SOURCE: HMS Associates LLC

HMS Associates LLC

January 06, 2010 14:18 ET

Market Recovery: Bumpy Road Ahead

Brooklyn Home Sale Prices Decline 9% in 2009, According to HMS Associates; Results Vary Neighborhood by Neighborhood

BROOKLYN, NY--(Marketwire - January 6, 2010) - The year 2009 saw average Brooklyn home prices decline 9% as sales volume dropped by 26% with some positive gains in the third quarter, according to Brooklyn-based real estate appraisal firm HMS Associates. "Although we've experienced a slight increase in both average sales prices and overall volume in the third quarter of 2009 the numbers have reversed direction in the fourth quarter," said Sam Heskel, founder and executive vice president of HMS Associates. "It may have been prematurely optimistic to think that the market is recovering."

Coinciding with this fourth quarter decline was the jump in unemployment to 10.2% in October, the highest since early 1983. Experts had not anticipated the rate to climb this high before 2010. Chief Economist at Moody's Economy.com, Mark Zandi, and Chief U.S. Economist at MFR Inc., Joshua Shapiro, now predict the rate to reach 11% later this year, a figure not seen since WWII. Unemployment is a major contributing factor in the housing market. If people are out of work they can't afford to buy homes, qualify for financing or keep the homes that they do have, thus increasing the number of foreclosures and distressed sales. What we are seeing is no longer just a subprime mortgage crisis. Unemployment is affecting people from all neighborhoods; buyers who had good jobs with good credit are now defaulting on their mortgages as well. Thus if unemployment keeps rising, we cannot expect the real estate market to fully recover.

For the fourth quarter, the number of Brooklyn properties sold fell 20% to 824 properties, down from 1,035 in the fourth quarter of 2008, according to the HMS study. Likewise, in the fourth quarter the average Brooklyn home price was down 10% to $589,000 from the average price of $654,000 in the fourth quarter of 2008.

The average home price figures come from HMS's comprehensive quarterly study of 15 representative neighborhoods in Brooklyn and include one-, two-, three-, and four-family homes, condos, and co-ops. The report includes neighborhoods that show both price increases and decreases and are deemed together a fair reflection of what is happening in Brooklyn as a whole, according to Heskel.

While the average price borough wide dropped 10% from the fourth quarter 2008 to the fourth quarter of 2009, neighborhood by neighborhood sale prices varied. They were up in Marine Park, Downtown Brooklyn/Boerum Hill, Greenpoint and Williamsburg, Heskel said. The number of homes sold fell in 12 of the 15 neighborhoods, with the biggest drops in Carroll Gardens, Downtown Brooklyn/Boerum Hill, Park Slope, and Greenpoint. Sales volume increased in Fort Greene, Bay Ridge and Clinton Hill. The increases in these three neighborhoods were due to the sharp rise in coop activity. Although overall sales volume declined by 20%, coop sales increased 9% from 256 sales in Q4 08 to 280 sales in Q4 09.

Volume has declined by nearly 26%, year over year. Condominium sales in particular were down a whopping 43% from 1,925 sales in 2008 to 1,088 in 2009. On the upside, the number of coop sales increased 13% from 835 sales in 2008 to 942 in 2009.

The total number of homes sold declined 47% from its peak in 2007; 5,460 sales in 2007 to 2,906 sales in 2009.

One year ago, Mr. Heskel noted one bright spot: the market favors buyers with good credit and adequate cash. Looking back, this evidently was the case this past year. 2009 was clearly a buyers market where borrowers with good credit and cash reserves were able to secure financing at good interest rates.

About HMS Associates

HMS Associates is a full-service Brooklyn-based residential and commercial appraisal firm. Founded by Sam Heskel in 1998, the firm serves all of New York City and its surrounding areas. Heskel, an associate member of The Appraisal Institute, is state certified in New York and New Jersey and is a member of The National Association of REALTORS®.

The team of appraisers at HMS Associates are FHA-approved, and Heskel is a member of Multiple Listing Services for Brooklyn and Long Island (includes Queens), Putnam and Westchester counties, and the Greater Hudson Valley.

For more details, market trends neighborhood by neighborhood, and to view the latest market reports, please visit our website at www.hmsassociates.net.

Contact Information

  • Sam Heskel
    Executive Vice President
    HMS Associates
    718-438-9400 #102
    Email Contact