Location, Location, Location: Gravesend!

The Times explains how someone actually paid $11 million for a house in Gravesend, Brooklyn:

The multimillion-dollar teardown is generally considered a suburban phenomenon, a peculiar indulgence of the well-heeled in places of grassy splendor, like Greenwich or Great Neck. But there is a quiet, out-of-the-way section of the Gravesend neighborhood in Brooklyn where it has become commonplace for houses to trade for millions of dollars, only to be torn down and replaced with ever more luxurious mansions.

The most eye-popping transaction, the one that still has real estate brokers and appraisers scratching their heads, occurred in 2003 at 450 Avenue S at the corner of East Fourth Street, where a 3,600-square-foot house on a double lot sold for $11 million, according to a deed filed with the city.

Brokers and appraisers said it might be the highest price ever paid for a house in the borough, easily surpassing the $8.5 million paid last year for a brownstone overlooking the promenade in Brooklyn Heights, the neighborhood that is normally considered the ne plus ultra of Brooklyn real estate.

Notwithstanding its high price, the house on Avenue S was torn down last year, and a 10,400-square-foot two-story mansion is going up in its place, at an additional cost of several million dollars. Like the old house, the new one has an orange tile roof — the neighborhood’s signature motif — as well as four bedrooms, five bathrooms, three half baths, a barrel-vaulted ceiling in the master bedroom, a grand double-height domed entryway and a finished basement with an exercise room and a theater.

Keep in mind that a 10,400 square-foot house translates into thirteen 800-square-foot apartments.

But beyond the tasteful grand double-height domed entryways, this case exemplifies the oft-heard maxim “location, location, location”:

In fact, it is a very particular part of Brooklyn, one where some of the wealthiest members of an extremely tight-knit enclave of Syrian Jews compete with one another for properties on a few coveted blocks of large homes around Avenues S, T and U, between the area’s main synagogues on Ocean Parkway and its most prestigious yeshiva on McDonald Avenue.

Because devout Jews are barred from driving on the Sabbath, houses within walking distance of a synagogue carry a premium. And while that has had an impact on real estate values in other Brooklyn neighborhoods, the effect could hardly be more extreme than it is in Gravesend, where house prices have risen to astonishing heights.

“This market is not dictated by interest rates or the price of real estate as a whole,” said Frank Lupi, the president of Wolf Properties, a real estate agency in Gravesend. “The houses over here, they sell very quickly, and you’re almost naming your price at this point.”