Townhouses In New York Continue To Yield Record Investment Returns
Buying a NYC townhouse once again proves to the best investment anyone can make.
Even for a stunning townhouse on the Upper East Side, $2.1 million in 1997 was a lot of money. Little did the homeowners realize that when they would next list the property 20 years later, the value would have increased by 781 percent to $18.5 million.
While the rest of the country is finally hitting its stride after the implosion of 2008, New York City prices, despite a minor blip, have kept rising. Fortunes, trust funds and Ivy League educations have been financed with little or no effort from the homeowner. Just buying and selling a property years later has made millionaires like no other American city. The UES property owned by Simon Oren of the Five Napkin Burger chainlet is one of many in New York where the only way has been up.
The interior of the Oren home, dripping with original features—woodwork, fireplaces, moldings and marble, along with chandeliers and six bedrooms—is the epitome of old school New York opulence. But the same property could have been in a similar condition two decades ago. It’s the location rather than the renovation that added a cool $16 million profit to the seller’s balance sheet—if the house gets sold for its asking price.
If you have the cash for a renovation, your can make an equally tidy sum in a much smaller time frame. Former hedge-fund trader Christopher Pia is asking $17.95 million for his renovated Federal-style townhouse in Manhattan’s West Village—more than twice what he paid for it four years ago after a $5 million renovation.
According to the Wall Street Journal, the Pias have fallen in love with renovation process and “like to move around.” Their next stop—another fixer upper in the Village or Tribeca.
Those numbers pale in comparison to the 21,000 square-foot townhouse 10 blocks away. The Dommerish Mansion on 50 East 69th Street is currently on the market for $72 million. The late plastic surgeon James W. Smith purchased the house in 1980 and converted it to The Center for Specialty Care, which specialized plastic surgery recuperation. Dr. Smith, who was a professor at Weill Cornell Medical College, died in 2006. Although the exact 1980 sales price isn’t known, according to court documents, the sale came with a mortgage of $1 million. If his estate gets their asking price, it wouldn’t be a bad rate of return.
Clearly, today townhouses in much of Manhattan are well beyond the reach of the average well-healed home buyer. If you are intent on a townhouse to buy and hold and looking for some good old fashioned NYC equity appreciation, is there anywhere that can bring the kind of returns clocked by the swanky homes on the UES two decades ago? Despite stunning appreciation, if you can get your foot in the door in Brooklyn and hold on for the long haul, by the time your infant offspring go to college, their pricey education, along with your retirement, maybe be locked up within the bricks of your home.
Jazz legend Lena Horne’s childhood home of 519 Macon Ave in Bed Stuy is currently on the market for $2 million. According to court documents, it was sold in 1999 with a mortgage for $100,000.
Could this house be worth $20 million in twenty years time? It’s hard to believe it will. However, Bed Stuy and neighboring Crown Heights have seen a dramatic drop in crime over the last couple of decades—around 75 percent — according to an article in the WSJ. This, coupled with the increased in Manhattan townhouses, as well as those in Park Slope and Prospect Heights, means significant appreciation is on the cards. Just how much—is open to speculation.
“The perceived value on a relative price/square foot basis is also attracting major investment in Brooklyn, where the REIT Dixon has purchased upwards of 600 townhouses in the last 6 years, most of them in emerging neighborhoods like Bedford Stuyvesant and Bushwick,” said Douglas Elliman broker Doug Bowen. “All of the houses are being thoroughly renovated into single family rental homes, which shows Dixon’s confidence in the long term prospect of townhouse values in Brooklyn.
Appreciation depends on how much people can afford to pay for a property. A high listing doesn’t guarantee a high sale unless people are making a high salary. In New York, home of Wall Street, generally, there is a buyer for even the priciest of pads. That has fueled the flames for record price increases. With the bad old bankrupt, crime-ridden days in the Big Apple firmly in the past, there’s no reason to think it’s about to stop anytime soon.
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