Like the rest of the city, Brooklyn's Cobble Hill section suffered a pronounced drop in prices in the early 1990s. The neighborhood's handsome brownstones have rarely passed the $500,000-mark in recent years, despite their 19th-century ambience and proximity to Wall Street.
But one Clinton Street house now has a sale pending for more than $900,000. On Kane Street, another home closed for $570,000. And for the first time in years, several brownstones have entered the market at more than $1 million.
Cobble Hill is the future, says the city. Boldly predicting a rebound, the Office of Management and Budget expects major rises in single-family home prices through the end of the decade.
In its latest report on economic conditions, OMB predicts the median price will rise 4% this year, to $166,500. If that's true, 1995 will mark the first increase since 1988, when the price of a single-family home was $185,000.
Successive years look even better. The report forecasts an 11.4% increase in 1996, 11.6% in 1997, 6.3% in 1998, and 10.4% in 1999, when the median price would be nearly $243,000.
Hard-hit category rebounds
The housing projections are another indication that New York's real-estate market, among the hardest-hit sectors of the city's economy during the last recession, has finally stabilized and is starting to rebound.
"We're expecting a turnaround," says Robert V. Nicoletti, chief economist of the city's Economic Analysis Unit.
Most of New York's single-family homes are outside of Manhattan, where a severely limited supply keeps prices far above those of the other boroughs. Predictions of overall price increases indicate a strengthening in areas where traditionally there has been less demand.
Many real-estate experts agree with OMB's predictions. "The city's figures don't surprise me," says Barbara Krongel, associate broker of Brooklyn's Harbor View Realty. "People are committing to New York again."
Still, some argue OMB may be a bit too optimistic. Job losses through big mergers and acquisitions-like the Chase and Chemical deal-make the economy less stable than the city thinks, say some experts. OMB's figures are based on expected national home-price rises, though New York's real-estate market is driven by many factors endemic to the city.
"There are a lot of caveats to our numbers," admits Mr. Nicoletti. "But they're the best we can do." One City Hall insider expects the price projections for single-family homes to be lowered in the next economic report.
However, the figures do reflect a new buoyancy in the residential real-estate market. Experts predict healthy price increases in the city's far more plentiful cooperatives and condominiums. Manhattan-based appraiser Mitchell Maxwell & Jackson Inc. expects an 8% to 10% appreciation rate for the city's co-ops and condos next year. In the first three quarters of 1995, there has been a 7.7% growth.
Rental pushes home-buying
"Rental is strong and getting stronger, so people are being driven into buying again after a lull," says Jeffrey J. Satriewicz, a Mitchell Maxwell principal.
Whatever happens with pricing, there is widespread agreement that the number of homes sold will continue to rise steadily. Only 8,313 single-family homes were sold in 1991, a drop from 10,661 in 1988. In 1992, the total grew to 9,608; in 1993, 10,736; and last year, 12,300 homes were sold.
The biggest price gains will come at the high end.
"For single-family homes in Manhattan, the city's 11.4% projected rise next year is conservative," says Barbara Corcoran, who is the president of the Corcoran Group Inc.
Ms. Krongel, the Brooklyn broker, notes that in Carroll Gardens, narrow 15- or 16-foot-wide homes that need work are selling in the mid-$500,000 range.
"Not only are purchase prices going up, the amount of money people are willing to put into them to fix them up is rising, too," she adds. "That tells me people are putting their roots down in the city again."
Carl Neuhaus, who is an associate broker of Staten Island's Neuhaus Realty Inc., says that single-family detached homes are selling especially well. Buyers still see the borough's townhouses and condos as a risky investment after their big depreciation during the recession.
For some neighborhoods, real-estate agents argue that the city's figures are way off base. Jack Blumner, who is an associate broker at First Choice Real Estate Inc. in Queens, says housing prices will be "stable." To project major rises is to "fall victim to the same thinking that damaged the market in the early Eighties, that we would see increases forever," he says.
"I would be very unhappy if prices rose as fast as the city expects," says Mr. Blumner. "That kind of rise would just scare buyers away again."