Brooklyn’s scorching real-estate market isn’t cooling off. The borough set new records for both prices and sales volume in the second quarter, according to reports from brokerage agencies. Sales of apartments and houses reached 2,845 in the period, the most for the second quarter in a decade, according to a new report from the Douglas Elliman firm. Brooklyn’s median sales price hit $795,000, up nearly 21% from the same quarter a year ago.
The loftiest prices were for townhouses in the brownstone belt, reaching a median of $2.2 million, up 13% from a year ago. While Brooklyn’s rental prices have stabilized, the borough’s hot market for sales has created a spillover effect, helping to boost prices in Queens as well. “Brooklyn has become the new Manhattan, while Queens has become the new Brooklyn,” stated Steven James, CEO for Elliman, New York City. “As prices rose in Manhattan, buyers moved to Brooklyn and now we’re seeing this flow of buyers consider Queens.”
Part of the pressure on prices has been created by tight inventory, with Brooklyn listings in the second quarter at 2,257 homes, down nearly 16% from the quarter a year earlier. That’s the lowest inventory recorded in the nine years it has been tracked, Elliman said. Bidding wars were a factor too. Defined as sales prices higher than the list price at the time of contract, bidding wars accounted for 23% of all Brooklyn sales in the quarter, sending the prices of those homes 4% over the list price.
Brooklyn’s price increases go well beyond its prosperous northwest corner. Townhouse prices averaged 14% higher than a year ago in central Brooklyn and 8% higher in south Brooklyn, according to the Halstead agency. Condo prices showed similar gains. “Halstead is seeing brisk activity in Brooklyn as the borough continues to attract an influx of buyers seeking great value and variety,” stated Trish Martin, managing director of Brooklyn sales for Halstead, which operates eight storefront offices in the borough.
The market fever in Brooklyn has proved contagious for Queens, which saw median sales prices rise nearly 10%, to a record $510,000, Elliman reported. Prices of luxury homes in Queens increased 9%, to $1.2 million.
For prospective Brooklyn renters, the good news is that prices have finally softened after many years of increases, thanks in part to new residential construction. In the second quarter, the number of new leases surged (62%, to 1,717) as rents declined, Elliman reported. Landlord concessions were nearly three times as common as a year ago.
The median net effective rent in Brooklyn, including concessions, was $2,813, down 1.6% from the same quarter in 2016. “Rents remain high but prices are sliding as concessions have stabilized,” stated Jonathan Miller of Miller Samuel, Inc., the author of Elliman’s reports. “Concessions are three to four times higher than they had been a few years ago, but they are staying consistent because they are working and vacancy has stabilized. I don’t expect concessions to rise much higher than they are now.” In other words, stated Hal Gavzie, Elliman’s executive manager of leasing, “This is a very good time for customers to be in the rental market.”
Miller told Curbed that he thinks the Brooklyn market still has plenty of room to grow, particularly in the condo market. Said he: “I don’t think we give enough credit to how powerful this ‘Brooklyn phenomenon’ is.”