This morning a listing alert came on my MLS advising 549 Lafayette St is on the market asking $800K. This is the exact type of home my wife and I have been looking for. Well actually a renovated version; let me explain.
In the 400 block there are three similar homes 434, 440 and 446 Lafayette all Victorian design on smaller lots i.e. 37.5’ frontage. All have been renovated with similar design criteria including enlarging the rear on the ground and upper levels including master suites with en sure bathroom and an additional 2nd bathroom. 440 Lafayette Street sold in 2015 for $825,000 and was truly turnkey condition. 446 Lafayette Street was last asking $1,150,000 (adjusted downward from $1,200,000) and is now under contract, also truly turnkey.
Thus I was intrigued with the 549 Lafayette Street listing. In my professional broker opinion; not as strong a block as the 400 Block of Lafayette Street as it is denser and is impacted by 6th Avenue traffic noise. Also the house has been a rental thus has not been updated or expanded recently. From the pictures a total renovation is needed and assuming an expansion would run $250,000 to $300,000 to replicate the design of the homes in the 400 block mentioned above.
Now let me compare sizes and condition:
549 Lafayette: 1,587 SF Above Grade / 846 SF Basement – Condition – Good (Asking $504.10 PSF Above Grade)
440 Lafayette: 2,084 SF Above Grade/ 329 SF Basement – Condition – Excellent (Sold for $395.87 PSF Above Grade)
446 Lafayette: 2,306 SF Above Grade/ 380 SF Basement – Condition Excellent (Asking $498.70 PSF Above Grade)
Thus as per my usual research I decided to look at the sales history of 549 Lafayette Street as follows:
In January 2011 the home seems to have been inherited, as the conveyance was a Personal Representative Deed, usually associated with an estate.
In February 2015 the home sells I believe through an arms length transaction for $225,000
Two months later in April 2015 the home sells again to an LLC for $456,000. Almost double in two months, which usually suggests either, not an arms length transaction OR someone just hit the market just at the right time.
Now 3 years later almost to the date, the home is asking $800,000 or a gain of $344,000 or basically a $10,000/month increase in valuation since the last sale.
Now back to 440 and 446 Lafayette St. Both of these homes are on a stronger block, have been gut renovated, expanded, offer 25% – 40% additional above grade square footage when compared to 549 Lafayette and are in excellent condition.
The following is their sales history:
440 Lafayette, which I believe mirrors market conditions:
- 11/98: Sold for $425,000
- 5/04: Sold for $665,000 (close to the pinnacle of the market cycle)
- 12/11: Sold for $675,000 (just coming out of the Great Recession)
- 9/15: Sold for $825,000 (Just as the market started to its ascent)
- -Of note, between 2004 and 2011 the house gained just $10,000 in value or based on inflation the house actually lost $130,000 in value.
- 9/98: Sold for $287,500
- 10/05: Sold for $530,000 (a few months shy of the pinnacle of the cycle)
- 7/13: Sold for $875,000 (market starting to begin to overheat)
- 2/18: Asking $1,150,000 under contract
Now granted someone may purchase 549 Lafayette for the asking at $800K. And in this market such a price may look attractive (yet on the 400 Block of Lafayette St a superior home and renovation asking $5 PSF less) .
However while I am not suggestion history repeats itself I would be remiss if they were my client not to mention one block south, larger homes in excellent renovated/upgraded condition sold for similar pricing just a few years back yet offering more above grade square feet and overall condition. Even in the present when comparing 446 Lafayette Street and 549 Lafayette Street within $5 PSF above grade, serious differences.
Personally I would take a pass. At $600K I am a cautious buyer, maybe even $625K knowing I am in it for another $200K and 6 months of construction to convert from its existing condition to my primary home. However at $800K I will pass and I hope the purchaser at that price does not see this blog posting.
Happy House Hunting.