Home prices in Brooklyn, New York’s most populous borough, declined 5.3 percent in the first quarter as low mortgage rates pushed first-time buyers into the market for cheaper properties.
The median price of condominiums, co-ops and one- to three- family homes that changed hands in the the period fell to $450,000 from $475,000 a year earlier, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today in a report. Purchases totaled 1,807, down 24 percent from the four-year high reached in the first quarter 2011, said Jonathan Miller, president of Miller Samuel.
Demand shifted toward less-expensive homes as renters discovered they could afford to buy amid a drop in borrowing costs, according to Miller. The median price of condos sold in the quarter fell 8.1 percent from a year earlier to $478,000, according to Miller Samuel and Prudential. For cooperative apartments, the median dropped 6.8 percent to $275,000.
“Cheaper stuff was bought because mortgage rates fell to record lows and stayed there,” Miller said in an interview. “The first ones to react tend to be the entry-level consumer, someone that’s trying to get into the purchase market, and the sharp drop in rates made it affordable.”
The average interest rate for a 30-year fixed U.S. home loan fell to 3.87 percent in February, the lowest in Freddie Mac records dating to 1971. The rate was 4 percent or lower for all but one week in the first quarter, according to the McLean, Virginia-based mortgage financier.
Condo Sales Down
Condos accounted for 30 percent of all sales completed in three months through March, down from 39 percent in the first quarter of 2011, Miller said. Co-ops accounted for 20 percent of deals, the same as a year earlier.
The number of Brooklyn properties listed for sale in the quarter declined 17 percent to 6,092, as lenders delayed bringing seized homes to the market while negotiating with state attorneys general who were investigating foreclosure abuses. The top U.S. mortgage-servicing banks agreed to a $25 billion settlement in February.
“You have an inventory total that is light on foreclosures,” Miller said. “If we didn’t have the hold-back on inventory, you wouldn’t have seen the same level of decline or any decline at all.”
Brooklyn homes stayed on the market an average of 152 days, 18 percent longer than a year earlier. Sellers pared an average of 3.5 percent off their original asking price to strike a deal in the quarter, compared with a 4.8 percent discount offered at the beginning of 2011.
In Queens, the city’s second-most-populous borough, sales plunged 16 percent in the first quarter to 2,176, and the median price fell 1.1 percent to $346,275, according to Miller Samuel and Prudential. The inventory of available properties fell 35 percent to 8,851.