One of my favorite blogs on the Internet is Brownstoner.

Started back on October 2004, it’s become a vital resource for all who venture to become homeowners in Brooklyn.

One of its most popular series is The House of the Day.   The point of the series is to solicit readers’ responses to the listing and offer an opinion on what it’s worth in relation to the broker’s list price.

On July 20, 2010, they selected 176  Adelphi Street in Fort Greene, Brooklyn.

Property Details

176 Adelphi Street is a 3 story, 2 family brownstone townhouse.  The building lot is 14 x 100 and the actual building only occupies 14 x 45, allowing for a nice size backyard.  The property boasts 2,028 square feet in living space and is located between Myrtle Ave and Willoughby Ave, and is in walking distance of The Fort Greene Park.

The List Price and House of the Day Value

Andrea Yarrington currently has this property listed for sale at $1,475,000.  After 23 submissions, the cool kids over at Brownstoner arrived at an average value of $1,214,428, resulting in a difference of over $250,000 between asking price and public opinion.

And while I believe Andrea applied best practices to arrive at her list price for the public, we decided to peek behind the curtain to see what factors are driving real estate value where this property is located.

The MBR analysis

conditions on the ground

Fort Greene, Brooklyn has seen better days with home values, just like many neighborhoods in our borough. It also has its share of properties going through some phase of foreclosure.

What has helped the neighborhood avoid rapid devaluation is the small population of  townhouses that have traditionally led to a scarcity in supply of available homes to purchase.

However, Fort Greene isn’t immune to losing in home equity entirely, and have experienced reduced prices on 6 of the 19 townhouse properties for sale on the New York Times recently.

Trulia provides a broader view of the neighborhood, where it cites as of August 29, 2010:

• 53 Properties are in some phase of foreclosure
• 194 Homes are For Sale, and only
• 86 Homes have actually sold in the last 9 months

While we believe the majority of homes for sale are unsold condo units, having a 2.26 to 1 ratio between for sale and sold reveals that there is too much supply chasing too few buyers.

the fundamentals

Mortgage interest rates remain low and Banks have been underwriting FHA loans at a manic pace.

Though a buyer for this property would more than likely be using JUMBO mortgage financing, there are enough lenders prepared to fund a buyer’s home purchase at this level in spite of the rate of default among borrowers with mortgage balances over $1 million.

There doesn’t appear to be any financial obstacles preventing home shoppers from purchasing a home asking 7 figures except that the recession is deepening and a consumer led recovery isn’t on the horizon anytime soon.

To make matters worse, the question has been raised if buying a home can still be viewed as a means towards building wealth.

Some believe that the current real estate led recession may leave emotional scars on the public, much like the Stock Market Crash and Great Depression had on a generation.

Buyers have resisted the urge to purchase on a whim and have instead chosen a more value based approach in the decision making process.

Neighborhoods like Fort Greene will continue to have high rates of homeownership but home sales won’t return to the high price point it reached in 2003-2004 for a very long time.

Our Verdict

We believe the sales range for this property is between…

• $975,0000 at the low end and
• $1,100,000 at the high end

This home happens to compare favorably with a sale at 190 Clermont Avenue; a 2 family, 3 story brownstone townhouse, with 2,752 square feet living space in a 16 x 40 building, which sold for $1,430,000 on 4/22/10, or $519 per sq. ft..

In our opinion, we’re looking at this property being sold for $485 to $525 a square foot.  There will be further price reductions among similar properties in the neighborhood competing for the small pool of buyers.

And the broker who establishes that meeting of the minds between seller and buyer for a property in Fort Greene will establish the floor for townhouse sales over the next 12 months.

Think we’re wrong?

Well, it’s possible.  Which is why we wanted to publish this series.  We wanted to take you inside the broker process so you can see how it evolves for a real estate agent (and how varied the assumptions will be among licensed practitioners).

Believe me, we have a lot at stake in making predictions about property sales outcomes.  It can easily back fire on us.  And it’s certainly not going to make us any new friends among the broker ranks (though we also consider what we’re doing as a public service to our colleagues).

So now that we’re on the ledge watching the crowd chant Jump, Jump, what’s your opinion?

Do you have a different view on how much 176 Adelphi Street will sell for?

Either way, let us know what you think of our prediction in the comments below.

And stay tuned for the results when we report what actually happened.

(for the sake of full disclosure, I had consulted with the owner of this property prior to it being listed by the current broker.  I had not offered this property for sale during that time or prior to it being listed for sale by the current broker.)

176 Adelphi Street, Andrea Yarrington, Brooklyn Property Sales, Brownstone Townhouse, Brownstoner House of the Day, Fort Greene Brooklyn