Factory Lofts (left) and the Metropolitan in Williamsburg
The inventory of new apartments in Williamsburg could double next year, which industry experts say puts more building foreclosures on the horizon.
An estimated 2,818 new apartments will have entered the Williamsburg market by the end of this year, according to data compiled by residential brokerage firm Aptsandlofts.com. Next year, 2,766 apartments are expected to come to market, the company data says.
Prior to the economy tanking last September, such figures would have been viewed as evidence of a healthy North Brooklyn real estate market. Now, they are met with trepidation.
“It used to be enjoyable, exciting to open a new building. Now it’s nerve wracking,” said David Maundrell, president of Aptsandlofts.com.
He said the biggest hurdle to selling a new project is obtaining mortgages, particularly since Fannie Mae started requiring in March that a building be 70 percent sold before it will guarantee mortgages in a building. Next month Freddie Mac is expected to implement the policy, which is intended to reduce the amount of risk the government-controlled finance companies take on.
“The pace of activity [in Williamsburg] is well off from last year,” said Jonathan Miller, president of appraisal firm Miller Samuel. “Not because of lack of demand, but because buyers are having a very difficult time getting financing for projects that aren’t 70 to 75 percent sold already.”
Miller and Maundrell concurred that some projects will not make it before being foreclosed on.
Already this year, banks have moved to foreclose on several buildings in Williamsburg.
Factory Lofts at 66 North 1st Street had at least five units in contract, and the Metropolitan at 349 Metropolitan had at least one closed sale, when their lender Chinatrust Bank filed for foreclosure in January.
In February, Capital One began foreclosure proceedings against the condominium Warehouse 11 at 214 North 11th Street. Maundrell said deposits were returned to more than 30 buyers.
In March, Wachovia Bank began foreclosure proceedings on 53 Hope Street, a six-story factory that Massachusetts-based developer Boulder Capital had planned to convert into 92 loft condominiums. Boulder, which did not return requests for comment, had only commenced interior demolition on the building.
Rising inventory coupled with the slow pace of sales has dragged down absorption rates, the rate at which a building is expected to sell or rent, Miller said.
“If a project is selling much slower than what was budgeted, it just all depends on the staying power of the developer and the bank behind them,” he said. “It’s project by project, but it’s not good.”
According to Aptsandlofts.com’s data, there are also 782 apartments on hold in Williamsburg, most marked by the now ubiquitous empty lot.