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 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.