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…
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]
OK Dibs, but please just let me know, at what percentage decline do you throw in the bull towel? 20, 25, 30? Just name a figure, I’m curious?
Brooklynnative…I am a long term bull on Brooklyn real estate. I think we’ll see a correction of 20-25% from peak comps. That’s what I’ve said all along. I think that over the next 3-5 years, we will be back close to peak comps if not above. Unless you’re a flipper or a spec developer, the short term (1-3 years shouldn’t matter to you; unless you are a homeowner and can no longer make your mortgage payment. Brownstone Brooklyn was not a speculative market in that people were buying these as second and third homes. Yes, prices ran up but that is not the definition of speculative market.
As prices decline, more of you should become bulls. Otherwise, over the long term, you are just contrary indicators.
If you were to focus on the Brownstone market as opposed to the 1-3 Family, the data is slightly better. With the peak price psf for 1-3 family at “only” $295 psf it is not very representative of Brownstone Brooklyn. The Brownstone category psf is down 16% from a year ago…$488 to $408. Even in the ghetto of bed Stuy, things are selling for $270-300 psf NOW and so these categories, though helpful are not truly representative of what we all consider brownstone Brooklyn. The Brownstone category listed 43 sales down from 64 a year ago with the average sales price at $1.1 MM vs. $1.34 MM.
Uhmmmm – what are these people comparing? The busiest months of spring to the dead months of winter? These numbers are the same every year due to the very seasonal nature of the real estate business in NY. They should compare numbers year over year – sales volume is down 29.7% and prices are down 27% from year ago on per square foot basis (the only meaningful metrics). Unemployment will also continue to rise in NY in foreseeable future and top 10% very shortly.
Still very bearish on real estate in NY.
Southbrooklyn – very good questions, someone good at math could probably figure it out using the Case-Schiller index.
thanks brooklynnate — exactly what i was wondering
Historically, what shape does the graph of the bursting of a real estate bubble look like? I mean, what percent off peak were prices in 1990? And what percent in 1993? Wouldn’t this give you at least a rough prediction of what the curve should look like this time? On the way to what kind of bottom? Keeping in mind that the crash of 2008 and subsequent recession is already and will ikely be much worse than that of 1989-92.
DIBS – If prices peaked in 3Q08, or less than a year ago, 18% decline from the peak seem pretty bad to me. The market took five years to seven years to bottom after the market crash in 87 – a one day wonder. Remember folks that bottom was hit after a huge 1 day to 1 week event, and it was all up from there. It was also an event that has been largely attributed to computer trading programs – with automatic sell stop loss programs running wild. Now, we are undergoing one of the largest deleveraging cycles in history, a real economic catastrophe, we’ve lost Bear, Merrill and Lehman, and the financial industry job losses dwarve those of 87. If the market bottoms at 18%, yes it’s not bad at all. But at what level Dibs do you agree it’s bad – 20%, 25%, just give me a number where you throw in the bull towel.
okay folks, interesting analysis time.
The graph at the top of page 2 of the Elliman report shows the price/sq foot for Condos.
For the last year (but I suspect for much longer before that as well), new developments commanded a significant premium to re-sale. This makes perfect sense – (apart from antiques) you generally pay more for something new than something old and used.
However, in the last quarter, the price/sq foot was fractionally lower for new developments. This is perhaps an interesting indication of the relative desperation of the parties.
Unless you cannot make your payments, a non-developer owner can generally take a longer-term view than the developer (who will be incurring cost of holding capital while the condo remains unsold).
An alternative interpretation could be that new-developments with a low level of occupancy may not be able to secure mortgages, meaning that only cash buyers (which should ordinarily be the lowest bidders) are able to transact.
Thoughts?