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Prime Brooklyn prices under pressure (finally)

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Read the 3rd quarter market results for Brooklyn published today by Prudential Douglas Elliman and you might think that prices in prime Brooklyn are as stubborn as ever, and that the big, fat yawn let out by those choice neighborhoods after the collapse of Lehman Brothers had never ended.

We were intrigued, however, to note in the report that listing inventory increased more than 18% from the prior year quarter. Not only are inventory levels more timely measurements than sales reports (which reflect contracts signed as far back as 9 months ago), but rising inventories often presage price stress in the market.

To get an even more up-to-the-minute picture, we turned to the recently recorded sales on StreetEasy.  After two years of reviewing hundreds of recorded sales and seeing virtually no downward price movement, and sometimes even increases in prices from the peak in 2008, we detected signs that things are starting to change. It's too early to determine whether this reflects the Brooklyn market as a whole going forward, but we were surprised by what we found sifting through the most recent 50 or so sales in prime areas of the borough.   For example:

  • A 2bed/1bath co-op at 40 Prospect Park West, unit 5G, in Park Slope was listed in May for $589,000, quickly entered contract and sold for $560,000 in October. Unit 6G sold in February of 2007 for $621,927.
  • Unit 3F at 285 Prospect Place, a one bedroom, one bath co-op, sold for $349,000 in August of 2006, for $375,000 in July of 2007 and for $355,000 in October.  The current sellers also renovated both the kitchen and bath, resulting in a decline in value much greater than the readily apparent $20,000 loss.
  • In Brooklyn Heights unit 5F at 2 Grace Court entered contract in September, after having been on the market for a little less than six months.  It isn’t yet possible to determine the sales price, but the last listing price of $450,000 is only $20,000 more than the unit sold for in May of 2005.

Bottom line? For all of you priced out of views from the Promenade, stroller-pushing in Prospect Park, or a spot at  PS321, keep hope alive. Your chance may be coming sooner than you think.

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