William S. Ross
Director of Development Marketing
Gregory J. Heym
Executive Vice President, Chief Economist
BY DAVID LOMBINO - Staff Reporter of the Sun
A study of Brooklyn townhouse sales identifies Bedford-Stuyvesant as an emerging staging ground for gentrification.
In the first half of 2005, the neighborhood experienced a 48% increase in the volume of sales over the same period last year. The average price of those sales increased by 35% to more than $495,000.
The report by Halstead surveyed every recorded sale of one- to four-family homes in Brooklyn during the first six months of the year. Overall, the report showed a 15% increase in Brooklyn townhouse sales over the same period last year.
"The townhouse market in many of the emerging neighborhoods has gone up at a really fast pace," a Brooklyn broker, William Ross of Halstead, said. "In Bed-Stuy two years ago, a nice four-story brownstone went for $450,000. In the last two or three years, that has risen to over $850,000."
The Brownstoner, the anonymous writer of a popular real estate blog about Brooklyn, said rising prices in Bed-Stuy were unsurprising given the supply of townhouses with historic architectural value and proximity to Manhattan, and that "waves of gentrifying home buyers" were leaving Manhattan.
The Brownstoner said the report may even understate the rise in prices. Halstead's prices, he said, were lower than those listed for properties on the market now.
The Brownstoner wrote in an email, "Halstead shows an average price for the first half of 2005 to be $495K. I'm not aware of a single brownstone on the market for that price. You might find a real fixer-upper in the $500s, but anything decent is in the $700-800K range."
The report also mentions growing demand in a number of Brooklyn neighborhoods further from Manhattan, even those with a less valuable housing stock.
Following the L subway line east from Williamsburg, the sales market in Bushwick boasted a 52% increase in the volume of sales and a 36% jump in average prices to nearly $435,000.Prices in East Flatbush jumped 29%, and in East New York, they rose 37%. Brownville prices also increased 25%.
An economist at Halstead, Gregory Heym, said the price increases in central and eastern Brooklyn mirrors growth over the last few years in northern Manhattan, the Lower East Side, and Midtown West. Mr. Heym said the growth is driven both by people who are moving to areas previously considered undesirable and by low interest rates and record employment, which encourage first-time buyers.
"Are people priced out of Manhattan and other areas looking in these neighborhoods? Of course," he said. "But I don't know how much can be attributed to gentrification. Part of it is just improved fundamentals bringing up prices.
"Crime is continuing to fall, and schools are better. As neighborhoods become safer, maybe some of the old views start to change," he added.
The report showed a growth in prices in affluent neighborhoods such as Brooklyn Heights, Park Slope, Fort Greene, and Cobble Hill, although they experienced a low volume of sales. Only 10 townhouses sold in Brooklyn Heights, 13 in Cobble Hill, and 67 in Park Slope over the first half of 2005.
Recent reports of the city's third-quarter sales showed a cooling in certain segments of the market. Mr. Ross said he expected a slowdown in the Brooklyn townhouse market in the second half of the year.
"I don't think we will see a second half that has the aggressive percentage increases the first half had," he said. "Compared to last year, they will still be higher, but considerably higher in slightly fewer neighborhoods."
Thursday, November 03, 2005