(Photo: James Leyne/Corbis)

Edgy Brooklyn
Two kinds of buyers choose the less bourgeois stretches of Brooklyn: the arty crowd in Williamsburg, Greenpoint, and (at the wealthy end) Dumbo; and the families that have made a go of areas like Bedford-Stuyvesant, Red Hook, and Crown Heights. Few will do great in a downturn, but the hipsters will be better off than the rest, who are likely to find themselves with no buyers to cover those renovation loans. That’s especially true in Bed-Stuy, with too few newcomers to offset stubborn crime and weak schools. Paying $750,000 for a house here puts you well into a danger zone. Crown Heights is better off, because of better subway access and proximity to Park Slope, but its houses still seem overvalued. A far stronger bet is Red Hook: Though there’s no subway and a huge housing project, it has the critical mass to handle a downturn. Water access, plans for Ikea and Fairway, and a continuing shortage of good properties suggest a real future. Williamsburg will remain a destination for those attracted to expensive vintage clothing and Thai food set to techno, and Greenpoint, next door, is a leafy family neighborhood with loads of owner-occupied three- and four-story townhouses that many brokers believe are still a little underpriced. The first casualties will be apartments around the Lorimer L stop, which lack the nightlife draw. Anyone overpaying for a condo in the Gretsch Building should watch out, given that 10,000 new apartments with waterfront views will be on the market in a few years. As for Dumbo, it’s small enough to keep demand high: “It’s there to stay,” says appraiser Jeffrey Jackson.

Risk Factor: 7.0