Prudential Douglas Elliman Brooklyn Market Overview Q1 - 2009

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Resale Market - Lower level of sales as prices continued to slide

Price indicators post more modest declines

(BROOKLYN, NY) -- Unlike its Manhattan counterpart, the decline in price indicators in Brooklyn, specifically the resale median sales price, showed a more modest decline. The median sales price in Brooklyn this quarter for re-sale properties was $469,000, down 10.7% from $525,000 during the same period last year. Although new development sales tend to reflect the market of more than a year ago, they saw a similar decline in median sales price, down 10.9% to $498,937 from $560,112 in the prior year quarter. The decline in new development price trends was due to a shift in the mix to smaller units that happen to close during the first quarter. Market share of new development closings was 15.2% in the first quarter and was nearly unchanged from the 16.7%market share in the same period last year. The overall median sales price of a Brooklyn residential property was $474,600, down 12.1% from the market peak of $540,000 in the third quarter of 2007. The overall housing market in Brooklyn began to see price declines more than a year ahead of Manhattan, perhaps explaining why there was not a more significant price correction this quarter after the contraction in credit occurred last fall.

After the credit contraction in the fall, number of sales off sharply

There were 1,186 sales in the current quarter, a 57% decline from the 2,761 sales of same period last year and a 35.8% decline from 1,846 units in the prior quarter. This is a pattern seen throughout the New York Region and many housing markets across the country. Higher underwriting standards have made it more difficult to obtain financing which resulted in a pronounced slow down in the level of sales activity. However, there has been an uptick in the number of contracts signed at the end of the quarter, partially due to a seasonal pattern that begins at the end of the quarter as well as an anecdotal observation of more first time buyers entering the market.

All property types showed a decline in number of sales and price indicators

Condos, co-ops, 1-3 family houses and luxury properties all showed a decline in median sales price from the same period last year and all four property types were consistent with roughly a 57% decline in activity over the same period. Market share of each property type was virtually unchanged from the same period last year. The four Brooklyn market regions in this report: North, Northwest, South and East, showed a wide array of price trends and declines in activity. East Brooklyn showed the most price weakness with a 25.2% decline in median sales price, largely due to a higher concentration of foreclosure activity. North, Northwest and South Brooklyn showed more modest declines in median sales price, however 84.5% of all sales in North Brooklyn were new development condos representing a year or more lag in market.

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Condo Market - Prices continued to decline as re-sale market share expanded

All condo price indicators showed declines as listing discount expanded

The median sales price of a condo was $463,185, down 8.6% from $506,493 in the same period last year. Price per square foot was $475, down 10.7% and average sales price was $531,889, down 7.2%, both down from the prior year quarter. The number of sales over the same period fell 57.5% to 328 units from 772 in the prior year quarter. Days on market expanded to 171 days from 163 days over the same period. Listing discount was 7.4%, up from 6.5% at the same time last year reflecting a wider spread between buyer and seller before a property goes to contract, playing a role in slowing the pace of sales activity.

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Co-Op Market - Price indicators and number of sales declined
 
Decline in number of sales consistent with all property types

The number of co-op sales in the current quarter was down 57.1% to 252 units, from 588 in the prior year quarter and represents 21.2% of all sales in the borough, essentially unchanged from the same period last year. The median sales price was $239,990 in the first quarter, off 11.4% from $271,000 median sales price in same period last year. Days on market expanded by more than three weeks to 141 days as properties took longer to sell. The listing discount was 8.5% in the first quarter, more than double the 4.2% listing discount of the same period last year.

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1-3 Family Market - Number of sales and price indicators

All price indicators showed declines

The median sales price was $550,000 in the first quarter, down 10.6% from the same period last year. The 1-3 family market had a 51.1% market share, essentially unchanged from the same period last year. Despite the consistency in market share, there was a 56.7% decline in the number of sales this quarter to 606 units, down from 1,401 units in the same period last year. Days on market was unchanged from the prior year quarter at 127 days while the listing discount, the spread between contract price and list price, nearly doubled to 9.4% over the same period.

 

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Luxury Market - Price indicators mixed as 1-3 family market share rose

Days on market expanded more than overall market

The median sales price declined 9.2% to $1,080,363 this quarter from $1,190,302 in the prior year quarter. Average sales price rose 3.9% and price per square foot fell 2.8% over the same period. Days on market expanded by approximately a month to 172 days over the same period while the listing discount fell to 2.6% from 4.3% in the prior year quarter. Northwest Brooklyn had 42.7% of all luxury sales and 1-3 family property market share increased to 67.5% from 61.4% in the prior quarter.

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North Market - Price indicators mixed as condos dominate market share

Number of sales fell, sweet spot in the fourth and fifth quintiles

The median sales price for a North Brooklyn property was $568,500 this quarter, down 4.5% from the $595,338 median sales price of the same period last year. Average sales price fell 12.5% to $559,255 from $639,076 of the prior year quarter. Price per square foot moved 13.5% higher to $411 per square foot from $362 per square foot over the same period last year. However, the price per square foot of condos moved downward by 11.6% to $519 from $587 in the prior year quarter. There was a 29.4% decline in the number of sales to 84 units over the same period, which was less than the 57% decline in the number of sales for each property type. This 84.5% market share of condos in North Brooklyn primarily represents new development activity of more than a year ago. The region represents a 7.1% market share for all of Brooklyn, which is above the 4.3% market share this time last year and is consistent with the increased concentration of new development activity.

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South Market - Price indicators declined as market share continued to rise

Overall price indicators post modest declines

For the past year, the South Brooklyn market share has continued to expand. The region had a 58.6% market share, up from 53.1% in the prior year quarter and up from 55.6% in the prior quarter. There was a 52.6% decline in the number of sales to 695 units, from 1,467 units in the prior year quarter. The median sales price was $447,500 in the first quarter, down 3.8% from the $465,000 median sales price of the prior year quarter. Average sales price was $508,718 in the first quarter, 2% below the $518,921 average sales price of the same period last year. When analyzing the market by quintiles, the top quintile median sales price was unchanged from the prior year quarter result of $850,000 and the first quintile showed a 2.9% increase to $175,000 over the same period. The second, third and fourth quintiles posted 7.6%, 3.4% and 8.7% declines in median sales price from the prior year quarter.

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East Market - Price indicators and number of sales showed sharp declines

Price trends are the weakest of all regions

The median sales price of an East Brooklyn residential property was $397,500 in the first quarter, down 25.2% from the $531, 2000 median sales price in the same period last year and down 11.7% from $450,000 in the prior quarter. Average sales price fell 16.2% to $432,662 from $516,311 in the prior year quarter and down 6.5% from $462,680 in the prior quarter. Based on median sales price there were double-digit declines across all quintiles indicating that market weakness was relatively uniform. The decline in median sales price ranged from declines of 13.8% to 24.7% from the prior year quarter. Over the same period, the number of sales fell 59.7% to 234 units from 580 units in the prior year quarter, the largest decline in all market regions. Market share for the borough slipped to 19.7% from 21% in the prior year quarter.

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Northwest - Price indicators post modest increase as number of sales fell

Price trends continued to be skewed by high end

The median sales price of a Northwest Brooklyn property was $657,500, 1.4% higher than the $648,162 median sales price of the prior year quarter. Median sales price analysis by quintile indicates improvement at the high end. The first through fifth quintiles showed more strength moving from bottom to top with median sales price changes from the prior year quarter of -3.6%, -1%, 2.1%, 6.6% and 13.6% respectively. Average sales price was $807,810, up 4.9% from the $770,123 average sales price of the prior year quarter. This price indicator was skewed higher by an increase in market share of 1-3 family properties sold during the quarter relative to other property types. Market share was 18.5% up from 15.2% in the prior quarter.

There were 173 sales this quarter, 69.3% below the 564 units to close in the same period last year and 56.3% below the 396 units in the prior quarter. Market share for this region fell to 14.6% of all Brooklyn sales from 20.4% in the prior year quarter.

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Brownstone Market - Price indicators and number of sales declined

Price indicators showed declines

All three price indicators showed declines from the same period at this time last year. The median sales price of a Brownstone property was $1,087,500, down 9.4% from $1,200,000 in the prior year quarter. Median sales price delineated by 1, 2 and 3-family also showed a decline over the same period. The median sales price of a 1-family property declined 35%, however this is considered an anomaly caused by the small data set used in measuring this metric. The declines in median sales price of 2 and 3-family properties are more consistent with the trend in this market segment. The other price indicators showed more modest declines. Average sales price was $1,309,644, down 6.5% from the $1,400,869 average sales price of the prior year quarter. Price per square foot was $488, down 1.6% from $496 in the same period last year.

Number of sales was off sharply

There were 32 sales in the quarter, down 63.6% from 88 sales in the same period last year and down 81.6% from the 174 units sold as a recent high water mark set in the third quarter of 2007. The average size of a Brownstone property sold during the quarter was 2,684 square feet, 5 % smaller than the 2,824 square foot average of the prior year quarter.

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