Price Drop in Brooklyn Heights

This is really an interesting example. It closed for $995k in 2007 - approximately the peak of the bubble. If prices are down about 20%, it isn't exactly a deal, but this has not been my observation of the Brooklyn Heights micromarket. I do think you can find a comparable space for 100k less in Brooklyn Heights, however.

Honestly, if I had the money I might try a lowball offer at 20% off current ask and see what happens. If they negotiate, negotiate hard. I do think this area is going to hold value relatively well.

Just cuz this is my neighborhood, I'll take a stab at this and say I think it's still overpriced. I think it's getting there, but not quite there yet. It looks like a great apartment, but not so nice that it should be $900K+. Not in this market.

If the early 2007 sale price was $995,000, I wouldn't think it unreasonable to seek another 10% (or more) off its current ask. This feels like an $800K-$850K place right now. I'm only looking at pictures, though, you've seen it. Is there any 'wow' factor with this place?

price will come down more. were just getting started

Wow - tough to say where the market's going to go, but I like that apt. Views and space are great. Not sure about that specific block, but being that close to BH AND DUMBO is pretty sweet. If you like it and can see being there for a while, and you can comfortably afford it, what do you have to lose by throwing in a low-ball bid. It is a stable neighborhood and the odds of you suffering a great loss in the long run are pretty low.

Here's a somewhat comp Brooklyn1, a new dev condo right at Montague and Clinton that appears to have fallen out of contract at $850K (I'm pulling this off a thread someone started yesterday):

streeteasy.com/nyc/sale/353210-condo-166-montague-street-brooklyn-heights-brooklyn

166 Montague is about as central as you can get in the Heights, and it appears to be a very nice renovation of a great building, nicer than most (all?) of the bigger condo developments in Downtown Brooklyn.

I would def. check it out and if you like it, put in a low ball offer. $760 psf isn't so bad for BH, which is a very solid area/great location, but as others have said, I think a lot of the prime areas in BK have more to come down. I think thus far sellers in BH, PS, CG, etc. have been holding out pricewise for some market turnaround.
I would feel seller out and see if recent price cut was out of desperation or if new price is "as low as they'll go".

CS, I'm going to guess that if the seller(s) are prepared to take a haircut below their closing price, they probably need to sell. The question then becomes, how badly?

Two-bedroom apartments in BH are holding up remarkably well. I would not be overconfident that they will come down further, or that you won't face competition for desirable properties. It's a solid area with good schools, and a *lot* of young couples who were priced out of the starter apartment market are old enough now to be eyeing two-bedrooms. I agree that it's overpriced, but for the area I'd say not by so much.

Also, this property has been saved by 25 users. I watch a ton of properties in this area, and I've noticed a rough correlation between how many SE users have saved a property and how quickly it goes into contract. 25 is a pretty solid interest level.

I def. agree won't come down MUCH more, which is why I suggested that BK1 go feel out the seller. I am looking at 3 BRs in prime BK areas, and I agree, most great units at decent prices still go fast these days (much to my chagrin).

Mine too, csmack. It's been a bit disappointing for people like us hoping to get a foot in the door, so to speak. Feeling out the seller is a good idea, I wasn't trying to contradict you.

not familar with brooklyn market but curious as why there seems to be a small consensus that prices aren't going to drop further. i certainly don't think that's true in manhattan.

cc, it's like downtown. seems frozen. shouldn't last, though.

few or no transactions?

I don't think that prices *won't* drop further. I'm debating how substantial those drops will be. Maybe another 5-10%? I could see parts of Boerum Hill, Cobble Hill, and Prospect Heights taking 40-50% haircuts, and maybe some high-end trophy properties in BH will go down, but I just don't see evidence of it happening in BH.

I am seeing fairly regular transactions in BH, columbia. Like I said, it's a great area, and a lot of young couples wanting to stay in the city are looking for 2-bedrooms there.

few. evnyc, keep in mind that the conforming loan limit may not remain elevated forever. it gets evaluated occasionally (is shong out there?), and in a declining market it may be adjusted down. i don't know enough about how they are set to opine whether that could happen here, and if so if it would be done on a neighborhood basis.

also, evnyc, the prices in BH could very well get pushed down by PS prices going down. I think there's significant room for drops there.

There I disagree, AR. I think there's a lot of downside potential for some of the more recently gentrified areas in Brooklyn. While "core" Boreum Hill and Cobble Hill will probably hold up okay, I think a lot of the fringier areas might become substantially less desirable, in which case gold-plated solid neighborhoods aren't going to come down, but become more desirable as safe havens from decline. That's my current theory, anyway.

if i understand you correctly, people will sell in fringe neighborhoods and take their diminished proceeds to more established areas and spend considerably more? i don't think it can work like that.

PS had a much longer period of price appreciation than the fringier neighborhoods. A 2/2 could be had easily in 1998 for $150k. When you have larger spreads between former and current pricing, you have more room for distressed sellers to cut to undermine the market. PS has a larger financial services population than the fringier neighborhoods, the fringier neighborhoods may or may not have had looser underwriting standards. Will be interesting to watch.

"if i understand you correctly, people will sell in fringe neighborhoods and take their diminished proceeds to more established areas and spend considerably more?"

No, columbia, you do misunderstand me and I'm sorry if I was unclear. I think that anything fringe is going to get hit hard because any buyers in the market will only be interested in areas that best maintain their value - gold-plated neighborhoods that you would have wanted to live in even during the 1970s. Especially during the bad old good old days.

I am not positing any relationship between sellers in diminished areas buying in other neighborhoods at all. I think people in fringe areas who take a bath when they have to sell are going to be more likely to either become renters or hightail it out of the city.

AR, I wonder if there will be that many distress sales - of course there will be a few, but if you could buy a reasonably-sized apartment for $150k 10 years ago, it's going to require one heck of a financial shock to make that mortgage unmanageable. A divorcing couple could readily rent a 2-bedroom for enough to cover the maintenance and mortgage. I think distress sales, if they come, are going to be more frequent among those who stretched to buy and then suffered a loss of income.

as has been noted in many other threads, there have been a ton of cash out re-fi's and its hard to believe that brooklyn didn't experience this as well. so, unfortunately, many people owe considerably more on their apartments than their original 10 year old basis price.

distress shows many faces. people may need to move to obtain reasonable employment, people may be near retirement and wish to cash out now. these are VERY small markets we are talking about. it takes very little distress.

and some may wish to sell while they feel they still can, before prices fall further. it takes a few quarters to show up.

And when I start seeing evidence of it, Columbia, I'm more than happy to change my tune. I just don't want my assumptions of what "should" be happening in the market to blind me to what actually *is* happening in the market. Outside of hard evidence that there was a lot of cash-out refi behavior going on in BH, and I'm not able to comment on that, I can't say that there SHOULD be more distress activity. All I can say is that I am certainly not seeing it in the particular market I've been watching for almost a year.

FWIW, we looked at an identical unit in the building in May 2006 that eventually dropped its price to $885K per SE (not sure what it closed at as SE does not list that info: http://www.streeteasy.com/nyc/sale/30849-condo-65-poplar-street-brooklyn-heights-brooklyn

Huge difference though, because that 2006 property included full rights to a parking space. So based on that, I think the current place is overpriced.

One slight revision - the kitchen in this new listing looks a lot better than the 2006 listing. So assuming the bathrooms were also done, it may not be as overpriced as I thought. Good luck.

to continue this discussion, I think the argument comes down partly to whether or not you think Brooklyn Heights is a neighborhood in a separate class than other 'prime' BK hoods. To some extent, I think it is -- certainly, big money seems more entrenched there than anywhere else. Probably big enough money spread widely enough to ride out the downturn in many cases.

People want to compare the Heights to Park Slope (where prices are dropping more rapidly), but the comparison only works to an extent. As evnyc noted, 'distress' sales are more likely to happen with overextended young people than with longtime owners or people with bulletproof money. Park Slope is much younger than Brooklyn Heights, and there's a lot more bulletproof money in the Heights, per capita, I'd imagine. Park Slope is also much larger so there's more churn and competition to expose and drive falling prices.

Still, I don't think Brooklyn Heights is immune. Quite a few more neighborhoods in Brooklyn are now considered viable (if not perfect) alternatives to Brooklyn Heights (and many people prefer PS, CG, etc. to the 'tony' Heights). As prices in those nabes drop, prices in the Heights will follow. I think it'll just take a bit more time.

JKB, you're right: personally I don't care much for PS, so I tend to discount it to some degree, but that just shows how my analysis is skewed. I would think that if you have a paid-off or very low mortgage payment, many people, even retirees, would simply hunker down and wait out a crappy market. That could lead to lower supply, which can artificially support prices in desirable areas. A lot depends on things that we don't know; I don't feel confident enough about any data I see to make predictions about the future, and I don't feel much more confident in anyone else's data either. So if the OP thinks this is a good deal and the purchase makes sense for his/her finances, I think OP should at least investigate more closely.

Oh yeah, totally agree. 'Overpriced' (or not) is ultimately in the eye of the buyer ...

"Not sure about that specific block, but being that close to BH AND DUMBO is pretty sweet"

Access is pretty good, but this should be cheaper because of the location. BH gets more expensive as you move AWAY from the bqe here, and this thing is way too close. You not only back onto bqe views, you're also where it meets fulton. There is a giant wall at this intersection... because its the *exit ramp* off the highway. You're not too far from A/C, but you're getting aways from the central area of BH.

Consider eagle warehouse, which is maybe a block away, and always been one of the cheapest buildings around for what you are getting. This is not a generally desirable location relative to better parts of the heights or dumbo.

In short, comparing purely location, this should be the cheapest it gets for BH... as far from Montague and retail and the promenade as possible.

(I just looked some more at the views).

High enough that you get some, good, but they're not showing them up close, and there may be a reason. You have a parking lot out there and a lot of not so pretty stuff to look over.