Monday, November 17, 2014

Brooklyn to Jersey.... Why the trend to NJ?

Courtesy of Emily Andrews for The New York Times
By many measures, Jeff Huston and his wife, Lisa Medvedik-Huston, arrived late to Williamsburg, Brooklyn. They weren’t among the first waves of artists and hipsters in the early-to-mid ’90s to cross the East River in search of cheaper, grittier confines. When they rented a spacious, duplex loft two blocks from the Bedford Avenue subway stop in 2007, they found a safe neighborhood already dotted with clothing boutiques and wine shops. The height of the real estate boom was approaching, and condos were rising along both the waterfront and McCarren Park.
Yet Brooklyn was still emerging from its postwar slump, and the borough felt new to many, including the young couple. It was five years before the first episode of “Girls” aired on HBO. The concerts that excited the neighborhood were held at an unused city pool, not a world-class arena christened by Jay Z. And real estate investors eager to make all-cash deals were still fixated on Manhattan.
Over the past several years the couple witnessed the much-bemoaned arrival of banker types, chain stores and tourists. Brooklyn has become a global brand.

Kathleen Kim and Brian Witte moved into a three-bedroom, one-bath rental in leafy Sunnyside, Queens, after giving up on finding suitable quarters in Brooklyn. Hesitant at first about the move, they find they like the “small town in the big city feel,” Mr. Witte says. 

And last year, when they were ready to buy, the couple quickly realized they had been priced out. “I can’t tell you how many listings said, ‘cash only,’ ” said Mr. Huston, whose real estate search included everything from $500,000 apartments to $900,000 fixer-upper rowhouses and took him from Williamsburg to Bedford-Stuyvesant. “That was a wake-up call.”

And so the Hustons bid farewell to Brooklyn. In October, they spent $550,000 on a 2,000-square-foot loft in a converted suitcase factory in Jersey City Heights, a section of Jersey City that overlooks Hoboken. “We weren’t sure there was anyone like us in the neighborhood,” he said. Then a Brooklyn-style coffee shop arrived. “The line down the street was all people like us. We could have been in Williamsburg. It was all, like, expats.”

Fed up with rising rents, bidding wars and neighborhoods that no longer resemble the low-rise bohemian enclaves they found when they arrived, many Brooklynites are moving out. They include decade-long renters who can no longer keep up with price hikes, qualified buyers who have been outbid one too many times, and young families who simply can’t find the space they want at prices they can afford.  

Many have tried in earnest to stay in Brooklyn, squeezing into smaller spaces or heading deeper into the borough in search of affordability. But there comes a point when that hourlong commute becomes difficult to justify, and the realization strikes that a house with a yard in Maplewood, N.J., can be had for about the same price as a condo in Midwood.  

In the northwest part of the borough, where chain stores like J. Crew and Rag & Bone are edging out locally owned bars and organic grocers, “Brooklyn has become unaffordable,” said Victoria Hagman, the broker-owner of the Realty Collective, founded in 2005. “For normal, middle-class people with good credit, we used to be able to say, ‘We can find you something.’ ” Now, even in once working-class areas like Windsor Terrace, Kensington, Crown Heights and Bedford-Stuyvesant, she said, “people are priced out of purchasing and landlords are asking egregious numbers.”

Neighborhoods in the central and eastern parts of Brooklyn largely remain low-income. But a combination of scarce listings, high demand and rapid-fire gentrification has sent prices soaring in the northwest quadrant, from Red Hook to Greenpoint along the waterfront and inland to Gowanus and Park Slope South. In the second quarter of 2014, 107 sales priced above $2 million took place, more than any other prior quarter, according to the Corcoran Group. Those deals included a $10.625 million townhouse on Willow Street in Brooklyn Heights, a $5 million loft in a shoe polish factory turned luxury condo building in Williamsburg, and a $3.15 million condo in Dumbo, to name a few.

Such high-end sales helped shrink the gap in median real estate price, which measures the middle of the market, between Brooklyn ($575,000) and Manhattan ($910,000) by 33 percent to $335,000 in the second quarter, down from $500,000 in 2008, before the collapse of the real estate market, said Jonathan J. Miller, the president of Miller Samuel, an appraisal firm.

Renters aren’t faring much better. The median rental price in northern Brooklyn was up 6.6 percent to $2,852 in July, marking the 14th consecutive year-over-year increase in monthly rent, according to a report by Douglas Elliman. That is $353 cheaper than the median monthly rent in Manhattan. Five years ago Brooklyn was $1,030 cheaper.

Sure, some Brooklynites who have noticed the shrinking gap are choosing to settle in the far corners of the Upper East and West Sides of Manhattan. But Brooklyn has shed its image as a bargain-priced alternative to Manhattan.

“One of the things I find sort of fascinating is that there were so many people in the city in my generation whose parents were struggling to get either themselves or their kids out of Brooklyn, and those people’s kids are now back in Brooklyn,” said Frederick Peters, 62, the president of Warburg Realty, a luxury Manhattan-based brokerage firm. “It kind of changed from Manhattan being aspirational for the generation of people who are 40 or under, to Brooklyn being aspirational.” As a result, he said, “most of the Brooklyn business we do is with people for whom that’s their first choice.”

The tendency is to move the search deeper into Brooklyn before looking elsewhere. Then, somewhere around Midwood, brokers say, the train ride to Manhattan becomes an issue for commuters and people begin searching for alternatives — including in areas they may have turned up their noses at just a few years ago.

When friends of Mr. Huston, 42, a filmmaker, and Ms. Medvedik-Huston, 43, an accessories designer, bought a brownstone in Jersey City several years ago, “I thought they were out of their minds,” Mr. Huston said. But now, having left their 688-square-foot Williamsburg rental to buy a 2,000-square-foot loft in Jersey City Heights, his view has changed. Their new home, a duplex, has two bedrooms, two baths, 11 floor-to-ceiling windows, exposed brick walls and a wine cellar. Two swings hang by ropes from the wooden beams. “It was a no-brainer, trust me,” he said, noting that their monthly outlay is just a couple hundred dollars more than what they paid in Williamsburg.