Brooklyn Home Sales Soar as Buyers Flee Manhattan Price Hype
Homebuyers in Brooklyn competed for a record-low number of listings in the fourth quarter, driving up prices in the New York borough that's historically been seen as a refuge from Manhattan's high costs.
Purchases in Brooklyn rose 22% from a year earlier to 2,582, while the median price of those deals climbed 15% to a record $750,000, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The number of homes for sale at the end of December tumbled 31% to 2,232, the fewest since the firms started keeping the data in 2008.
The sales market in Brooklyn, the city's most populous borough, is moving in the opposite direction to Manhattan’s, where rising supply is offering buyers more choices and the option to walk away from listings they view as overpriced. Manhattan's median home price dropped 8.7% in the fourth quarter to $1.05 million as sellers awakened to a slowdown after years of holding out for all they could get, the firms said last week.
"You have a disconnect with sellers in Manhattan, and Brooklyn is poaching some of that demand," Jonathan Miller, president of Miller Samuel, said in an interview. "Overall, it's generally a lower price point, and affordability has been a big issue the last couple of years."
Buyers seeking lower-priced properties also turned to Queens, where deals climbed 14% in the fourth quarter from a year earlier to 3,917, Miller Samuel and Douglas Elliman said Thursday. The median price of those purchases rose 6% to $498,000, the second-highest in records dating back to 2003.
With listings in Queens plummeting 22%, few sellers needed to accept discounts. An average of 0.7% was whittled off the asking price in the quarter, compared with 2% a year earlier, the firms said. The absorption rate, or the amount of time it would take to sell all the listed properties at the current pace of deals, was 2.8 months, the fastest in 11 years.
"In the outer boroughs, the sentiment remains that there's a lot more upside, that there’s still gas in the tank" for prices to rise, Miller said.
In Brooklyn, prices climbed across all property types, according to Miller Samuel and Douglas Elliman. The median for condos, including new developments, jumped 23% to $895,000, while co-ops sold for a median of $385,000, up 6.9%. The median price of one- to three-family homes increased 9.3% to $830,000.
Brooklyn buyers were so eager to compete that more than half of transactions in the quarter were at or above the asking price, Miller said.
Corcoran Group, in its own report Thursday, said the supply of costly new-development units in Brooklyn almost doubled from a year earlier to 566 units. At the same time, inventory for $350,000 to $500,000 was little changed, and listings for less than $350,000 fell 13%. The dearth of lower-priced options led to the fewest fourth-quarter apartment sales that the brokerage has recorded since 2012.
Brooklyn buyers at lower price points have been searching deeper into the borough, in neighborhoods further from Manhattan, said Frank Percesepe, an executive vice president at Corcoran who oversees the firm's sales for the district.
In South Brooklyn, including the waterfront neighborhoods of Coney Island and Sheepshead Bay, the median price of deals climbed 25% to $375,000, with inventory shrinking 5% to 963 properties for sale, according to the company.
Closer to Manhattan, the area including the Brooklyn Heights and Cobble Hill neighborhoods saw the median price rise 9% from the final quarter of 2015 to $1.01 million, according to Corcoran. Sales in that area, nearest to the Brooklyn Bridge, fell 2% to 165 deals, while inventory dropped 20% to 167 properties on the market at the end of December.
"There's a real problem with inventory at the low end," said Percesepe. "If we had additional inventory at the lower end, we'd see double the business we're doing today."