Market
October 30, 2009
Report: Foreclosures Hurting Prices in Bed-Stuy
Small multi-family buildings in lower-income neighborhoods of Brooklyn have been particularly hard hit by the housing crisis, according to a new report from TerraCrg Commercial Realty Group. As reported in The Real Deal, 80 percent of foreclosure filings in Brooklyn over the past year were for mortgages under $1 million and 51 percent of non-residential mortgages were for three- to four-unit residential buildings; the article also notes that "the majority of the foreclosures took place in lower-priced neighborhoods like Bed-Stuy and East New York." The result? "A bevy of three- to four-unit residential buildings in Bedford-Stuyvesant can be had for under $300,000." No big surprises here, though the headline tries to put a positive spin on the news: "Discounted Brooklyn brownstones coming to market, but not in prime neighborhoods."
Discounted Brooklyn Brownstones Coming to Market [TRD]
October 28, 2009
NYT: Housing Not Out of the Woods Yet
"Plenty of pain yet to come," is how one economist summed it up in an article in the New York Times this morning about the country's housing market. The article's main point is that the improving data we've seen over the past three months may very well be a head-fake rather than the first leg of a recovery:
Artificially low interest rates and a government tax credit are luring buyers, but both those inducements are scheduled to end. Defaults and distress sales are rising in the middle and upper price ranges. And millions of people have lost so much equity that they are locked into their homes for years, a modern variation of the Victorian debtor’s prison that is freezing a large swath of the market.
Closer to home, the data from Case-Shiller show that New York City is still holding up relatively well, with prices down just 10 percent over the last year, as compared to 30 percent in Las Vegas and 15 percent in Seattle.
Fears of a New Chill in Home Sales [NY Times]
Graph from the New York Times
October 22, 2009
No Surprise: Building Falls Off in City
The number of housing units created in New York City this year is expected to drop more than 75 percent from 30,000 last year (and the prior four years) to just 6,300 this year, according to the New York Building Congress, though building spending across all sectors should decline by only 20 percent or so. “It’s a declining construction market,” the NYBC's president Richard T. Anderson told The Times, “but not as much as we anticipated.” The report also claims that the construction bear market has bottomed, but developers don't necessarily agree. “They’re way too exuberant,” the developer Douglas Durst said, adding that vacancy rates continue to fall and rents are still dropping. Meanwhile, DOB reported that 460 residential projects have been put on hold—and that third of them are in Brooklyn.
Sharp Drop in Building Residences in the City [NY Times]
Photo by hunter.gatherer
October 21, 2009
Housing Starts 'Sputter' in September
Here's a graph we plucked off the blog Seeking Alpha (which in turn got it from Calculated Risk) in the wake of yesterday's reporting of September housing start data. The numbers, which showed a small uptick from August and a large fall-off from a year ago, came in well below consensus expectations, causing the blog to comment that, "While there is ample evidence that the world economy is starting to pick up steam, one of the traditional engines for driving the U.S. economy out of recession is sputtering."
Rental Prices Continue to Fall in 3rd Quarter
Life's gotten a little easier for the renting crowd, according to a new report from Brownstone Homes (a firm we'll admit to never having heard of). In the third quarter, which is the period of biggest turnover, more than half of new leases in Brownstone Brooklyn were done at lower prices than the preceding period. In Brooklyn Heights and Park Slope, the reductions were as much as 15 percent. Not surprisingly, apartments are sitting on the market longer, resulting in a correspondingly higher overall vacancy rate. All fine and good, but we'd like to know something about the number of data points.
Brooklyn Rents Down, Apartment Vacancies Up [Brooklyn Eagle]
Leases Up, Rents Still Down in Brooklyn [Curbed]
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.
October 5, 2009
Optimism on State Street
New York Magazine has a feature in its real estate section this week called "Hey, This Might Work," in which the mag asks six optimistic developers for their strategies for coping in this market. One of the six properties featured: The planned six-townhouse development at 345 State Street. Says developer Hesky Brahimy, "We're not worried. It's six, not 600." As far as we're aware, no one's given him a deposit yet for any of the new homes, which are priced at over $3.5 million a pop.
Hey, This Might Work [New York Mag] GMAP
Six More New Brownstones for State Street? [Brownstoner]
October 2, 2009
TRD Takes Brooklyn's Pulse
While Elliman and Corcoran have just released their 3rd Quarter reports on Manhattan, the current issue of The Real Deal that just dropped has an exhaustive analysis of the Brooklyn real estate market—so exhaustive that it's hard to pick out just a few snippets here. Here's some top-level stuff:
Overall, the median closed sales price in Brooklyn has already fallen back to 2005 levels, dropping 19 percent over the past two years, according to StreetEasy. Rental listing prices dropped 12 percent over the past year, not including all of the concessions landlords are throwing in these days. Meanwhile, a city tally early last month found that Brooklyn had more stalled construction sites than any other borough with 214 -- a stunning 47 percent of all 448 projects citywide.
What else? Robert Knakal predicts prices have another 5 to 10 percent to fall, and another professional market watched looks on the bright side of things when he says, "it's not going to be the end of the world if these [new condo developments] start selling at discounts. It's going to provide much-needed affordable housing for the middle class, which doesn't really exist right now." In the neighborhood-by-neighborhood breakdowns, Williamsburg comes out looking in the worst shape in terms of distressed properties and supply glut. Still, even Park Slope has its share of bad news: The number of transactions there fell by almost half over the past year and listings prices are down 25 percent since 2007. Read on.
Toppling the King [The Real Deal]
September 28, 2009
The Darkness at Richard Meier's Brooklyn Tower
When Richard Meier, the architect famous for his glass and steel towers such as those on Perry Street in Greenwich Village, announced plans in 2005 for one of his signature buildings at Grand Army Plaza, the idea met with plenty of resistance from residents of Prospect Heights, Crown Heights, and Park Slope, as well as Brooklynites throughout the borough. Thus, some people might have read with relish the New York Times article profiling the building, now open ten months but on the market for much longer. Through interviews with neighbors and residents, the article leaves final judgment somewhat up to the reader: its vacancy rate proves the Richard Meier experiment in Brooklyn a failure, or a building planned in the boom years that is now struggling to fill spaces (the developers report sales of 50 percent of the units, while Streeteasy has recorded only 25), just like many other new developments, independent of architect or developer. Some residents of the sparsely occupied glass box expressed worry about the dropping values of their new purchases, while one retired couple showed more longevity of thought: "We’re living here for the rest of our lives. We know there are ups and downs in the market. It’s not a time to panic."
Glass Half Empty: Richard Meier's Brooklyn Tower [NY Times]
On Prospect Park: Is Anybody Home? [Brownstoner]
Photo via Curbed
Appraising the Appraisers
Appraisals, for all their importance in getting a mortgage and buying a home, seem to be rather nebulous. This past weekend, The New York Times ran an article pointing out several gray areas in the art of appraising. First of all, a change in the Home Valuation Code of Conduct that took effect back in May gave banks exclusive power over the appraisal process. The plus side, and intent of the change, is that brokers, builders, and buyers cannot influence the appraisal as much; the down side, according to some appraisers in New York, is that banks are using national appraisal firms that assign appraisers who charge lower fees—i.e., less experienced appraisers who are likely unfamiliar with the local market, something which is essential in New York City's market of microscopic subclimates. It is common, of course, in a down market for appraisals to come in low, but the combination of inexperienced appraisers and fewer data points due to lower volume might result in inaccurately low valuations. Buffalo News made a similar report about the appraisal industry upstate, and CNN Money reported that the housing industry met with New York Attorney General Andrew Cuomo last week to protest the current Code of Conduct, and the attorney general's office agreed to consider the matter further. The primary sources for these articles are brokers and local appraisers. We'd like to hear from other players in the game, as well. Any bankers, buyers, or national appraisers out there who want to throw their hat into the ring?
New York Appraisals Get Shortchanged [NY Times]
Tougher Appraisals Make Home Sales Harder [Buffalo News]
Housing Industry to Cuomo: Let's Work Together [CNN Money]
Photo by Richard Wanderman
September 8, 2009
Renters Become Their Own Landlords
The New York Times this weekend chronicled the housing woes of Mariah and Dominique Freda, two sisters who started out by playing the rental game in Park Slope. They were leasing a two-bedroom for $2,050, but the poor conditions and the inflexibility of the landlord motivated them to look into buying a place of their own. The buying game turned out to have obstacles of its own, but the sisters eventually settled on a 1,400-square-foot, two-bedroom, three-bathroom condo in Park Slope with a spiral staircase leading to a basement recreation room. The apartment had started out with a price tag of $639,000 but had recently been reduced to $599,000 and had a deal fall through; with some help from Dad, they were able to make an all-cash offer that beat out a higher, competing bid. The common charge and taxes were slightly less than $400 a month. "I didn’t realize how annoying a landlord is until I didn’t have one anymore," Dominique told the Times. From the article, it seems that the Freda sisters could not have purchased the condo without their father's assistance, who provided the up-front cash and is acting as the girls' mortgage lender—a luxury that not all renters have—but their story is also one of renters who persevere to take matters into their own hands.
Theirs to Fix and Fix Up [NY Times]
Photo by Angel Franco for The New York Times
August 12, 2009
DB: Half of Mortgages Will Be Underwater by 2010
The Business Insider had a scary post yesterday about a recent report from Deutsche Bank predicting that 25 million homeowners, more than half of those with mortgages, will have negative equity by next year. According to the Case-Shiller Index, average peak-to-trough decline nationally as of April 2009 was 33 percent, with New York only off 21 percent. Deutsche Bank thinks that national number is heading to 40 percent, with the Northeast making up for lost time; in addition, it's the blue-chip loans that will comprise much of the next wave of the negative equity plunge (only one in seven prime loans is currently underwater). And why's all this negative equity so bad? "Bottom line," writes Business Insider's Henry Blodgett, "More negative equity will lead to more foreclosures."
Half Of US Homeowners Will Be Underwater By 2011 [Business Insider]
August 6, 2009
An End to the Real Estate Recession in Brooklyn?
The Brooklyn Real Estate Roundtable, hosted by the Brooklyn Historical Society, met on Tuesday to discuss, among other things, whether the economy has finished receding, as some analysts conjecture. The Brooklyn Eagle reports that David Kramer, chair of the roundtable's steering committee, said: "Perhaps we are at the bottom [of the recession], and there’s a long journey ahead. But at least there’s a journey ahead.” Even if there is a light at the end of the tunnel, however, the real estate biz is still in the tunnel. Speaker Mark Caller of the GLC Group noted, for example, that despite relative success with nForth and professed optimism about an upcoming project at 163 Washington Avenue in Clinton Hill, developing in the city nowadays is a "nightmare." Of course, bad news for developers can be good news for buyers: the original plan at nForth included only hook-ups for washers, but in the current market, GLC also provided washers and dryers with every unit. This is good news, of course, only for buyers who can afford to purchase in today's economy.
Are We At The Bottom of the Recession? [Brooklyn Eagle]
July 29, 2009
Million Dollar Deals Dead in Red Hook
July 21, 2009
Jonathan Miller: No Market Bottom Yet
July 16, 2009
Elliman: Brooklyn Market Improved in 2nd Quarter But...
Sales volume in Brooklyn leapt 20.4 percent between the first quarter and second quarter of 2009 and the median price of co-ops and condos ticked up 2.9 percent, according to a report out this morning from Prudential Douglas Elliman. "It suggests there was pent-up demand from unusually low activity," said Jonathan Miller, CEO of real estate appraiser Miller Samuel, which compiled the report for Prudential Douglas Elliman. Before everyone breaks out the champagne and declares the real estate market in recovery, though, the report also notes that volume was off 29.7 percent versus a year earlier. Prices were also down dramatically from a year earlier; for example, the average price of a one- to three-family home in Brownstone Brooklyn fell 15.9 percent. "Unemployment is still rising, credit has not loosened and we still have a very weak economic environment," Miller said. Click on chart above for larger view.
Brooklyn Market Overview 2Q 2009 [Elliman]
Home sales in Brooklyn, Queens rise as prices tumble [NY Daily News]
Glimmer of Hope for Brooklyn Market [NY Post]
July 6, 2009
HMS: Prices Continue to Fall in Brooklyn
The appraisal firm HMS Associates came out with its second-quarter market report last week and, unsurprisingly, it showed that prices are down from both last quarter and the same period last year. The firm says the average price in Brooklyn in the second quarter of 2009 was $548,560, 18 percent less than $670,419 in the same period last year. The average price in the first quarter was $589,135. While there was an uptick in sales volume in the second quarter as compared to the first—545, an 8 percent increase—there were half as many sales as in Q2 2008, when 1,145 were recorded. Prices were down in almost every neighborhood tracked by the report. The biggest losers were Dumbo/Downtown Brooklyn/Boerum Hill, where prices fell 22 percent to $754,000, and Sheepshead Bay, where prices also fell 22 percent, to $263,200. Click through for the full press release.
Getting a Jump on the Q1 Post-Mortems [Brownstoner]
Photo by the stella
July 1, 2009
Case-Shiller: Beware the Head Fake
There was some reason to take comfort about yesterday's data from the Case-Shiller Index—the rate of price declines slowed for the third straight month nationally. But before you break out the champagne and check books, get a dose of what the Wall Street Journal had to say yesterday:
The bloodletting may not be over. Here’s why: If price declines accelerate for the mid-to-upper end of the housing market, then that could generate enough large declines in values—even among a small segment of the overall housing market—to push the index lower still.
Meanwhile, here in New York (where there's plenty of "mid-to-upper" properties) housing prices ticked down another 1.6 percent in April for a total of 21 percent off the June 2008 high, as the chart above shows.
June 26, 2009
Rising Inventory Bad News for Burg
With over 5,000 new apartments (condos and rentals) expected to hit the Williamsburg market this year and next (combined), it doesn't take an Economics PhD to predict what the impact on pricing is likely to be or what it could mean for the number of foreclosures in the area. There are over 1,800 new condos coming online this year and another 1,200 or so scheduled for 2010, according to The Real Deal. A bigger problem than pricing or over-supply, though, is lack of financing. Very few lenders (if any) are willing to finance condo purchases in buildings that don't already have the large majority of their units in contract. "The pace of activity [in Williamsburg] is well off from last year," said Miller Samuels' Jonathan Miller, "not because of lack of demand, but because buyers are having a very difficult time getting financing for projects that aren't 70 to 75 percent sold already." Unless that changes, developers have few options other than to go rental (which their financing partners don't always want to do) or lose their properties. In fact, banks have already begun foreclosure proceedings at the Factory Lofts at 66 North 1st Street, Warehouse 11 at 214 North 11th Street and the Metropolitan at 349 Metropolitan (above). "It used to be enjoyable, exciting to open a new building," said David Maundrell, president of Aptsandlofts.com, who provided the inventory predictions aboe. "Now it's nerve-wracking." Indeed.
More Foreclosures Likely as W'burg Inventory Grows [TRD]
June 23, 2009
Harvard's State of the Housing Market Report
"From their quarterly peaks during the housing boom to the last quarter of 2008, real home equity was down 41 percent, existing median home prices 27 percent (and at least 40 percent in 26 metropolitan areas), new home sales 70 percent, and existing home sales 33 percent. Homeowners also pulled back on home improvement projects, with spending off 13 percent in real terms in 2008 and even larger declines expected in 2009. The cutbacks in home building and remodeling shaved a full percentage point off economic growth in 2007 and nearly another point in 2008." — The State of the Nation's Housing via Matrix
June 18, 2009
Corco: Signed Contracts Up, Inventory Down
"Condominiums and cooperatives continue to experience increases in the number of signed contracts per month, due in large part to sellers adjusting their pricing downward. The typical seasonality in the marketplace is likely also to be a factor. The availably inventory appears to have peaked, and is slowly retreating. However, it will take several more months to confirm the trend, as it may be due to other factors." — Corcoran Manhattan Monthly Market Snapshot
Bank Predicts NYC Market to Fall Another 40 Percent
If a certain bank analyst is to be believed, New York real estate has a long way to go still before reaching bottom. A Time article earlier this week cites a Deutsche Bank report predicting that housing prices in the New York metropolitan area will fall 40 percent from their March levels. The major driver of the bank's estimate is an affordability index that shows New York is still relatively a very pricey place to shack up.
New York Home Prices Forecast to Drop 40% [Time]
Photo by tomodea
June 4, 2009
Developers, Banks Doing to Renegotiation Dance
If you've been wondering why many condo developments have been slow to make broad price cuts in the face of overwhelming evidence of a weakening market, this month's issue of The Real Deal has your answer for you: Banks. "What incredulous buyers often don't realize is that across-the-board price cuts have not been easy for most developers to make, because price reductions must be cleared with lenders," the article says. A few of the major development marketing groups like Corcoran and The Developers Group report that the debt holders are starting to play ball, but they are exacting tougher terms out of developers in return for lowering what's referred to as the "release price" for a new unit. Desperate at this point, developers are increasingly biting the bullet. "In September, [developers] weren't willing to see there was going to be this type of negotiation," said Jacqueline Urgo, president of the Marketing Directors. "They are much more open now." The article doesn't name any Brooklyn names but it's probably a good bet that developers of projects like One Brooklyn Bridge and Oro that were highlighted in another Real Deal article this month as only being about 1/5 sold have had some intimate conversations with their lenders in recent months.
May 18, 2009
Will Everyone Go Running Back to Manhattan?
Crain's recycles the question (asked by The Times a week earlier) that seems to be on everyone's mind these days: Do falling Manhattan rents spell the end of Brooklyn? We don't think so. Clearly some people who work in Midtown and were living in Brooklyn based on price alone ("If it's as expensive in Brooklyn as Manhattan, I'd rather just be in the real thing,” says one publicist) will return to Manhattan but, we'd bet, most of the creative professionals who've put down roots in the County of Kings are here to stay. Real housewife Alex McCord summed up how we—and, if this poll is to be believed, many others—feel when she told the paper, “Even if we had Warren Buffett money, we would never leave.”
Can Brooklyn Keep Its Mojo? [Crain's]
Brooklynites Jumping Ship to Manhattan? [Brownstoner]
Photo by cornell100
May 11, 2009
REBNY Panel Reality Check
Last Thursday night, the Real Estate Board of New York held a panel discussion about the impact that the bear market in real estate is having on the brokerage industry. Here are some choice quotes courtesy of The Real Deal.
"You can't get financing for anything that isn't 50 percent sold, and in some cases, 70 percent." — Hal Wilkie, Brown Harris Stevens
"Development is going to be very quiet if not non-existent for the next three years." — Diane Ramirez, Halstead
"[The current market] forces you to focus like a fat man who got a heart attack, then started to exercise." — Barak Dunayer, Barak Realty
"[Agents should] figure it out, because there's always opportunity." — Dottie Herman, Douglas Elliman
Corcoran chief Pam Liebman's comment from last week fits right in to this context: "A lot of brokers won't survive this."
Real Estate Firms and Brokers Need to Think Thin [TRD]
Latest Restaurant Additions
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Chickadee Chick
added November 6, 2009 12:00 PM in Park Slope -
Vutera
added November 5, 2009 12:00 PM in Williamsburg -
Park Cafe
added November 4, 2009 12:00 PM in Park Slope -
Bahia
added November 3, 2009 12:00 PM in Williamsburg -
Aqualis Grill
added November 2, 2009 12:00 PM in Fort Greene -
Wombat
added October 30, 2009 12:00 PM in Williamsburg -
Organic Heights
added October 29, 2009 12:00 PM in Park Slope -
Giardini Pizza
added October 28, 2009 12:00 PM in Carroll Gardens -
Rye
added October 27, 2009 12:00 PM in Williamsburg -
Bati
added October 26, 2009 12:00 PM in Fort Greene