Buyers Cooling to Brooklyn
The Brooklyn condo market is not longer hot, hot, hot, reports the NY Observer, but just kinda luke warm. Condo sales dropped 11.3% percent in the second quarter, from 778 to 690. “Although prices continued to rise, the average condo sales price increased by only 4.9 percent from the quarter before—$573,060 to $601,280—compared to 8.6…
The Brooklyn condo market is not longer hot, hot, hot, reports the NY Observer, but just kinda luke warm. Condo sales dropped 11.3% percent in the second quarter, from 778 to 690. “Although prices continued to rise, the average condo sales price increased by only 4.9 percent from the quarter before—$573,060 to $601,280—compared to 8.6 percent from the same quarter last year,” they write. So, what’s that mean for you? Fingers crossed, the Wall Street meltdown will result in a buyers’ market, or at least in developers trying very, very hard to please potential customers. As our own Mr. B says in the piece, “Anything that can make a project stand out right now, whether it’s the design or the finishes, that’s more important in a tough market. Some projects seem to still do well, including the Edge and One Brooklyn Bridge Park. As one broker notes, We have seen a slowdown but we haven’t seen it stop.
Hurricane Wall Street Hits the Boroughs [NY Observer]
Williamsburg Bridge, Williamsburg Savings Bank. Photo by Vidiot.
so again as i see your source , your telling me 42 percent signed an option arm. but a rise of 63 % of 804 makes the payment approx 1500 dollars an interest rate of 6 percent. did a person who took a 1 percent teaser rate expect one percent forever?? i doubt most of these house will foreclose(unless flipping) given that i would think most buyers would understand they would reset within a year and know their future payment.
dave in bedstuy, i dont know where you get your numbers from but they make zero sense.
for a 250000 dollar mortgage to have a 804 payment it needs a mortgage with an interest rate 1%. how many people have these ??
for the same mortgage to go to $2027 it would have to adjust to over 9%. anyone who took a teaser rate mortgage at 1% that adjusts to 9% is an idiot who deserves to lose their home.
how man people in brooklyn do you think actually have this type of mortgage. this scenario is hyperbole at its best.
sam – I think you got it backwards – we are experiencing massive de-leveraging, and are facing a tremendous recession if not depression – the issue is DE-flation, not inflation.
You are correct Sam. Warren Buffet was on Charlie Rose last night, and he said exactly that…inflation will be a problem in the coming years because of this crisis.
He also said that while the immediate prospects are bad (he said the economy could turn in as early as 6 months and as late as possibly 2-5 years) but that his overall prospects for the country were great. He said think about the last 100 years…2 world wars, the Great Depression, 9/11, and the country has moved leaped and bounds in that time despite those obstacles.
Really interesting to hear his take on all of this.
We have been looking on and off for the last year in Brooklyn (Prospect Heights / Crown Heights / Lefferts). There are a bunch of new smaller condo projects that I have visited, and they always seem empty. I walk by every few weeks to check things out, and there is no activity, just a quiet building, with empty units. I’m usually the only person at Open Houses. The developers always have banners saying “50% sold!” but I just can’t believe that’s the case. Can they misrepresent that? Anyway, maybe prices will come down a bit. I’d be happy to put a dent in the supply of condos… at a very very reduced price of course.
I have an ARM and it was adjusted down to 6%, which is the lowest it can go. Interest rates are pretty low now. that’s not the problem.
Inflation is going to be the problem. Perhaps in the next couple of years two million dollars for a house will seem like a bargain.
I just cant believe that thes condos will condtinue to do so well. There are just too many of them and they’re in shitty neighborhoods…I just dont understand why someone in this market would drop 600,000 on a condo in Bushwick thats a ten minute walk to the subway. I dont care how nice the bathroom fixtures are, its idiotic to me.
From today’s Gartman letter…
Fitch tells us that 42% of all adjustable-rate mortgages
sold in ’06 were option ARMS… twice the rate of the year
previous. Further, Fitch estimates that on the order of
$100 billion of option ARMS will be reset over the next
two years. Further, and most ominous of all, monthly
payments for those homeowners will increase by a
stunning average of 63%! In other words, someone
holding an option ARM on a $250,000 mortgage could
see his/her monthly payment on that mortgage leap
skyward from $804 to $2,027.
Have any stats been done as to how many condo projects are in the works and how many units are coming into the market?
A realtor colleague ( someone I only 1/2 trust ) that 500-1 thousand condos are sitting in Brooklyn unsold and 2-3 thousand are coming into the market in the next 2 years. Unless he was including Atlantic Yards, I find these figures highly questionable.
Will there be that much inventory glut?