Four years ago, I helped a friend in Austin look for a place to buy in the Dallas metro area.
Dallas was cheaper than Austin, where he was renting an 800-square-foot apartment for $1,400 a month. The rise of remote work meant he was free to move anywhere.
It was an eye-opening experience for this lifelong New Yorker, because we have normalized the astronomical prices we pay for housing here. Shopping in Dallas was like going back in time.
Maybe you’re one of those people who reminisces about what homes in New York City cost 30 years ago, and wish you had bought more of them, or not sold what you had. “If only we had snapped up that fixer-upper that went for $600,000. It just sold for $6 million!” my wife said once. (We couldn’t afford it at the time anyway.)
I recall house-hunting in 1993, when one-bedroom co-ops in Park Slope were as little as $75,000 and three-bedroom condos in landmarked brownstones went for $220,000. Everything is about eight times more expensive now.
But in Arlington, Texas, in late 2021, homes were trading for what they did in New York City in the early ’90s. My friend was on a tight budget, had zero savings and owed thousands of dollars on his credit cards, so I tried to get him to buy a 793-square-foot one-bedroom, newly remodeled with stainless steel appliances, for the preposterous price of $85,000.
The mortgage payment, insurance, property taxes and homeowners’ association fees would have been $782 per month. The condo had a pool, too. It was so cheap, I thought about buying it myself.
But my friend had delusions of grandeur, which is how he had ended up in his sorry financial situation at the age of 56, despite being gainfully employed and having no family to support. He wanted someplace better, with more resale value, even though he expected to never sell.
In early 2022, he lost a bunch of bidding wars in the $130,000 to $150,000 range. Without my knowledge, he eventually bid $195,000 (which he couldn’t afford) for a condo in North Dallas, a “nicer” (read: wealthier) neighborhood with “better” schools (even though he had no kids).
Fortunately, the deal fell through because the Biden administration’s new rules for Fannie and Freddie required the condo to have more money in reserve than it did.
I talked some sense into my friend, who then bought a similar unit in Arlington for $128,000. His mortgage, property taxes and insurance today are $793 a month. For the first time ever, he could save for retirement without repeatedly raiding his 401(k). He has since paid off his credit cards and put away $67,000.
He was able to achieve life-altering financial and housing stability because homes are so cheap in Arlington. Obviously, Texas is different from New York City in many ways, but it’s noteworthy that Arlington achieved low-cost housing without rent regulation or subsidies. It simply let developers build basic, three-story complexes.
The state that most famously did the opposite, California, now has such high housing costs that many of its non-rich residents are moving to Texas.
But there’s a sad ending to this tale now developing: Texas localities are banning apartment development by adopting some of the same restrictive rules that have made homes so costly in California (and New York, for that matter), as Jay Parsons recently explained.
Here’s hoping state lawmakers manage to stop them before they learn California’s lesson the hard way.
What we’re thinking about: Mayoral front-runner Zohran Mamdani has said he was earning only $47,000 a year when he signed his first lease for his $2,300-a-month, rent-stabilized apartment in Queens. “I was looking for an apartment that I could afford on my own,” he told the New York Editorial Board. He omitted that landlords typically require tenants’ annual income at lease-signing to be 40 times the rent, which would have been more than $90,000. How did he get the apartment? Send guesses to eengquist@therealdeal.com.
A thing we’ve learned: Of the 191,000 apartments built over the past decade that received a city subsidy, only about 3 percent had three or more bedrooms, the New York Times reported.
Elsewhere…
Gov. Kathy Hochul on Thursday signed legislation that, in her words, “bans collusion using algorithm-enabled rent price fixing.” The Real Estate Board of New York had asked Hochul to make some chapter amendments to the bill, S7882/A1417-B, but she didn’t.
The measure didn’t seem like a high priority for REBNY, though, because it doesn’t outright ban software programs that help landlords price their rentals. Assembly sponsor Linda Rosenthal had already amended the bill.
The bill summary says the legislation “prohibits a person or entity from knowingly or with reckless disregard facilitating an agreement between two or more residential rental property owners or managers to not compete with respect to residential rental dwelling units, including by operating or licensing a software, data analytics service, or algorithmic device that performs a coordinating function … among such residential rental property owners or managers.”
Closing time
Residential: The top residential deal recorded Thursday was $4.75 million for a 3,443-square-foot, sponsor-sale condominium unit at 323 Bergen Street in Boerum Hill.
Commercial: The top commercial deal recorded was $20 million for a 27,020-square-foot auto body repair facility at 127-48 Northern Boulevard in Corona.
New to the Market: The highest price for a residential property hitting the market was $29.5 million for a 12,250-square-foot townhouse at 11 Gramercy Park South. Adam Modlin and Andrew Nierenberg of the Modlin Group have the listing.
— Matthew Elo
