One: That’s the number of apartments that closed in Cobble Hill in May. There was also just one single solitary closing the month before that in April, according to research compiled by StreetEasy.
This month The Real Deal zeroed in on the area to find out what kinds of deals were making it to closing.
While on the face of it, that one deal seems like a pretty bleak indicator of the market in the Brooklyn neighborhood, those in the know maintain it’s not nearly as bad as it appears.
The neighborhood is small in size — it roughly spans from Atlantic Avenue to Degraw Street and Hicks to Court streets (or Smith Street, depending on whom you ask). And given its housing stock of low-rise brownstones, there simply aren’t that many apartments in the area.
Add the fierce loyalty of the area’s residents, and their penchant for putting down roots, and it makes sense that Cobble Hill hasn’t ever been a neighborhood known for doing a ton of trading.
As a point of comparison for this May’s one deal, in May 2008, there were five closings in Cobble Hill (two of which, because of the disputed boundaries, some people might argue are actually in Boerum Hill).
The biggest reason for the slowdown, experts said, is that today’s sellers are reticent to even put their apartments on the market.
According to numbers culled from the first half of 2009, Sam Heskel, executive vice president of real estate appraisal firm HMS Associates, estimates volume in Cobble Hill is down by 53 percent.
“They’re scared to buy [another place]; they’re scared to [borrow] money,” said Heskel, who was careful to note that this is a citywide trend.
Sellers are also, it seems, scared to take even the slightest hit.
“If you look at what’s on the market, they’re either priced too aggressively, or the sellers aren’t serious,” said Prudential Douglas Elliman’s Terry Naini, who represented the buyer of 44 Bergen Street, Cobble Hill’s lone May closing.
“A really nice listing came on the market [in Cobble Hill] recently and they ended up renting it because the seller said, ‘I don’t want to sell if I have to sell at a discount.'”
Townhouses especially are still at pre-recession prices, she noted.
“People hear that Norah Jones bought on Amity [Street], and they think they can sell for $3 million,” Naini said. “There’s still a gap between where sellers are and where buyers are, and that’s why you’re not seeing a lot trade.”
Heskel said that the value of condos in the area is down by 16 percent over last year; townhouses and one-to-four-family homes are down 10 percent, and co-ops are down around 13 percent. But all three types of stock are up over the first quarter of this year. The neighborhood is also somewhat buffered by the fact that it did not see the same meteoric rises in value during the boom as some other areas.
“The property values [in Park Slope] went up a lot faster than in Cobble Hill or Boerum Hill. And because it had the sharpest increase, it’s suffering a lot more,” said Naini. “[Cobble Hill is] more stable with regard to pricing. It’s taking a longer time to sell our product, but we haven’t had to drop our prices as Park Slope had to.”
The steadiness might be thanks again to the size of the area’s housing stock.
“Not having a lot of inventory creates stability for the pricing,” said Gail Morin, the Corcoran broker who represented the seller of 44 Bergen Street.
Foreclosures in the neighborhood, meanwhile, seem to be more or less nonexistent. (“I couldn’t find any for the last six months,” said Heskel.)
Each of the brokers The Real Deal spoke with said that despite the lack of closings in April and May — the most recent full months of data available at press time —they had noticed an uptick in interest over the last couple months. So what is sparking that interest?
“Everything that sells is under a million. The properties that are under a million seem to have a much quicker absorption rate, much quicker than anything over a million,” said Naini. “Part of that is what everyone knows already, which is that it’s first–time homebuyers who are buying.”
Morin helped her seller put 44 Bergen, a 2,020-square-foot condo, on the market for $1.2 million on January 19. After about five weeks of very little interest, they dropped the price to $1.139 million.
This was about the time that Naini convinced her client to come look at the apartment.
“When I took [my buyers] there, they said, ‘We can’t afford that.’ And I said, ‘It’ll sell for $999,000,'” said Naini.
“We went in, they liked it, and they bought it.”
The unit went into contract on March 11, and closed in early May for $999,999.
“What I’m finding in the market in Cobble Hill is a lot of buyers are scared of the asking prices, and they don’t move forward,” said Naini. “If the buyers at 44 Bergen weren’t my clients, they probably wouldn’t have even gone to look at the place, but it’s perfect for them.”
Heskel said that the difference between the listing prices and the contract prices of condos averages 6 percent. The difference at 44 Bergen was just over 12 percent.
Regardless of negotiability, most Cobble Hill brokers seem to have the same thing to say about the general feeling of the market in Cobble Hill: It’s getting better. “I’m definitely seeing an uptick in activity,” said Steven Gerber, a broker with Corcoran. “Open houses are more well-attended, people are actually calling during the week to set up appointments.”
Gerber just negotiated the signing of a contract for 314 Clinton Street, a three-bedroom co-op on the first floor of a 1,700-square-foot, floor-through corner brownstone with a fireplace and a 500-square-foot outdoor space.
After the listing came on the market at the end of April, priced at $1.35 million, Corcoran hosted two open houses. In their wake there were seven bids on the property, said Gerber.
None of these bids went over asking, but the bid the seller chose, which belonged to the buyer with the largest down payment, came close.
In other positive indicators, the retail scene on Court Street has recently seen a flurry of activity.
“The retail was sluggish for a while. There were five vacancies on Court Street, and they all got rented within the last two months,” notes Andrew Friedman, a broker at Halstead Property, highlighting a health food restaurant going in next to Trader Joe’s and a new coffee bar at Warren and Court streets. “That shows the health of the neighborhood.”
Said Heskel, “Cobble Hill, like the better neighborhoods in Brooklyn, started declining later, and will recover sooner.”