Getting a Jump on the Q1 Post-Mortems
In a case of premature data ejaculation, appraisal firm HMS Associates has put out its first quarter numbers on the Brooklyn real estate market with the last two weeks of March still unreported. Nevertheless, the trends are obvious. Sales volume? Down. Average sales prices? Down too. For two years, sales volume has dropped, but prices…
In a case of premature data ejaculation, appraisal firm HMS Associates has put out its first quarter numbers on the Brooklyn real estate market with the last two weeks of March still unreported. Nevertheless, the trends are obvious. Sales volume? Down. Average sales prices? Down too. For two years, sales volume has dropped, but prices have not, said Sam Heskel, executive vice president of HMS. Now, as last, prices are falling into line with the reality of diminished sales volume. Volume between January 1 and March 15 of this year was off 35 percent from the first fourth quarter of last year; average sales prices around the borough fell 12 percent. Versus the first quarter of last year, volume was down 65 percent and prices were off 8 percent. But not all neighborhoods felt the pain equally; nor do their diverging performances conform to any kind of logic. According to HMS, prices were actually up in Greenpoint, Carroll Gardens, and Sunset Park while they dropped dramatically in Brooklyn Heights, Sheepshead Bay, and Fort Greene. Rather than showing much about any particular market, these results simply underscore the shortcomings of using average, rather than median, prices to get a snapshot of trends. In case you were worried they’d end on a negative note, Heskel comes through with a drum-beating quotation: If there is a silver lining at all, this is an excellent time to buy for those who are in a position to do so.
BROOKLYN HOME PRICES PROJECTED
TO DROP BY EIGHT PERCENT IN FIRST QUARTER OF 2009
Sales Volume Expected to Plummet 65%
from First Quarter 2008, according to HMS Associates Report
New York, March 30, 2009….Brooklyn home sales are on track to continue their downward spiral in the first quarter of 2009, according to the latest report prepared by real estate appraisal firm HMS Associates.
HMS studied 15 neighborhoods between January 1, 2009 and March 15, 2009. The firm found that the average home price fell by eight percent from $641,464 in the first quarter of 2008 to $589,135 in the period between January 1, 2009 and March 15, 2009. The total number of sales dropped 65% from 1004 in the first quarter of 2008 to 347 between January 1, 2009 and March 15, 2009.
These are not full quarter numbers, cautioned Sam Heskel, executive vice president of HMS. There is a percentage of sales out there that must still be recorded. However we suspect that the trend will not change much over the remaining two weeks.
On a consecutive quarter basis, the average home price dropped 12% and sales volume fell 34.7% between the fourth quarter of 2008 and the period between January 1, 2009 and March 15, 2009, HMS said.
For two years, sales volume has dropped, but prices have not, said Heskel. Now, as last, prices are falling into line with the reality of diminished sales volume.
The average home price figures come from HMS’s comprehensive quarterly study of 15 representative neighborhoods in Brooklyn and include one-, two-, three-, and four-family homes, condos, and co-ops. The report includes neighborhoods that show both price increases and decreases and are deemed together a fair reflection of what is happening in Brooklyn as a whole, according to Heskel.
While the average price borough wide dropped eight percent so far this year, there were significant variations in different neighborhoods. Prices rose by double digits in Greenpoint, Carroll Gardens, and Sunset Park but fell by steep margins 24 to 38 percent — in Brooklyn Heights, Sheepshead Bay, and Fort Greene. The number of homes sold fell in all 15 neighborhoods, with the biggest drops in Williamsburg, Carroll Gardens, Boerum Hill/Cobble Hill, Clinton Hill, Fort Greene, and Bay Ridge.
Because the volume of sales has dropped off so greatly it is difficult in some neighborhoods to get an accurate assessment of what is going on in the quarter, Heskel said. In some instances you have a huge price increase, but based on only one or two sales, so the increase is skewed. It’s more useful to look at broader trends, which show price gradually declining along with the slowdown in sales volume.
The picture was much bleaker in some neighborhoods not included in the study, such as Bedford-Stuyvesant, East New York, Bushwick, and Brownsville. Foreclosures were still a problem in the four neighborhoods of 58 Brooklyn foreclosures listed in the first quarter by PropertyShark, 30 were in these four areas. Heskel also noted that the level of foreclosures works out to one foreclosure for every six homes sold in Brooklyn.
Here again, says Heskel, the trend that has been developing is still in play. The Brooklyn neighborhoods that are least able to weather an economic downturn are getting hit hardest.
If there is a silver lining at all, this is an excellent time to buy for those who are in a position to do so, said Heskel. We are seeing more people taking advantage of these historical low rates and prices throughout the metropolitan area.
About HMS Associates
HMS Associates is a full-service Brooklyn-based residential and commercial appraisal firm. Founded by Sam Heskel in 1998, the firm serves all of New York City
and its surrounding areas. Heskel, an associate member of The Appraisal Institute, is state certified in New York and New Jersey and is a member of The National Association of REALTORS®.
The firm is FHA-approved, and Heskel is a member of Multiple Listing Services for Brooklyn and Long Island (includes Queens), Putnam and Westchester counties, and the Greater Hudson Valley.
yeah, it’s a really decent location and the coop appears to be stable and have good finances. I wouldn’t pay their asking price, but I would pay, say, $950k. I haven’t made an offer because I expect someone else will pay more and I don’t want to go through the hassle. I say $950k because that is my best guess as to where this unit would trade a year or two from now. In the meantime someone else will be willing to step up and catch the falling knife. Thus I wait.
Sweet looking pad on 8th Ave, lechacal. The square footage on the Ansonia unit seems to have the usual Corcoran inflation applied.
I really like the second place you linked, Lechacal.
Reasonable maintenance too for that large a space.
So I just think you’re being a tad overly optimistic.
Just because prices have dropped precipitously in Bushwick and Brownsville already, does not mean that the more “prime” areas aren’t going to see these same significant drops in the coming months.
There still isn’t really all that much good news out there to base a recovery on.
I guess I don’t see how you can say that prices will “probably stay flat for a while” and “true economic collapse and inflation could be looming around the corner” in the same paragraph.
I hope the former is true also, but I see absolutely no signs that Brooklyn home prices are going to “stay flat for a while.” Perhaps after they take a 30% hit, yes. But now…no way.
I have to admit I’ve never understood the appeal of the Ansonia, but maybe it’s all about the community. There something very industrial about the place (particularly the ground floor units with the steel grating on the windows). I looked at a 3 br in the Ansonia recently and thought the asking price was a double serving of wishful thinking. Here is the link: http://corcoran.com/property/listing.aspx?Region=NYC&ListingID=1487709 If someone else is willing to pay anything near this asking price…well, more power to them and I’m happy to be wrong on this.
I also recently looked at this unit, which is actually quite nice and I think will sell for a good price: http://corcoran.com/property/listing.aspx?Region=NYC&ListingID=1516732 This is the kind of place that I would very seriously consider if I didn’t see continued risk of broad price declines.
This happened also in the Great Depression. Shock in 1929, things got better, shock again in I forget 1933 or so, then things got better, shock again….etc. Until WWII.
OK let me put it another way.
I would not be surprised if prices stop falling sometime around Q1 2010.
I would also not be surprised if the US defaults at the same time and throws everything into total chaos and disaster for the next decade.
Stay tuned.
Flat screen TVs need to be free.
11217, I read that. So?
Lechacal,
The way I see it, things have gone back to a more “normal” market. Some properties sit, some still sell in 2 weeks. It’s gone back to the principles of location, location, location and then finding that special property that stands out from the rest.
Just an aside though…I’ve seen a couple Ansonia apartments sell lately (on Streeteasy) for very large prices. Don’t underestimate that place. It’s a bit of a community within a community, and the units there usually sell to a friend of a friend of someone who already lives there. The Ansonia is a pretty hot ticket for small families, even though it doesn’t sound like you love them.