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March 3, 2009
Brownstones, Co-ops Outperformed Condos in Q4
The median sales price in Brooklyn has been in decline for five consecutive quarters, according to Douglas Elliman's Fourth Quarter Market Overview. The median figure dipped below $500,000 in the fourth quarter of 2008 for the first time since the first quarter of 2006. Average prices were down 5.2 percent from a year earlier and 2.8 percent from the prior three months. Perhaps more noteworthy, the number of transactions plummeted from 3,222 in the fourth quarter of 2007 to 1,846 last quarter; the rate of decline has been increasing for the past year. The only good news: The median sales price of brownstones in Northwest Brooklyn rose 12 percent; co-op prices were also up slightly. Update: This flu must really be going to our heads—as one commenter points out, these reports have been out for several weeks. The Manhattan 10-Year report is the new one. Oh well.
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Comments
Like I posted below, I was surprised that 1-3Family were such a large % of the overall market...I was thinking more like 30-40% but they were 47% in 4Q08 and 50% in 4Q07.
Condos were only 28% in 4Q08 and Co-ops were 24%.
1-3 family continues to be a much better deal with Average price per sq ft at $278 vs. $586 for a condo.
This is the type of data that supports my contention that 1-3 Family will see a far less severe drop than the condo market. But even I am surprised how well these prices had held in 4Q. yes, 1Q09 will be different but, not markedly so.
Posted by: daveinbedstuy at March 3, 2009 10:07 AM
How is this at all meaningful? An average price goes up -- but could that not also mean that larger units are being sold at lower prices -- not that smaller units are seeing increased prices? I believe the first hypothesis is closer to the state of the market.
Posted by: BH76 at March 3, 2009 10:22 AM
Since I don't plan on selling anytime soon, the value of my home is less significant to me than my ability to retain good tennants. I have a very good relationship with them now, but if the downtown coop/condos that are going rental offer similar space for less money, well.... I am currently getting market rates and seriously considering offering one-year leases with no rent increase when the leases are up late in spring/early summer. As long as I keep my job and my property filled I'm all set. Enter a complication into the equation, and I'm in trouble. I wonder how many people are in my situation -- I'm guessing quite a few.
Posted by: MacD at March 3, 2009 10:24 AM
Of course Ed Koch and David Dinkins had nothing to do with those problems back then. The stock marhet began a rally a few weeks after the 87 crash that continued throught the 90s. Its different EVERY time.
Posted by: daveinbedstuy at March 3, 2009 10:24 AM
But the real estate agents told me last October that it was the perfect time to buy! You don't think they were being dishonest with me, do you?
Posted by: RaginCajun at March 3, 2009 10:33 AM
People who put stock in what real estate agents say get what they deserve. :)
Posted by: daveinbedstuy at March 3, 2009 10:36 AM
"The median sales price of brownstones in Northwest Brooklyn rose 12 percent"
No doubt skewed by the handful of high-end brownstone sales, no?
Also, didn't we recently learn that the peak was AS RECENT as 1Q 08?
Posted by: bk14 at March 3, 2009 10:38 AM
Vinnie Barbarino - The stock market crash was not the cause of any of the real estate problems in the early 1990's. It was the late 1980's real estate bubble and the systemic banking failure involving the S&Ls.
Posted by: lincolnlimestone at March 3, 2009 10:44 AM
The whole point of looking at median numbers, as opposed to averages, is to reduce or eliminate the impact of a handful of outlier data points skewing the numbers...
Posted by: brownstoner at March 3, 2009 10:45 AM
And Lindsay, Koch & Dinkins and the lack of a war on crime.!!!!
Posted by: daveinbedstuy at March 3, 2009 10:46 AM
I saw this report as well and I have a question: what is their definition of a "brownstone"? Is is the classic brownstone or any free-standing "house"?
Is this a brownstone?
http://www.brownstoner.com/brownstoner/archives/2008/08/house_of_the_da_544.php
How about this?
http://www.brownstoner.com/brownstoner/archives/2009/03/house_of_the_da_635.php
or this (it's not even made of stone, much less brown)?
http://www.brownstoner.com/brownstoner/archives/2009/02/1304_glenwood_r.php#comments
Posted by: Rookie at March 3, 2009 10:53 AM
Rookie,
People use Brownstone as a general term for most town/row houses (brown/limestone and even brick).
Technically Brownstone is a brown Triassic sandstone which was once a popular building material.
As far as the homes you showed the first was a true brownstone, the second a limestone and the third a Victorian.
Posted by: TownhouseLady at March 3, 2009 10:59 AM
MacD's comment got me thinking. What will happen to rents as leases come up for renewal? Neither landlords nor tenants seem eager to rock to boat in these uncertain times, but there appears to be downward pressure on all housing prices (rented or owned), and broker fees are beginning to evaporate (making a tenant's threat to walk away more credible). Is his zero-increase (but also zero-DECREASE) plan--"I am currently getting market rates and seriously considering offering one-year leases with no rent increase when the leases are up late in spring/early summer."--unreasonably optimistic under the circumstances?
Posted by: betterside at March 3, 2009 11:00 AM
The underlying statistics are interesting but comparing between groups ie condo vs. coop vs townhome is MEANINGLESS - how can you compare condos - which 50% are developer sales vs coops where virtually ZERO are developer sales; how can you compare median price changes in condos where the Median sale price is HALF the price of the coops (584k for Coops vs 280K for condos).
There are so many problems doing these comparisons that it is embarrassing that Brownstoner even tries. Suffice to say - the number of sales are down for every class and if you ask ANYONE trying to sell ANYTHING - prices are down from 18mo ago.
Posted by: fsrg at March 3, 2009 11:05 AM
I certainly don't think these numbers look terrible, given what's going on.
It's also interesting to note how much inventory is down, even since last quarter. I take that as a good sign. People who don't need to sell, aren't.
Posted by: 11217 at March 3, 2009 11:12 AM
@Townhouse lady. I'm defintely familiar with the definitions, I'm just curious as to what meets the definition for these market reports.
You'd really consider that first one a brownstone? It's made of brick, not sandstone. I'm pretty sure it was built as a multi-family row (tenement) house.
Posted by: Rookie at March 3, 2009 11:13 AM
betterside--good question. I am going to try for a similar thing as macD in that I like my tenants and want them to stay. Certainly if they like staying and they are happy with rent at current level then we will just renew as is---they definitely have more power in the relationship than they would have a few years back. Will be interesting to see what happens as you say.
Posted by: wasder at March 3, 2009 11:24 AM
fsrq: Comparing price trends in condos and coops certainly is meaningful. Buyers substitute condos for coops to a pretty significant extent (very few are the buyers who are in the market exclusively for one or the other), so price behavior in one is very relevant to the other.
Don't misinterpret what I just said to mean that there should not be a difference in price between the two. I am just saying that they are strongly correlated.
What an unusual thing to become sensitive about.
Posted by: lechacal at March 3, 2009 11:33 AM
Yeesh! I looked again and you're right Rookie. I must be getting old cause it looks like I need glasses.
Sorry for the rudimentary answer. I honestly thought you were actually asking.
Posted by: TownhouseLady at March 3, 2009 11:36 AM
THL;
"Brownstone" is a brown-colored limestone. It is not sandstone. Sandstone makes for a very poor building material, especially in places like NYC with a harsh winter.
Most of the brownstone in NYC was quarried from Northern NJ, near its border with NYS.
Posted by: benson at March 3, 2009 11:44 AM
Now is a great time to buy. People are moving into Brooklyn in waves as it becomes increasingly family friendly and new great shops and restaurants are opening up all over the place. Things are different in Brooklyn given it is NYC where foreign buyers will continue to pick up real estate and there is an enormous amount of wealth. Prices will just continue to rise. Buy now or be priced out forever!
Posted by: thedudeabides at March 3, 2009 11:48 AM
To the landlords, I have been in my rental for 3 years. Rent has increased each year. My current lease expires in April, and I plan on negotiating it down, at least to the year 1 level.
Posted by: Abe Froman at March 3, 2009 11:49 AM
Old News?
uhhh, correct me if i'm wrong mr brownstoner - Today is March 3. This report was released on Jonathan Miller's site ******january 13****.
If you want to talk about something relevant with these old stats how about how many of these were entered into contract before the most recent Oct meltdown.
pay no attention that the stock market is almost half what it was before that (affect downpayments?) not to mention that 20% down on most mortgages gave way to 25-30% down. many lenders are considering brooklyn to be a depressed area and are not lending (contrary to some mortgage brokers saying otherwise)
seriously - is this just filler because you guys had the flu? its ok, c'mon just be honest.
Posted by: invisible at March 3, 2009 11:52 AM
"The only good news: The median sales price of brownstones in Northwest Brooklyn rose 12 percent; co-op prices were also up slightly."
p''(t) < 0.
***Bid half off peak comps***
Posted by: Brownstones Half Off at March 3, 2009 12:24 PM
lechacal - I agree comparing prices of coops and condos is very meaningful.....but comparing median prices of all such units is a total waste. Such a macro analysis tells you ZERO.
Such stats do not factor in maintenance (which is generally higher in a COOP b/c the Corp. generally has its own mortagage) - tells you nothing about the relative size of the average unit (one can assume that the median price of the COOPS is double Condos b/c the Coops that sold are much bigger) and they factor next to nothing for location (the biggest pricing factor of all) - surely the distribution of condos and coops are not equal with prime established hoods like the Heights, Cobble Hill Upper Slope, etc.. having far more Coops then new condos.
Posted by: fsrg at March 3, 2009 12:25 PM
BHO: Yes, it appears that p"(t) 0 for the time being (thus reinforcing my general point that prime brownstones will hold up better than other housing stock). Bear in mind that p'(condos) is significantly < 0 and p'(coops) is also < 0.
Posted by: lechacal at March 3, 2009 12:37 PM
Odd, my post lost some important stuff when I posted it. Let's try again.
BHO: Yes, it appears that p"(t) 0 (thus reinforcing my general point that prime brownstones will hold up better than other housing stock). Bear in mind that p'(condos) is significantly < 0 and p'(coops) is also < 0.
Posted by: lechacal at March 3, 2009 12:40 PM
THe only poster here making any sense is Dave. The other posts here are just noise.
This is the hard data we have all been waiting for. It explains that there is a grain of truth to most of the varied opinions expressed here. Prices in Brooklyn are going down, but prices of townhouses in the "prime" areas increased 12 percent while condos fell.
So there.
Brooklyn is special after all. Nya nya nya.
Posted by: mopar at March 3, 2009 12:43 PM
Well, it appears that some combinations of characters just won't post. Interesting. Maybe I was inadvertently creating some kind of code. In any event, my past two posts should be ignored.
BHO: Brownstone prices are decelerating, but for the time being the rate of appreciation is still positive (thus my general point that prime brownstones will hold up better than other housing stock). For comparison, bear in mind that the rate of appreciation for condos and coops is negative.
Posted by: lechacal at March 3, 2009 12:43 PM
Deriving comfort from 4Q 08 statistics is like experiencing a tremor before a massive earthquake, and saying "hey, these earthquakes are actually not THAT bad!"
Posted by: Paul C at March 3, 2009 12:54 PM
I thought brownstone is a sandstone and that is why you see the deterioration you do. It has and always will be an inferior building material, despite its appearance.
Posted by: Iknow at March 3, 2009 12:59 PM
Benson-
You better tell Wikipedia then b/c that's where I cut the definition from:
http://en.wikipedia.org/wiki/Brownstone
Posted by: TownhouseLady at March 3, 2009 1:02 PM
THL;
Frankly, I don't rely on Wikipedia as a source. There was an article in the Times or News about 2 or 3 months ago demonstrating this point by examining the Wikipedia site on NYC.
That said, I might be wrong on this point, though I could swear that I read once that brownstone is a form of lime stone impregnated with iron oxides (hence, its color) and that this mixture makes it a eaker material than pure limestone. I'm going to research this point further.
Are there any geologists in the house to clarify this issue?
Posted by: benson at March 3, 2009 1:12 PM
THL;
I stand corrected. You are right, brownstone is a form of sandstone:
www.mzarchitects.com/images/PPN/Brownstoneguide.pdf
Note that I am not alone in my (incorrect) impression that brownstone is a form of limestone:
http://www.calfinder.com/library/siding/types-of-siding/brownstone-siding
Well, I learned something today!
;-)
Posted by: benson at March 3, 2009 1:26 PM
"Deriving comfort from 4Q 08 statistics is like experiencing a tremor before a massive earthquake, and saying "hey, these earthquakes are actually not THAT bad!"
This should be quote of the day.
Posted by: nyc87 at March 3, 2009 1:30 PM
"BHO: Brownstone prices are decelerating, but for the time being the rate of appreciation is still positive (thus my general point that prime brownstones will hold up better than other housing stock). For comparison, bear in mind that the rate of appreciation for condos and coops is negative."
lechacal (pronounciation and background please): You mean "rate of [prices] is still positive". But of course. A negative rate of prices will follow a deceleration. Simple gravity. Throw a ball straight up into the air and it will inevitabally come down. But right before it reaches its peak altitude, you can say it's still going up.
The anology by Paul C at March 3, 2009 12:54 PM pretty much nails my point.
***Bid half off peak comps***
Posted by: Brownstones Half Off at March 3, 2009 1:33 PM
Benson- I studied gemology (not quite the same) and am looking in my reference books to see if I can find anything.
Posted by: TownhouseLady at March 3, 2009 1:46 PM
...and I don't agree that prime brownstones will hold up better. Whatever the premium, it was already built in before the 200% run-up from the 90's. They will suffer a proportional fate.
Maybe I overuse the lag concept (unemployment, national and regional and local price trends, etc.) but that is definitely what is happening with property types. Condo price drops look worse now because they are the riskiest (shoddily constructed and easily financed) and first to "go". Brownstones will follow after co-ops. They can run but they can't hide.
***Bid half off peak comps***
Posted by: Brownstones Half Off at March 3, 2009 1:53 PM
BHO: No, I mean rate of appreciation. Appreciation is a rate. Price is just a data point. Prices are going up in a very small slice of Brooklyn real estate, prime brownstone properties. And price decreases do not necessarily follow deceleration (although I think they will in this case). Deceleration can lead to any one of (1) depreciation (2) zero price growth or (3) slower price growth. And that's enough pedantic number talk for today.
How did it come about that I am arguing with the bears? To step back and see the big picture, my view continues to be that prices are falling in Brooklyn and will continue to do so for some time, and that prime brownstones will be less affected than coops, which in turn will be less affected than condos (the hardest hit of all being new construction condos in fringe areas).
It means the jackal. Le Chacal. It's French. I'll leave the rest super mysterious other than to note that I am not French.
Posted by: lechacal at March 3, 2009 2:00 PM
http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aDZ_c0FbatiY
In reference to Manhattan median apartment price increases, but same for Brooklyn prices: "The gain mostly reflects deals from the first half of the year, before the collapse of Lehman Brothers Holdings Inc..."
Posted by: nyc87 at March 3, 2009 2:05 PM
Well put lechacal.
Benson, I'm counting 11 different species of Limestone and 5 Sandstone. I'm not seeing Brownstone mentioned immediately and I gotta run so I have to stop. I will confirm that the red/brown is from the iron deposits (iron is very cool it can produce green in stones- peridot is one).
Let me know what you find.
Posted by: TownhouseLady at March 3, 2009 2:09 PM
mopar - if you think these are "hard statistics" - you are either an idiot or a recently laid off portfolio modeler for CDOs....
Posted by: fsrg at March 3, 2009 2:10 PM
"BHO: No, I mean rate of appreciation. Appreciation is a rate. Price is just a data point."
No, you mean rate of price [points]. Yes, appreciation is a rate. But the rate of that same appreciation (the terms you just used) is something else (negative in the case of brownstone prices). Yes, price is a data point but I said RATE of price.
Not a market debate, just a technicality. The Jackal is on my squad!
Team Bear...We Go Hard We Go Hard...
***Bid half off peak comps***
Posted by: Brownstones Half Off at March 3, 2009 2:18 PM
No one on Team Bear has yet to quote sales data to support their case.
Vinnie.....its called trading down...you can't buy a $25 MM townhouse in Manhattan so you buy a 43-5 MM one in brooklyn...the wife wines a bit more but that's life unlesss you work for her father.
Posted by: daveinbedstuy at March 3, 2009 2:27 PM
"No one on Team Bear has yet to quote sales data to support their case."
See me @ 12:24 PM. Rate of change (number of sales and prices all negative) is all that matters. Case supported like a mofo. No go support your koolaid habit.
***Bid half off peak comps***
Posted by: Brownstones Half Off at March 3, 2009 2:35 PM
metaphase...go back and print the report out and read it again.
Brownstone median prices are up 12% from the prior year quarter.
Brownstone median price is down 2% from the prior quarter.
Yes, its too small a sample but the sample has always been consistently small. Its not as if it has fallen.
More represenatative would be the 1-3 Family numbers which would include brownstones.
Hell, we're not even sure what their definition of brownstone is. However it does imply that these are ONLY Northwest Section brownstones and I would have to agree given the size of the prices.
Posted by: daveinbedstuy at March 3, 2009 3:04 PM
OK, BHO...here's your 12:24 post....
"The only good news: The median sales price of brownstones in Northwest Brooklyn rose 12 percent; co-op prices were also up slightly."
p''(t) < 0.
***Bid half off peak comps***
Posted by: Brownstones Half Off at March 3, 2009 12:24 PM
Wishing for half off won't make it so. Your rent was due yesterday.
Posted by: daveinbedstuy at March 3, 2009 3:23 PM
"The Jackal is on my squad!"
Hey! Me too! He is an esteemed member of Team Reasonable of which I am a member.
Team Reasonable We Go Reasonably!!!
***Bid Half off new login names and personalities***
Posted by: wasder at March 3, 2009 4:28 PM
you owe me a new keyboard wasder - mine has got coffee on it now...
Posted by: the chicken at March 3, 2009 4:44 PM
chicken---I'll send one over pronto!
Posted by: wasder at March 3, 2009 4:47 PM
jackal...we are not very far apart on our respective views at all. I welcome you to my team, whatever it is.
I don't think there's anyone on a team here that might think prices are going up. It was Team Bear that charaterized us as Team Bull.
Team reasonably will meet at the far end of the bar.
Posted by: daveinbedstuy at March 3, 2009 4:55 PM
Happy to meet at the far end of the bar, but can I drink unreasonably?
Posted by: lechacal at March 3, 2009 4:59 PM
I would expect nothing less. I think that this time we might even venture into shots!!!!
Posted by: daveinbedstuy at March 3, 2009 5:03 PM
Team Reasonable = Sneaky Transition to Team Bear
The transition progresses with the red data. By the time they get to Team Bear (all fearful and shit) I'll be on Team Bull, cleaning up in Bed Stuy for half off or less.
***Bid half off peak comps***
Posted by: Brownstones Half Off at March 3, 2009 5:05 PM
The only thing we have to fear is fear itself.
Posted by: daveinbedstuy at March 3, 2009 5:08 PM
I think if you look at the note above the Median Sales Price graphic on page 4 of the report you'll see that Elliman is defining "brownstone" as "1-3 family sales that occur in 'Northwest Brooklyn'". "Northwest Brooklyn" is in turn defined by Elliman to include most of the areas that you would probably expect, but excludes Bed Stuy and Crown Heights.
Posted by: ajaxclorox at March 3, 2009 5:18 PM
I've been renting a 3BR apt. on 3rd St. for close to three years now. Nice place and location, but I have always felt that I was paying too much and have gotten a rent increase every year. This year I am planning on negotiating the rent down at least 15%, maybe more. If not, I will be walking down the street until I can get a comparable place for a better price (taking in considering moving expense + fee).
Posted by: cjmorris1201 at March 3, 2009 5:29 PM
"The transition progresses with the red data. By the time they get to Team Bear (all fearful and shiit) I'll be on Team Bull, cleaning up in Bed Stuy for half off or less."
SSSHHHHHHH please don't give away trade secrets BHO....
I love Brownstoner! This is a place where the delusional can have their moment in the sun.
Team Bear I would like for you look at this chart...
http://dshort.com/charts/bears/four-bears-large.gif
Today this S&P broke the 1996 trend line and is at 696.33 and guess where the next level of support is??? It's called Hell.... It's so over.....
The What
Someday this war is gonna end...
Team Bear...We Go Hard We Go Hard...
Posted by: Return of The What at March 3, 2009 5:38 PM
"Team Reasonable = Sneaky Transition to Team Bear"
Not true. I have never had a market based take on this stuff. I have aligned myself with anyone who loves Brooklyn and wants to make their neighborhoods better. Being on Team Bull or Team Bear implies having some understanding of market forces and a prediction about the future. I guess I have sided with bears in that I completely agree that prices are in for a whacking but I abhor the cackling and glee that comes with your POV. Lechacal is a good example of someone who seems to know what they are talking about, someone who can be bearish about the market without being a douchebag.
Posted by: wasder at March 3, 2009 5:56 PM
"By the time they get to Team Bear (all fearful and shit) I'll be on Team Bull, cleaning up in Bed Stuy for half off or less."
This is a fairly shocking statement. If you are What, it puts the lie to everything you have ever said about hating Asshats and makes you one yourself. If you are not What and are just the wannabe, BHO, you are pegging yourself as the hypocrite that you are. Either way you lose in the game of KARMA.
Posted by: wasder at March 3, 2009 6:00 PM
Oh and just to clarify, Team Reasonable means being a decent person regardless of your take on the market. You are disqualified BHO.
Posted by: wasder at March 3, 2009 6:03 PM
Team Reasonable = Sneaky Transition to Team Bear
LOL trop drole!
Posted by: pierre de taille at March 3, 2009 6:38 PM
No real estate agents are honest hard working people and they would never lie. They are always on the side of the buyer and never the seller and it breaks their hearts when real estate prices bubble.
Posted by: hannible at March 3, 2009 6:42 PM
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