First, the entirely expected bad news for real estate developers and brokers: The Brooklyn condo market is slipping. According to the third-quarter Brooklyn market report from appraisal firm Miller Samuel, condo sales in the borough dropped from 979 in the third quarter of 2007 to 660 in the same period this year, and the median sales price fell from $529,490 in the third quarter of 2007 to $505,493 in the third quarter of 2008, a decline of 4.5 percent.
Developers can smile, however, knowing that prices aren’t down everywhere in the borough. The median sales price for condos in North Brooklyn, which includes the neighborhoods of Greenpoint and Williamsburg, jumped from $544,801 in the third quarter of 2007 to $617,049 this year, according to the same report, sponsored by brokerage Prudential Douglas Elliman.
Although the sales volume has slowed considerably during the same period, the 13.3 percent increase in the median sales price reflects the steady increase of on-line luxury condo developments in the North Brooklyn enclave and, more importantly, shows that the shiny new towers sprouting up along the East River are finding a receptive market despite the tumbling and unpredictable economy.
The influx of high-priced units is ushering in a new era of gentrification in the hipster-friendly neighborhoods, as more young professionals and families are drawn to Williamsburg and Greenpoint’s lower-than-Manhattan prices, easy commutes and established neighborhood atmosphere.
Bill Ross, a director of development marketing at Halstead Properties, has been selling North Brooklyn real estate for 25 years and is keenly aware of the drastic changes since the area was rezoned in 2005 for more residential development. “Four or five years ago, before the rezoning, there wasn’t that much to do,” said Mr. Ross. Now with condo development of unprecedented size being built on the river, the area is inundated with top-class condos of all sizes.
According to Jonathan Miller, Miller Samuel’s chief executive, 83 percent of all real estate transactions in North Brooklyn are condo sales, and the bulk of condo buyers are young professionals. Ten years ago, Williamsburg was the go-to neighborhood for hipsters and artists priced out of downtown Manhattan; now it’s turning into the neighborhood for price-savvy condo buyers and space-hungry families tired of cramping into ever-smaller apartments.
No development has attracted more public attention than the Edge, a 30-story, amenity-laden tower built right on the East River by Douglaston Development. The Edge opened for business about six months ago and made headlines earlier this month when a penthouse sold for $5.145 million, the highest price on record for a Williamsburg condo. According to Douglaston’s chairman, Jeff Levine, about 110 of the project’s 575 units have already been sold, with approximately 75 selling in the building’s first three months of existence and 35 units selling in months four, five and six. “We were a real estate market on steroids and now we are back to selling at a pace which is more in line with a normal market,” Mr. Levine said.
Elan Padeh, president of the Developers Group, has noticed a similar trend among the would-be buyers of his company’s several properties in North Brooklyn.
“There is a tremendous amount of buyers out there; the trouble is wrapping up mortgages,” he said. The steady stream of fast money that helped finance New York’s real estate boom has dried up, and Mr. Padeh, like other developers, is eagerly awaiting a restored credit market.
Certainly, the condo developers picked a less-than-ideal time to unveil their luxurious new towers, and there is a possibility that some will have to reduce prices or follow the lead of Toll Brothers, which recently converted some unsold units at its Northside Piers project to rent-to-own apartments.
By early next year, there will be a greater understanding of how North Brooklyn’s condo market has responded to the financial crisis and whether any such price cuts are necessary. Until then, no worries.
“You would have to be brain-dead not to be worried,” Mr. Levine said, “but there will be a market here.”