Market

The Times sat down with Dottie Herman, CEO of Prudential Douglas Elliman, to get her thoughts on the real estate market in New York. A few highlights: Elliman (which is getting a new website that will include listings from other brokers) has done three times as much business in 2010 than in 2009; she thinks we’re in a “price-sensitive market”; finished apartments are selling much better than ones that need work; and we’re not necessarily in a sellers’ market yet but “people feel we’ve hit bottom.” Oh, and on the Brooklyn front, Elliman just opened a new office in Williamsburg.
The 30-Minute Interview:Dorothy Herman [NY Times]

Corcoran released its 2nd Quarter Market Report for Brooklyn this morning and the results are more or less in line with Elliman’s findings from yesterday. Here’s the summary excerpt:

Compared to a year ago, price metrics remained relatively stable. During Second Quarter 2010, the median price of a Brooklyn apartment sale was $459,000 and an average $591 per square foot. In the resale market, median price increased 5% while average price per square foot remained relatively level with Second Quarter 2009. New development sales represented 48% of apartment sales this quarter, compared to 37% a year ago. Despite regaining market-share, median price declined 7% while average price per square foot held steady at $602. Single-family townhouses were strong this quarter; median price increased 18% from a year ago. In the multi-family townhouse market, however, median price decreased 6%.

That single-family number is pretty interesting. Plus, if you look at the resale market numbers, everything looks pretty darn rosy: Median prices rose 5% versus Q1 a year ago and 8% versus the first quarter of this year. Another interesting thing we noticed: In what Corcoran calls Zone 2, which includes everything from Dumbo down to Red Hook, condo prices were way up and co-op prices were way down. Anything else jump out at you?

Douglas Elliman released its 2nd Quarter market report for Brooklyn this morning and the results are, well, mixed. (The Wall Street Journal’s take on them is quite rosy though.) All the big numbers—like average and median sales prices and number of transactions—were up compared to a year earlier but did not compare so favorably against the first quarter of this year. From the summary sent out via email:
-Median sales price increased 5% to $463,000 from $441,090 in the prior year quarter but slipped 0.6% from $466,000 in the prior quarter.
-Average sales price increased 10.1% to $545,110 from $495,120 in the prior year quarter and increased 2.5% from $532,061 in the prior quarter.
-Number of sales increased 16.2% to 1,660 from 1,428 sales in the prior year quarter but fell 10.8% from 1,861 units in prior quarter.

About what you would have expected?

“A record drop in pending home sales and a slowdown in the construction market contributed to a sluggish outlook for the economy Thursday, highlighting the significance of government stimulus measures and job growth.” Read more on The New York Times…

Just-released March data from Case-Shiller shows New York City housing prices continuing to fall both on a monthly and yearly basis. New York was down 0.7 percent versus February and 2.4 percent versus March 2009 while some of the cities to be hit hardest early on, like San Diego and San Francisco, continued to experience strong recoveries. Price improvement in the housing market is clearly slowing and there is a very, very real risk that over the next few months, the year-over-year change in prices turn negative, Dan Greenhaus of Miller Tabak & Co. told The Wall Street Journal. That is not to say housing drags us down into a full-on double dip recession, something we’ve never believed, but its tough for us to envision a scenario in which housing prices decline and sentiment and perhaps consumption does not follow suit. The official press release is here.

We’re a day late and a dollar short on this one but…the Case-Shiller numbers for February were released yesterday and, while the 20-city index was up 0.6 percent versus a year ago, prices fell from January in 19 out of 20 cities. New York, which ticked down 0.4 percent in the month hit its lowest point in this cycle. These data point to a risk that home prices could decline further before experiencing any sustained gains, said David Blitzer, chairman of the Index Committee at S&P.

Corcoran just released its First Quarter Report for this year and the news is good: Median apartment prices were up nine percent over both the first and fourth quarters of last year. The resale market was quite strong, up 17 percent over a year ago, while prices at new developments fell off 11 percent over the same time period. (Average price per square foot at new developments fell from $712 in the first quarter of 2009 to $611 in the first quarter of 2010.) The townhouse data was a little wacky: Single-family prices were down more than 30 percent between Q4 and Q1 while two-, three- and four-families were up by almost the same amount. (Data sample issue perhaps?) Another bullish measure: The number of million-dollar sales in Brooklyn rose over 2009 levels.

Unlike the commercial numbers we saw yesterday, the residential real estate market in Brooklyn perked up in the first quarter of 2010, according to a report released today by Miller Samuel for Douglas Elliman. “The modest decline of inventory and a return to a higher level of sales activity helped stabilize prices across most markets,” said the report. “These trends combined with the sharp decline in days on market and listing discount suggests that the consumer is bypassing properties that are not priced close to market levels. The median and average sales prices across all property types ticked up 4.2% and 7.5% from the fourth quarter, but both were down slightly from the first quarter of 2009. The number of sales increased year-over-year from 1,186 to 1,861 and the days on market decreased from 142 to 114. House sales in Brownstone Brooklyn saw the most price improvement, with the median sales price rising 15% from $1,087,500 to $1,250,000. Bring it!

Brooklyn had the weakest commercial real estate market last quarter, with a meager 107 properties changing hands, down 24.6 percent from the first quarter of 2009; likewise, the dollar volume was down from $209 million to $162 million over the same period. (By comparison, in the first quarter of 2006 sales volume was $1.1 billion.) One more positive sign was a rise in price per square foot from $160 to $180.
Brooklyn Property Report Q1 2010 – PDF [Massey Knakal]

Americans have assumed the roller coaster goes one way, legendary bond manager Bill Gross told The Times this weekend. It’s been a great thrill as rates descended, but now we face an extended climb. While rising interest rates will reverberate throughout the economy, they are likely to have a particularly noticeable impact on the housing market. With rates on 30-year fixed mortgages currently in the mid-5-percent range, every percentage point rise can increase the cost of carrying a home by 19 percent, according to a Columbia prof. Whether there ends up being a proportionate decline in home values remains to be seen, but it’ll certainly add another headwind for the housing market just as some regions have started to see some stabilizing. The only good news for those with existing fixed-rate mortgages is that, to the extent that higher rates correlate with a rise in inflation, real interest rates on your mortgage could fall.
Consumers Face the End of an Era of Cheap Credit [NY Times]
Graphic from The New York Times

The program that saw the Federal Reserve pump more than a trillion dollars into the purchase of mortgage-backed securities came to an end yesterday. The Fed’s purchases helped drive rates on 30-year mortgages down from over 6 percent when the program started in early 2009 to under five percent last month. Susan M. Wachter, professor of real estate and finance at the Wharton School of the University of Pennsylvania, called the program the single most important move to stabilize the economy and to prevent a debacle.” The big question now is, Where do rates go from here?
Fed Ends Its Purchasing of Mortgage Securities [NY Times]

The seven million households that are behind on their mortgage payments aren’t the only ones who will be thrown a life vest under a new federal program announced Friday. The $50 billion program would also attempt to stabilize the housing market by creating incentives for lenders to reduce the principal on mortgages that are now worth less than the homes they are secured by. The number of homeowners now estimate to be “underwater” is 11 million, though not everyone would be eligible for the principal reduction: To qualify, you must owe more than 115 percent of the value of your home and be spending more than 31 percent of your monthly income on your mortgage. The feds also plan to offer $1,500 in relocation assistance to homeowners who sell their homes rather than letting them go into foreclosure.
A Bold U.S. Plan to Help Struggling Homeowners [NY Times]
Photo by hoff_john

The Furman Center at NYU has just given birth to another one of its detailed studies about New York City, and it’s got lots of info in it about how the Borough of Brooklyn fared during the last decade. More specifically, the report looks at population and housing data between 2000 and 2008. During that period, unemployment decreased from 10.7 percent to 7.2 percent. There was a decline in the poverty rate and a rise in median household income over the same period. “Housing sale prices peaked later in Brooklyn than in three of the other boroughs, but by 2009, price declines from their peak were comparable to the City as a whole,” says the report. “Home purchase and refinance mortgage borrowing rates decreased from 2007 to 2008. Foreclosure filings have increased dramatically since 2007, with nearly 7,000 notices of foreclosure filed in 2009.” As for demographics, Brooklyn continues to have the largest black population of any borough, with 33 percent of residents identifying as black, but Brooklyn was also one of only two boroughs to experience a rise in white population since 2000.
Brooklyn Market Report 2000-2008 [Furman Center]
Dissecting the Real Estate Boom [Curbed]

The Bloomberg administration has presided over 100 rezonings, a massive effort at rethinking and re-engineering the city’s social and economic landscape. A new study by the Furman Center at NYU takes a look at the 76 rezonings that took place between 2003 and 2007 and tries to get a handle on the current and long-term impact. Bloomberg rezoning strategy as overseen by Amanda Burden at the Department of City Planning sought to balance the preservation of existing low-density neighborhoods with the expansion of building rights along major avenues, on the waterfront and near transportation centers. Overall, of the 188,000 lots that were affected, the NYU study estimates, 23 percent were downzoned, 14 percent were upzoned, and the balance, over 60%, were subject to a contextual rezoning. How’s it all playing out? While we find that on paper, the upzonings have added more capacity than the downzonings have taken away, we also find reason to doubt that all of this new capacity will be built out for residential use, and it remains unclear whether we are on track for creating enough new residential capacity to accommodate the one million new New Yorkers that are expected to live in the City by 2030, said Professor Vicki Been, the lead author of the study. More specifically, the report finds that 80,000 new units of housing have been created, in broad strokes enough to house about 200,000 people. According to The Times, the city claims that it’s not relying only on rezoning to achieve its housing creation goals. Still, other critics argue that the numerous downzonings were a strike against diversity and mobility: “Whether intentional or through a lack of sensitivity to the concept of equitable development, downzoning in predominantly higher-income and white communities leads to restricted housing options for people of color and low- and moderate-income residents, said Ronald Shiffman, a former planning commissioner.
Despite Much Rezoning, Scant Change in Residential Capacity [NY Times]