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October 15, 2009
Elliman Q3 Report: Better Than Q2
The Douglas Elliman 3rd Quarter Market Report for Brooklyn came out this morning and the numbers show broad improvement quarter-over-quarter but still weakness compared to a year ago. Median sales prices fell 6.7% to $476,000 from $510,000 in the prior year quarter but rose 7.9% from $441,090 in the prior quarter; average sales price fell 5.3% to $544,676 from $575,287 in the prior year quarter but jumped 10% from $495,120 in the prior quarter; and the total number of sales declined 19.6% to 1,847 from 2,298 sales from the prior year quarter but increased 29.3% from 1,428 units in prior quarter. The numbers in North Brooklyn looked the ugliest, with average price per square foot down 35% from the year earlier and the number of sales off by more than 40%. Two-family houses across the borough also proved surprisingly resilient, with median sales price holding flat from a year ago and rising 27% over the quarter. For more detail, check out the full report here.
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Comments
We have hit the bottom now we go sideways for 6 months before inflation brings home prices back up.
(Team Bull)
Posted by: sebb at October 15, 2009 9:12 AM
Further analysis reveals:
In the 1-3 family market, the median sales price was -10.6% from a year earlier but +3.1% from the prior quarter. Number of sales rose from 716 in 2Q to 944 in 3Q. Price per sq. ft. rose from $214 in 2Q to $268 in 3q.
In the Brownstone market, median sales price was -13.9% from a year earlier but + 15.3% from the prior quarter. PSF rose from $408 in 2Q to $547 in 3Q. Number of sales rose from 43 to 62. Interestingly, median sales prices rose from 2Q to 3Q for 1 family and 2 family but declined for 3 family.
ALL firther evidence that my prediction of a bottoming of prices in brownstone Brooklyn for townhouses will occur before the end of the year.
Posted by: daveinbedstuy at October 15, 2009 9:13 AM
Unfortunately, or fotunately for some, inflation is going to be the dominant factor in every apect of the finincial markets for at least the next 5 years.
We are all going to be millionaires soon! However a gallon of gas will be $10 and a modest 1 BR condo will run you about $5000 a month.
Posted by: newsouthsloper at October 15, 2009 9:16 AM
I purchased my Weimar Republic era wheelbarrow today for transporting the sacks of cash I'll need when buying a loaf of bread next year. There's gonna be a rush on them, mark my words.
Posted by: dittoburg at October 15, 2009 9:19 AM
The market is overheating in anticipation of the banks lending money....interest bearing accounts pay ZERO which encourages you to spend.....or at the very least speculate in the market (Stock, housing, commodity) in spite of the fundamentals in the market that say prices shouldn't be as high as they are. The stock market is going up because there are so many dollars searching for an investment home....housing prices will soon follow.
Posted by: moreteasir at October 15, 2009 9:19 AM
NSS- says who? treasury market doesn't see what you see, that's for certain.
this report highlights the growing gap btwn brownstone price (semi-stable) and condo/coop prices (northwest median falling pretty significantly), which can't last forever.
Posted by: antidope at October 15, 2009 9:22 AM
newsouthsloper : 100% correct.
Jim Rogers has said that the Dow could go as high as 50000 nobody knows how high things can go , resulting from the Fed's monetary easing.
Posted by: sebb at October 15, 2009 9:26 AM
nss & ditto are apparently more aware of this than the collective knowledge of the bond market. Although I own hedges on treasuries (which, so far I have lost money on) we are not going to see extremely high single digit inflation let alone anything double digit resembling either the Weimar Republic (lunatic fringe thinking) or the late 70s/early 80s here in the US (not far from lunatic fringe thinking).
Carry on.
Posted by: daveinbedstuy at October 15, 2009 9:28 AM
http://www.paddypowertrader.com/uploads/blog/jul28_09_vob_dw.gif
DIBS - I know where you can get one made from ipe if you're interested
Posted by: dittoburg at October 15, 2009 9:31 AM
IN OTHER NEWS THIS MORNING.... The CPI FELL 1.3% YOY in September
Posted by: daveinbedstuy at October 15, 2009 9:33 AM
To me # of sales is significant figure. But quoting change in median and average sales prices and claiming that represents change in value of your condo or house is inaccurate and misleading. Condos and houses are not stock certs where each has same meaning and value.
The mix (location, size, quality) from 1 quarter or year does not = the mix (location, size, quality) of another.
The figure can indicate trends but should absolutely not be interpreted as value of your home is up or down X%.
Posted by: Petebklyn at October 15, 2009 9:39 AM
Throw in the towel, Pete. Take your lumps and concede defeat like the chicken did.
Posted by: daveinbedstuy at October 15, 2009 9:41 AM
dave, judging by these posts, you might want to explain what CPI is.
Posted by: joe_the_bummer at October 15, 2009 9:42 AM
Joe, this is the edumacated crowd. It's not like I got to do some 'splainin to cornerbodega.
Posted by: daveinbedstuy at October 15, 2009 9:43 AM
Condo Price Index, right?
Posted by: antidope at October 15, 2009 9:49 AM
this is better news than expected but dont believe this is saying / showing prices are going up rather it's a mix change driven increase. nevertheless it is better news than I expected - logs that into notepad.
Posted by: more4less at October 15, 2009 9:52 AM
In that case I hear the Williamsburg CPI is looking like an alpine skiing run.
Posted by: dittoburg at October 15, 2009 9:52 AM
well, inflation is an easier thing to call than brooklyn real estate and people are all over the place. I mean, you've got the most slack in the economy in 80 years, you've got a very hawkish fed, asset prices still very depressed, personal wealth devastated, 10% unemployment...and you're talking about wheelbarrows of cash just because the Fed has rates at zero?
Do you know how long Japan had rates at zero? More than 10 years! and what did their economy do? It deflated over that time.
If inflation is the base of your best argument for higher real estate prices, I'm interested in hearing your second best argument.
Posted by: joe_the_bummer at October 15, 2009 9:57 AM
The second best argument is that "they aren't making any more land". The third best argument is "real estate only goes up".
Posted by: dittoburg at October 15, 2009 10:00 AM
Exactly, ditto, and both true. :)
Posted by: daveinbedstuy at October 15, 2009 10:02 AM
ok, DIBS, I give up. I'm paying BHO to take ownership of my house.
(whatever happened to DOW8000 or DOW7500 or whatever his/her name was).
Posted by: Petebklyn at October 15, 2009 10:03 AM
Right, a real estate report produced by a broker in conjunction with an appraisal firm.
That said, the data actually does make some sense given the relative upbeat attitude in the 3Q comapred to 2Q and the super low interest rates available (I had a mortage guy quote me a conforming 30 yr fixed for 4.85% with 0.25 pts and a HELOC at prime with is currently sub 4%). In terms of NYC home prices, though, its really just a race against time - can the local economy recover before interest rates start to go up again, and can sellers continue to hold out. Still a risky proposition to buy right now if you only have 30% or less of a home value in your bank account.
Posted by: Brokedeveloper at October 15, 2009 10:05 AM
DOW8000 or whatever his name was, was 100% correct.
Anyway, can someone tell me what quarter was the peak for brooklyn? wondering how off we are from peak.
Posted by: Ringo at October 15, 2009 10:07 AM
ha ha ditto...
the irony is that we did make a lot more land, if square footage of condo space is considered land (and it should be, since running out of land is a supply argument). rezoning, new lux hi-rises. Look how much more land there is in north brooklyn!
Posted by: joe_the_bummer at October 15, 2009 10:10 AM
Sorry, listening to Jim Rogers is slightly worse than listening to Larry Kudlow. Both make Kramer look intelligent.
J-t-B's correct. Unemployment at 10%, business lending incredibly low and Rogers is screaming about inflation? A few good years as a Hedgie and a right wing political agenda does not an expert make. Read Fooled by Randomness. He's the poster child.
Posted by: Johnny at October 15, 2009 10:15 AM
3Q 2007 looks like the peak from my building's experience.
Posted by: BH76 at October 15, 2009 10:20 AM
Jim Rogers has a very large collection of erotica.
Posted by: daveinbedstuy at October 15, 2009 10:33 AM
low mortgage rates are no accident either. the fed is well aware that higher rates will stop the housing recovery in its tracks. they are targeting mortgage rates by actually buying mortgage securities in the open market. this lowers the interest rate add-on that mortgages get over the base rate. this will be relaxed as the private mortgage security markets recover, but what you can count on is that they target this rate, and it's below 5% for a reason. buying now to beat what you think is an imminent rate hike is not a good idea. if you want to bet on rates, do that with your broker -- don't do it by buying a depreciating asset with a low-rate loan.
Posted by: joe_the_bummer at October 15, 2009 10:33 AM
I know what the DOW went down to, he/she was optimistic. Just wondered where he/she went...or changed name to.
Or what prediction has now.
Posted by: Petebklyn at October 15, 2009 10:35 AM
sorry, Petebklyn. I misunderstood. Yeah, wish he'd come back. I'm thinking about trading up to a bigger place, it's a big jump in price -- need him to sign off.
Posted by: Ringo at October 15, 2009 11:03 AM
Rogers has been predicting an inflation crisis since I started watching CNBC in 1997. He might be slightly smarter than Kudlow but no less wrong. Read Krugman instead. He is NOT worried about inflation in a stag deflation environment.
Posted by: FatLenny at October 15, 2009 11:39 AM
I second that -- read as much Krugman as you can.
Posted by: joe_the_bummer at October 15, 2009 11:41 AM
Brownstones Half Off's Profile
Formerly DOW8000SP800 and 25 to 50 Percent Drop (Identity Crisis)
http://www.brownstoner.com/profile/Brownstones%20Half%20Off
Posted by: Bklnite at October 15, 2009 11:58 AM
is erotica off peaks or climbing to new highs?
Posted by: Petebklyn at October 15, 2009 12:05 PM
When you see the money supply being dramatically increased due to fiscal expansion then yes, you'd say that this could lead to inflation. However, this down turn has seen a significant widening on the supply side which would take years to correct. Just look at the unemployment numbers - we're at 10% now and much of europe is well in excess of that.(spain at a staggering 18% !) That said, inflation is not likely to be a big driver of house prices in the near term(no $10 bread either).
What we can say is that supply and demand will continue to be the dominant factors for house pricing and this report is one fact that suggests demand is increasing albeit marginally. Increased confidence and low mortgage rates are naturally positive in helping demand. The call is which direction are these going down the road. For my money it may be a stagnant market for a few years but long term investing in a tax efficient investment will typically beat other forms and hence prices will continue to tick up in the years to come.
Posted by: 10thStreetReno at October 15, 2009 1:04 PM
DOW8000SP800 was wrong, should have been DOW6600SP660 because that is how low we got to.
Jim "way wrong" rogers is a sack of shit; he was telling people not to sell oil last year when it got to $147.
Posted by: dandel at October 15, 2009 2:55 PM
Post Lehman DOW closed no lower than 7609, dandel @ 2:55. S&P no lower than 798. Intraday lows don't count. 5% and 0.2% errors, respectively, aint bad.
Did Jim Rogers get a lot more wrong than he got right? Why's he so rich?
I'm with him on one thing - GOLD 2,000 BABY!!! (and beyond but will crash again like 1980)
***Bill Thompson for Mayor***
Posted by: Brownstones Half Off at October 15, 2009 4:46 PM
Re Elliman Report:
This report will fool a lot of people. So will DIBS. The bottom will be way beyond New Years. Way beyond!
***Bill Thompson for Mayor***
Posted by: Brownstones Half Off at October 15, 2009 4:49 PM
like [in the year] 1980. Clarification on that was a must.
***Bill Thompson for Mayor***
Posted by: Brownstones Half Off at October 15, 2009 4:51 PM
Eh, prices are already climbing. But they may drop again for a brief period -- possibly because of more foreclosures, unemployment, or higher interest rates. After that, I think they will be flat for a few years.
This from someone who just bought, partly for the reason Joe decries above -- to avoid a higher interest rate.
Posted by: mopar at October 15, 2009 6:42 PM
Higher interest rates automatically depress prices, mopar. They should be a non-factor for buyers.
***Bill Thompson for Mayor***
Posted by: Brownstones Half Off at October 15, 2009 8:26 PM
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Le Barricou
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