Bloomberg News

Brooklyn Home Prices Increase on Demand for New Condominiums

July 14, 2011

(Updates with Real Estate Board of New York data beginning in 18th paragraph.)

July 14 (Bloomberg) -- Home prices in Brooklyn, New York’s most populous borough, climbed in the second quarter, led by demand for condominiums in new developments as affluent buyers entered the market.

The median price of newly built condos that sold in the period was $535,000, a 9.9 percent jump from a year earlier, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today in a joint report. The median price of all Brooklyn condos, co-ops and one- to three-family houses increased 3.7 percent to $480,000.

“We’ve recaptured almost half of the values from the credit crunch, but it doesn’t mean the market is rising,” Jonathan Miller, president and chief executive officer of Miller Samuel, said in a telephone interview. “I’m not characterizing this as a recovery, but stability.”

Almost three years after the real estate crash tightened credit and sent property values tumbling, deals at new developments in Brooklyn are increasing. New condos, which generally attract wealthier buyers, made up almost a quarter of all Brooklyn home sales in the three months through June, up from 14 percent last year and the largest share since Miller’s company began tracking the data in 2008, he said.

“There’s been a more affluent shift in the market,” Miller said. “We’re going on three years since the credit crunch, so maybe it’s a sign, at least in the upper end, of more confidence.”

New-condo sales totaled 478 for the second quarter, a 76 percent increase from a year earlier, according to Miller Samuel and Prudential.

Tax Credit

Rising demand for new condos helped keep Brooklyn transactions stable for the second quarter, Miller said. Sales of all properties totaled 1,942, little changed from a year earlier, when buyers under contract rushed to complete deals before an initial June 30 expiration of a federal tax credit of as much as $8,000. Sales declined 18 percent from the previous three months, Miller Samuel and Prudential said.

The median price for all condos was $525,000, up 8.2 percent from a year earlier. The price of previously owned condos rose 2.9 percent to $499,000.

Buyers of co-ops in the second quarter paid a median $260,000, 3.7 percent less than a year earlier and a 12 percent decrease from the previous three months. The number of co-op sales rose 8.7 percent from a year earlier to 351.

Purchases of one- to three-family houses in the borough fell 9.9 percent from a year earlier, and the median price increased 2 percent to $510,000.

Luxury Properties

Sales of luxury properties, defined by Miller Samuel and Prudential as the top 10 percent of all transactions by price, were little changed from a year earlier. The median price was $1.3 million, a 14 percent gain from the second quarter of 2010.

“The markets that seem to be faring the best are at the higher ends,” Miller said.

New York City’s unemployment rate was 8.6 percent in May, its lowest point in more than two years and below the national average of 9.1 percent that month, according to the state’s labor department. The city’s financial industry added 10,400 jobs in the 12 months through May.

Brooklyn homes stayed on the market an average 142 days in the second quarter, a 38 percent rise from a year earlier, reflecting an increase in inventory, Miller Samuel and Prudential said. A total of 7,002 residences were listed for sale, up 12 percent from a year earlier. At the current pace, it would take almost 11 months to sell them all, according to the report.

Gaining Strength

“It’s not like 2007, 2008. You’d put up a listing and there would be 100 people lined up around the corner,” said Michael Ettelson, a broker for Prudential Douglas Elliman in Brooklyn. “But it’s stronger than it has been in the past two years.”

Ettelson and his team arranged the sale in late June of a three-bedroom condo in the Prospect Heights neighborhood. The purchase price for the 2,677-square-foot (249-square-meter) duplex was $1.2 million, 4 percent less than what the owner originally sought, Ettelson said. It was on the market for 42 days, according to StreetEasy.com, a property-listings website.

Sellers pared an average of 3.9 percent off the initial asking price to strike a deal in the last three months, compared with a 2.8 percent discount offered a year earlier, according to Miller Samuel and Prudential.

Real Estate Board

In a separate report today, the Real Estate Board of New York said residential transactions in Brooklyn totaled $1.38 billion in the second quarter, up 8.5 percent from a year earlier. The median price for all homes climbed 5 percent to $477,000.

The Cobble Hill neighborhood had the largest median price increase for condos, co-ops and one- to three-family houses. Values jumped 96 percent to $1 million, the trade group said.

In Queens, the city’s second-most-populous borough, sales plunged 41 percent in the second quarter to 2,361, and the median price climbed 2.1 percent to $342,000, according to Miller Samuel and Prudential. Homes stayed on the market an average of 115 days, a 19 percent increase from a year earlier, and sellers knocked an average of 7.1 percent off asking prices.

--Editors: Christine Maurus, Daniel Taub

To contact the reporter on this story: Ashwin Seshagiri in New York at aseshagiri@bloomberg.net.

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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