Insight on Brooklyn Real Estate

One bedroom and Studio apartments are about to move quicker and at higher prices in Prime Brooklyn. Rents will increase at a slower pace in 2012 than over the past two years.

Prudential is about to report that Studio and 1 BR sales revived in Manhattan in the 1st Quarter of 2012. That is important because it portends the same in the prime areas of Brooklyn. And that will have two ramifications in our real estate market.

First: It will mean that the slowest part of our sales market – the smaller apartments – will begin to move faster and have some upward pressure on their prices.
Second: More subtly, it will take some of the steam out from under the upward surge in rents.
The following chart tells you what the median 2BR apartment with at least 1.5 baths will rent for today. Those numbers are up substantially over the past two years. I estimate from rentals I personally completed of such apartments that the overall increase in rent totals 25% over the past two years.

Would you believe you can DOUBLE THE SIZE of your house for $150,000 to $200,000? You could do this by moving to Windsor Terrace from Park Slope and other Brownstone Brooklyn neighborhoods. From Brooklyn Heights you can almost double the size of your home and get a couple of years of college tuition for FREE! Check out these comparative numbers showing a move from a 2BR condo in various Brownstone Brooklyn neighborhoods to a house in Windsor Terrace:

Chart Data Source: Streeteasy.com Feb 28,2012

There is an opportunity for arbitrage in Brownstone Brooklyn homes.
Point one:
You might think that Brooklyn Heights has the most expensive houses in Brownstone Brooklyn. In some ways you’d be right. HOWEVER in others, not so. Take a look at the following chart. Houses sell for the highest prices in Brooklyn Heights. However, your house in Cobble Hill has crossed the $1,000/SF line and will cost more per square foot than that mansion in the Heights. Does this make sense?

Point two:
I know real estate is all about location, but is a home in Cobble Hill really worth paying $2,000,000 (Yes, that’s Two Million Dollars!) more than in Windsor Terrace? I love Cobble Hill and I’m not putting Cobble Hill down. It’s a great neighborhood. Cobble Hill’s new offerings however, if realized, are going to set records. I hope they do, but I have my doubts that will happen. Windsor Terrace houses, on the other hand, look relatively undervalued to me.

If you are building, buying or selling in Brownstone Brooklyn, you’ll want to have price points by neighborhood as well as a handle of the general trend in condo prices. Condo prices vary considerably from one Brownstone neighborhood to another. Buyers often ask me to compare prices in one neighborhood with another. For example, do you know that the median price of a 2BR condo in Park Slope is about the same as that in Carroll Gardens, but substantially less than in Cobble Hill? This post provides just such detail and a lot more. Caution: This does not mean, for example, that Cobble Hill prices make sense! It does say what’s happening on the ground today.

In general, condo prices have held up very well in the neighborhoods of Brownstone Brooklyn. Prices in the brownstone area of Brookln actually gained 4.3% in 2011 according to The Elliman Report, Quarterly Survey of Brooklyn Residential Sales.

Here are today’s condo prices various Brownstone Brooklyn neighborhoods (I included Williamsburg for perspective on another “hot” area in Brooklyn):

This is the first major condo development in Carroll Gardens in some time. It comes at a time where we are beginning to experience a shortage of new condo housing and I think that it will be a huge success – selling quickly at the highest prices per square foot ever experienced in this market. Click here for a link to a video of the site that I made on Feb 22nd.

The Developer (Alchemy Properties) has told me it would like to begin a “soft sell” with at least a model kitchen and bathroom completed by the beginning of May, assuming that the the Attorney General’s office has accepted the Offering Plan by then.

The condominium, located at 340 Court Street in Carroll Gardens, will be comprised of 32 condos – 2, 3 and 4 bedrooms units. There also will be 11 townhouses on both the Sackett and Union Street sides. There is underground parking as well. The building will have great amenity space – including a workout room/gym for the residents, a children’s play room and bicycle storage. All of the condominium units will come with a storage cage as well. Each condo will have a 421a real estate tax abatement, too.

Everyone would like to pay less income taxes. And, every year, we do our best to pay the minimum we can within the tax rules of the day. This is not lost on our politicians. Raising taxes can be a quick way to another job for them. What about cutting gov’t spending in a weak economy?

Thinking about that question takes me back to Econ 101 and my dear Professors Pullen and Breckenridge at Colby College. They taught Econ 101 from the Samuelson text book that has endured to this today. I mention these gurus because there were certain truths of economics that we learned from them.

One of the economic truths is that C+I+G=GNP. The Gross National Product is the sum of the following expenditures – Consumption (C), Investment (I) and Government(G) spending. Today our situation is that both consumption and private investment are soft. Companies aren’t investing (here at least) and consumer demand is hurt by fallout from the bursting housing bubble. If C+I+G = GNP, and both “C” and “I” are weak, then government spending needs to be strong to move GNP in a positive direction.

Our representatives in Washington seem bound and determined to cut government spending, right away, not increase it. The result of this has to be a decline in GNP unless such cutting is immediately offset by a surge in consumer spending and/or private investment.

I am hopeful that such a surge will take place. Perhaps lowering the tax rates of all of us will cause “C” and “I” to surge? I have my doubts about that.

What has this got to do with Insight on Brooklyn Real Estate? The decisions of Washington are bound to have a significant impact on real estate in Brooklyn.

Stay tuned.

Park Avenue buildings have door people. Brooklyn’s large new buildings from Prospect Park to the Harbor have them as well. A first-class building in Brooklyln will have 24 hour door people, additional storage for owners, and washer/dryers in each apartment. Our Brooklyn buildings have a lot of amenities in common. Check the following chart:

I think the differences are interesting too. Only one here has a swimming pool. Three feature children’s play areas. Indication of slightly differing marketing strategies, or just drawing an expense line in the sand?

Williamsburg Prices firming in smaller developments.

As you know from my previous posting, the smaller Williamsburg developments (that excludes the EDGE and NorthSide Piers) have been producing a pretty steady volume of contracts. On average, 35 Buyers have signed a contract for a condo in the smaller Williamsburg developments every month from January 2010 thru May of 2011.

Prices are up about 4% this year. The following Brooklyn Insight Chart will tell you what the pricing is on various condo layouts. The prices are averages taken from the last asking price of 170 condo units going into contract during 2011. They do not include data from The EDGE or NorthSide Piers.

Note that in Williamsburg the large 3 Bedroom condos sell at premium pricing. This is not true everywhere. In some parts of Brooklyn, developers have trouble moving the large units and they can sell at a lower price per square foot than the smaller units in the same building.
Please note that these pricing numbers do not include Contracts signed at NorthSide Piers or the EDGE. Incomplete info on those contracts indicates that the pricing is substantially higher in those buildings.

Williamsburg – Condo sales are doing well.

This post is directed to buyers and sellers interested in the Williamsburg condo market. Sales have been brisk lately and a shortage of quality condo product may be happening in the smaller projects. The big projects on the waterfront are selling well but have a substantial amount of apartments yet to sell.

From January 2010 thru May of 2011, almost one thousand new condo contracts were inked in Williamsburg. By my estimate, 987 of them. Please check out the following Insight Brooklyn Chart for some details:

Project size has a big influence on these numbers. Two projects, NorthSide Piers and The Edge inked 401, or 41%, of all the contracts over the last 17 months.

The smaller condo projects matter contributed 59% of new contract volume. They registered 586 new contracts of sale during the period and inked an average of 35 new contracts a month.

The first 3 months of 2011 show buyers of the NSP and EDGE condos signing a total of about 35 contracts a month. The smaller condos developments, in total, have been doing that average over the past 17 month.

Is there a beginning of shortages of condo product at the smaller project level? Are sales at the big projects slowing down a bit over the last couple of months?

We’ll see better about that when the data on closings for June and July are reported.