Attention, New Yorkers who still think Brooklyn is an affordable alternative to Manhattan: stop deluding yourselves. The second quarter market reports for Brooklyn and Queens show that's no longer the way of the real estate world. "Brooklyn has evolved into a destination market and is standing on its own," says Jonathan Miller, appraiser and Elliman report preparer. "While there is Manhattan spillover from people that are priced out, many buy there because it's 'Brooklyn.'" And Brooklyn comes at an ever-increasing price. Median and average sale prices set record highs, rising 15 and 14 percent respectively to $550,000 and $672,000. In new developments, prices are even higher, according to Corcoran's report, rising to $834,000 compared to $756,000 during the same period last year. At the high end of the market, things rose even more; the luxury median sale price increased 20 percent to $1.65 million. Everything is on the up and up because inventory continues its downward spiral, dropping more than 18 percent to the lowest second quarter level in five years.
[Charts via the Elliman Report]
Because prices keep climbing in Brooklyn, the Queens market is picking up speed. "Queens is the beneficiary since people that are being priced out of Brooklyn are considering Queens," says Miller. "While Brooklyn has been strong for a few years, Queens is just getting started, posting a couple of strong quarters and is benefiting from Brooklyn's strength." Inventory in Queens is still falling (as it is in the whole region), sitting steady at an 8-year low. Sales increased quite a bit in Q2, making for the fastest absorption rate in five years. Median sale price rose nearly 10 percent to $390,000, while the average rose a tad more than 10 percent to $441,417. The luxury market kept pace, rising 9.1 percent to $900,000 ("What a steal!"?the immediate thought in our $95-million-listing-warped brains).
Drivers of the market remain the same: tight credit is keeping inventory low because many people who would like to sell don't qualify, therefore they can't buy. So everyone is just sitting tight until the market "rises enough for them to have more equity to buy."
In the land of Brooklyn rentals, prices in June?wait for it??also rose to record highs! Miller found the median rent to be $2,737, the highest since he began tracking in January 2008. The average jumped 13.6 percent from last year, to $3,122. The MNS report found rents to rising significantly less, with the average hitting $2,552, but that's likely due to the fact that the MNS report looks at more neighborhoods than the Elliman report, which just looks at the North and Northwest regions of the borough. MNS includes further outlying neighborhoods that tend to be cheaper, like Bay Ridge, Bed-Stuy, Clinton Hill, Crown Heights, and Prospect-Lefferts Gardens.
MNS looks at individual neighborhoods, and things varied quite a bit across the board. Williamsburg saw rents rise on all units, while Dumbo had the biggest jump, with studio rents rising more than 9 percent. Boerum Hill, Cobble Hill, and Crown Heights, on the other hand, all saw a decrease in the average rent.
Across the river in Manhattan, Miller found mixed results, with median rents rising less than 2 percent year over year to $3,135, "which may or may not be the beginning of a trend." Miller put the average rent at $3,870, slightly less than it was in June of 2012, but on a quarterly basis, the median rent was the highest it's been in four years. The MNS and Citi Habitats reports also found rents to rise, but not on the same pace. MNS says rents rose more than 4 percent, hitting $3,842; Citi Habitats found the average rent to be $3,424. All three reports found studios rents to rise the most, so get yourself some roommates because, according to Miller, "Rents remain high and no short term relief is expected."
· Elliman Market Reports [official]]
· Citi Habitats reports [official]
· MNS Brooklyn June 2013 rental report [official]
· MNS Manhattan June 2013 rental report [official]
· All Market Reports coverage [Curbed]