Rise in sales of low-end co-ops drives down average home prices in Brooklyn in Q4

A sharp drop in national mortgage rates coupled with a barrage of weak economic news in the fall drove down the overall average prices of property sales in both Brooklyn and Queens in the fourth quarter of 2011, according to reports from Prudential Douglas Elliman and Brown Harris Stevens, released today.

In Brooklyn, home prices overall declined largely due to a jump in the volume of sales of lower-priced co-ops. The average sales price dropped by 7.5 percent to $529,640 in the last quarter of 2011 from $572,892 in 2010, while the number of total sales increased by 6.1 percent to 1,558 from 1,468, according to Eliman’s report. Meanwhile listing inventory decreased 4.8 percent to 5,908 units from 6,203 the year-prior quarter.

In terms of property types, the median sales price of a Brooklyn condo was down as well, to $476,580, a 5.8 percent dip from the same three months in 2010, while the number of sales was unchanged, the Elliman report shows. The median sales price of a co-op was $265,000, down 15.9 percent from $315,000 in fourth-quarter 2010; meanwhile, the volume of co-op sales was up 27.6 percent.

“I’d characterize the Brooklyn market as stable but fragile,” said Jonathan Miller, president and CEO of Miller Samuel, the preparer of the Elliman report. “We’re continuing in this two-year adventure to move sideways. [The year] 2012 could very well be a repeat of 2011, which in some ways was a repeat of 2010.”

He continued: “If you break up the market by regions, the lowest-priced regions had substantial gains in sales activity; lower-end properties are more sensitive to changes in [mortgage] rates. Counter to that, higher-priced areas saw prices continuing to edge higher, but activity falling off.”

Sales in the Brooklyn luxury market averaged $1.2 million, Elliman’s report says, down 8 percent from the last quarter of 2010.

A rise in lower-end sales activity may also be due to nervousness from lower-end buyers as the result of the economy, said Michael Guerra, executive vice president and managing director at Elliman in Brooklyn.

“Well-qualified borrowers most likely have already purchased,” he said. “Now we’re seeing people who aren’t as strong trying to get back into the market.”

Lower-end buyers, he said, took pause to wait out the recession.

“There’s been a lot of money on the sidelines for some time,” Guerra noted, “but people are now accepting that the world is not coming to an end this Wednesday and you have to carry on and live your life. At the high end, people are taking precautions to protect themselves [financially]. On the lower end, however, people have fewer assets and more to worry about.”

According to BHS’ report, which covers the second half of 2011, the most expensive Brooklyn area in which to purchase was the combined neighborhoods of “Brooklyn Heights-Carroll Gardens-Cobble Hill-Columbia Street Waterfront-Dumbo-Red Hook,” in which the average price of a condo or co-op was $819,656. The second most expensive area was “Greenpoint-Williamsburg,” for which the average price was $659,788.

Meanwhile, in Queens, new development market share was at its second highest level since the credit crunch began, with high-end, turn-key properties commanding high prices. The median sales price for a luxury apartment was 819,691, up 6.5 percent from the last quarter of 2010, Elliman’s report says. The lower limit of the top 10 percent of all sales was $700,000.

The median sales price for a Queens condo was $410,000, up 57.8 percent from fourth-quarter 2010, but the number of sales was down 61.6 percent to 240 units. For co-ops, the median sales price was $185,000, down 2.6 percent from 2010, while the volume of sales surged 127.7 percent to 592 units.

“Queens is typically more fragile than Brooklyn,” Miller said. “Sales prices [in the borough] were mixed.”