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Brooklyn Sale Prices Hit 11 Year High, Rents Press Ever Higher

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Brooklyn sales didn't break as many records as Manhattan sales did in the fourth quarter, but the borough kept right on pace. According to the Elliman report, prepared by appraiser Jonathan Miller, the median sales price in Brooklyn set an 11 year high, rising to $570,110. "It is the only borough to exceed the pre-Lehman peak," says Miller, "and speaks to how much Brooklyn has changed." The Corcoran report, however, shows that the sales market followed the fourth quarter trend of slowing down, with the median price slipping to $442,000 because of a wealth sales in South Brooklyn below $500K. Corcoran also found that the number of closed sales dipped 9 percent, but the Elliman report, on the other hand, shows that sales in Brooklyn jumped 21.2 percent year-over-year, and inventory fell to the second-lowest level since 2008. Thus, prices pushed higher.

Rents in Brooklyn kept up with the sales, inching upward, but the pace of growth slowed for the third consecutive month. December saw a median rent of $2,660, and an average of $3,181—a 10.5 percent jump from December 2012. The higher average is due to the luxury rentals increasing more than the overall market, according to Miller, who puts Brooklyn's luxury rent threshold at $5,001. Miller notes that these higher-end rentals are coming mostly from new developments.

In Manhattan, the situation for renters is a teensy bit better. Miller puts the December median rent at $3,100, which is a 1.6 percent drop from December 2012, making this the fourth month with a decline from 2012 levels. This, coming after 27 months without a decline, is kind of impressive. Manhattan renters also saw a rise in landlord concessions (equivalent to one month's free rent), which Miller attributes to landlords trying to keep the vacancy rate low. "Slipping rents and rising use of concessions are consistent with the rising vacancy rate, which was at its second highest level since I began tracking in August 2006," says Miller. He adds, "Part of the cooling off of the market a bit is related to the heavy sales volume of the past six months that poached renters from the rental markets who opted or were able to buy - trying to get in before rates and prices rose further."

Like Brooklyn though, the luxury rental market (starting at $6,595) in Manhattan also outpaced the rest of the market, with rents in the top 10 percent of the market rising 14 percent. This pushed the average rent to $4,009, according the Elliman, but MNS puts it notably lower at $3,756. Due to a lack of inventory, Battery Park City saw the greatest price increase, rising more than 10 percent from $3,941 to $4,341.

Because of a lack of data, Miller does not track rentals in Queens, but his fourth quarter sales analysis of the borough shows things are staying pretty much the same. "Queens housing prices have been bumping along up and down slightly over the past couple of years," says Miller. The borough's median sale price dropped a bit to $372,700, while the average price remained the same at $$431,241. Inventory, like everywhere else, is sharply down, having dropped 39.6 percent from Q4 2012 to 5,248 units. Sales jumped more than in Brooklyn or Manhattan, likely because mortgage rates spike in the spring, but Miller points out that last year, buyers in Brooklyn and Manhattan were rushing to close ahead of the fiscal cliff. "Queens didn't get the same fiscal cliff year end surge that Manhattan and Brooklyn enjoyed because the rush to close before year end in those markets was more heavily weighted at the upper end of the market," explains Miller. "So the fiscal cliff deadline looming, sales were unusually low back then—compared against the rush of activity this year, the sales increase was exaggerated."
· All Elliman Reports [Elliman]
· Brooklyn Q4 Sales [Corcoran]
· MNS Manhattan Rental Report [MNS]
· MNS Brooklyn Rental Report [MNS]
· All Market Report coverage [Curbed]