectable property tax on the unit. And 4 years later when the abatement is over, you're actually paying above the norm.
And to take it further.....this buildings tax bill now drags other building's bills up because now this building is a higher comp for the area.

I think the city wins the long game big time specifically with 10 year manhattan 421a buildings

"It also has 3815 sq ft of unused air rights"

Doesn't mean that you can actually build those. There are several other DOB restrictions such as sliver law.
https://fontanarchitecture.com/nyc-sliver-law/

Another argument against taxing for unused far is that additional square footage does cost the city in terms of services. Most kids to educate and more congestion.

And someone should send LPC a huge tax bill as they do not let many townhouse owners utilize the square footage.

Not sure how my original post about whether or not Manhattan real estate appreciates became a thread on taxing air rights but that's the beauty of SE forums.

Or they could charge NYU and Columbia RE taxes on properties held as investment (and not as educational facilities or dorms), as I don't believe they pay RE tax even though they consume city services.

The billionaires underpaying for condos argument, I don't buy. Abatements aside, they are paying a really, really high absolute amount.
And this is not because their abodes take up tons of land and air rights, or because they send an army of kids to public schools, but because of high price per square foot they paid that probably includes furnishings, custom design services, and golden toilets. They are subsidizing other city residents as is, so no complaints from me.

My main problem is 4k sq ft townhouses in BK paying $350 per month, while my relatives in Staten Island pay more for a house less than half the size and 1/10th the price, and coops and condos in Manhattan are paying a ton more as well for less space and value.

The explanation, as I understand it, is that BK townhouse assessed value was frozen when the tax law was passed at the level it was then, with a cap on raises. When my relative's tiny SI townhouse was built in the 90s, it's starting assessed value was based on the market price, which was significantly higher than the assessed value on the BK house at the time (because the cap was already in effect there for many years). Discrepancy narrowed a bit (as SI dropped in value for a few years after GFC), but the SI tiny house is still paying more taxes than a larger house in BK that is much more expensive. And SI does not even have a subway line. And you have to pay $$ every time you cross the bridge (+ now potentially a congestion charge if you go to Manhattan).

Truth, Lavamp seems very good. How did you discover it?

>> You can be earning 4-5% in Tbill or CD, absolutely risk free.

T bills are more like 5.5% these days.

truthskr10,
What tax abatement did 220 Central Park South get? Answer: none. And what percentage of market value is Ken Griffin 's $238 million penthouse?
https://therealdeal.com/new-york/2019/02/28/the-city-values-ken-griffins-record-setting-238m-penthouse-at-9m-heres-the-math-behind-that/

I'd also look into the taxes on blue blood expensive buildings like 740 Park Ave. "Market Value " $95 million. Assessed Value $43 million. Annual taxes $5 million. Actual current value of units?$650 million? So taxes 0.8%? While the John Adams 101 West 12th Street has a nearly identical AV/taxes but total actual market value is probably closer to $400 million.

Krolik,
I don't know why you don't buy it. You're arguing against math.

The biggest mistake the Coop/Condo lobby ever made was to not be lumped in with Class 1.

BTW as far as I can tell, NYC gets a lousy return on the tax abatements.
https://www.wnyc.org/story/years-95-property-tax-break-paid-you-enjoyed-billionaires/

@30 I am not against math, I am focusing on a different metric: absolute dollars, in proportion to square feet (with or without air rights) and city services consumed. I don’t think BK houses are covering their fair share of funding for schools and parks, but I definitely know Griffin does, and then some.

Also, value of a one of a kind collector item is hard to estimate. You have a starting value, but the following year, how are you going to figure out if market value if there no similar transaction? By the way, didn’t most purchases on billionaires row decrease a lot in value? How do we know Griffin’s apartment’s value is still what he paid for it?

@Krolik Didn't know Columbia and NYC had property tax breaks. Shows a galling 'Progressive for thee, libertarian for me' ethos. Aren't they rolling in it?

@GeorgeP Disclaimer: I've never been to see Seward Park Coop apts no idea about build quality but if character is of no value/importance to you they're in a fun, diverse neighborhood and maintenance is OK. Someone here may know more