Free fall! Housing prices are plummeting

New block on the block
The Brooklyn Paper / Dennis W. Ho

After bucking a national trend for more than a year, home prices in Brooklyn are finally in free fall, a new study revealed on Monday.

The average sale price dropped 18 percent, to $548,560, during the second quarter of 2009, compared to the same period last year, according to the study from HMS Associates, an appraisal firm.

More concerning was the drop in total number of sales — typically a barometer of whether a prevailing price trend will continue. Last quarter, the volume of sales plummeted 52 percent, with only 545 sales from April to June, compared to 1,145 during the same period last year.

The good news — if there is such a thing amid the gloom and doom — is that there were eight percent more sales in this quarter than during the first quarter of 2009.

“Prices continued to decline, which is no surprise, but there was a slight pickup in the sales activity from the first quarter to second quarter of this year,” said Sam Heskel, the executive vice president of HMS Associates. “Because sellers have been more realistic and prices have come down, we are seeing more activity as buyers feel more comfortable making offers.”

The findings continue a trend begun last year when the volume of sales plunged from Newtown Creek to the Narrows. Yet prices still continued to rise in the Brownstone Belt through the end of 2008, until taking a walloping hit last quarter, according to analysis by a different firm.

The study looked at sales data from 15 neighborhoods for one-, two-, three-, and four-family homes, condos, and co-ops.

It found that the biggest drop was in the amalgamated neighborhood of DUMBO, Boerum Hill and Downtown Brooklyn, where the average price crashed 22 percent to $754,000. The area is crammed with new luxury high-rise buildings, and brokers have had a hard time unloading their stock.

Greenpoint, another previously hot corner, saw prices fall 20 percentt, but neighborhood brokers weren’t worried.

“There’s been a drop, but I can’t tell you it’s been 20 percent,” said Herb Kliegerman of North Brooklyn Realty.

Kliegerman said the market is glutted with more listings, yet fewer buyers because people no longer expect a fast increase in the value of their home. “Before, the motivation to buy an apartment was not for the psychic value, but for the expected appreciation in price,” he told The Brooklyn Paper.

Park Slope saw dramatic price reductions, too. The report said there were 47 condos sold in the second quarter for an average price of $695,000, down from $730,000 for the 41 units sold from January to March.

Carroll Gardens and Cobble Hill were immune to the freefall seen in most other neighborhoods. Prices inched upward by one percent to $933,438, though there were 62 percent fewer sales. The average price didn’t budge in Fort Greene either, remaining the same at $911,538 compared to 2008.