Bloomberg News

Brooklyn Luxury-Home Prices Rise 5.4% as Brownstones Lure Buyers

July 19, 2012

Luxury-home prices in Brooklyn, New York’s most populous borough, increased 5.4 percent in the second quarter as buyers sought the most expensive properties in a market with limited inventory.

The median price of luxury co-ops, condominiums and one- to three-family homes that changed hands rose to $1.37 million from $1.3 million a year earlier, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today in a report. The lower limit for Brooklyn luxury homes, defined as the top 10 percent of all sales this quarter, was $999,000, said Jonathan Miller, president of Miller Samuel.

“The luxury buyer is out there now, and they’re looking for opportunities,” Miller said in an interview. “Barring any unforeseen changes, it’s going to be relatively tight at the upper end of the market for the next year or two.”

A rise in demand for Brooklyn brownstones in the last six months helped fuel the increase in luxury prices because there is a relatively fixed supply of these properties, Miller said. In northwest Brooklyn, home to neighborhoods including Park Slope and Carroll Gardens, the median sales price for one- to three-family homes jumped 9.5 percent to $1.32 million from $1.2 million a year earlier.

Prices in the broader Brooklyn market were little changed. The median price of condos, co-ops and one- to three-family homes that sold in the quarter fell 0.6 percent to $477,108, according to the report. There were 1,988 transactions, up 2.4 percent from a year earlier.

Shrinking Supply

The supply of homes on the market tumbled 18 percent to 5,772 properties, according to the report. The absorption rate, a measure of how long it would take to sell all the inventory at the current pace of sales, fell 19 percent to 8.7 months from 10.8 months a year earlier.

The drop in supply failed to boost prices because potential homebuyers faced tight credit restrictions or saw little urgency to enter the market, Miller said.

“The expectation is, the economy is weak, mortgage rates are probably going to stay at low levels for a while, ‘I’ll wait for the right one to come along,’” he said.

The average interest rate for a 30-year fixed U.S. home loan fell to 3.56 percent in the week ended July 12, the lowest in Freddie Mac records dating to 1971. The rate was 4 percent or lower for the entire second quarter, according to the McLean, Virginia-based mortgage-finance company.

Reduced Price

Stephen Donnarumma, 50, put his one-bedroom apartment in Carroll Gardens on the market in May for $625,000, and didn’t get any offers until he lowered the price six weeks later to $575,000. After that, he received four bids within five days.

Donnarumma went into contract this week for the home, a co- op on the fourth floor of a building completed in 1856, with an all-cash offer for the asking price.

“That was a very strong clearing price,” said Donnarumma, who was represented by Joan Goldberg from Brown Harris Stevens.

Homes took about 12 percent longer to sell than a year earlier, averaging 159 days on the market, according to Miller Samuel and Prudential. In the luxury segment, the average days on the market fell to 109 from 123.

“There was extraordinary demand for luxury property and very limited inventory to show,” said Michael Guerra, executive vice president and managing director at Prudential Douglas Elliman.

In Queens, the city’s second-most-populous borough, the median sales price rose 3.8 percent from a year earlier to $355,000, according to Miller Samuel and Prudential. The number of sales dropped 2.3 percent to 2,306, while the supply of homes for sale tumbled 33 percent to 8,754.

To contact the reporter on this story: Noah Rayman in New York at nrayman@bloomberg.net

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


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