Williamsburg questions from 1st time buyer

My wife and I have been looking at Williamsburg for a few years, thinking about getting a pied-a-terre. There are certainly a large number of new condos that are scheduled for closing in the next 6-12 months. We are waiting to see how closings will progress over the next few months. For closings to occur the condo needs to be 50% sold/under contract (if not then banks won't finance). If they aren't 50% sold then the sponsors may feel pressure to lower prices to try to sell more condos to get to 50%. So, I feel that there is certainly room for prices to fall further. Tower 1 of Northside Piers had large price reductions last month for other reasons, but the thinking is that other developments will follow. Another thing to consider is the viability of the sponsor. You don't want to put a down payment down and then have the sponsor go bankrupt because they can't survive the down turn. So, by waiting until they actually start closing may be a sign that the sponsor/development is viable. (We are concentrating on Northside Piers and Warehouse 11)
There hasn't been much activity on the resale market in Williamsburg. We've been following resales for a while and only 1 condo in our price range every few months seems to pop up. This is a bit surprising given the layoffs we hear of. Maybe no one in Williamsburg works on Wall Street.

for the record, i'm renting off the lorimer stop and love the area, but there is no way i'm buying a piece of the most polluted neighborhood in the continental US, much less at $600/sf.

the market dynamic of w'burg is unique in that there's so much inventory waiting in the wings to be developed, your upside in the short-medium term is minimal (demand is constant, supply is growing = lower prices). IMO, in the long term your upside is bad too. Normally once an area is populated with artists, the yuppies move in with their strollers and property value goes up (e.g. dumbo, soho in the 80's). But with the pollution that won't happen in w'burg, people won't want to raise their kids there. i know i certainly don't.

gh1660,

Unfortunately, it's not a really simple decision (and those that insist it is have a pretty clear agenda, IMHO). .I would say there is a significant difference between the Bedford and Lorimer areas - the BQE cuts right through at Lorimer, which really divides Williamsburg, I think. You'll pay a premium to be west of that area. Here's some quick steps I'd suggest:

1. Explore both areas and figure out what makes the most sense to you. Bedford and North 6th is really the epicenter of WB for many people.
2. Beyond that, you have to look at specific buildings and determine the ones that fit your needs best. It's easy to get overwhelmed by the number of developments out there, so it'll really help to whittle down your list to a few places you'd be truly happy to live in.
3. Study each building on your list, determine how many units are left, whether the layouts are suitable. If it's already occupied, see what you can get in terms of finances and if there have been any maintenance increases or payments in arrears.
4. Choose your ideal unit(s). Look at previous closings in the same line. You have a very good chances of getting a good discount (depending on when the closing was, other concessions, etc.), but this will be useful info to have on hand.
5. Bid aggressively. Don't be afraid to "insult" them. There will certainly be considerable resistance, but they'd be pretty foolish not to listen to a bid at least. Think of it as a starting point anyway.
6. Read the negotiating tactics thread here on Streeteasy. Use it to your advantage.

All that said, I wouldn't be in any kind of rush to buy. This is an important decision, so it should take time. Don't be scared off by some of the doom and gloom here, but be wise and disciplined with your action plan, and you'll come out ok. Good luck!

liulide, I do think the "pollution" myth is a bit exaggerated. The stats don't bear out the need for so much fear at this point (note that northside WB is considered part of the Greenpoint district):

http://www.health.state.ny.us/statistics/cancer/registry/docs/volume1nycneighborhoods.pdf

Thanks so much for the comments so far. My first question is if banks won't lend before over 50% is closed, then how can I get something in a building that just started selling? (For example, 72 Berry.) Would they drastically have to lower prices for those first buyers? Also, how are condo fees raised for the whole building if only a small percentage of units are occupied.

Overall, I have some money to put down, but don't want it to go to waste in this neighborhood. There is a lot of "doom and gloom" like bjw mentioned. Are there other good neighborhoods to look at in BK that are more stable, yet have reasonable prices?

Any more general advice is much appreciated.

Thanks

You can put a deposit down and reserve a condo without the 50% level being met. Closing occurs when the building is completed and banks will finance the mortgages, which they will do when 50% of the building is under contract. So initially you'll give money to the sponsor (who will put it in escrow). Then when closings commence in the future that payment will be applied as part of the mortgage down payment/closing costs.

Williamsburg won't disappear if some developments fail. Look at the activity, restaurants, shops that are there now. If you like it now and don't mind if it doesn't become the second Greenwich Village then do your homework, be patient, and make a decision that you will feel comfortable with.

gh1660 - I think 72 Berry will be fine. I have buyers in the area, and have steered them away from some of the new development for fear that they will a) overpay and b) not be able to close due to too few units in contract. 72 Berry appeals to me because it's a conversion, not a ground-up build, has nice but not over-the-top finishes, good ceiling heights & original detail, and the prices aren't as insane as others in the neighborhood. It reminds me of the Mill Building, but with better layouts due to smaller footprint. I also love the location - above the scrum of North 6th/7th, but a short walk to the Bedford L and all services. I also like the fact that the view out to the river from the common roof deck is protected by the m-1 zoning and the park. Also, not a ton of amenities, so you're not paying huge monthlies to maintain a pool, a gym, a cinema, a playroom... And with only 25 units, it won't take long to reach 50% or even 70% sold (as of last week there were 6 contracts out). Don't screech, all - I am not the broker for 72 Berry! I just think it has a good shot at making it. It's been a while since I felt that way, really.

Side note - Jed Walentas just closed on his hotel building around the corner on Wythe. We'll see what happens with that (he's trying to add some stories to it). It won't affect the river view from the roof deck, but it could bring a slightly Soho House vibe to this corner of the 'burg. How you feel about that is up to you.

I won't pretend to know the area well, but there is one simple thing about real estate markets that you should know, along with a little history. Marginal areas are the last places to go up and the first and fastest to fall. Williamsburg started to get a lot of attention quite a few years after the NY market came back and partially as a response to rising costs in other neighborhoods of Manhattan like the EV and LES -- where younger people in nontraditional jobs had been living. With a lot of underused areas and fewer restrictions (such as building height limits and historical preservation), places like Williamsburg are more prone to overdevelopment, which will likely accelerate downward momentum. Will Williambsburg avoid this? I don't know, but I would put it among the most risky neighborhoods to buy in right now.

In this economy, many banks won't lend to a buyer without the building being 50-70% sold. In order to reserve a condo without 50% sold I believe you would have to put down a considerable downpayment (30%) before a bank will agree to lend to you. I seems that most developments will drastically reduce prices when they are very close to being 50% sold since they are itching to get those last few deals to reach that number. If you know a building is close to 50% sold, I would advise you to go in aggressively with a low-ball bid. Many of the sales happening in Williamburg now are "all-cash" deals since we are in a frozen credit market.

I think williamburg is a good investment in the long run (10 years ). If you looking to keep the property for only 5 years I wouldn't advise buying at all right now.

Also as bjw2103 mentioned the pollution rumors are a bit exaggerated. If you look at the raw data collected by the gov't, Williamburg cancer rates are at normal levels relative to other nyc neighborhoods.

There is a difference between reserving a condo and closing on a condo. For example Northside Piers requires $10,000 to reserve a condo. They will also make sure you qualify for a mortgage through their financing arm before reserving one for you.

About the the overdevelopment issue: I don't think premium areas (2-3 block radius around the Bedford subway stop) will be affected by the overdevelopment issue in the long run because this space is limited and future developments will only get further and further away from convenient transportation as buildable space in this area diminishes.

gh1660,

I would be very careful before committing to a building that's under 50% sold at this point. If you really love a unit in one of these buildings, I would work hard with your lawyer on placing as many contingencies in the contract as possible (starting with the financing contingency, which you should definitely not waive). This should help protect you, though I'm sure the sponsors' attorneys will put up some resistance at first. You can also negotiate on price obviously, though I'd bet they're even less eager to do that.

As for unsold units' common charges - check with your attorney and on the offering plan, but in general, the sponsor is responsible for the carrying costs on all the unsold units.

In terms of stable neighborhoods, I don't know if anything else in Brooklyn is significantly "better." Brooklyn Heights, Cobble Hill, etc. are more desirable for some, but those are by no means "cheap" areas, and there's much less new construction if that's your thing.

tina24hour,

I agree there's a lot to like about 72 Berry (esp the location), but don't you think the "home offices" hurt the value of the space? It would be great if those were real bedrooms, and as such I think the pricing is really ambitious here.

Thanks a lot for the info so far. It's very helpful to hear people talk about the WBurg landscape with (seemingly) no agendas.

Couple comments on Wmburg.

Comment: Not being an expert by any means, but having spent a couple afternoons in last year or two walking around Wmburng, one nice thing that struck me is that the significant chunks of neighborhood are significantly quieter than just about anywhere in Manhattan, due, I percieve, to the lower density (so fewer air processors going in a zillion buildings, the water (without a highway next to it), fairly large area that is NOT next to the equivalent of one of the Manhattan avenues. [People who live in Manhattan are, in my experience, often unconscious or in denial about the noise they live with, which is almost unavoidable due to the close proximity to the avenues which are all just highways almost]

Comment: To me Wmburg will improve with more population, and developments because it will cause more retail and service infrastructure to appear. To me it is still a little sparse in that regard, particularly near the water.

Comment: Just my view ...but...Chelsea and other grade b+ areas of Manhattan should hit 500-600 psf for cookie-cutter condos, and so these cookie-cutter condos in Wmburg ought to be at least 25% below that.

Question: Isnt the FIDI collapse (starting, and getting worse) bad news for Wmburg too bec/ those who were going to Wmburg for price reasons have another option in manhattan?

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was my comment too insightful?

well, i own in williamsburg west of the BQE, and i really like it here, so take my ideas with that in mind i guess. my thoughts are the following:

1 - it's not remotely fringe - especially on the north side all the way to graham. it's got every amenity that any one could want, and for many, it's the preferred area to go out. of course, no matter what, it's very convenient to manhattan. if you have a car, it's great cause the bqe is right there and it's easy to get to other brooklyn or queens to shop or whatever. it's also close enough to walk or bike home which i do all the time from lower manhattan.

2 - the 94 precinct is very safe. low low crime and there's no projects until past woodpoint to the east or broadway to the south.

3 - if you are going to buy, determine your real price and look at a building that's already got a c of o and has people living there already. then, just offer whatever you want.

4 - for now, the reality is that the psf is over $600 on average west of the bqe especially on the north side. in fact, recent sales show over $800 psf (i just pulled all sales/closings since nov cause of a refinance). so... try between union and graham to dip below $600 psf.

5 - many owners that are in my building did not and would not consider any other area because we like it or feel we fit in here. plenty of people that have bought recently have lived in WB for years.

6 - i don't buy into the area being over developed because it's still way less dense than manhattan and even park slope or fort greene. NYC has had really really low rental availability for years because of an overall housing shortage. the recent building hasn't touched the overall lack of supply issue. if all these unsold condos become rentals, than the supply of apts to buy will be limited once the market bounces back even if that's not for a couple of years.

good luck no matter what you decide.

jimstreeteasy,

That's an interesting point about the Financial District. I'm sure there are some people who have looked at both, but I'd guess it's a small minority. They're pretty different neighborhoods in a lot of ways. I work close to Wall St, and I never really considered anything down here. Many people love it, just not sure there's a huge crossover with WB people.

wisco,

I'd agree the northside isn't at all fringe, but I do think once you're east of the BQE that label truly applies. Yes, there are amenities, though I think you're overstating the case a bit - only the Bedford area really matches what you'd find in the better areas of Manhattan. The proximity to Manhattan is hard to overstate however. It's easier to get to the village, Soho, etc. from here than when I lived uptown. As for pricing, I would advise being very patient right now. Recent sales prices are still quite high and I think it'll take a while to get a clearer picture.

For the northside part of williamsburg what price range can be considered high? What do you think would be considered a good bargain per square footage wise for the most prime areas of williamburg in today's market?

Aptchase,

It depends on a few things: apt size/type, which building, whether there's outdoor space, etc. In general though, nothing should touch 7 figures unless you're talking about a massive space (at least 3BR, but probably 4BR+) or a townhouse. In terms of ppsf, prime northside shouldn't be much higher than 700 at this point (though people have and do pay more). I think we'll see lower in the next year or so, though I really don't think we'll see sub-300, as one commenter posted in another thread.

gh1660,

Really? You think there's no bias here? Most of these people are real estate brokers, you know that right? What world are you living in?

Some of these other comments about services are just ridiculous. There's not a single laundry place that delivers in the Bedford Ave. area. Definitely no dry cleaner delivery. There's no decent grocery stores either. Not a single one. People buy groceries from Fresh Direct or little corner places. At least bjw is being honest about how fringe things are east of the BQE. But the line actually starts east of Havemayer, not at the BQE. There's a very, very small area where there's a density of restaurants, a couple cafes, maybe one hair salon, a relatively low quality yoga place. There's one gym - Maxim. The idea that Williamsburg is dense with services is absurd. Wisco is lying. All the way to Graham? Ha! Right. Go take a walk over there. He's nuts. Sure, compared to the ghetto, Wburg is loaded with services! Compared to Manhattan neighborhoods? No way. LES is relatively service poor and Wburg is definitely worse in that department.

I particularly love #6 in his comments. Not over-developed? Take a walk up and down the streets that cross Bedford Ave from N. 3rd to N. 12th. It's a miracle if you don't see a construction site every other plot. Are these places selling? No. Almost all are struggling. Then, for fun, go walk over to the park and check out the buildings that have been sitting vacant and dropping prices for months over there too. Use your brain.

bjw2103,

There you go again putting, your foot in your ass. You are the biggest hypocrite in RE.

"It is not a "fact" that all apartments in Williamsburg will be cheaper in 12 months; it's an opinion."

"I think we'll see lower in the next year or so"

"though I really don't think we'll see sub-300, as one commenter posted in another thread."

We are in The Great Depression Part II. As President Obama said it will get worse* before it gets better. Warren Buffet said NY/NYC will be the last to come out of this Depression, why is this? You are begining to sound like Mayor Bloomberg and he's a raving queer lunatic. All thats going on we don't know where the plateau lies but there you go pulling stories out of your anal cavity again.

Be very careful about financing with new construction. Wait until the price drops to $500 PSF in 72 Berry. W11... Warehouse 11... many people in contract are getting out due to lack of financing.

what no shopping? huh? ctown, tops, Khiims? if you buy a new condo you'll probably have your own washing machine and don't need delivery. pick up my dry cleaning on the way home. big deal. anyway, i was talking about overcrowding. you are talking about condos having a hard time selling in a terrible economy. settle down. i'm not a broker. i'm a regular person who likes living in williamsburg, and i disagree about everything being in one area. i shop east of the bqe all the time. there's a fish store, a bakery and a butcher within a block from each other on metropolitan. there's a grocery store next to an excellent fruits and vegetable deli on graham off of metropolitan. the restaurants and bars are all over from broadway to franklin in greenpoint to graham to wythe. there's an excellent restaurant on bushwick that i go to even called il passatore just south of metropolitan. i feel like it's ok to talk about the positives of a neighborhood to a potential buyer as someone who's purchased and is in for the long run.

"Really? You think there's no bias here? Most of these people are real estate brokers, you know that right? What world are you living in?"

backup, I think that's a pretty off-base comment. I don't think anyone here is a broker except for tina24hour (and because she's completely open about it). Is it so far-fetched that some people really like the neighborhood? I do think some people can be a bit effusive, but I also think you're intentionally knocking the area here to make your point. Almost anyone buying here doesn't have to worry about laundry delivery (I would guess at least one place does, but because I have a w/d, I really don't know), and the dry cleaner is literally on top of the subway exit, so there's really nothing to worry about here.

As for the rest:
Groceries - Tops is really great and is prices are pretty good. The new Khim's on Driggs is also quite big. These are legit supermarkets.
Restaurants and cafes - You need to check the facts here. WB is a foodie destination and there are tons of options. It's a particularly strength of the neighborhood, I think.
Hair salons - More than enough here. Beehive, Woodley and Bunny, Deluxe, etc. are all well-reputed. This is kind of a given in a somewhat "artsy" neighborhood, no?
Yoga/gyms - There's 2 yoga studios I know of on North 7th alone and 2 more on North 6th. You're a little more correct about gyms as there's only 2 in the immediate area (Maxim and Soma), but that's really not so bad.

I can't vouch as much for the Lorimer area, but there are several great shops scattered there that I know of, and I admittedly don't know it as well. It's also behind the curve and I expect it'll improve as more people move in, especially along Union Ave.

mutombo,

That's some pretty vulgar stuff. None of the quotations you posted are hypocritical. Analyzing the market is not nearly as simple as you try to make it. Stay classy.

backup,

Why so angry? I respect you opinion and I am glad no one is forcing you to buy in Williamsburg.

I am not a broker either, just a person who loves New York. I love the UWS where my family and I stay when we're in town. We love hanging out in the Village, running in Central Park, exploring the restaurants along 9th Ave. We also have been hanging out in Williamsburg and it fits us well. I know its nothing like the UWS in terms of stores, restaurants, and services; but its got what we need and want. The cost to live in Manhattan (and the hottest Brooklyn neighborhoods) is prohibitive and the cost to live in Williamsburg is attractive...and getting MORE attractive to us. We have spent days in Williamsburg checking out the restaurants, shops, AND grocery stores. We have walked around with our kids at midnight. We have taken the subway to and from all points in Manhattan. We have been east of the BQE and north of McCarren Park. We are comfortable with Williamsburg.

I'm not trying to make someone buy in Williamsburg. Just giving them my view of the market and Williamsburg, as they requested.

Those quotations are quoted by YOU and are hypocritical. Analyzing the market is not easy and I don't attempt to make it simple.

Ah, the good old days: Williamsburg has nothing. Williamsburg will die. Anyone who likes Williamsburg is a broker.

LookPied,

Good for you. For your foresight, "good" taste that brought you to W'Burg before the rebound and then big jump in prices. I was just back to W'burg in the past two weekends. The beautiful weather brought out crowds of people everywhere and there is so much vitality and energy just walking around, hah, even with many construction projects in prime W'burg.

I am just so thankful I finally escaped the suburbs (land of mediocrity except maybe schools) to be in this gastronomic heaven and other cultural activities. There is so much good food around, it is an endless adventure. The waterfront is beautiful, Bedford is bustling, the side streets have interesting shops to look at. AND endless restaurants to try out. I love the alfresco dining, seeing people milling around and enjoying themselves.

Of course, my building is amenity rich; love the wonderful pool, the jacuzzi, the sauna, the gym. Ahhh, life is good in good "ole" W'Burg. Glad I bought in last year. Hah not as good as you, but I am happy. Hope you continue to enjoy life in W'Burg. There is more and more stuff coming into town here with the passage of time.

rlr689, which is it, you were just back to Williamsburg in the past two weeks, or you bought in the last year?

http://www.nytimes.com/1992/05/23/nyregion/survey-finds-high-cancer-rate-in-2-neighborhoods-in-brooklyn.html