Why prices in Cobble Hill /Carroll Gardens/Park Slope don't make sense.

"....prices for a Cobble Hill coop should be significantly less than for a coop on Fifth Avenue."

I hear where you're coming from, but as some wag once said, a parrot can tell you everything there is to know about economics: "supply and demand."

So when folks say a price "should" be whatever for anything, if the market is (relatively) free and there is a free flow of information, the truth is that the important information about the commodity is incorporated into the price (actually paid). Obviously this didn't work in the end with Bear Sterns or Enron stock, but there was no small amount of deceit involved there as well. As a general rule, if you want a better piece of fish, or a better apartment, all you have to do is pay more. We all pretty much agree as to what constitutes "better."

I am not at all sure the buyers for Cobble Hill, CG and the Slope are the same population or in the same quantity as the buyers for CPW. Not even sure why you're doing that particular comparison, we're talking very different kinds of urban living experiences. Also, it's the sales price that matters; the asking price is not the story.

If asking prices are too high to attract buyers, and the market has serious sellers (as opposed to people who are just testing the market for kicks) prices will fall, fear not. If you think asking prices are out of line and you're right, then your lowball offers should be entertained by any serious sellers. If you're losing apartments to buyers who offer close to ask, then prices aren't "stuck," they are merely reflecting the place where the supply and the demand curves cross.

CT -- there was a discussion about this a couple months back -- I was making the same point as you that compared to UWS, Brooklyn is the same price.

Fluter - we can also go thru the exercise of arguing if the buyers for CH are the same as CPW. Let's split the difference and say about 50% of people would be happy in either location and end up opting for one or the other.

I think the point is that with RE transactions, there is an overall tendency for sellers to be unwilling to lower prices to market conditions. This leads to the situation where you have rising inventory, fewer transactions, and sellers unwilling to change their offering price. In effect, they are trying to ride it out. This situation was alluded to in today's NYTimes story on the Sac Town RE market, saying that most of the transactions are coming from foreclosures rather than resales (as resellers are too firm in their prices).

Fluter, I think the question from OP is how long before pricing in Brooklyn becomes unstuck.

currenttime -- I actually think Park Slope is different than CH and CG. Prices in Park Slope have been noticeably dropping (I'd provide examples, but I'm in a hurry). My initial thought about CG and CH is that you're right -- it's a combination of fewer deals to persuade sellers that the market has, indeed, dropped; and just a smaller/slower neighborhood market than big Manhattan neighborhoods or the Slope.

It seems counterintuitive that prices are so sticky in prime Brooklyn, but there it is. Still, I think you're seeing cracks even in CH and CG. Check out 113 Carroll. That's barely a 2 BR, I know, but the price drops have been dramatic and swift. That's the kind of example that influences prices downward.

Still, I think it's 3-6 months out (end of summer, at least?) before the majority of prime Brooklyn sellers say, 'yikes, I better sell NOW!." I think some of those sellers are out there now (being realistic as opposed to aspirational in their asks), but they're still pioneers in that attitude.

I feel like I've seen more examples of aggressive price-cutting, though. Apartments that have cut prices sharply and quickly when they don't sell.

One more point now that I took a look at that Sackett St. listing. I think CG is a neighborhood largely dominated by local brokers. They seem to be much less willing to cut prices or price according to the current market. The asks on those places in the 'Columbia Waterfront District' are CRAZY.

"Cobble Hill is my favorite neighborhood in New York and I would much rather live there than on Central Park"

I think there are more people who think the exact same thing. I'm one of them.

As I have posted on various other threads, it's not just the general loveliness of these neighborhoods (CG & CH), it's the schools. I agree that the prices seem a bit sticky given the rest of the market, and especially in comparison to Manhattan. If the schools get overcrowded, lose their sheen, or start waitlisting zoned students - that would loosen the pricing. But for parents looking at a choice between private school (expensive) Manhattan zoned schools (no longer a lock, see http://www.nytimes.com/2009/05/01/nyregion/01kindergarten.html), and lottery schools (scary), the additional $100/sf for Cobble Hill or Carroll Gardens can seem like a bargain.

If you don't have school-aged children, you can find great deals at the margins of these neighborhoods right now, on lovely tree-lined blocks in other school zones. If you do, well, you see my point.

Tina
(Brooklyn broker)

Schools, schools, schools. One thing I have noticed about my generation (born late 60s, early 70s) is how reluctant we are to inflict a suburban lifestyle on our children. This is true not just of NYC but all the cities that my friends live in.

Tina, but if you stay in district 2 in Manhattan, rather than in district 3 or, even worse, in Brooklyn, you have a decent chance of providing also good public MS and HS to your children, whereas in Brooklyn, after they've attended one of the few good PS, they're stranded.

Fluter: "I am not at all sure the buyers for Cobble Hill, CG and the Slope are the same population or in the same quantity as the buyers for CPW."

If I am priced out of Cobble Hill, I guess I'll shop for a co-op on CPW or Fifth Avenue.

Trompiloco - sure. I don't think it's folks with tweens who are snatching up the expensive places in CG/CH. Most folks with preschool kids can't see into the distant future through the fog of sleep deprivation and terror. Or was that just me? There are so many other great reasons to raise your kids in this neighborhood - not the least of which is the abundance of cool, non-urbanbaby moms and dads - that the coming storm of middle school can seem a long way off.
Tina
(Brooklyn broker)

"Schools, schools, schools. One thing I have noticed about my generation (born late 60s, early 70s) is how reluctant we are to inflict a suburban lifestyle on our children. This is true not just of NYC but all the cities that my friends live in. "

So, instead of moving to the suburbs, we're moving the suburbs here...

NYC trailed the national market by 2 years. Not surprising for brownstone brooklyn to be trailing Manhattan by a few months. Less liquid market, more kids, lets investor-owned, etc.

But, this just means its going to decline for longer...

I think we are comparing CONDO's to coops. Very few coops in carroll gardens, no? A brand new condo with A/C washer/dryer and no work needed, with low cc's and a tax abatement is going to seemingly cost more than a wreck of a coop that needs months of work, hassles and cash and then has a higher monthly with the maintenance, but is really cheaper.

obviously, day to day living is WAY cheaper in brooklyn. i rented on E.56th while waiting for my burg condo to be finished and regular stuff like wine, beer, take out, dry cleaning, restaurants etc... is about 30-50% more.

on another note, i personally prefer Brooklyn and have been here for most of the last 12 years. the personality of williamsburg for me specifically is so unique and cool (sorry, but it's the correct word), no way i go for the tourist/chain store/people in suits/blahs of manhattan at this point.

Not so familiar with 2 bed mkt, but for brownstones three recent closings will reset the comps lower:
419 Union St - $1.81m (+/-3040 sqft)
114 Bergen St - $1.685m (+/-2500 sqft)
271 Degraw St - $1.9m (+/-3016 sqft)
All were renovated, so current clearing price for nice stuff seems to be in $600-$650/sqft range

I agree with you a thousand percent, Currenttime, but one factor here to consider is the nature of the old-time property owners in CH and CG.

I lived in CH for several years and most of the people who bought houses there before the bubble (in the 1990s or earlier) were either blue-collar folks or just barely middle class.

For instance one well-known landlord in the neighborhood ran a popular butcher shop on Court St. I don't know if the shop is still there, but everybody knew John, and he got rich, but he didn't get rich from selling pork chops. He got rich from buying houses in the neighborhood when they cost $100k or $200k, and then renting them out.

Other home owners in CH that I knew were nurses, building contractors, and public school teachers.

Now the psychology of these kinds of sellers is different from someone who buys a place on the upper west side. These folks have made a 500% return or better on their housing investment, and they are folks who never made a big return on any kind of investment otherwise. They have savings accounts and 401ks and CDs and that's about it. They don't have excess money to invest so they are not used to taking risks and losses.

So if you tell someone like this that his house is now worth $2mm when he only paid $200k for it, that owner is going to cling to that new value till hell freezes over. Because this is someone who is not going to get rich any other way.

So these are going to be the most resistant sellers to the new down-market valuations. They simply are not going to sell if they can't get the value they think they are entitled to.

If they need to raise cash they will find a relative to make a non-arms length transaction with, they will improvise, they will do whatever they have to do, but they will not give up their bubble-made gains unless there is gun at their back.

I think what I am saying applies to a lot of apartment owners as well as house owners, although it is more dramatic with house values.

I have a friend who bought a decent, cheap co-op in Park Slope years ago before the bubble, and now she absolutely will not acknowledge that the value of her apartment is one penny less than the peak price for comparable places, which the market reached in 07. She has put the place on the market a couple of times but was never a serious seller. My guess is she never will be.

"on another note, i personally prefer Brooklyn and have been here for most of the last 12 years. the personality of williamsburg for me specifically is so unique and cool (sorry, but it's the correct word), no way i go for the tourist/chain store/people in suits/blahs of manhattan at this point. "

You get that hot topic is a mall/chain store, right?
;-)

> GraffitiGrammarian

Good post, I agree with you there. Definitely a much less liquid market. Its going to be a slower but longer decline.

Tina24hour, you may be right that parents don't think ahead to MS when buying, but they are crazy not to. The MS situation for that district is pretty desperate: one good choice.

familyguy: what is the one good choice?

Wisco: While it's true that many apartments in CH and CG are condos, I tried comparing coops to coops.
Here are some more. Very dreamy-- in good condition and with outdoor space-- but perhaps overpriced.

http://www.streeteasy.com/nyc/sale/399889-coop-335-sackett-street-cobble-hill-brooklyn
335 Sackett Street #2 for $850,000.

http://www.streeteasy.com/nyc/sale/347616-coop-44-tompkins-place-cobble-hill-brooklyn
44 Tompkins Place #1
09/09/2008 Listed in StreetEasy by Brown Harris Stevens at $940,000.
10/02/2008 Price decreased by 5% to $895,000.
02/27/2009 Price decreased by 5% to $850,000.

I think it's MS 51 William Alexander. Basically, every parent in district 15 wants their kid to go there so it's a total scrum. The rest make a run at the privates, which is also a scrum since quite a few people pick this moment to hop to private regardless of school district.