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Brooklyn home prices rise the most in 6 years

[NEW YORK] Home prices in Brooklyn, New York’s most populous borough, had the biggest gain in six years as buyers competed for a dwindling number of properties for sale.

The median price of condominiums, co-ops and one- to three-family homes that changed hands in the fourth quarter was US$512,500, up 13 per cent from a year earlier, appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate said yesterday. The inventory of listed homes tumbled 21 per cent to 4,685, the lowest since Miller Samuel began tracking the data in 2008, said Jonathan Miller, the New York-based firm’s president.

“People who have been patiently waiting on the sidelines are having trouble finding something,” Michael Guerra, a managing director at Douglas Elliman who oversees Brooklyn sales for the brokerage, said in an interview.

“There’s not much new development, and in the resale section of the market, there are just fewer people who are moving.”

Owners are in no rush to list their properties for sale in a market where prices have changed relatively little in three years, Mr Miller said. Those who bought during the market peak and saw their values plunge in the crash may not have built up enough equity to sell and trade up to something bigger, he said.

“I don’t want to list and be officially on the market until I’ve identified the property I’d like to buy,” Mr Guerra said of his clients’ thinking. “But I don’t have a lot of property to look at, therefore I’m going to wait.”

Sellers are also reasoning that buyer demand will last as long as borrowing costs are low, according to Mr Miller. With the average rate for a 30-year fixed loan hitting a record 3.31 per cent in November and the Federal Reserve pledging to keep rates down through 2015, owners see no urgency to attract buyers now, he said.

Inventory is also scarce in Manhattan, where the number of homes for sale dropped to the lowest in at least 12 years, Miller Samuel and Douglas Elliman said on Jan 3.

The year-over-year price jump in Brooklyn was the biggest since the third quarter of 2006, Mr Miller said. The median sale price reached a peak of US$540,000 a year later.

Home purchases in the borough totalled 1,445 in the fourth quarter, down 7.3 per cent from a year earlier, according to Miller Samuel and Douglas Elliman.

Properties spent an average of 136 days on the market in the quarter, about the same as a year earlier. The absorption rate, or the amount of time it would take to sell all the listed properties at the current pace of deals, was 9.7 months, down from 11.4 months in the fourth quarter of 2011.

The listing discount, or the amount that sellers agreed to whittle from their last asking price to strike a deal, fell to 1.5 per cent from 3.7 per cent a year earlier.

“When the spread tightens it means you have lack of inventory, and you’re not seeing sellers overprice,” Mr Miller said.

“The concern would be that as we see inventory continue to fall, the pent-up demand from lack of supply” will spur owners to set unrealistically high prices, he said. “At least at this point, sellers are maintaining their sanity.”

In Queens, the city’s second-most populous borough, the median sale price in the fourth quarter climbed 14 per cent from a year earlier to US$390,000, Miller Samuel and Douglas Elliman said. The number of deals dropped 4.4 per cent to 1,914, and the inventory of homes for sale was little changed at 8,683. – Bloomberg