Brooklyn home prices jump most since ’06 as supply drops

Tags: Real Estate
Home prices in Brooklyn, New York’s most populous borough, had the biggest gain in six years as buyers competed for a dwindling number of properties for sale.

The median price of condominiums, co-ops and one- to three-family homes that changed hands in the fourth quarter was $512,500, up 13 per cent from a year earlier, appraiser Miller Samuel and brokerage Douglas Elliman Real Estate said on Thursday in a report. The inventory of listed homes tumbled 21 per cent to 4,685, the lowest since Miller Samuel began tracking the data in 2008, said Jonathan Miller, the New York-based firm’s president.

“People who have been patiently waiting on the sidelines are having trouble finding something,” Michael Guerra, a managing director at Douglas Elliman who oversees Brooklyn sales for the brokerage, said in an interview. “There’s not much new development, and in the resale section of the market, there are just fewer people who are moving.”

Owners are in no rush to list their properties for sale in a market where prices have changed relatively little in three years, Miller said. Those who bought during the market peak and saw their values plunge in the crash may not have built up enough equity to sell and trade up to something bigger, he said.

“I don’t want to list and be officially on the market until I’ve identified the property I’d like to buy,” Guerra said of his clients’ thinking. “But I don’t have a lot of property to look at, therefore I’m going to wait.”

Sellers are also reasoning that buyer demand will last as long as borrowing costs are low, according to Miller. With the average rate for a 30-year fixed loan hitting a record 3.31 per cent in November and the Federal Reserve pledging to keep rates down through 2015, owners see no urgency to attract buyers now, he said.

Inventory is also scarce in Manhattan, where the number of homes for sale dropped to the lowest in at least 12 years, Miller Samuel and Douglas Elliman said on January 3.

The year-over-year price jump in Brooklyn was the biggest since the third quarter of 2006, Miller said. The median sale price reached a peak of $540,000 a year later.

Home purchases in the borough totaled 1,445 in the fourth quarter, down 7.3 per cent from a year earlier, according to Miller Samuel and Douglas Elliman.

Properties spent an average of 136 days on the market in the quarter, about the same as a year earlier. The absorption rate, or the amount of time it would take to sell all the listed properties at the current pace of deals, was 9.7 months, down from 11.4 months in the fourth quarter of 2011.

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