February 15, 2004

Moving Up Without Moving On


Douglas and MaryAnn Pratt spent $300,000 in converting their 1,800 square foot ranch in Bayside, Queens, into a colonial with 4,100 square feet.

INCREASING numbers of homeowners in neighborhoods across the city are deciding that the grass is greener on their own side of the fence, choosing to sink significant amounts of money into alterations or expansions rather than move on to grander addresses or the suburbs.

There is, of course, nothing new about remodeling: the caveman probably redid his den periodically. But although no comprehensive data on such alterations is kept, architects, contractors and lenders say the pace of such construction is accelerating, especially in neighborhoods where single-family and semiattached homes predominate in Brooklyn, Queens and Staten Island.

"We're seeing a lot more people renovating rather than moving because they know what they have," said Mitchell Kersch, president of the Major Homes Corporation, a remodeling concern with offices in Bayside, Queens, and Albertson on Long Island. "You can't go more than two blocks in Queens without seeing a Dumpster in front of a house, and right now we are approximately 10 to 11 months behind in heavy construction."

Keith Steier, president of Knockout Renovation Services in Brooklyn, said, "It is happening in all neighborhoods." " Among the communities he cited were "Flatbush, Bay Ridge, Bensonhurst, Dyker Heights, even Canarsie and Gravesend."

The wave of improvement, urban planners, lenders, architects, contractors and homeowners themselves agree, is the result of several factors converging: low interest rates, soaring resale prices and depleted inventory.

"People are going out and looking at what it would cost to relocate," said Butch Galante, president of the Home Improvement Contractors of Staten Island, "and what they would get in a larger home and saying, `I don't want to move where I have to spend a lot of money to get where I am now on decorating and landscaping.' "

That does not mean people are skimping on the alterations they are doing on their homes. Douglas Pratt and his wife, MaryAnn, for example, set out to add a fireplace and bathroom to their one-story ranch in Bayside, Queens, and ended up with a two-story center-hall colonial.

The disparity in taxes from one community to another has significant impact as well. "Even though there was a tax increase of 18 percent in the city last year," said John Calcagnile, an architect in Howard Beach, Queens, "you can do a mansion and taxes will still be affordable compared to Nassau County. The taxes here will be about $4,000 to $6,000, compared to $10,000 to $15,000 on Long Island."

Taxes aside, homeowners tempted to look elsewhere are finding that no matter how much their houses have appreciated, the prospect of reaping huge profits on the resale market would still leave them hard pressed to find something of equal value.

"People are staying put because if they were to sell they would probably have to take a lesser house than the one they own," said Richard Russell, president and chief executive of the Richland Equity Resources Corporation, a mortgage brokerage. "A lateral move now is a step down and if you step up, you have to pay at least 25 to 30 percent more."

Bayside, Queens
Instead of High Taxes, Major Rehabilitation

Roseann and Anthony Chiappano of Bayside, Queens, reached that conclusion after a short-lived foray into the market. "We were considering Nassau, where the bigger homes are, but the taxes will kill you," said Mrs. Chiappano, a retired bookkeeper whose husband owns a foreign auto parts business. "We found something in New Hyde Park that was acceptable, but the taxes were $18,000 — and that was for a condo. We deliberated and decided to stay here, do a rehab and get the kind of house we wanted for minimal cost compared to moving and taxes."

Such extensive work was done on the house they have lived in for 20 years that, Mrs. Chiappano said, "what started out as a Cape no longer is. I don't even know what to call it.

"We knocked down walls in the living room to make it bigger; gave up a bedroom on the first floor to make a great room; put in a new level with three bedrooms, including a master suite with double doors and a closet as big as a separate room, a guest room and a gym."

Describing the gym, she said: "After years of buying equipment on TV, I now have enough to fill up the room, but honestly I don't use it. I just dust it." She also has an air-jet bathtub used for bubble baths.

The cost of the project, which was completed late last year, was $110,000. "But people have already come to me offering $700,000, and several neighbors have been so excited by my house that they copied it," she said. Had they put her house on the market, she said, they would probably have asked for $500,000 before the improvements.

The Chiappanos took out a home equity loan to pay for the work. "All the numbers fell together," she said. "We can live in luxury and be comfortable with the payments. And when it comes time to move, we will get a nice penny for it."

From moderate income to affluent, many people are following the same path, plowing savings from refinanced mortgages and home equity loans back into their houses.

Simply put, Mr. Kersch said: "Money is cheap. A house that was worth $300,000 four or five years ago is now worth $500,000. So the owners have $200,000 in equity on which they can borrow at 4 or 5 percent."

Mr. Kersch, who said his business had doubled in the last two years, does not delude himself about what will happen when interest rates inevitably start to climb again. "I've been at this long enough so I can see the trend," he said. "As soon as the interest rates go up, the amount of work will go down."

Favorable financial conditions are, of course, not the only impetus to break through walls, add stories or upgrade kitchens and bathrooms. In some communities, like Crown Heights and Borough Park in Brooklyn, with large Orthodox Jewish populations, the need for space for families with many children is always pressing. In addition, members of ethnic or religious groups tend to cluster and do not want to leave, no matter how easily they could afford to relocate.

A decision to remain in place also reflects a more positive view of the city, in the opinion of Barry Hersh, associate director of the Newman Real Estate Institute at Baruch College.

"If you think the neighborhood is iffy, you don't invest in it," he said. "But if you think it is going in the right direction, then you increase your investment."

That attitude, in turn, can spread from one house and one block to the next. "People in little Capes next to million dollar mansions are saying, `My house is no longer worth $300,000, but $600,000, so why not put something wonderful in and stay there,' " said Rikk Davidson, president of As You Wish Construction, Kitchens and Bath Design in Bayside, Queens.

One effect of these trends: what was traditionally viewed as the "starter house" is no longer always the first step on a ladder of progressively costlier dwellings but can be an end itself, subject to substantial transformation.

Depending on the materials used, Mr. Davidson estimated that the average bathroom redo can cost $10,000 to $20,000; a kitchen makeover, $15,000 to $50,000 or more (he recently did one for $175,000); deck, $3,000 to $10,000; and exterior, $5,000 to $30,000. "It's very easy to spend over $100,000, and sometimes it amazes me what people will spend," he said.

Mr. Calcagnile, who says that he has redesigned more houses than he can count during his 20 years in Howard Beach, said one of the most frequent requests made by clients is to expand.

"Everyone wants to max out what they are legally permitted to do, and people say to me, `I bought this one-story ranch or Cape, and I want you to design it to make it as big as possible with as many bedrooms as possible,' " he said. "They may be on a tight piece of property, but they want a mini-mansion. Everyone is looking for four bedrooms, three bathrooms, beautiful kitchens, family rooms, in-ground swimming pools, detached garages."

David Rees, who owns David Rees Appraisals and who inspects properties throughout the city, said: "They also want all the high-end interior finishes. They're putting in triple-pane windows, expensive hardwood floors and marble floors, European kitchens with commercial ranges, Sub-Zero refrigerators, stainless steel.

"What you've seen in Manhattan forever," he said, "you're seeing in the boroughs now."

Fort Greene, Brooklyn
Through a Window to the Refrigerator

Not all alterations, of course, are done for cosmetic reasons. For 23 years, Peter Barna, acting provost of Pratt Institute, who is a professor of industrial design, and his wife, Myonggi Sul, an associate professor of interior design there, had to duck down and go through a four-and-a-half-foot-tall opening that had once been a window frame to get to their refrigerator because it sat in an unheated shed behind their house in Fort Greene.

(The original kitchen in the 12-foot-wide 19th-century town house was in the basement, with the refrigerator in the shed. Some years ago, the kitchen was moved upstairs to the back of the house, but it remained unheated.)

"My wife always wanted to live someplace else, in a loft or some other kind of space," Mr. Barna said, explaining why they had not modernized the kitchen until now.

"But now with property values, the truth is that we couldn't afford to buy a house comparable to ours today, so renovating allows us to bring it to where we want to be," he said. "The neighborhood has changed tremendously and it is a wonderful place to be."

The Barna kitchen was left where it was, but it is now entirely encased in an extension to the house and the shed has been demolished. "It has a large floor-to-ceiling window looking into the garden, radiant heat in the floor, a new fridge, cooktop, dishwasher, disposal, and where there was a mud room below, we have a nice laundry room," Mr. Barna said.

In addition, the couple cleaned and repointed the exterior bricks, replaced the roof and put in new skylights. "Now we are very happy and comfortable," he said.

The renovation cost $80,000, raised by refinancing what remained of the mortgage and tapping into home equity.

The house — which Mr. Barna bought for $70,000 when he was a graduate student at Pratt before Fort Greene became a desirable location — is probably worth $850,000 to $900,000 today, he estimated.

Noelia Gomez, a portfolio administrator for an investment advisory firm, wanted to sell the single-story ranch house she and her husband, Johnny, have owned for about seven years in Bellerose, Queens, and move on.

"I was thinking maybe I wanted a bigger backyard, more privacy and more closet space," she said. "But my husband didn't want to move, so instead we decided, `Let's fix up this place and make it more livable.' "

About 70 years old, the house, on a small plot was basic: it had two bedrooms and one bathroom. The Gomezes had the bathroom gutted, insulated and tiled and added a pedestal sink.

"I liked the result so much I decided to do the kitchen, where I only had maybe 16 inches of counter space," Mrs. Gomez said. "Now I have a lot more, plus stainless steel appliances, granite countertops and a rustic porcelain floor. Then, we insulated the dining room, Sheetrocked it and painted it."

Still on tap: a deck and an upgraded basement. So far, the Gomezes have spent about $60,000. "We just got a letter," she said, "saying it was assessed at $200,000 and change. Next year, they say, it will go up to $300,000."

Similarly, Neil and Shelley Harwayne briefly contemplated selling their waterfront house in the Tottenville section of Staten Island when they retired from their jobs, he as deputy superintendent of alternative high schools in the New York City school system, she as a regional superintendent in charge of more than half the public schools in Manhattan.

"We never considered moving away but faced the question, `Do we keep this big house or move to a small condo?' " Mr. Harwayne said. "We have an apartment in Manhattan and thought of buying a bigger one there." In the end, though, they decided they could not leave their 1905 beachfront Victorian.

They first tackled the kitchen, which Mr. Harwayne described as "very tiny." He added: "If we spread our arms, we would touch the walls and cabinets, so we decided to expand that. One thing led to another and another and another, and we ended up adding 600 square feet, obviously not just kitchen."

They broke through walls and added a family room, among other improvements. Mr. Harwayne would not say how much he had spent, nor how much the house is now worth. But he did say, "The house next door was sold for $690,000 last year, and the new owners tore it down."

Park Slope, Brooklyn
Readying a Home for Old Age

The process of redoing his home has been more evolutionary for Henry Bertoni, chairman of the department of electrical and computer engineering at Polytechnic University, who has owned a 120-year-old, two-family house in Park Slope for 25 years. Now he, and his wife, Helene Ebenstein, director of the Caregiver Resource Center at Mount Sinai Hospital, are starting an alteration on the first floor, where her mother lived until her death last year.

"My wife and I have decided to reoccupy the whole house, and part of the renovation is to make the ground floor into a comfortable space with a place for the television and couch, a bedroom, a nice big bath and sliding doors to the yard," he said. Work on the project began on Monday.

In addition, the couple will take down some walls, install central air-conditioning and convert the heating system. On the parlor floor they intend to remove walls between the dining and living room and the hallway to open up the space.

Although the project will cost about $100,000, the decision was not monetary. "One of the things I learned from having taken care of my mother-in-law and my mother, who is 96, is that the city is an extremely good place for elderly people," Mr. Bertoni said. "You can walk and get all kinds of services to take care of yourself. So we intend to stay here."

Douglas Pratt, who owns a company that builds Laundromats, always dreamed of having a fireplace and a master bedroom with its own bathroom, but the ranch house he and his wife, MaryAnn, bought in Bayside in 1998 had neither.

"While we were looking at the house, we had the feeling it might not be perfect, but knew we couldn't pass it up because of the size of the property, one-third of an acre, which is big for Queens," Mr. Pratt said.

Still, he yearned for the fireplace but explained, "We couldn't just tack it on because it would have stuck out in the backyard."

So while they were at the renovation, he said, "we took off the roof, added a second floor and now $300,000 later, we have a center hall colonial, not a ranch, and went from 1,800 square feet and three bedrooms to 4,100 square feet and five bedrooms.

"Everything in the house has changed, and this year we are putting in a pool," he said. "We keep throwing money into the house, not so much as an investment but because we don't want to go anywhere else. So we figure, `Let's make it as enjoyable as possible.' "

The Pratts paid $605,000 for the house and put in another $300,000. "I have been told that after the pool, it will be worth about $1.6 million," Mr. Pratt said. "I can't see people spending $1.6 million in Queens, but then I couldn't imagine myself spending $600,000 five years ago."

Copyright 2004 The New York Times Company