I finally bit the bullet and migrated Notorious R.O.B. to a self-hosted WordPress blog. This blog, hosted on WordPress.com, will no longer be updated.
Please visit www.notorious-rob.com and modify your bookmarks, permalinks, and blogrolls.
Just a heads-up admin note: I’m in the process of migrating this blog over to a self-hosted platform.
Blogging will be light until that is completed.
So now is a good time to go get caught up on some of those 2,500 word monstrosities
Brian Boero of 1000watt recounts a dinner conversation and throws down some challenging questions and assertions:
This particular debate centered on the following question:
“Have we reached the end of the real estate story now that FSBOs and discounting have lost their menace?”
As Brian puts it, there were two camps, comprised of him in one camp and everyone else in the other camp:
Methods have changed. Markets have changed. The balance of power between brokers and agents has shifted. Consumers have access to enough data to choke a horse.
But the basic structure of this business remains remarkably intact.
There are two possible conclusions to be taken from this:
A. Real estate is exceptional. The complexities and emotions that characterize the real estate transaction will forever shield it from structural change. Bill Gates, Barry Diller and about a billion dollars in VC have been thrown against the barricade with no transformative impact. The story is over.
B. We’re due for a cataclysm. The forces of change, of technological innovation, of inchoate consumer frustration, are stacked high against the dam of Real Estate As We Know It. It will not – it cannot – hold. The story is far from over.
My dinner pals were in the “A” camp. I argued for “B.”
Given that the whole thrust here is theoretical and futuristic, I can’t help but charge in foolishly where wiser men fear to trod. Read more…
A really fun discussion on Twitter with Robin Greenbaum (@cobrokenation) led me to just do a very quick, very back-of-napkin, and likely very inaccurate comparison between two rental units. As Robin pointed out, since comparisons are very difficult, depends on many factors, and the like, no matter what I come up with, this is likely to be wrong.
Nonetheless, I’m curious to see if we might see any interesting bits of data.
One unit is a 1BR at 22 River Terrace, a luxury rental building constructed in 2001:
Detailed info can be found here, but the vitals of the unit are:
725 sq. ft., monthly rent of $2,880, 23rd floor but facing east (aka, no river views). I know the floorplan is hard as heck to see, but it’s pretty standard fare for NYC apartments.
The Verdesian is a newer building, built in 2006, and LEED Platinum is not given to just about anybody with a solar panel or two. There was quite a lot of thought and technology devoted to the building.
The unit here is a 1BR as well:
The vitals here are:
750 sq. ft, $3,065 per month, and east-facing on the 13th floor. Clearly, the little alcovey “Den” area means a smaller living room, but the floorplan might be better for some, worse for others. Who can say?
On a straight $$/sq.ft. basis, however, the difference is only $0.12 between the newer, eco-friendly unit and the older, non-green unit: $3.97/sq. ft. for 22 River Terrace vs. $4.09/sq. ft. for The Verdesian. If we hold the square footage equal at 725, that means a monthly rental difference of $87.00.
To my untrained, unpracticed, and non-realtor eyes, this seems rather insignificant and would tilt the decision towards the Verdesian. According to GreenbuildingsNYC.com, the Verdesian’s advanced systems, EnergyStar appliances, and various other design & architectural choices, means a 40% savings on electric bills for residents.
According to ConEdison, the average NYC resident can expect to pay $104.97 per month in electric bills. A 40% savings on electricity alone is $41.99 per month. Nearly half of the “green premium” (if that’s what it is) is taken care of simply from savings in electric bills.
Now add in the fact that The Verdesian is five years newer, and offers “Fresh filtered air, continuously humidified or dehumidified, depending on climate conditions” to every unit, and it isn’t clear to me that the green premium starts to head towards zero.
Again, comparing different units, different buildings, with slightly different amenities and the like is hazarding error. But it does seem significant to me that the actual cost difference may be as low as $45 or so per month — less than the cost of a cup of Starbucks latte per day.
If this is true, then the green premium at least in the NYC rental market is heading towards zero, and renters really have to ask why they would go to a non-green building vs. a green building.
I for one would love to see some real comparisons by real professionals — realtors, appraisers, I summon thee!
PS: Note that I am a heretic when it comes to anthropogenic global warming hype, so this has nothing to do with religious views on carbon footprints and such nonsense.