ROOKLYN HOME SALES VOLUME PLUMMETS 41 PERCENT IN SECOND QUARTER, NEW STUDY FINDS

In Contrast, Prices Rose a Modest Five Percent; Results Vary Neighborhood By Neighborhood

New York, August xx, 2008  The number of home sales in Brooklyn dropped an eye-popping 41 percent in the second quarter of 2008, even though the Brooklyn home sale price inched up 5 percent to $670,792, according to a study by Brooklyn-based real estate consulting and appraisal firm HMS Associates. While the overall average home price rose from $637,783 for the second quarter of 2007 to $670,792 in the second quarter of 2008, neighborhood by neighborhood the report showed a mixed bag of price increases and reductions. Average home prices rose in Brooklyn Heights, Fort Greene, Clinton Hill, and Crown Heights but fell in Williamsburg, Greenpoint, and Dumbo/Vinegar Hill/Downtown Brooklyn/Boerum Hill. Prices and sales volumes showed a lot of variation in different areas. Boroughwide, the news was gloomy regarding sales of houses -- the average price of single-family homes fell from $753,000 to $699,000, and four-family homes dropped from $1.3 million to $1.1 million. Even condos were down from $628,000 to 599,000. What strength the market could muster came largely from co-ops, which rose from $415,000 to $474,000, and two-family homes, up from $792,000 to $821,000, the report showed. The report covers sales of single- and multi-family homes, condos and coops in 16 representative neighborhoods or neighborhood groupings within Brooklyn, said Sam Heskel, HMS's executive vice president. HMS is an independent consulting and appraisal company and is not affiliated with any brokerage firms. The report does not include neighborhoods where high turnover and a large volume of subprime mortgages are suspected  including Bedford-Stuyvesant, Bushwick and Brownsville  because these neighborhoods are not typical of the borough as a whole and would likely skew results dramatically, Heskel said. He believes the overall sales numbers would drop dramatically by including those areas. The second quarter report includes 26 neighborhoods grouped into 16 neighborhood groupings that show both increases and decreases, and are deemed together a fair reflection of what is happening in Brooklyn, according to Heskel. The report is available online at www.hmsassociates.net.

A Big, Big Drop in Sales Volume Contrasts Sharply with a Modest Price Uptick Heskel noted several reasons for the rise in prices coupled with the drop in sales volume for the second quarter. Sellers hoping for top dollar were still reluctant to lower prices while buyers, spurred by news reports of an economic slowdown, waited longer to see if prices would fall, Heskel said. "Even more important, the subprime crisis has caused lenders to tighten standards for granting loans, making it more difficult to get home financing," Heskel said. "Buyers and sellers may agree on a sale price, but the buyer fails to qualify for a loan under the tightened standards. Because of this, brokers are seeing many contracts fall through. "Given the strength of sale prices despite a big drop in volume between the '07 and '08 quarters, it may be a while before home prices come down to realistic levels," he said. "It's mostly in the neighborhoods with a high percentage of subprime loans that we've seen a significant decline in home prices."

Neighborhood Highlights and Lowlights Overall sales in upper echelon neighborhoods like Brooklyn Heights showed some strength in the second quarter of 2008, the report shows. In Brooklyn Heights, prices increased on weak sales volume, which was down 64 percent from the second quarter of 2007 to the second quarter of 2008. Condo prices dropped a whopping 44 percent, but coops rose by 5 percent and the neighborhood's total average home price rose 32 percent. Fort Greene saw a 77 percent increase in sales prices, the largest of all the neighborhoods, with the average home price up from $590,000 to $1,046,000. Sales volume, though, was way down, a 43 percent drop from 30 homes sold to 17 homes sold. Park Slope gets a very mixed review. Prices rose for single- and four-family homes, as well as for coops, with condos and two and three family home prices down, for an overall nine percent home price decline. Home sales volume took a smaller hit, falling four percent from 186 to 179. Driving the market here were sales of 119 newly developed condo units in the 2008 second quarter, and 69 newly developed condo units in the 2007 second quarter. Dumbo/Vinegar Hill/Downtown Brooklyn/Boerum Hill saw a big drop in prices, with the average home price falling 13 percent from $911,000 last year to $790,000 in the second quarter of 2008. Sales volume fell by 20 percent, from 60 homes to 48 homes sold in the neighborhood in the first quarter of 2008. Williamsburg was a bad news leader in the second quarter, where a 58 percent drop in condo prices set the pace for a 22 percent drop in prices for all homes and a 61 percent fall in number of homes sold.