Corcoran Market Report: We're OK, Actually
We got our hands on Corcoran’s Q2 sales data, and it shows that the state of the Brooklyn market isn’t quite as precarious as the Times made it out to be. The median price per square foot sales price of condos and co-ops is up 10 percent over this time last year, to $560,000, and…
We got our hands on Corcoran’s Q2 sales data, and it shows that the state of the Brooklyn market isn’t quite as precarious as the Times made it out to be. The median price per square foot sales price of condos and co-ops is up 10 percent over this time last year, to $560,000, and there was a 4 percent reduction in condo/co-op inventory. In terms of townhouses, while the median price on one-families was down 3 percent from Q2 ’07 levels, to $965,000, the median price on 2-4 families was up 6 percent, to $1,240,000. In fact, all the brownstone Brooklyn neighborhoods had pretty substantial price increases in the larger townhouse category, and inventory was extremely tight. The most startling figure in the report is the 15 percent decrease in median prices for Williamsburg condos, but even that doesn’t seem so horrible when you factor in that Corcoran had 47 percent more condo listings between April and June ’08 compared to the same three months in ’07. Another mediating factor to consider in viewing the drop in median price of Williamsburg condos: Many developers began skewing their mix of inventory towards studios and one-bedrooms since those were the units that were selling best; if there were more small apartments in the 2008 data, one would expect to see average and median prices declining. Conclusion: We don’t think the party’s over and done with in Brooklyn, either.
Manhattan ‘Still a Party’; Hangover for Williamsburg? [Brownstoner]
“Property in New York City has never declined by such an amount, even during the 1930s.” Polemicist.
People were literally burning down their property in the 70s and you think property values hadn’t fallen 50%? Property in many neighborhoods was basically worthless because they had been redlined and the banks wouldn’t lend money to buyers for those areas. Plus, with the city’s rent stabalized/control laws, landlords’ operating costs were higher than the income. If something goes down to 0 where you burn the sucker to the ground and risk criminal charges, I’d say you’ve incurred more than a 50% loss. Even Park Slope suffered through a lot of arson – all those empty lots along 4th and streets like 2nd where all those new buildings went up – they had had buildings on them until the 70s.
Just to be “clear” I’m not predicting this will happen again but just disproving your point.
4:58
I’m not going to get into an extensive discussion of real versus nominal dollars, but I will say that real estate has been excluded from the CPI survey since 1980. I’m not sure how you are calculating your real numbers, but if you’re talking about the 1990s, you’re going to have to use something other than the CPI to make such a claim.
In the end however, I can say you are wrong in general for one simple reason – people don’t buy homes with “real” dollars. They finance them. There is a huge difference between debt and equity in the big wide world of real estate. Too big of a topic to discuss here, but if you’re really interested in the notional concept of real dollars and how it relates to residential real estate, I’d think about it in terms of deflation. Deflation rates in the 1930s were much more mild than people think (I believe it was about 10% from 1929 to 1939) but the results were catastrophic for debtors.
There is near infinite demand for housing in this borough of 2,300,000 people.” Polemicist at 11:36.
“My point is simply this…Prices might decline, developers and buyers might foreclose, but it’s not like these new condos will have zero value or worse.
Polemicist at 1:07.
“If there was an “infinite demand” why would the prices decline?” Brooklynnative 1:28
Perhaps you should work on being a bit more clear. Polemicist 4:47
Yeah, I’ll work on that, thanks for the tip.
Bxgirl:
Like usual, I’m not sure what your point is. While I realize you love to hold a contrarian stance towards me, your final assessment of my intentions are most baffling. I won’t even bother addressing them.
Annyywaayyy…. The history of Harlem as I described it is pretty well known. Why don’t you read the Wikipedia entry and check out the citations for more info on the history.
http://en.wikipedia.org/wiki/Harlem#Arrival_of_black_people
Small groups of black people lived in Harlem as early as 1880, especially in the area around 125th Street and “Negro tenements” on West 130th Street. The mass migration of blacks into the area began in 1904, thanks to another real estate crash, the worsening of conditions for blacks elsewhere in the city, and the leadership of a black real estate entrepreneur named Phillip Payton, Jr. Harlem experienced another real estate bust in 1904-1905; after the collapse of the 1890s, new speculation and construction started up again in 1903 and the resulting glut of housing led to a crash in values that eclipsed the late-19th century slowdown.[5] Landlords could not find white renters for their properties, so Philip Payton stepped in to bring blacks. His company, the Afro-American Realty Company, was almost single-handedly responsible for migration of blacks from their previous neighborhoods,[7] the Tenderloin, San Juan Hill (now the site of Lincoln Center), and Hell’s Kitchen in the west 40s and 50s.[8][9] The move to northern Manhattan was driven in part by fears that anti-black riots such as those that had occurred in the Tenderloin in 1900[10] and in San Juan Hill in 1905[4] might recur. In addition, a number of tenements that had been occupied by blacks in the west 30s were destroyed at this time to make way for the construction of the original Penn Station.
In 1907, black churches began to move uptown. St. Philip’s Episcopal Church, for one, purchased a block of buildings on West 135th Street to rent to members of its congregation.[11] During World War I, black laborers were actively recruited to leave the southern United States and work in northern factories, thinly staffed because of the war.[7] So many came that it “threaten[ed] the very existence of some of the leading industries of Georgia, Florida, Tennessee and Alabama.”[12] Many came to Harlem. By 1920, central Harlem was predominantly black and by 1930, blacks lived as far south as Central Park, at 110th Street. The expansion was fueled primarily by an influx of blacks from the West Indies and the southern U.S. states, especially Virginia, South and North Carolina, and Georgia. As blacks moved in, white residents left; between 1920 and 1930, 118,792 white people left the neighborhood and 87,417 blacks arrived.
Between 1907 and 1915,[13] some white residents of Harlem resisted the neighborhood’s change, especially once the swelling black population pressed west of Lenox Avenue, which served as an informal color line until the early 1920s.[7] Some made pacts not to sell to or rent to blacks.[14] Others tried to buy property and evict black tenants, but the Afro-American Realty Company retaliated by buying other property and evicting whites. They also attempted to convince banks to deny mortgages to black buyers, but soon gave up.[15]
Polemicist, on a *real* basis, this city and others (Boston, LA) have seen huge drops as recently as the early 90’s. I don’t know if it was 50%, but it was well over 30%.
You are right that a 50% *nominal* decline would be unprecedented since the depression, but the bubble was also unprecedented, so it isn’t out of the question at all. And it probably wouldn’t trigger or require a depression, either, for all the reasons various people have listed above.
“personally i think in brownstone brooklyn, prices will fall more in the 10-20% area.
50% would be more than in speculative towns like miami and las vegas. there is zero reason to think that would happen here. apples and oranges.”
Just make a graph of prices and draw the trend line. Even give the line a one-time bump because PS has gotten famous (although, of course, the really significant improvements happened way before the bubble). You need a 50% drop or a decade of stagnation to get back to trend. No guarantee that it’ll happen, of course, but hardly “zero reason.”
And we’ll all be better off if it happens by the fast route, not the slow one.
Brooklynative:
I would chill out a bit before you make such ridiculous statements. I really don’t understand why this site attracts such easily excitable nutcases, but you are hardly in a position to make such broad personal attacks.
The proper way to analyze real estate is to segment the market. Right now, new product is marketed towards people in the top 5% (or 1% in Manhattan) of the households of New York City in terms of earnings. I apologize for not understanding your point, but what you are really trying to say is that there is going to be reduced demand for new product that is priced for people earning say over $200,000. That’s fine, and you’re right a number of owners will be underwater – but that doesn’t mean the city at large is going to be adversley impacted. In the broad discussion of social utility, this condo construction boom is still hugely positive.
Perhaps you should work on being a bit more clear. In any event, you drew an obviously incorrect conclusion from my words – likely predicated under the false assumption that I understood you imprecise discussion of demand.
That said, your 50% price drop predictions in Brooklyn are laughable. If that happens, it will mean this country is in the midst of a depression worse than ever. Property in New York City has never declined by such an amount, even during the 1930s.
In the same way that most of NY is driven by Wall St, most of it is driven by the arts. By some measures, the arts taken together are financially more important to the city than finance.
The museums, music, galleries, restaurants, theater, architecture, events attract lots of people, who in turn attract lots of people, both as residents and tourists. Advertising and media, which attract the same sort of people (often the same people) are still among the largest employers. Corporate headquarters are here largely because corporate executives want to play here — most of them don’t need to be here for business reasons. The universities and their spinoffs are also huge. Take away the arts, and NY is just overpriced, crowded, muggy, and in deep economic trouble.
4:12- wrong yet again. Don’t you get tired of being wrong all the time?