Brooklyn Real Estate Prices Going Down or Staying Up?

Up, down, turn around. Please don't let me hit the ground.
--New Order

Yeah, it's a little off to quote an 80s song (totally out of context, no less) in an item about Brooklyn real estate prices, but it's what came to mind about the future of the overheated Brooklyn market over the next twelve months. Yesterday, the Daily News noted that prices are still strong in Brooklyn, but we wonder for how much longer.

We think there's going to be a lot of unsold stock as new units come on the market in neighborhoods like Williamsburg and Greenpoint, where, to put it crudely, a lot of grossly overpriced crap is going up. The Flatbush Avenue corridor and its new luxe highrises will be another interesting test of market demand. Other neighborhoods like Park Slope could soften a bit too in an overall slump, but that is because prices have zoomed into the stratosphere. We think demand will remain relatively high and undergird prices relative to other parts of Brooklyn. In simple terms, a $500K 1BR apartment in a brownstone with a view of Prospect Park will hold up far better in a softer market than a newly-built $500K 1BR in the middle of a construction zone on Berry or Kent Avenue. Just before the New Year, Brownstoner offered a very informed analysis of which neighborhoods could fare well and which might not, and there is a very long discussion thread with the item too.

And, then, there's this observation, from a blog called New York City Housing Bubble:

I went poking around last couple days at unfinished condos as well as relatively new units in Williamsburg and Greenpoint. Some prices are cut 10-20% off original asking prices, and sellers/developers were open to offers 10% below those discounted prices. This is not the bottom. Spring/Summer 07 will be a sight to behold.

It will be an interesting thing, indeed, to see what a more realistic market will bear as thousands of new units come on the market. We actually think that late 2007 and 2008 will be the real time of carnage in Brooklyn in terms of price cuts and unsold inventory.