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.
Yes, some special properties in the slope are definitely still selling for very high prices. A nice limestone on a park block isn’t going to take the same hit as a coop on a non-park block or a unit in the Ansonia condos.
From what I can tell, Park Slope prices are at around 2005/06 levels. There are special properties that are selling (I’ve even seen a couple on Streeteasy going for above ask) but PS prices have definitely eased significantly.
You need to read this if you think we’re close to the bottom:
Mopar, I don’t understand how you can say in one breath that we are near the bottom, and then in the next say that America is bankrupt. Do you not see how the two might be correlated? We are indeed living in dramatic times…most of which has been spun out from the housing market, which according to most show no signs of a bottom.
http://www.nytimes.com/2009/04/01/business/economy/01econ.html?hp
I couldn’t put a figure on it. All I can say is I feel pretty certain prices are down from 2007. I would guess that a place I would have had to spend $1.2 million for in 2007 I could get for maybe $1 million. Median price data for closed sales would be a better guide, but that of course is a lagging indicator (it reflects trasnsactions that went into contract months ago rather than what you could go into contract for today).
“Maybe the looting in the streets The What desires.”
Mopar I very upset that you did not include me with the looters! Free Flat Screens!
“Check out the excellent — and really scary — article in The Atlantic by a former exec at the IMF about how our country is just like a corrupt banana republic and in just as much trouble.”
I read that article a could of days ago and that’s why everything is Jacked Up! The Plutocracy (Big Boys) has Hijacked the financial system and until you get rid of the Criminal Class everything is going to be bad.
Mopar I crown thee; Mopar the Savior! Now ride down Asshat Hill naked on a horse!
The What (Whips out his camera)
Someday this war is gonna end..
Cool, Lechecal. The report didn’t include Park Slope prices, right? Any idea how much they are decreasing by?
Note the report said prices increased by double digits in some neighborhoods, decreased in others, overall down 8 percent. I thought that was interesting. In fact, it’s what I’ve been noticing all along.
Brooklyn — and NYC — is a big, heterogeneous place.
“Prices typically drop until buy-and-hold rental investors see screaming buys, so dramatic that they are willing to take the risk of still more price drops.”
This is happening right now in those aforementioned foreclosure areas. You can buy a two-family in the $300s — rents exceed costs — and they are going fast.
mopar: Prices in Park Slope are decreasing.
hey finance guy — agree with everything. care to put a number on it? I think peak to trough 50% (I’ve supported it before on one of these threads), and I think it’s a up to 10 years before a turnaround. any finance guy on TV always has to throw out a number….