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January 13, 2009

Elliman: Condos Down, Co-ops Flat, Brownstones Up in 4Q

Condo prices and transactions in Brooklyn continued their decline in the fourth quarter of 2008, according to a report from Prudential Douglas Elliman. The median price of a condominium fell 3.9 percent from the third quarter and 7.5 percent from a year earlier; the number of transaction fell 20 percent and 43 percent over the same periods. While volume was also down significantly for co-ops, prices for the traditionally more stable apartment class were roughly flat. The big point of light? Townhouses in Brownstone Brooklyn, which saw median prices rise 15 percent from $1,115,000 in the fourth quarter of 2007 to $1,285,000 in the fourth quarter of 2008. "Currently, brownstones seem to be [a] relative anomaly in the market," said Jonathan Miller, whose appraisal firm Miller Samuel prepared the report. "It's a form of housing stock that's limited in availability and, for the moment, has been relatively unscathed." Sounds nice, but we think it paints too rosy a picture.
4Q Brooklyn Market Overview [Douglas Elliman]
Brownstone Brooklyn Prices Unscathed in 4Q [The Real Deal]
Brooklyn Apartment Sales Prices Fall 7.5 Pct [Reuters]

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Comments

Taking a word from our beloved leader's speech to the press yesterday, many of our beloved posters like cornerbodega, Miss Muffett and BHO have apparently "misunderestimated" the market for brownstones.

Posted by: daveinbedstuy at January 13, 2009 9:18 AM

I would have thought this to be closer to the median for Brownstone sales.

With the exception of some sections of Crn. Hts & BS, I've not seen any listings in Brownstone BK for prices this low. I assume, then, that there has been an overwhelming amount of activity in 'fringe' neighborhoods over this last year.

Besides, price drops almost always begin at the top of the market -- as demonstrated by the 20ft. Park Place home which listed for 1.99 last week.

Posted by: YngRntr at January 13, 2009 9:23 AM

"Besides, price drops almost always begin at the top of the market"

Profound insight.

Posted by: daveinbedstuy at January 13, 2009 9:27 AM

Calling Miss muffett, how are you feeling this morning? Kind of sick hey.
As i have said before this is not Miami,Vegas, Ca , Arizona. We did not have the overbuilding that many other states had. If anyone on this blog thinks we had to much new construction in NYC, than you need to get out more and see what happened across America.
(Team BULL)

Posted by: sebb at January 13, 2009 9:47 AM

Miss Muffett: Will you still insist that you have not lost money, while waiting for prices to drop? You have been paying rent and you refuse to calculate your losses.
Well Anyhow to all the Brooklyn Brownstone owners who love brooklyn and believe in this market congratulations on a good investment .

Posted by: sebb at January 13, 2009 9:51 AM

sebb--though I am nominally a member of your team, I wouldn't be so quick to get all cocky at this point. Methinks a few years of just getting on with things and keeping one's head down is in order. Nose to the grindstone as they say...

Posted by: wasder at January 13, 2009 10:01 AM

If you go into the D E website, you can see that the corresponding number for 3Q 2008 was $1,312,500 so there was a decline from 3Q to 4Q BUT, both the 3Q and 4Q median numbers were above the 2Q number which was $1.200MM. Volatile.

In the 3Q, there were ONLY 70 sales (and 64 in 2Q). I don't know the 4Q number of sales but this is a small enough number that the median will be volatile because of a few very high end sales or an increase in the number of sales at the low end.

Posted by: daveinbedstuy at January 13, 2009 10:02 AM

Sebb - I suggest you drive around Jackson Blvd. and the rest of LIC and then come back and state that NYC did not have too much construction. The amount of empty finished places there is shocking.

Posted by: dittoburg at January 13, 2009 10:05 AM

wasder and sebb...you're both right. i bought my brownstone in May 2007 and even though it was all renovated and perfectly nice for most people, I dumped another $100k+ into it. I know that I could not sell it today for what I have in it and probably not even what I paid for it. But I don't want to. I love it and am very, very happy. I've been through many cycles with many different properties in NY, Philly, Chicago and elsewhere and that's all this is, a cycle.

I have no doubt that in 5-10 years I'll make a handsome profit on this house. I certainly feel sorry for anyone who bought in 2007-2008 and have the misfortune of needing to sell now.

Posted by: daveinbedstuy at January 13, 2009 10:07 AM

I really feel sorry for those of you who are so arrogantly confident in the ever rising values of the beloved Brownstone.
I pity your complete lack of knowledge regarding markets as well as history. But I do envy that you have been able to enjoy more rest-full nights than the rest of us, cuddled in the warmth of your naivety.
Dont worry - I for one, wont spend too much time telling you how wrong you were, when your cocoon of ignorance is opened.

Posted by: fsrg at January 13, 2009 10:07 AM

Sebb, I think that Miss Muffett deserves at least one day off so feel free to direct your ire at me as I'm a member of Team Bear.

"You have been paying rent and you refuse to calculate your losses."

There's two ways to calculate your position.
1) On "income/expense" which would be the cost of rent v the cost of servicing a mortgage.
2) On "gain/loss" on the value of the property.

On either measure, I think the Renters are ahead for any point in the last year.

Posted by: the chicken at January 13, 2009 10:08 AM

the chicken....Renters are always head in their own mind!!!

Posted by: daveinbedstuy at January 13, 2009 10:17 AM

I looked at the full year 2007 and 2008 sales prices posted on nyc.gov for Brooklyn Heights 1-, 2- and 3-family houses. Each year had 14 sales. (I ignored a few sales of townhouses classified as rental walk-ups because it's impossible to know whether the buyer will convert back to 1,2 family or turn into condos.) I didn't bother doing quarter to quarter comparisons because the annual sample size is itself pretty small.

Median price increased by 1.8% (to $3.5 mil), average price increased by 4% (to $3.85 mil) and the average per-square-foot price increased by 7.1% (to $987).

Interestingly, in 2008, average discount to initial ask was 12.1%, whereas in 2007, there was an average 1.9% premium to ask. (Based on streeteasy and other listing data.)

Posted by: NorthHeights at January 13, 2009 10:23 AM

NorthHeights....your last paragraph seems perfectly logical. The sales prices in the second paragraph are obviously skewed to the high side by a concentartion of high end sales in the extremely low and unrealistic number of sales at 14!!!!

Posted by: daveinbedstuy at January 13, 2009 10:26 AM

DIBS, that may be true all the time! - but I think a dispassionate considered view would agree with me in the last year (remember that I've owned and rented so I see the pros and cons of each)

Posted by: the chicken at January 13, 2009 10:34 AM

wasder : I agree with you.

dittoburg : You are correct with the LIC , but that is really not that many new condos when compared to the amount of people in NYC. Now if you go to south florida and you see what has happened you will understand why prices are falling. Supply and demand my friends .

Posted by: sebb at January 13, 2009 10:45 AM

The fact is as the bubble rose developers vomited out new condo construction.

How many new historical row houses went up?

Regardless of what the current housing market is like or what it will be like in the near future. The brown/brick/limestone homes will weather the storm.

Posted by: TownhouseLady at January 13, 2009 10:47 AM

Brokers are the most honest people I know (Brooklyn Bridge is on sale). When Prudential Douglas Elliman says prices for Brownstones are increasing means everyone should buy one. There's only a limited supply of Brownstones. Buy one now! Next year Brownstone prices will ONLY increase (Madoff recomended investment). Mortgage rates are at historic lows (if you have perfect credit or a huge downpayment). New York City (Wall Street layoffs projected to be over 200,000) especially Brooklyn Heights and Park Slope are immune from the economic downturn.

Posted by: ZooLander at January 13, 2009 10:48 AM

Whatever happens to the price of brownstones I better not hear that someone that bought a brownstone now has a difficult time paying for the monthly payments and would like some TARP money to help him or her stay in their home. I got a letter from my landlord and she wanted double the rent. Well I was told that was the market. Well you know what all your million dollar brownstones are almost worthless. Moving to a cardboardbox near you.

Posted by: hannible at January 13, 2009 10:52 AM

"Besides, price drops almost always begin at the top of the market -- as demonstrated by the 20ft. Park Place home which listed for 1.99 last week."

I believe we heard from someone later in that thread who had seen the property who said it needed massive amounts of work.

Posted by: 11217 at January 13, 2009 10:53 AM

Yawn. You know where I stand. Jackal out.

Posted by: lechacal at January 13, 2009 10:54 AM

True Sebb, but supply and demand is also local. There is not so much demand to live on the Pulaski bridge or some condo overlooking Borden Ave. that the supply in LIC will not be an over-supply.

Not that that will have any effect the Brownstone market.

Posted by: dittoburg at January 13, 2009 10:55 AM

"I got a letter from my landlord"

I opened and read it...it said they were SUCKERS!

Posted by: East New York at January 13, 2009 10:59 AM

I agree with Townhouselady. Brown/Brick/Limestone buildings will weather the Real Estate meltdown. Sure,they may sell a few dollars below asking but they will sell nonetheless b/c they are rare and tend to be a great investment.

Posted by: gemini10 at January 13, 2009 11:27 AM

I would suspect brownstones reflect more of a flight to quality. If fewer transactions are taking place overall, than given people's psychological anchoring on higher prices it seems logical that only the premium properties are trading, distorting the average up.

Posted by: Farkus at January 13, 2009 11:33 AM

Corcoran also released their report which also goes along with the idea that Brownstone Brooklyn is holding on better than other areas...

*
Corcoran has also released its year end report and the results are somewhat at odds with the early bloodletting reported by Mr. Miller. Cocoran reported an overall median increase in Brooklyn prices of 2 percent from 2007 to $580,000. Per Corcoran:

In 2008, median co-op sale price was up 7%. Similar to 2007, co-op median price increased in all size categories, ranging from a 2% increase for studios to an 18% increase for three-bedroom residences or larger. Meanwhile, median condo price was down in every size category, for an overall decrease of 5%. However, because there were more sales of smaller, more efficient units this year, average price per square foot still went up slightly while absolute prices fell. In the townhouse market, the median price for a single-family unit increased 6%, while the median price for a 2-4 family townhouse increased substantially by 34%.

Corcoran, by the way, found median condo prices in Williamsburg down 13 pecent. The most interesting overall trend in the report is that it found condo prices down 5 percent while coop prices increased 7 percent. So, one thing that both reports can agree on is that the coop market is holding up better than condos.

Posted by: 11217 at January 13, 2009 11:34 AM

"but they will sell nonetheless b/c they are rare"

Rare - really?? There are tens of thousands of them (if not more) all over NYC, in every Boro (except maybe SI), nearby cities like Jersey City and Newark and similar structures (2-4 story row houses) are available by the thousands in every city that has any appreciable residential component (i.e. Boston, Philly, Baltimore, etc..)

Posted by: fsrg at January 13, 2009 11:49 AM

fsrg: But nobody wants to live in Philly , or Baltimore.

Posted by: sebb at January 13, 2009 11:59 AM

"I have no doubt that in 5-10 years I'll make a handsome profit on this house."

Hey!!! Koolaid!!!

"How many new historical row houses went up?"

Effectively, many. From dilapidation to renovation. Brom boarded up to "Boardwalk". A gut reno is not much different than building a brand new house on vacant land. You're still putting in new studs, beams in some cases, floors in some cases, plaster, tile, fixtures, mechanicals, appliances, sinks, toilets, yada yada yada. "Restored" is the new "New".

Before Team Bull gets ahead of itself, let's revisit the above:

"It's a form of housing stock that's limited in availability and, for the moment [key word], has been relatively unscathed."

AND (from the other Jonathan)

"Sounds nice, but we think it paints too rosy a picture."

Keep the cameras rolling. Brownstone volume is down. Prices will classically follow. Pre-Lehman contracts.

(Team Bear)

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 12:13 PM

What's funny is that Elliman has had many brownstone listings that have just sat on the market at bubble prices, only to be eventually lost and passed off to other brokers...

Posted by: bk14 at January 13, 2009 12:17 PM

"Besides, price drops almost always begin at the top of the market -- as demonstrated by the 20ft. Park Place home which listed for 1.99 last week."

Re: I believe we heard from someone later in that thread who had seen the property who said it needed massive amounts of work

I remember that and concede the poster may have been telling the truth. But a flaw in my example does not, I think, undermine the overall soundness of my observation.

After reading all the comments up to this point, my hope here -- as someone who is just finishing grad. school and is thus nowhere close to buying anything --is that developers see the stability in the brownstone market and actually start building properties that maintain the historic charachter of the neighborhoods we live in . . . because even in a volatile market they will continue to sell.

Posted by: YngRntr at January 13, 2009 12:19 PM

"[F]rom boarded up..."

I'm so self-conscious. And so special...so special...so special (couldn't resist).

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 12:20 PM

BHO sits on the sidelines massaging Miss Muffett's feet. Even witht he data right in your face you remain ignorant.

Posted by: daveinbedstuy at January 13, 2009 12:44 PM

BHO: Are you actively looking for a home, or are you siting on the sidelines?

I think wasder has the right attitude. Head down. Nose to the grindstone. For those of us who own and don't need to sell, there is nothing more to do but keep making payments on the mortgage and living our lives.

For people looking to jump in, I am interested as to what drives your decision. (Miss Muffet need not respond to that question.)

Although people can talk in theory, we won't know the full picture until this is all over and we can look back at the timing and trends.

Posted by: Miss Chiff at January 13, 2009 1:10 PM

Yes, if you don't need to sell, there is really no problem. And if you are intending to buy, I see no reason to buy today if you have cheap rent. I think its pretty conservative to say your downpayment will magically grow from 20% to 25% within the next year even if you keep it in a lame 3% CD.

Posted by: dittoburg at January 13, 2009 1:14 PM

"BHO sits on the sidelines massaging Miss Muffett's feet."

With Aveeno.

"Even witht he data right in your face you remain ignorant."

You mean this data, daveinpigsty?

"Still, brownstones are not immune to the economic downturn, he said, although they appear to be holding up well for the time being. There were only 60 townhouse sales in brownstone Brooklyn in the fourth quarter, a 36.2 percent drop in sales volume from the prior-year-quarter. Slowing sales mean prices will almost certainly fall in the coming quarters, Miller said."

Did you read that? As I already implied, collapsing volume is the proverbial 'canary in the coal mine' for collapsing prices. If waiting and saving to put more money down on a cheaper house is ignorant, I don't want to be "informed".

(Member Team Bear)

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 1:43 PM

"Did you read that? As I already implied, collapsing volume is the proverbial 'canary in the coal mine' for collapsing prices."

It's only the canary in the coal mine if inventory rises significantly.

Which it has not thus far with regard to brownstones. If people hold out (as I suspect most will) and not try to sell, the limited supply of housing will keep things higher than if there was a ton on the market.

Posted by: 11217 at January 13, 2009 1:50 PM

Dibs, the more you speak the more you sound like an uneducated cheerleader. Whatever makes you feel better about your soon to be half off crib in Bed Stuy. It doesn't take much to realize whats going on but theres always a coupl' of delusional few who need that proverbial brick to the head ;)

Posted by: cornerbodega at January 13, 2009 1:58 PM

"BHO: Are you actively looking for a home, or are you siting on the sidelines?"

Both, off and on. Perpetual tug of war with wifey's emotional irrationality. Now, it's on.

"For those of us who own and don't need to sell, there is nothing more to do but keep making payments on the mortgage and living our lives."

But for those who need to sell...ACCEPT THE HIGHEST QUALIFIED BID ALREADY!!!

"For people looking to jump in, I am interested as to what drives your decision."

Me too. Speak up people!

"Although people can talk in theory, we won't know the full picture until this is all over and we can look back at the timing and trends."

Code for "you can't time the market". But you can. An analysis of the history of the Case-Shiller Index will show you that a 'top' or 'bottom' in the market has occured no earlier than 9 months when the reading approached zero on a year-over-year basis (month to month change from same month last year). From in the 'red' (losses) to in the 'green' (gains) or vice versa.

Bottom line, you're gonna take a position. What do you base that position on if not history?

(Team Bear)

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 2:01 PM

BHO: After you are done with the Aveeno ....

Do you think sales volume could be affected by banks being hesitent to lend? I am not tlaking about the obvious application that should have been rejected the first time around. I am talking about a reaction by some lending institutions to become almost too strict with their lending requirements thus keeping some potential buyers out of the market.

I thnk some of the sales volume decrease is due to people sitting on teh sidelines and waiting, but I think some of this has to do with the turbulence in the banking industry as well.

Posted by: Miss Chiff at January 13, 2009 2:02 PM

"Perpetual tug of war with wifey's emotional irrationality."

BHO: Now it's on...

So help me god if my husband ever had the gaul to think, let alone post something as insensitive as that about me.

I hope, for her own sake she's not reading this.

You egotistical schmuck!

Posted by: TownhouseLady at January 13, 2009 2:08 PM

"It's only the canary in the coal mine if inventory rises significantly."

Not true. Inventory can stay the same and even drop if there is a minority of sellers who don't NEED to sell and they take their listings off the market. The remaining majority would be forced to dump their holdings, possibly in short sales. This minority/majority distribution is an assumption but we are living in very dark days economically so it is not far fetched. At all.

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 2:13 PM

"Do you think sales volume could be affected by banks being hesitent to lend?"

Absolutely. They no longer collect fees to offload the 'hot potatos'. They have to hold them and record them in their books whether the 'patatos' are performing or not.

"I am not tlaking about the obvious application that should have been rejected the first time around."

But you are. It's all one and the same. Fear mirrors greed. People bought high and banks/investors supported the transactions because of greed (prices only go up). The course has reversed because of fear.

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 2:24 PM

Townhouse Lady--you took the words right out of my mouth. Everytime DOW/BHO starts to get on my better side out comes a clunker like that. Egotistical does not even do his attitude justice.

Posted by: wasder at January 13, 2009 2:25 PM

BHO: THanks for getting back to me.

Interesting point on the emotion of buying. Ultimately, this is a business deal, but it can be very hard not to get emotional - "I love this house and have to buy it" "I am having a hard time lettng go of a house full of memories"

Hopefully, your head wins out but your heart isn't hurt in the process.

As for C-S Index, my comment was more of ending the running arguement but I understand your point. However, isn't there a lag in the reporting? Granted it is not long, but if you are not ready to buy as soon as the reports would say buy you end up a little behind the curve right? You have to find the house, get the bid accepted, get the financing and close. That can take time. Perhaps that lag won't matter much if the rebound is slow. You expect a quick drop, long bottom and then gradual rise?

Posted by: Miss Chiff at January 13, 2009 2:29 PM

"You egotistical schmuck!"

You're right, Townhouselady. I take that on the chin. I apologize to all the ladies out there for my chauvinistic streak. God forbid my wife reads what I wrote. I would get snuffed.

(But seriously, ladies, don't you have a stereotype or two about us?)

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 2:30 PM

It's cool ;)

Just do something nice for her when you get home. She doesn't need to know why.

Posted by: TownhouseLady at January 13, 2009 2:34 PM

"But you are. It's all one and the same. Fear mirrors greed. People bought high and banks/investors supported the transactions because of greed (prices only go up). The course has reversed because of fear."

I think I was thinking the same thing just putting it differently. Out of fear, banks are over-reacting but in the opposite direction than they were before. Do I understand you correctly?

As for your wife, you better hope she doesn't read that you are rubbing Miss Muffet's feet with Aveeno. (Pow, right in the kisser!)

Posted by: Miss Chiff at January 13, 2009 2:37 PM

"Perhaps that lag won't matter much if the rebound is slow. You expect a quick drop, long bottom and then gradual rise?"

The lag (there's already a two-month lag built into the index) is what I was referring to when I said "...no earlier than 9 months...". History shows slow drops, slow flats and slow rebounds. That's what I expect. Unlike the stock market, RE is veeeeeeery slow. Plenty of time to assess the market and get in (or out when you think the top is near).

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 2:42 PM

"Just do something nice for her when you get home."

Aveeno.

"Do I understand you correctly?"

Yeah, Chiff. I was just making the point that everything was interrelated. Fees and 'value' appreciation.

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 2:46 PM

The ignorant (dibs, sebb et al) showing their ignorance today...

Posted by: cornerbodega at January 13, 2009 2:47 PM

One last one, BHO ....

"But for those who need to sell...ACCEPT THE HIGHEST QUALIFIED BID ALREADY!!!"

Besides the obvious, why do you say this? Do you beleive that we need to get rid of the inventory and take our licks asap so we can get back to basics faster? Or is this more of a personal nature, i.e., sell me your house please since you are only avoiding the inevitable declines and you are making my beautiful wife, who I love to bits, angry and when she is angry she takes it out on me?

Thanks for the chat, BHO.

Have fun shopping at Duane Reade before you go home.

Posted by: Miss Chiff at January 13, 2009 3:24 PM

If you're having the gauls thinking for you, that is a problem. Look at the state of their unemployment system for a start.

(gall).

Posted by: dittoburg at January 13, 2009 4:13 PM

"...why do you say this?"

A house is only worth the highest qualified bid on it. This bid can change at any time for better or for worse. Since the trend is down for the foreseeable future (next two to five years), the bids will only get lower with time. If you NEED to sell, time is not on your side.

We went from "buy now or be priced out forever" to "sell now or be priced in forever" (can't break even on resale, even before subtracting costs).

***Bid half off peak comps***

Posted by: Brownstones Half Off at January 13, 2009 5:19 PM

Got it. Thanks, BHO.

Posted by: Miss Chiff at January 13, 2009 7:15 PM

"We went from "buy now or be priced out forever" to "sell now or be priced in forever" (can't break even on resale, even before subtracting costs)."

that sucks and gives me more sympathy for your position BHO.

Posted by: wasder at January 14, 2009 12:00 AM