Brooklyn is hotter than ever. No longer a secondary choice for those who could not afford Manhattan, in the past few years Brooklyn has become a destination for those seeking quality lifestyle and housing with a dialed back less intense lifestyle than in Manhattan. Brooklyn boasts some of the hottest areas in New York City real estate: Cobble Hill, Park Slope, Brooklyn Heights and Williamsburg are sizzling. The New York Times recently dubbed this phenomena the “Brooklyn Gold Rush.”
Numerous factors play into this shift including: economics, lifestyle, the quality of apartments and education. Obviously, economics is a major factor as Brooklyn for the most part is less expensive than Manhattan (but that is changing fast). But that’s not all. Young singles and couples are attracted to the borough for its burgeoning innovative restaurant scene, the beauty of the location, the less pressured style of life (the so-called “Brooklyn Chill”) and a flourishing cultural scene. The quality of the space and floor plans in older buildings, which can still offer old school charm with a little bit of quirk, add to the allure. Some excellent public and private schools draw couples with young children.
The overall Brooklyn market experienced a robust upsurge in the second quarter. Product was moving at the fastest pace in two years and the second fastest since the fourth quarter of 2008. According to the Elliman Second Quarter Market Report, the average sale price was up 3.6% at $585,700 from the first quarter with the median price up 6% to $477,000. Overall sales increased to 1,807 units, up 10% from the first quarter. With the listing discount of 4% remaining stable.
Inventory of 5,772 units was down 5.3% from the first quarter and 17.6% from 2011. This reflected increased demand and a drop in supply. The lack of product, and the continued stringent requirements by financial institutions, even with historically low interest rates, held back further market improvement.
New developments surged as some projects resumed selling and new product came onto the market. This, along with the increase in sales of larger apartments, helped drive up the averages. The average price per square foot at $622 was the highest since the fourth quarter of 2008.
Particular strength was seen in brownstone (1-3 family homes) sales which comprise 47.9% of the market. According to Jonathan Miller, of the appraisal firm of Miller Samuel Inc. who prepares the Douglas Elliman quarterly reports, the price of a brownstone in Park Slope increased 20% to $1.45 million over the second quarter of 2011, with 158 sales. In Boerum Hill the increase was 60% to $1.7 million and in Red Hook, with a smaller base, the price increased 73% to $825,000.
The rental market also showed significant strength. For example, according to one market report, Park Slope rents in April were up 33% from the 2011 level. Anecdotal evidence confirms the various reports and shows Brooklyn as having the most cash-return possibilities for first time investors. One of my colleagues bought in Williamsburg at $600/sf and sold 12 months later at $800/sf.
The lack of inventory is bringing back the fast-paced days of 10 years ago with apartments moving in three days.
To those who grew up in Brooklyn in the several decades after World War II, the borough was a special place. It has regained that status.