By Charles Hack
In today’s Brooklyn real estate market, anyone who already owns their home can pay their mortgage, kick back and enjoy the ride. Or perhaps with the equity they have earned, upgrade their home. But with property-price hikes of 35 percent or more since last year, first-time buyers not earning Manhattan wages can forget about it. Well almost, but affordable neighborhoods are evaporating fast. The report found that average sale prices for apartments in Prospect-Lefferts Gardens – while still one of the more affordable areas in Brooklyn – increased 64 percent from $180,000 to $296,000 in one year. Prices for apartments across Brooklyn increased from $354,000 to an average of $478,000, according to the Real Estate Board of New York (REBNY), Residential Sales Report 2005. Some of the Brownstone neighborhoods such as Brooklyn Heights, Cobble Hill, Park Slope and DUMBO rate are among the highest-priced neighborhoods in the borough. “The increased sales activity and surging apartment prices demonstrate a booming market,” said Steven Spinola, president of the Real Estate Board of New York (REBNY), who spoke at the launch of their first annual report at the Marriot Hotel at 333 Adams Street on Feb. 7. Spinola acknowledged that the double-digit growth could cool somewhat in 2006. Just don’t expect prices to drop. “This is clearly a positive sign for the borough and I don’t see any indication at all that there is any weakening in the market. It is a clear, positive statement for the Borough of Brooklyn,” Spinola said. Michael Slattery, senior vice president of research at REBNY, agreed, saying that slowing is part of a natural cycle that follows a very heated market. “I don’t see there has been any softening,” Slattery said. “The rate of appreciation seems to have abated somewhat. The rate we have seen before probably was not sustainable for a much longer period of time. Twenty five percent growth in a year is a pretty healthy growth. You can’t expect to see that year in, year out.” There is a danger that younger and working class families will be left behind in the gold rush, however. “The outer boroughs were where the working class could go and attain the American dream,” said Councilmember Yvette Clarke, in whose constituency Prospect-Lefferts Gardens resides. “But with real estate values going up so precipitously is very hard for working class families to achieve that now.” Clarke says that higher real estate values also have a ripple affect, making non- stabilized rental properties unaffordable too. Prospect-Lefferts Gardens, zoned for one family homes, has been up until now one of Brooklyn’s best kept secrets, with many homes occupied by the children of people who bought them originally, she says. The challenge is to find ways for the less wealthy to be able to afford to buy and rent in Brooklyn too, she said. The report was compiled from information supplied by condos, co-ops and brokerage firms borough-wide. Prices for one- and two- family homes increased on average by 21 percent from $440,000 to $530,000 in 2005. Sale prices for one- and two- family dwellings in Prospect-Lefferts Gardens increased 29 percent from $513,000 to $660,000 for houses. In Sunset Park average apartment prices leapt by 125 percent from $169,000 to $381,000, and for houses by 27 percent from $460,000 to $583,000. While this report only reported on 19 neighborhoods in northwest Brooklyn, another analysis of 1,600 properties by Rich Schulhoff of the Brooklyn Board of Realtors showed similar but slightly more modest increases. According to this data, prices across Brooklyn rose on average from $457,000 in 2004 to $521,000 in 2005, representing 14.3 percent for one- to three-bedroom homes. Schulhoff used data from the Multiple Listing Service, a catalog of properties available through a pool of agents. The discrepancy might reflect differences in the sample used or suggest that buyers are getting closer to their asking prices, or both. Price increases over the last year jumped by a third in Mill Basin, 16 percent in Bay Ridge, and 21 percent in Sheepshead Bay. Some real estate agents say there has been a slowing in some of the neighborhoods over the last quarter. Prices in Mill Basin, Bergen Beach, Bay Ridge and Manhattan Beach, may have dropped as much as 10 percent for some properties over the last quarter, according to according to John Reinhardt, president and chief executive officer of Fillmore Real Estate. He said some prices may be a “little inflated,” partly because of low interest rates and “media hype” of a real estate bubble. But with Kensington and many other neighborhoods increasing fourfold in the last four years, according to Reinhardt, the general trend is still up. Reinhardt predicted that sales may pick up again, particularly if the economy continues to strengthen. The REBNY report was designed to provide a little more science to what for many real estate agents and brokers is something of an art, based on local knowledge of sales, anecdotal evidence and hunches. The report may also help brokers be more confident about that information when they advise clients, Spinola said. “Now there is independent confirmation of information that they had, so they can go to their clients and say with confidence ‘here is the data and this is what you may realistically hope for if you are selling your apartment or what you might have to pay’,” said Spinola. Asked why the REBNY study only took into account northwestern Brooklyn, Spinola said that neighborhoods were selected because they showed the most real estate activity and this was the first annual report. Future ones are likely to be more comprehensive, he said.
