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It's Time to Stop Thinking About Brooklyn & Queens As Cheap

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There was a time when Manhattan set the pace far and away for sales and rental records, but that time has passed. Brooklyn is right on its heels. After new stats released last week declared that Manhattan apartments reached an all-time high in their average sales price (amongst other things), Brooklyn has proven to follow suit. New stats released by Douglas Elliman confirm that Brooklyn sales prices also reached an all-time high in their average, coming in at $788,529. Granted, Manhattan still trumps at $1.87 million, the two come in even closer in median sales price (which data people like Curbed contributor and market reports wiz Jonathan Miller argue is a more accurate reflector of the real estate landscape.) While the median sales price in Manhattan in Q2 was $980,000, Brooklyn's median sales price was a not-too-shabby $605,000.

Given that this all sounds impressive, it's worth noting that Brooklyn sales prices increased less than one percent since the end of this quarter last year. But more and more people want to stake their flag in the borough; Corcoran's stats say that just over 1,300 properties sold in Brooklyn in the second quarter, marking the second highest quarterly sales total in the last four years. Competition for property is stiff. Elliman says the average amount of time a listing remained on the market at the same price was a mere 73 days, which is 33 percent less time than was recorded for quarter two last year. Those 73 days, Jonathan Miller says, is the shortest average amount of time properties in Brooklyn have been on the market since Elliman started tracking housing data in 2007 (and let's be real, Brooklyn was a lot different, even then.)

As is to be expected these days, Queens also set all kinds of records in the second quarter. The average and median sales price of condos in the borough set an all-time high, at $575,339 and $468,000. Resale condos also set records for average and median sales price and price per square foot, which helps cement Queens' status as the abstract Statue of Liberty of 21st-century New York City ("Give me your tired (of paying rent), your poor (from paying rent), Your huddled masses yearning to breathe free (from Manhattan and Brooklyn rents) ... "). Unsurprisingly, Long Island City, with its proximity to Manhattan and never-ending stream of cushy new developments, is rising rapidly with a new median sales price of $998,000. That's more than a 25 percent bump from this time last year, when the median sales price was $775,000.

Although Queens once provided less expensive rents, prices in the borough's western neighborhoods are still holding their weight despite a slight lag in rising prices. While the median rent hasn't risen in a few months, that doesn't have to do with a lack of demand; it just means that more studio and one-bedroom apartments are making their way onto the market, which traditionally cost less than apartments with two bedrooms or more. Being that prospective buyers across the city have largely been priced out of Manhattan and Brooklyn, it makes sense that smaller "starter" apartments are on the up and up in Queens. Although median prices in the borough have been down for a few months, median sales prices rose a whole 8.5 percent year-over-year from $355,000 to $385,001.

As is to be expected, Manhattan and Brooklyn rentals made some serious headway in June. Manhattan shows no signs of being any less on fire than it is, with June marking 16 whole years of consistently rising rents (!!!) in the city's smallest and most expensive borough. Curiously, lower-priced apartments saw the highest price-ups last month, with Citi Habitats reporting that the average price of a Manhattan studio rose 3.6 percent since this time last year to an average ask of $2,272. One-bedrooms rose a not-insubstantial 6 percent in the same period to $3,016. Miller explains that smaller apartments are rising and larger ones are not responding with a price up because this is "what the market will bear," which is comforting in a twisted way. Brooklyn median rents set an all-time high at $2,964. Brooklyn's rentals followed a similar path to Manhattan's, where price gains were mostly seen in smaller apartments.

The takeaway? People are turning to Brooklyn when they get priced out of Manhattan, and those getting priced out of Brooklyn are turning to Queens, lifestyle choices aside. Mortgage lending is still super tight (you can in part thank these guys for that), so "starter" apartments are still unobtainable for those looking to buy, which is keeping people in the rental market and putting pressure on smaller apartments. Prices are going up, and they don't appear to be slowing down.
· Brooklyn Sales Market Report [Elliman]
· Queens Sales Market Report [Elliman]
· Manhattan, Brooklyn, and Queens Rental Market Reports [Elliman]
· 2Q15 Brooklyn Sales [Corcoran]
· Market Reports archives [Curbed]