- Posted at 11:20, November 20, 2013
- By Russ Bleemer
There's an interesting New York Times story today on home buying in Bushwick, as well as Hudson County, N.J., that throws a curve on the "buyer" part of the sales: the buyers are investors, and they are sweeping up dozens, even hundreds of houses as investments.
These are hedge funds, and big investors, and they are in your family's neighborhood. A Brooklyn Douglas Elliman real estate broke quoted in the article says that 70% of the sales it is observing "to hedge funds, investors and others taking advantage of what was happening in Brooklyn,” and [o]nly about 30% were actual end users or first-time buyers.”
The Times explains the operations of an Australian investment fund--publically traded on the Australian Securities Exchange, by the way--which has purchased about 70 area homes over the past year. The article says that the fund has bought "more than 538 homes, townhouses and brownstones from Jersey City to Queens and Brooklyn."
The story highlights a four-bedroom "1900s-era brick rowhouse, deep in the Bushwick section of Brooklyn with not a frozen yogurt shop or Starbucks to be found" under renovation. The fund bought it for $635,000 in June, and says it will be ready for leasing in less than two weeks "for as much as $5,490 a month."
The article says that such purchases come with controversy: they make sense where prices are depressed, like the southwest, but not in Brooklyn, where values have been rising steadily or flat-out soaring for years. The big money investors, the article says, can be frustrating the dreams of first-time home buyers.
So neighborhoods are improved ... and residents are priced out with the high rents, as the buyers are hanging onto the homes and looking for an income stream.
The Australian buyers' representative closes the article with the group's fear: He wonders aloud if it has calculated wrongly about crime in the neighborhoods it is investing in.
The Times has the details here.