After a pandemic-inspired move to the New Jersey suburbs, Rebecca Goldberg Brodsky has longed to get back to Brooklyn. An interior designer, she missed the vibrancy of New York City, and the connections she made while living there.
Goldberg Brodsky and her husband searched for neighborhoods in Brooklyn for six months, but had no success with their budget of about $400,000. So they decided to “go all in,” she says, moving around their assets so they could spend exponentially more. In the end, they found a three-story apartment — located in what was once a church — for $1.1 million in Park Slope and moved in in September 2021.
Goldberg Brodsky was ecstatic to live somewhere with good public schools and a bustling community, and he was willing to overlook the old floors, lead paint, and astoundingly high price. That is, until her “new” refrigerator didn’t work—and an exterminator found the apartment was infested with rats.
“It was much more expensive than we expected,” Goldberg Brodsky says, estimating that they spent about $30,000 on a kitchen renovation. “We are very fortunate in many ways in terms of making more money during COVID, and we can work together to make this work.”
Courtesy of Rebecca Goldberg Brodsky
Soon, dreams of using their renovation budget on fresh paint and floors are dashed; Instead, Goldberg Brodsky and her husband had to spend tens of thousands of dollars protecting their new home from insects by putting metal mesh in the walls and replacing the old windows.
They are far from isolated. In today’s housing market, even a price over $1 million doesn’t guarantee buyers a luxury home in some areas. In fact, many find that they have to spend more after purchase—perhaps tens of thousands of dollars—to make their new home livable.
Of course many new homeowners want to update their kitchen cabinets or change the bedroom’s paint color for aesthetic reasons, as Goldberg Brodsky and her husband intend to do. But during this past year’s hot housing market, where many buyers took whatever home they could get their hands on and prices skyrocketed, seven-figure spending was often just the beginning of the financial journey.
“I’m fine with that mentally as long as this economy is in place, and it doesn’t turn into a catastrophic event,” says Goldberg Brodsky. “Hopefully five or 10 years from now I can say it’s worth it.”
Houses are getting smaller and older
In booming markets like Dallas, Phoenix, San Francisco (and surrounding areas), Seattle, and more, the cost per square foot is rising, according to data from Zillow, so million-dollar homes are getting smaller. A typical home sold for $1.5 million in the third quarter of 2022 was 2,959 square feet, compared to 3,342 square feet in the third quarter of 2020.
They’re also unlikely to be purebred off-the-shelf builders, says Jeff Tucker, Zillow’s chief economist. And the median age of a $1.5 million home being sold is also significantly older: It increased from 28 years in the third quarter of 2020 to 35 years in the third quarter of 2022.
“The amount or volume and quality of homes that will sell for $1.5 million has really gone down because overall price levels have gone up so dramatically in the last couple of years,” says Tucker. “Homes that look surprisingly normal rather than stately mansions are now selling at this extraordinary price point.”
An old house doesn’t necessarily mean it’s in poor condition. But it does increase the chances of needing certain updates to bring it up to the modern code. Especially in expensive West Coast markets, Tucker says $1.5 million “could be enough to buy a little fixer-upper.”
“Maybe people will pay that kind of money to buy a house and find decades-old heating or electrical systems,” says Tucker. “Not only did they spend $1.5 million on the house, they need to transfer the money and spend tens of thousands of dollars on major system repairs.”
A few years ago, a home in the most expensive neighborhoods in a place like Seattle would cost $1.5 million or more only if there was something truly unique or custom, says Tucker. Now, entire neighborhoods are priced at that level.
Amanda McAvena and her husband spent more than twice that amount—$3.5 million—for a Brooklyn home last year that had to undergo its fair share of renovations. Like Goldberg Brodsky, McAvena also had to remodel the kitchen when she moved in.
“They did a pretty good job on the photo slate, but… there weren’t even basic things to live with, and the stove barely worked,” McAvena says. Upon moving, she and her husband soon had to replace lead-paint-covered cabinets, a water main, and windows throughout the house.
It’s disappointing, the 36-year-old says, especially since she and her husband had saved up since their early 20s for their new home.
“There was no family support network, and there were no gifts,” she says. “We put all our savings into this one, and we have pink bathrooms. The hot water tank came out right away. It’s definitely not a witch house.”
However, McAvena is confident that they will recoup their investment one day. They plan to live in the house for the next 20 to 30 years, raise their children there and enjoy all that the neighborhood has to offer.
Nor does Goldberg Brodsky feel any remorse. She feels a deep connection to her neighborhood and cannot imagine living anywhere other than New York City; She says her business is thriving.
“We made peace with what we could do. We made memories regardless,” she says. “If anything, he can only go up from here.”
Sign up wealth features Email list so you don’t miss out on our biggest features, interviews and exclusive investigations.