Has the Buyers' Market Come to Brooklyn? Duh.
HMS Associates released some dismal, but not surprising news yesterday: Average Brooklyn home prices dropped two percent to $695,285 in Q3 of 2008 (from $708,457 in 2007), as opposed to a three percent rise in the first quarter and an eight percent rise in the second; we had one percent more sales (from 988 to…
HMS Associates released some dismal, but not surprising news yesterday: Average Brooklyn home prices dropped two percent to $695,285 in Q3 of 2008 (from $708,457 in 2007), as opposed to a three percent rise in the first quarter and an eight percent rise in the second; we had one percent more sales (from 988 to 999). Now for more not-very-surprising neighborhood breakdowns: prices were up in Brooklyn Heights and Prospect Heights and down in Sheepshead Bay, Greenpoint and Park Slope (well, maybe that’s a wee bit surprising). The number of homes sold went up in Carroll Gardens, Williamsburg and Marine Park and went down in Greenpoint, Fort Greene, and Brooklyn Heights. Bed Stuy, East New York and Brownsville weren’t included; had they been, the average prices would surely have been much lower. Poor Bed-Stuy was recently named by CNN as having one of the highest foreclosure rates in the country. We know our readers are very skeptical of numbers, but the authors of the study say they translate to one thing: a buyers’ market. Agree?
Photo by bondidwhat.
Just about a year ago,
I set out on Brownstoner,
Seeking my fame and fortune,
Looking for a pot of gold.
Things got bad, and things got worse,
I guess you will know the tune.
Oh ! Lord, Stuck in Lodi again.
I’m losing it completely. Somebodty pass me my meds…
I not kidding.
The What
Someday this song is gonna end…
BTW – to illustrate my point about the psychology within pricing even better – go back only a few months because I vividly recall arguing with some genius here that was saying oil would never again fall below $100 a barrel, that this time “was different”…guess what – oil is NOW at $57 a barrel and the “analysts” are fighting on who can lower their price targets quicker.
Dow – you ignore the Florida RE boom of the late 70’s early 80’s.
wine lover – you ignore that the “demand” is based on perceptions – including perceptions of which way the housing market is going. i.e. people aint coming to buy if they think prices are falling.
Houses are not financial instruments, they have no inherent value besides the shelter they provide, they pay no dividend, and have no retained earnings. Once you get past a roof, running water, a kitchen and heat – the “value” of all the rest is purely what people value these extras (location, layout, finishes, etc…) at. Peoples desire (demand) is then mitigated by income and cost of capital.
In many places houses actually cost less than their replacement cost.
Ultimately wine lover the point is….”facts” play only a small roll in pricing.
One psychological “fact” that does play into all this however is that the psycology has historically worked the same in both directions – that is on the way up people convince themselves that “this time is different” and prices rise to unimaginable levels AND on the downside people convince themselves again that “this time is different” and prices fall to extremely low levels. And while both “levels” are correct for their time – so far (at least in the last 500yrs or so) this time is never that “different”, so the trick is to avoid being burned by the swings in mass psycology so you can have a nice place to live – which is the point after all.
Why are you posting here as ROTW and over in the Forum as What
Loser
“sebb vs what…
This is gonna be on fire.”
No way I messing with sebb. He’s on that extra strength stuff. The Reality Distortion Field that surround him is very strong!
“if the population continues to grow at the pace that the statisticians are expecting, we continue to see a high demand for property here.”
BBZZZZZ! Wrong. People are getting laid off in droves! Most of the newly transplanted Asshats are going back to flyover land. Maybe they can start doing something productive again like helping with the harvest.
“Guiliani cleaned it up and made it happen. Prices were way too low back then. NYC was a disaster and now its a world class city and that isn’t going to change.”
Check that Dave and sebb.
You have to be in complete denial now. The Mutant Asset Bubble is imploding right in front of you…
The What
Someday this war is gonna end…
Yeah Polemicist…”black swan” is the phrase du jour. Quite overused these days if you ask me. I guess you read the WSJ. If I hear that, “perfect storm” and “fat tail” anymore I’m going to barf.
Economics is very complex. Some (Soros) argue that we have lived through a long-standing mega-bubble in many asset classes. What is happening now, the unwinding of that bubble, is unprecedented. We can all argue til we’re blue in the face but no one knows the definitive answer. The only thing we all agree on is that prices WILL go down, even in prime areas. 50% does not seem out of the question, and 25% seems modest. But really, how far prices will decline, and for how long, is anyone’s guess. Barring some future catastrophe, I too think that, eventually, NYC prices will go back up, but there are so many other things that might change that too – alternative energy, for example and better public transport that will make suburban commutes more attractive. Anyway, there’s no question we’re heading for a prolonged buyers market where prices will drop a lot and for a while and we’ll just have to wait to see what else the future brings.
“NYC was a disaster and now its a world class city and that isn’t going to change.”
Never heard of a black swan, eh?
Bloomberg just cut 1,000 cops, by the way.
Freakonomics had something to do with the low prices in the 80s and early 90s and the subsequent rapid rise thereafter. Guiliani cleaned it up and made it happen. Prices were way too low back then. NYC was a disaster and now its a world class city and that isn’t going to change.