Brooklyn, Queens residential markets weaken

TRD New York /
Jul.July 15, 2009 06:17 PM

The decline of sales prices in Brooklyn and Queens accelerated in the second quarter of 2009, with both boroughs showing double-digit annual price drops, according to quarterly market reports released today by Prudential Douglas Elliman.

In Brooklyn, the median sales price slipped 16 percent to $441,090 in the second quarter, from $525,000 in the same period of 2008. Queens, meanwhile, saw a 13.8 percent decline in median sales price, to $362,000 in the first quarter from $420,000 in the second quarter of 2008.

For both boroughs, that’s a more dramatic increase in median price drops than first-quarter 2009, when Brooklyn saw a 10 percent decline in median sales prices compared to first-quarter 2008, and the Queens median price fell 5 percent.

Meanwhile, the number of sales in both boroughs continued to fall sharply from last year, while both saw an uptick in transactions from the previous quarter.

There were 2,129 home sales in Queens in the second quarter, up 18.2 percent from 1,801 in the first quarter, but down a steep 45 percent from 3,876 from second-quarter 2008. Brooklyn showed a similar pattern, with sales volume falling 29.7 percent to 1,428 from the 2,031 in the second quarter of 2008, but up 20.4 percent from 1,186 in the previous quarter.

“What happened in the outer boroughs is largely what happened in Manhattan, where we saw a sharp decline in the number of sales year-over-year and a double-digit decline in price indicators,” said appraiser Jonathan Miller, the reporter’s preparer and president and CEO of Miller Samuel.

The impact of the credit crisis and unemployment was clear from the consistency of declines across different neighborhoods, Miller said.

“The numbers are different but the trends are similar,” he said. “They’re doing the same sorts of things because it’s external. It’s credit and weak economic conditions.”

For example, northwest Queens, where a bevy of new construction condos have sprung up recently in Long Island City, saw its average price decline 14.7 percent to $479,541. Other Queens regions saw a similar drop, like northeast Queens, where the average price fell 14 percent to $424,658.

As in Manhattan, the outer boroughs saw a slight uptick in transactions from last quarter, the result of seasonality and the “release of pent-up demand from the end of 2008, when it was very quiet,” Miller said, noting that low interest rates encouraged more market activity this spring.

Also like Manhattan, this uptick isn’t enough to constitute a market turnaround.

“We’re still way off from where we were even a year ago,” Miller said. “It’s too early to call a point where we’re turning a corner because we’re still seeing price declines and unusually low activity.”

While Long Island City remains attractive to home-seekers, the difficulty of obtaining mortgages has torpedoed some deals, said Edward Milton Cisneros, a NY Living Solutions agent who regularly takes buyers to Long Island City.

“People that would have qualified for a mortgage last year don’t necessarily qualify anymore,” Cisneros said, noting that many buyers aren’t aware that underwriting standards have gotten stricter.

“They go shopping first and then think about how they’re going to get a loan,” he said. “That’s prevented some deals from happening.”

He said he worked recently with a couple from out of state who found a Long Island City apartment that they liked and began negotiating with the developer, only to find out too late that the duo “qualified for a lot less than they thought [they would],” Cisneros said. “They were very surprised.”

The same holds true in brownstone Brooklyn, a category Miller measured by tracking sales of one- to three-family homes in northwest Brooklyn. The median sales price for those desirable homes — once thought to be immune from price drops afflicting the rest of the market — dropped 18.3 percent to $980,000, from $1.2 million in the second quarter of last year.

Chris Thomas, executive vice president and managing director of sales at the Brooklyn Heights office of Brown Harris Stevens, said the area has been impacted by the scarcity of jumbo mortgages and by layoffs in the finance sector. He noted that many Wall Street buyers are attracted to Cobble Hill and Brooklyn Heights because of their close proximity.

But buyers are now starting to become more active, he said, adding that his office has had more than 10 townhouses go into contract in the past three weeks.

“A lot of townhouses that had been sitting without offers and had seen price reductions are going into contract and closing,” he said.

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