Q2 2018 Brooklyn Market Insights Report
While buyers in the Brooklyn market may be taking a similar pause as their Manhattan counterparts, listings are moving at a more solid clip.
Overall inventory numbers remain relatively stable or down and sellers are aligning themselves with current market expectations which has lead to quicker absorption and a more active environment.
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Condo inventory increased in 2Q 2018 by 4% year-over-year from 980 listings to 1,020 listings, attributable to a 6% year-over-year increase in inventory priced under $3M, which accounted for 92% of condo inventory in Brooklyn. This increase in inventory in the ‘core’ price segment of the market mirrors what was observed in Manhattan during 2Q 2018, where core-luxury inventory increased by 15% year-over-year. Buyers contemplating condos in Brooklyn priced between $500K - $3M exhibited patience as a result of numerous factors: (1) the recent tax reform that reduces deductibility of state and local taxes, including property tax in New York, (2) gradually rising interest rates, which directly reduces affordability for leveraged purchasers, and (3) awareness of potential market weakness / perceived over-supply in the core luxury market.
With regards to co-ops, the number of listings totaling 561 in 2Q 2018, represented a 1% decline from 2Q 2017, driven mostly from a 6% decline in inventory priced below $1M, which accounted for 83% of co-op inventory. This decline in sub-$1M inventory was offset by a 34% increase in inventory priced above $1M. As a result of this influx of inventory priced above $1M, the median asking price of a co-op increased by 15% year-over-year from $485K to $560K.
With regards to single family homes, inventory declined by 12% year-over-year to 270 listings in 2Q 2018 from 305 listings in 2Q 2017, driven by a significant reduction in homes asking less than $1M (-40% y-o-y) as buyers absorbed lower-priced inventory during the quarter. Similar to the co-op market, as a result of less inventory available at lower price points, the median asking price of a single-family home increased to $1.9M in 2Q 2018 from $1.7M in 2Q 2017.
02. Contracts Signed
Given the aforementioned concerns of core purchasers, the number of condo contracts signed during 2Q 2018 totaling 496 reflected a 3% year-over-year decline. Condos priced under $1M, which represented 45% of total contract velocity, experienced a 14% year-over-year decline from 263 contracts last year to 225 contracts this period. Particularly, neighborhoods such as Williamsburg, which accounted for the largest share of contracts signed (19% of total condo contracts), saw contract velocity dip by 25% year-over-year from 123 contracts signed in 2Q 2017 to 92 contracts in 2Q 2018, mainly attributable to the looming L-train shutdown.
Co-op contract velocity declined by 2% year-over-year from 356 contracts in 2Q 2017 to 349 in 2Q 2018 -- albeit at higher asking prices. The median last asking price of a co-op contract was $699K -- a 12% year-over-year increase from $625K and a 26% quarter-over-quarter increase from $554K.
Single-family contract velocity dipped by 33% year-over-year from 169 contracts signed in 2Q 2017 to 113 in 2Q 2018. This decline was driven primarily by homes last asking between $1M - $3M, which experienced a 41% year-over-year decline in contract velocity from 112 contracts signed in 2Q 2017 to 66 in 2Q 2018.
Condo closings declined by 15% year-over-year from 708 closings in 2Q 2017 to 599 in 2Q 2018, driven mostly by clustered closings at numerous new developments during 2Q 2017. New Development projects such as 550 Vanderbilt, The Boerum, Austin Nichols House, 465 Pacific Street, 251 First Street, and 51 Jay Street accounted for 200 closings alone during 2Q 2017. 2Q 2018 closings were further exacerbated by a broader decline in contract velocity intra-quarter driven by lingering uncertainty for buyers in the core price segment of the condo market.
Co-op closings totaling 318 during 2Q 2018, represented a 5% year-over-year decline, primarily driven by a 19% year-over-year decline in co-op closings priced between $1M - $3M. Predominant co-op neighborhoods such as Southwest and Southeast Brooklyn, which accounted for 50% of total co-op closings, yielded mixed year-over-year results. In Southwest Brooklyn, where the median sales price increased by 5% year-over-year to $341K, co-op sales were up 3%. On the other hand, co-op closings in Southeast Brooklyn, which had a more sizeable increase in median sales price of 14% y-o-y to $359K, saw a 15% decline in the number of closings, as demand tapered in response to higher prices.
Single-family closings declined by 24% year-over-year from 238 in 2Q 2017 to 182 in 2Q 2018. This decline was primarily driven by homes priced between $1M - $3M, which saw a 35% year-over-year decline in closings from 101 in 2Q 2017 to 66 in 2Q 2018.