March 28, 2008

Mega-Projects Dropping Like Flies

This morning Clyde Haberman has an op-ed summing up how a lot of New Yorkers feel right now about the city's grand development plans: Most believe they're not gonna happen anytime soon. For Brooklyn, the big maybe-never is Atlantic Yards, but there's been a pileup in the past couple of weeks of other fading prospects: the MTA's promise to extend service is on hold; Moynihan Station is looking to be a bust; and no one knows whether the long-planned Javits expansion will occur. But it's not like New York hasn't faced shattered visions before, and often for the better. Haberman quotes CUNY poli-sci professor John H. Mollenkopf as saying huge projects frequently go through several design phases over many years, and so, "'New York will come back, and we will get another crack at all these things.'" On a related score, Metro's Amy Zimmer reports on how there are worries that a stalled AY means empty space at the site will be used as parking lots for years to come. Councilmember Letitia James says parking lots are "a revenue generator and right now [land is] sitting fallow,” arguing that Forest City Ratner should not allow the property, which is now attracting the homeless and illegal dumping, to be used in such a fashion.
As Builders’ Grand Visions Dissolve, So Does Our Faith [NY Times]
Visions of Parking Lots at Stalled Atlantic Yards Site [Metro]
Photo of demolished building in AY footprint by threecee.

Park Slope: The Canary in the Coalmine

When we talk about the Brooklyn neighborhoods that are likely to fair best in the market downturn, blue chips like Brooklyn Heights and Park Slope are typically mentioned. But a New York Magazine article yesterday suggests that it's all relative. While Park Slope may be holding up better than, say, Bedford Stuyvesant, it's evidently doing a whole lot worse than Tribeca, which is the article cites as the richest neighborhood in the city. As the chart, at right, shows (with data provided by Streeteasy), one-bedrooms are up 23% over the past year in Tribeca while they're down 2% in the Slope; three-bedrooms are up 26% in Tribeca and down 14% in Park Slope. Does this suggest a relative weakening for Brooklyn as a whole versus Manhattan going forward?
Where Boom Meets Bust? [New York Magazine]

March 26, 2008

Market Update: Bad News For Subprime-Stunned Nabes

A Crain's article features some pretty grim sales data from Brooklyn-based appraisal firm HMS Associates. It goes a little something like this: Bed-Stuy, East New York, Brownsville and Ocean Hill are looking kinda screwed right about now. Sales volume in the four neighborhoods, which were hit hard by subprime lending, is down 64 percent over the past six months, and prices are nudging down. “Financing is simply not available,” says HMS Executive VP Sam Heskel. “Sales are down all over, but in subprime neighborhoods, you see it more.”
Brooklyn Starts to Feel the Real Estate Pinch [Crain's]
Photo by Reid Harris Cooper.

March 17, 2008

Overpricing Not Working in Carroll Gardens

"What the heck is going on in Carroll Gardens?" we asked back in January. Our question was prompted by a rash of ridiculously priced townhouses in the area. Well, since then, three out of the four houses we looked at that day woke up to reality and one is still clinging to its delusions of grandeur. 329 President has since been reduced by $605,000 and 78 3rd Place by $795,000; 44 1st Place, the nicest and biggest of the batch, appears to be off the market.
What the Heck Is Going On in CG? [Brownstoner] GMAP
HOTD: 40 2nd Place [Brownstoner]
HOTD: 78 3rd Place [Brownstoner]
HOTD: 44 1st Place [Brownstoner]

March 10, 2008

The Waiting Game

The days of racing with the clock are over in NYC's residential market (no duh), and the Times' real estate cover story this week examines what the dynamics of a less frenzied market look like. While prices haven't dropped much, buyers and sellers are taking their time nowadays, and a lot of people are considering how much rehab their properties need, or undertaking lengthy/expensive fix-ups, before listing them. Case in point:

Carolyn Walkin and her husband, Jim, wanted to move to the Long Island suburbs to find better schools for their daughters, Ava, 4, and Veronica, 2. But they were so worried about a potential recession that they did extensive research to ensure they could sell their three-family brownstone on Henry Street in Cobble Hill, Brooklyn, for the price they wanted. Ms. Walkin spent about five months and had conversations with at least seven brokers before choosing Terry Naini of Prudential Douglas Elliman. Before that, she had also researched auction houses and considered selling the brownstone without a broker. Even though they finished an extensive renovation two years ago, they added details like art on the walls to attract sellers. Within one hour of their first open house, they received an offer for their asking price of $2.5 million. But Ms. Walkin didn’t relax until the paperwork was signed.

Not a bad outcome, but perhaps indicative of the high anxiety in the air these days.
Responding to a Less Heated Market [NY Times]
Photo by TrespassersWill.

March 3, 2008

Herd About the Housing Bubble?

Yesterday econ/real estate guru Robert Schiller penned an article for the Times examining why Greenspan, market experts and individual investors didn't see warning signs of the disastrous housing bubble:

The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks. Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble.

Schiller concludes that the lack of foresight about the bubble has to do with "herd behavior" and "information cascade," whereby rational investors' individual decisions add up based on incomplete info. The phenomenon helps explain why an entire nation would be under the thrall of the notion that housing=a great investment. A cascade is possible when a whole country buys into the same belief despite individual analysis that refutes prevailing wisdom. The result? Rising prices and a big bad bubble. So what's next? "It is now possible that a downward cascade will develop — in which rational individuals become excessively pessimistic as they see others bidding down home prices to abnormally low levels," writes Schiller.
How a Bubble Stayed Under the Radar [NY Times]
Collage by Amy Jaz.