Gregory J. Heym
Executive Vice President, Chief Economist
From left Chester Higgins Jr./The New York Times (2); Uli Seit for The New York Times
From left: prices were cut at Le Conselyea in Williamsburg; the developer is paying closing costs at Thornton Park; buyers negotiated for a brownstone in Bed-Stuy.
By CHRISTINE HAUGHNEY
THE Brooklyn real estate market has turned into a bundle of contradictions in recent months. While prices in neighborhoods like Park Slope and Brooklyn Heights soared this summer, so did the number of foreclosures in neighborhoods like Bushwick and Bedford-Stuyvesant.
Sorting through these contradictions, buyers are starting to find bargains in a borough that was in danger of forever losing its reputation as an affordable alternative to Manhattan.
People buying homes and apartments in the resale market are finding more leeway to negotiate on price. Buyers of new condominiums are negotiating price cuts and persuading developers to throw in extras, especially in neighborhoods like Greenwood Heights and Williamsburg.
“It’s never wrong to ask to negotiate in the market that we have,” said Thomas McAteer, a Prudential Douglas Elliman broker in the company’s Park Slope office. “Developers are willing to negotiate on things ranging from transfer taxes to parking spaces to storage spaces. A smart developer is open to that.”
That doesn’t mean buyers should expect to get apartments for a song, especially in Brooklyn’s most coveted neighborhoods. Data recently released by the Corcoran Group show that sales in and around the three areas where Corcoran has offices — Brooklyn Heights, Fort Greene and Park Slope — closed at all-time highs in July, August and September.
Buyers paid an average of 11 percent more for apartments than they did a year ago and closed 28 percent more transactions. The sales volume of single-family houses in Brooklyn rose by 63 percent from the year before, and buyers paid an average of $1.6 million, according to the Corcoran data.
“The areas that we do, and I can only speak about them, are doing very, very well,” said Frank Percesepe, the regional vice president of the Corcoran Group in Brooklyn. “We’re not finding weakness.”
At the same time, some neighborhoods are really struggling. Foreclosures in Brooklyn jumped by 17 percent in the third quarter, rising to 149 compared with 127 in the corresponding period last year. That’s out of 823,000 Brooklyn households, according to data tracked by PropertyShark.com. The neighborhoods of Bedford-Stuyvesant, Bushwick, Ocean Hill, East New York and Flatbush are all among the 20 New York City neighborhoods with the most foreclosures.
Typically, owners who have missed three mortgage payments or more and whose lenders have filed suit are considered to be in preforeclosure. In Brooklyn in the third quarter, the number rose by 56 percent, to 1,844, from 1,183 a year earlier.
Ryan Slack, the chief executive of PropertyShark, said that many owners sell their homes before reaching foreclosure and that if enough owners did so, this could help drive down prices in the broader Brooklyn market.
Many buyers are looking for bargains in new Brooklyn condos. In the last two months, developers cut prices on 15 of the 230 new condo projects in Brooklyn that the Web site StreetEasy.com tracks, according to Derrick Gross, the business analyst for the site. The buildings were in many different neighborhoods: Park Slope, Williamsburg, Crown Heights, Kensington, downtown Brooklyn, Brooklyn Heights, Fort Greene, Dumbo, Windsor Terrace and Clinton Hill.
Price cuts can often be found at smaller projects or on developers’ last few unsold units, said Mr. Percesepe of Corcoran. As he put it: “If there’s six or seven apartments in the building left over, they may say, ‘Offer an incentive.’ They want to finish with the expenses of the sales office.”
Price cuts also are cropping up in neighborhoods like Greenwood Heights, where a lot of projects came to market at once at prices nearly as expensive as in Park Slope. StreetEasy.com lists six in the area that have lowered their prices. For example, at Green Hill Condos, 324 22nd Street, the developer cut prices by about 5 percent on all seven apartments in the building. That means a 1,915-square-foot duplex with a private garden was reduced to $999,000 from $1.09 million and two 900-square-foot two-bedrooms were reduced to $559,000 from $599,000.
Mr. McAteer, who is marketing Green Hill for Prudential Douglas Elliman, said that after the price cuts, 20 potential buyers attended an open house on Oct. 7. Even so, he said he was having to work much harder to close deals than he did a year ago. “We have to be much more aggressive and organized,” he said.
Like Greenwood Heights, the Williamsburg area has a large number of apartments coming to market at once, resulting in an equally large number of deals. Greenpoint and Williamsburg have 2,274 apartments under construction and another 9,571 in the planning stages, according to data from Halstead Property.
David Maundrell, the president of Aptsandlofts.com, a Williamsburg brokerage, said a 55-unit building that would have sold out in eight months a year and a half ago now takes about 14 months. So, he said, many developers have cut prices by about 10 percent and have offered to pay closing costs.
“Prices are down across the board,” Mr. Maundrell said.
Such discounts are persuading some buyers to jump at purchases. Mr. Maundrell’s brokerage is handling the marketing for the Thornton Park project with 14 condos at 721 Flushing Avenue in East Williamsburg. He persuaded the developer to pay closing costs, which can equal 5 percent of the purchase price. In four weeks, nine buyers have made offers, and the developer has accepted four of them. Condos in the building range from $270,000 to $509,000.
Buyers are finding that they can negotiate even better deals when they do a little homework. When Carmel Pedatella wanted to buy an apartment at 55 Berry Street in Williamsburg, she did some research, comparing the original asking prices and the actual sale prices in the 45-unit building.
Ms. Pedatella, who works in the finance department at Polo Ralph Lauren, calculated the difference in prices and came up with her own figure. She then offered $20,000 less than the asking price for a one-bedroom with private roof deck but agreed to buy a $10,000 storage unit, too. The developer basically agreed, but accepted a $10,000 price cut on the apartment and threw in the storage unit.
Christine Blackburn, a Prudential Douglas Elliman broker handling sales at 55 Berry, recently worked out a deal with another buyer for one of the last remaining apartments, a $815,000 one-bedroom with a home office. To close the deal, the developer agreed to pay for the construction of a walk-in closet that cost more than $3,000.
“We’re definitely negotiating,” Ms. Blackburn said. “It’s not a market in which anyone wants to lose deals. Every deal is precious because there’s a lot of uncertainty.”
Ms. Blackburn says developers are especially flexible on apartments that cost more than $1 million. In fact, they may be willing to reduce the price so that the buyers do not have to pay the 1 percent state mansion tax that applies to properties costing more than $1 million.
Some developers who are just now putting their buildings on the market are cutting prices from the start. More than a year ago, Terry Naini, a broker at Prudential Douglas Elliman, helped the developer of Le Conselyea at 149 Conselyea Street in Williamsburg calculate prices for the eight apartments. They decided on $599,000 to $995,000.
But by the time the apartments were ready for sale in September, Ms. Naini realized that it would be much harder to get those prices, so the developer agreed to cut them to $425,00 to $799,000. So far, she said, the developer has accepted offers from three buyers.
Sammy Brief, a partner in the Treo Group, the developer of Le Conselyea, said he had agreed to price cuts because he wanted to sell out in a few weekends instead of holding out for weeks for a little more cash.
“Every apartment that doesn’t sell the developer pays interest on,” he said. “I would rather take out the money right away and develop a different property.”
Owners of apartments and houses are also finding that they have to cut their prices, especially in neighborhoods with a lot of new construction or high-priced homes. Mr. Maundrell of Aptsandlofts.com said resale prices had dropped by 15 percent in the last year in Williamsburg and Greenpoint.
Owners of larger free-standing homes in the $2.8-million-to-$3.5-million range are becoming more open to negotiation, said Peggy Aguayo, an owner of the Aguayo & Huebener Realty Group in Park Slope, and buyers can try to knock 4 to 5 percent off the purchase price. Ms. Aguayo has seen five buyers ask in the last three to four months, and in four cases, the sellers agreed.
“There’s more negotiation there than there was before,” she said.
That’s what Josh and Mary Dennis found out. Last spring, the couple, who lived on the Upper West Side, saw a four-story renovated brownstone at 855 Jefferson Avenue when it came on the market in Bedford-Stuyvesant. They liked the house, but they thought the $1.1 million asking price was too high. They did some research and found that neighboring brownstones sold in the last year typically went for no more than $850,000. So they made an offer for $750,000, which the seller, Ban Leow, declined.
But after a $975,000 deal fell through, Mr. Leow, an agent for Fillmore Real Estate in Williamsburg, realized that he wouldn’t get the price he wanted. In the meantime, the Dennises increased their offer to $950,000, and Mr. Leow accepted.
Last month, the couple, their 22-month-old daughter, Ava, and Ms. Dennis’s brother, Steve Gasser, moved into their new home. Ms. Gasser said that she, her husband and her brother were happy with their purchase even though they are far from restaurants and a dry cleaner.
“There are deals out there,” she said. “You just have to compromise a little bit.”
Sunday, October 14, 2007