Brooklyn's Progress
April/May 2007

BY TONIA SHAKESPEARE

Issuing their second annual Brooklyn Residential Sales Report in March, the Real Estate Board of New York (REBNY) depicted sharp increases in the prices of residential dwellings throughout the borough last year. According to the residential sales report, the median sale price of one, two and three family homes racked up a 16% gain to $570,000 in 2006. The highest spurt, with an average sale price of $681,000 in 2006, which was a 32% increase from 2005, was posted in the neighborhood of Carroll Gardens. From this recent data, it appears that the residential gains in Brooklyn may just continue in 2007.

Cheryl Gladstone, director of real estate and development at the Brooklyn Chamber of Commerce said that there was talk of the real estate market deflating when REBNY issued their first report last year, which showed an 80% jump in real estate prices. This latest news, however, indicates that the residential boom is still going strong. “Housing value will continue to go up for property owners. We will also see a greater diversity in types of people coming to Brooklyn,” said Ms. Gladstone, citing Williamsburg as a neighborhood experiencing a cultural shift from a working class to a more middle class market due to the increase in luxury condo construction.

A change in the status of tenants was no more evident than in DUMBO/Fulton Ferry where the highest reported average sale price of a condominium was $1 million dollars. Brooklyn Heights maintained the highest average price per square foot for a condominium at $900. Martin Gold, president of Martin Gold Management, said that even with the high prices people are still buying in Brooklyn. “Now that interest rates are higher, it’s not interest rate driven anymore; then maybe it is a stronger market,” he admitted. Although there will always be a need for housing in New York, Mr. Gold still questions the long-term outlook of this winning residential streak. “But how many people can buy million-dollar condos?”

Not everyone agrees with the rosy report issued by REBNY, however. John Reinhardt, president/CEO of Fillmore Real Estate, which has 500 agents scattered about the borough, doesn’t believe the numbers in the report paint an accurate picture. Instead, Mr. Reinhardt claimed that the increase in prices has actually leveled off, adjusting 10% to 15% downward. “Are these hundreds of sales based on a small number?” he asked. “Take out new construction and see how does that affect the existing home sales.”

Mr. Reinhardt stated that the report could have had a more diversified representation if it showed a breakout of new construction prices versus existing home sale figures. In areas such as Greenpoint, which had lots of new construction in 2006 and a 65% upward spike in prices, Mr. Reinhardt believes the numbers make sense; but in Canarsie, East New York, Sheepshead Bay, Bensonhurst and Bayridge, where homes had been sitting on the market for four to seven months in 2006, and are still languishing for months, the figures don’t apply. “I don’t like to say the market is going down, we’re just not getting the premium prices where the markets rose dramatically,” said Mr. Reinhardt. “When a home was marketed at $500,000 and then went up abruptly to $550,000.”

Nonetheless, with the growth spurt of new development in areas such as Coney Island, Ditmas Park, Kensington and Red Hook (where a huge Fairway market opened last May), the long-term positive residential view may be applicable, but with a caveat that prices may not exceed or even mimic 2006 gains. Because as Mr. Steven Spinola, president of REBNY, states: “This report clearly shows that the strength of New York’s residential real estate market is not limited to Manhattan.”