The $1 million fixed upper
After moving to the New Jersey suburbs due to the pandemic, Rebecca Goldberg Brodsky was desperate to return to Brooklyn. As an interior designer, she missed the vibrancy of New York City and the connections she had made while living there.
Goldberg Brodsky and her husband spent six months scouring Brooklyn neighborhoods but were unsuccessful with their roughly $400,000 budget. So they decided to “go all out,” she says, moving their fortunes so they could spend significantly more. Eventually, they found a three-story apartment — located in a former church — for $1.1 million in Park Slope and moved in in September 2021.
Thrilled to live somewhere with good public schools and a vibrant community, Goldberg Brodsky was willing to overlook the old flooring, lead paint, and staggering price. That is, until her “new” fridge didn’t work — and an exterminator discovered the apartment was infested with mice.
“It was a lot more expensive than we expected,” says Goldberg Brodsky, estimating they spent about $30,000 on the kitchen remodel. “We are very fortunate in many ways to have made more money during COVID and we could team up to make this work.”
Courtesy of Rebecca Goldberg Brodsky
Dreams of using her renovation budget for new paint and floors soon dissipated; Instead, Goldberg Brodsky and her husband had to spend tens of thousands of dollars to protect their new home from bugs by installing metal screens in the walls and replacing old windows.
You are far from alone. In today’s housing market, even a price tag over $1 million doesn’t guarantee buyers a luxury home in some areas. In fact, many are finding they have to spend more after they buy them — potentially tens of thousands of dollars — to make their new homes livable.
Of course, many new homeowners want to update kitchen cabinets or change the color of the bedroom for aesthetic reasons, as Goldberg Brodsky and her husband intended. But during last year’s hot real estate market, when many buyers grabbed whatever they could get and prices rose exponentially, spending in the seven figures was often just the beginning of the financial journey.
“I’m mentally fine with it as long as this economy holds and it doesn’t turn out to be a catastrophic event,” says Goldberg Brodsky. “My hope is five, in ten years I can say that it was worth it.”
The houses are getting smaller – and older
In booming markets like Dallas, Phoenix, San Francisco (and vicinity), Seattle and others, Zillow data shows that cost per square foot is rising, and so million-dollar homes are shrinking. The typical home sold for $1.5 million in Q3 2022 was 2,959 square feet, compared to 3,342 square feet in Q3 2020.
They’re also less likely to be pristine turnkey buildings, says Jeff Tucker, senior economist at Zillow. The median age of a $1.5 million home sold is also significantly older, from 28 years in Q3 2020 to 35 years in Q3 2022.
“The caliber or the size and quality of the homes that sell for $1.5 million have all really gone down because the general price level has gone up so very high in the last few years,” Tucker says. “Houses that look surprisingly normal rather than lavish villas are now being sold at this rather extraordinary price.”
An older home doesn’t necessarily mean it’s in bad shape. However, it does increase the likelihood that certain updates will be required to bring it up to date with the code. Especially in the expensive West Coast markets, $1.5 million “may be just enough to buy a little fixer-upper,” Tucker says.
“People might pay that much for a house and find that the heating system or electrical system is decades old,” says Tucker. “Not only did they spend $1.5 million on the house, they have to turn back and shell out tens of thousands of dollars for major system repairs.”
A few years ago, a home in the priciest neighborhoods in a place like Seattle would have cost as little as $1.5 million or more if there was something truly unique or useful about it, Tucker says. Now entire districts are rated at this level.
Amanda McAvena and her husband more than doubled last year — $3.5 million — on a Brooklyn townhouse that was undergoing some renovations. Like Goldberg Brodsky, McAvena had to redo the kitchen when she moved in.
“The ad photos did a pretty good job, but … there weren’t even basic things to live with, the stove barely worked,” says McAvena. When she moved in, she and her husband soon had to replace the lead-painted cabinets, water mains, and windows throughout the home.
That’s disappointing, says the 36-year-old, especially since she and her husband have been saving for their new home since their early 20s.
“There was no family support network, there was no gift giving,” she says. “We’ve put all these savings into it, and we have pink bathrooms. Our hot water tank was empty immediately. It’s certainly not a glamorous establishment.”
However, McAvena is confident that one day they will recoup their investment. They plan to live in the house for 20 to 30 years, raise their children there and enjoy everything the neighborhood has to offer.
Goldberg Brodsky has no regrets either. She feels deeply connected to her neighborhood and couldn’t imagine living anywhere but NYC; She says her business is booming.
“We have made peace with what we can do. We still made memories,” she says. “If anything, things can only go up from here.”
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