Well, yeah, it sounds like it if your hydrometer was reading 1.035 and you were expecting 1.052.
BUT, and this is what I do, I know that my efficiency is crappy. So, I just use more grain! And remember, whatever recipe you used is based on the recipe creator's efficiency. So, say I'm making Yuri's recipe and he gets 85% efficiency for an og of 1.050 (just an example!), using 8 pounds base malt. When I make that same exact recipe with my 68% efficiency (at best), my og will be 1.040. Since I know that before I start, I adjust my recipe to use 10 pounds base malt. So, you can find out what your normal efficiency is, and still create any recipe and any og.
Another thing you said- your hydrometer read 1.035 or 5% alcohol. That's not quite accurate. If you were making wine, yes, since it would ferment back to .990.
But that 5% is potential alcohol, not the true amount to expect in your beer. For a true ABV reading, the formula is (OG-FG) x .131. Beer always has unfermentables in it, and should never get below around 1.008 or so. So, if it was 1.035, and it finished at 1.010, the formula would be (35-10) x .131 = 3.28 ABV. A nice session beer!
So the answer to your questions is pretty complex, as you can see! The short answer is to take your sg when you get ready to pitch the yeast, and at the end of fermentation. The hydrometer is useful, though, for checking the runnings of your sparge as well as determining your pre-boil gravity.