Brooklyn Home Sale Prices Decline 9% in 2009, According to HMS Associates; Results Vary Neighborhood by Neighborhood

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.

Somewhere in between the release of last week’s Manhattan market reports and the moment the first burger hit the grill on the Fourth of July, real estate appraisal firm HMS Associates snuck out a second-quarter recap of Brooklyn sales action. The numbers are similar to Manhattan’s, in that they are ruthless: double-digit price declines over last year (the Brooklyn average was $548,560), sales cut in half, etc. The Brooklyn Paper has a tidy summary of the report, pointing out that the biggest price declines came in the hybrid mega-hood of Dumbo, Boerum Hill and Downtown Brooklyn. Read the full article at Curbed .

New York - Homeowners across the country are challenging their property tax bills in droves as the value of their homes drop, threatening local governments with another big drain on their budgets.

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.

This week I’m featured in a Real Deal webcast on the sale of distressed properties. Please have a look:

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 …

Our recent press release on the end-of-year Brooklyn report:

New York, N.Y., January 15, 2009 – The year 2008 saw average Brooklyn home prices inch up a mere 2 percent in an otherwise bleak landscape as sales volume dropped by one third, with no signs of picking up in the coming months, according to Brooklyn-based real estate appraisal firm HMS Associates. 

“We are now seeing a very pronounced continuation of the trend from the third quarter of 2008, with more inventory sitting on the market and not moving,” said Sam Heskel, founder and executive vice president of HMS Associates. “When you look at fourth quarter numbers separately, the drop-off is even more dramatic.”

For the fourth quarter, the number of Brooklyn properties sold fell 57 percent to 532 properties, down from 1,250 in the fourth quarter of 2007, according to the HMS study. Likewise, in the fourth quarter the average Brooklyn home price was down 2 percent to $670,000 from the average price of $680,000 in the fourth quarter of 2007. 

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 boroughwide dropped two percent in the fourth quarter, neighborhood by neighborhood sale prices varied.  They were up in Brooklyn Heights, Carroll Gardens, Bay Ridge, and Sunset Park but fell in Boerum Hill/Cobble Hill, Crown Heights, and Marine Park, Heskel said.  The number of homes sold fell in all 15 neighborhoods, with the biggest drops in Boerum Hill/Cobble Hill, Brooklyn Heights, Clinton Hill, Fort Greene, and Bay Ridge.

The picture was much bleaker in some neighborhoods not included in the study, such as Bedford-Stuyvesant, East New York, and Brownsville.  In these three neighborhoods, there were 16 foreclosures among one- to four-family homes in the fourth quarter – one for every five home sales. For the full year 2008 in East New York, as one of the most dire examples, prices for one- to four-family homes dropped more than 6 percent from 2007, while the number of such homes sold fell 56 percent. 

“Unfortunately the Brooklyn neighborhoods that are in the weakest economic positions to weather a downturn are getting slammed the hardest as the real estate market continues to slow down,” Heskel said.

Heskel noted one bright spot in the equation: The market favors buyers with good credit and adequate cash.

“At this point properties are priced to move, and buyers with good credit and cash reserves will be able to secure financing at good interest rates,” Heskel said.

Below please find a summary of a news release that HMS put out today.  Your thoughts are welcome as always on a topic that has all of the local market talking:

As the average Brooklyn home price dropped two percent to $695,285 in the third quarter of 2008 from $708,457 in 2007, it has become a buyer’s market, with more inventory out there and sellers being forced to bring prices down to get property to move. This does not downplay the difficulty of getting financing in this tighter credit market, but if a property is priced well and the buyer has good credit and a decent income, the market right now favors the buyer.
The number of Brooklyn properties sold rose one percent from 988 to 999.
The two percent price drop in Brooklyn in the third quarter compares with an eight percent rise in the second quarter of ‘08 and a three percent increase in the first quarter of this year.

While the average price boroughwide dropped two percent, neighborhood by neighborhood sale prices varied. They were up in Brooklyn Heights and Prospect Heights but fell in Sheepshead Bay, Greenpoint, and Park Slope.  The number of homes sold rose in Carroll Gardens, Williamsburg, and Marine Park but dropped substantially in Greenpoint, Fort Greene, and Brooklyn Heights.
In three neighborhoods not included in the study, Bedford-Stuyvesant, East New York, and Brownsville, site of numerous apparent turnovers, flips, and subprime loans, the picture was bleaker.  Here there was a 50 percent decline in housing sales during a recent six-month period because of tighter lending standards.  A recent CNN/Money report named Bed-Stuy as among neighborhoods with the highest foreclosure rate nationally.
Single family home prices across all neighborhoods studied fell from $738,000 to $734,000, four-family homes rose from $1,212,000 to $1,423,000, co-ops fell from $557,000 to $492,000, while condos were up from $657,000 to $687,000.
What’s happening in Brooklyn reflects the Manhattan market.  Wall Street layoffs and smaller year-end bonuses are having an impact on the Manhattan market, and that means Brooklyn prices will continue to come down as well. You’ll have fewer Manhattan clientele coming to Brooklyn because Manhattan prices are lower too.