Foreclosure Boom in Williamsburg and Greenpoint!

Jan 14, 2010 by Will Yakowicz

The 2009 real estate results are in:

Williamsburg and Greenpoint take 10th place among the borough’s 18 other community districts in number of foreclosures this year with 244 properties going belly up.

Although ranking 10th out of nearly 20 districts doesn’t sound bad the neighborhoods’ foreclosure filings increased 157-percent since 2008. Even worse, since 2007 the communities suffered a 352-percent increase.

Interestingly the new high-rise condos, which sprouted throughout the two neighborhoods like weeds since the 2005 rezoning, were hit the hardest.

“In 2009 Greenpoint and Williamsburg were the only community districts outside of Manhattan where the majority of its foreclosure filings came from condo units, rather than 1 to 4 family properties,” said Amy Armstrong a director of New York University’s Furman Center for Real Estate and Urban Policy who helped collect the foreclosure data for the entire city.

“Between 2008 and 2009, the share of foreclosure filings on condos doubled from roughly four-percent to nine-percent citywide.”

But condos are not the only types of housing that were hit hard this year. Mixed-use, commercial, and industrial buildings in Williamsburg and Greenpoint all suffered a decrease in value.

“The property value has dropped 10 to 30-percent in this area, but East Williamsburg and Bushwick may have dropped even 50-percent,” said Mark Lively vice president of sales at Massey Knakal.

Lively said that he closed 52 sales in 2009 compared with the real estate boom in 2006 when he closed 250 sales. He also said that half of his deals last year still had mortgages from the previous owner.

Although Lively said the price per square foot for an apartment on Manhattan Avenue dropped up to 40-percent, he was able to make some good financial deals.

“There’s a lot of work to be done in the market, especially with the broken new condo deals, but with mixed-use housing good deals can still be found,” said Lively.

So, It’s a Buyers Market, Right?

According to most brokers in the area if you need a loan forgetaboutit! Loans are hard to come by, even if you look good on paper to lenders. For the market to be yours, you need to have fast hands and a fat wallet.

“Prices are great for the buyer, but it’s so competitive that the deals get snapped up quickly. For people who have cash and are able to buy a home with cash — it’s a kid in a candy store,” said local broker Tom Bencivengo of Tungsten Property. “But if you need a loan, even if you make money, it’s hard.”

Fire Sale?

Bencivengo said that it’s tough times for getting a loan, but it even tougher times for selling. He said one to three family homes are between $650,000 to just under a $1 million.

“A seller with a price that is a tiny bit too high can sit for six to nine months,” Bencivengo said. “Prices drop by the month, the longer it’s on the market, the closer it gets to the $650,000 mark. It’s almost a loss to buy a two to three family home for over $800,000 and anything over $850,000 is asking for too much.”

Is the Bust Gonna Go Bust?

Jonathan Miller, the real estate guru and president of the leading real estate appraisal firm of the five boroughs, Miller Samuel Inc. will not say the bust has gone bust, nor are we close. The market’s doom is due to a network of cause and effect.

“In the general context when you have elevated unemployment it creates economic stress on housing. The longer we see the unemployment rate staying the same, the longer the stress on housing,” Miller said. “If the unemployment rate peaks in 2010 it still suggests we are going to have continued exposure to foreclosures.”

According to the Department of Labor, the unemployment rate in 2009 was 10.2-percent citywide and in Brooklyn it was 11-percent, double the rate in 2008. So, we still have a ways to go.

Miller also said that the credit crunch added to the increase in foreclosures.

“A few years ago, if you had a pulse you could get a mortgage. But lately the lenders have reverted to more conservative norms,” said Miller. “Part of the problem is not just people not being able to sell, but the lending standards are so different and owners cannot refinance. Until unemployment eases it’s unlikely that credit will ease. We are likely to see more difficulty in the real estate market.”