BROOKLYN, NY–(Marketwire - January 6, 2010) - The year 2009 saw average Brooklyn home prices decline 9% as sales volume dropped by 26% with some positive gains in the third quarter, according to Brooklyn-based real estate appraisal firm HMS Associates. “Although we’ve experienced a slight increase in both average sales prices and overall volume in the third quarter of 2009 the numbers have reversed direction in the fourth quarter,” said Sam Heskel, founder and executive vice president of HMS Associates. “It may have been prematurely optimistic to think that the market is recovering.”

Coinciding with this fourth quarter decline was the jump in unemployment to 10.2% in October, the highest since early 1983. Experts had not anticipated the rate to climb this high before 2010. Chief Economist at Moody’s Economy.com, Mark Zandi, and Chief U.S. Economist at MFR Inc., Joshua Shapiro, now predict the rate to reach 11% later this year, a figure not seen since WWII. Unemployment is a major contributing factor in the housing market. If people are out of work they can’t afford to buy homes, qualify for financing or keep the homes that they do have, thus increasing the number of foreclosures and distressed sales. What we are seeing is no longer just a subprime mortgage crisis. Unemployment is affecting people from all neighborhoods; buyers who had good jobs with good credit are now defaulting on their mortgages as well. Thus if unemployment keeps rising, we cannot expect the real estate market to fully recover.

For the fourth quarter, the number of Brooklyn properties sold fell 20% to 824 properties, down from 1,035 in the fourth quarter of 2008, according to the HMS study. Likewise, in the fourth quarter the average Brooklyn home price was down 10% to $589,000 from the average price of $654,000 in the fourth quarter of 2008.

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 10% from the fourth quarter 2008 to the fourth quarter of 2009, neighborhood by neighborhood sale prices varied. They were up in Marine Park, Downtown Brooklyn/Boerum Hill, Greenpoint and Williamsburg, Heskel said. The number of homes sold fell in 12 of the 15 neighborhoods, with the biggest drops in Carroll Gardens, Downtown Brooklyn/Boerum Hill, Park Slope, and Greenpoint. Sales volume increased in Fort Greene, Bay Ridge and Clinton Hill. The increases in these three neighborhoods were due to the sharp rise in coop activity. Although overall sales volume declined by 20%, coop sales increased 9% from 256 sales in Q4 08 to 280 sales in Q4 09.

Volume has declined by nearly 26%, year over year. Condominium sales in particular were down a whopping 43% from 1,925 sales in 2008 to 1,088 in 2009. On the upside, the number of coop sales increased 13% from 835 sales in 2008 to 942 in 2009.

The total number of homes sold declined 47% from its peak in 2007; 5,460 sales in 2007 to 2,906 sales in 2009.

One year ago, Mr. Heskel noted one bright spot: the market favors buyers with good credit and adequate cash. Looking back, this evidently was the case this past year. 2009 was clearly a buyers market where borrowers with good credit and cash reserves were able to secure financing at good interest rates.

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 team of appraisers at HMS Associates are 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.

For more details, market trends neighborhood by neighborhood, and to view the latest market reports, please visit our website at www.hmsassociates.net.

The average home price in Brooklyn during the second quarter of 2009 was $548,560, 18 percent less than $670,419 in the same period last year, the HMS report showed.

There were a total of 545 sales during the second quarter of 2009, an 8 percent increase in activity over the first quarter of 2009.

“Prices continued to decline, which is no surprise, but there was a slight pickup in the sales activity from the first quarter to second quarter of this year so far,” said Sam Heskel, an appraiser and executive vice president of HMS Associates. “Because sellers have been more realistic and prices have come down, we are seeing more activity as buyers feel more comfortable making offers.

 “This could indicate that the market is bottoming out and that the downward trend is approaching its end,” Heskel said.

Volume is still dramatically down from last year, HMS reported. The 545 sales in the second quarter of 2009 is 52 percent less than the same period last year, when there were 1,145 sales.

The price drop was consistent in virtually every neighborhood in Brooklyn, marking a difference from just a few months ago when the borough’s average price fell but some neighborhoods were still seeing modest price increases, the HMS report showed.

In Carroll Gardens/Cobble Hill, where prices were still increasing last quarter, the average home price was just 1 percent higher compared to the same period last year, and sales volume was down 62 percent. In Greenpoint, which also showed price increases last quarter, the average home price dropped 20 percent and sales volume was down 15 percent.

“If you are able to come up with the financing, there is a lot of inventory out there and lower prices in neighborhoods that are still very strong, so it can be a good time to buy,” Heskel said.

The home price figures and sales volume 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 neighborhoods included in the report together are deemed a fair reflection of what is happening in the Brooklyn real estate market as a whole, according to Heskel.           

Almost every neighborhood saw a price decline, the quarterly report showed. The only exceptions were Carroll Gardens/Cobble Hill, with its 1 percent increase to an average home price of $933,438 and Fort Greene, where the average home price remained statistically the same at $911,538.

The steepest price declines were in Dumbo/Downtown Brooklyn/Boerum Hill, where prices fell 22 percent to $754,000, and Sheepshead Bay, where prices also fell 22 percent to $263,200, according to the report.

The complete report will be posted at http://www.hmsassociates.net/marketingreports.cfm

The requests are coming in record numbers, from owners of $10 million estates and one-bedroom bungalows, from residents of the high-tax enclaves surrounding New York City, and from taxpayers in the Rust Belt and states like Arizona, Florida and California, where whole towns have been devastated by the housing bust. Click here to read the full article from the New York Times.

Read more at Brownstoner.

I completely agree that there needs to be a way to prevent lenders from putting pressure on appraisers to produce favorable property valuations and am in favor of a firewall between the lending industry and appraisals. But the provision to require a third party to order appraisals is problematic.

Appraisal Management Companies (AMC’s) add another layer of fees to the process, which will either be passed on to buyers or will force appraisers to operate as such reduced margins that it will become too difficult to attract and retain appraisal professionals of high quality and experience. Appraisals these days are more complicated than they were  a couple years ago, when the market was constantly rising. A thorough, professional appraisal is a complex process, and it would be an unfortunate development if the appraisal industry was forced to raise fees in order to stay in the business.

Further, there are bound to be loopholes in the new provisions that still allow lenders to work directly with appraisers, defeating the purpose of the revisions to the code.

I’m curious to know what lenders and mortgage brokers think about the changes in the code, and how this will pan out for all professionals involved in the industry. Please feel free to share in the comments section below.

Sam Heskel on Real Deal Webcast

… In this week’s Webcast, appraiser Sam Heskel of HMS Associates also tells The Real Deal’s Jill Gardiner that investors are beginning to look …

This year has been unique because property values have been in sharp decline. Your tax bill, as you know, is based on your property tax assessment, but tax assessments do not keep pace with changing markets, especially when the market changes as rapidly as it has in the past few months. Current assessments are most likely based on property valuations made a long time ago, when prices were higher. Chances are, you have not heard from your municipality about this. If so, check immediately to see how your home has been assessed and what your taxes will be for 2009. If your taxes seem out of line, you can file an appeal.

The appeal will require you to enter what you believe to be the true value of your home. While you can do research and make your best guess at this, the best way to determine this value is to have a professional appraisal conducted. The value you enter on your appeal will be used as the basis for your appeal, so it’s best to have a professional appraisal that will stand up to professional review by your municipality.

Please contact me if you are interested in learning more or would like to schedule an appraisal. For more information about the appraisal process in New York City and New Jersey, or for information on other municipalities you can visit our website. or contact us by phone at 1-866-467-5100.