Today, Brooklyn is quickly becoming a real estate haven for investors, with prices skyrocketing throughout its varied neighborhoods. Find out how the luxury market is being affected and when to invest in Brooklyn’s real estate market.
Brooklyn Real Estate Breaking Records
In Q1 2018, one-third of all neighborhoods in Brooklyn hit record high rents, according to studies from StreetEasy. Brooklyn plays host to the three neighborhoods with the most expensive median sales price in all of New York City. These neighborhoods are Carroll Gardens, SoHo and Tribeca. Across the board, Brooklyn real estate is rising. Its cost of living places it currently as the 17th most expensive city to live in on the planet.
The average cost of a one bedroom apartment:
- in Brooklyn city center – US $1,146.99/sq .ft
- outside of Brooklyn city center – US $600.00/sq .ft
The average rent for a one bedroom apartment:
- in Brooklyn city center – US $2,782.35/sq .ft
- outside of Brooklyn city center – US $1,837.50/sq .ft
With a seven percent increase in median sales price year-over-year, Brooklyn is quickly catching up to Manhattan – just to give some perspective.
East Brooklyn, Prospect Park, and Williamsburg are some of the only neighborhoods that have experienced a dip in prices over the past year. All of these locations took a dip of around four percent each.
Brooklyn vs. New York Real Estate
In high flying neighborhoods around New York, developers are all about commercial properties such as hotels. Many of them are actually moving completely away from the residential market. Locals in New York are becoming less and less able to afford apartments, either buying or renting. However, office space and space for vacationers and travelers are still at a premium in many locations.
Gentrification is taking place all over the United States and you can see this kind of gentrification going on in Brooklyn, although it is not quite as strong. Compared to the other boroughs, Brooklyn is slightly less commercial. You still get a “street” feel to the area, which is why it is so popular for upper-middle-class hippies and young travelers who are looking to “find themselves.” These are people with generational wealth who are paying for apartments and upkeep through fathers and grandfathers. Everyone else is really being priced out of the market. Many of them are moving to neighboring states to find lower home prices.
Part of the success in Brooklyn is due to the slow growth in Manhattan during 2017. These reports come from real estate research firm Miller Samuel, who said that Manhattan’s lower inventory helped to tighten up the market in Brooklyn. If people cannot get in the center of the action – Manhattan – they are willing to settle for a place just outside of the real deal, as long as they are within arm’s length of the golden trophy. Smart municipalities recognize this and will use that attention to turn themselves into a golden trophy that begins to attract its own attention. This is exactly what developers are doing in Miami Dade County and in many up-and-coming cities across the world, including Izmir, Casablanca, and Dallas.
Signs of Cooling Means Move Fast
Brooklyn has been showing sales gains for the past 10 quarters. Although Brooklyn is breaking certain records, there are certain other leading indicators that show these records will not continue to accelerate at the pace that bullish investors may want. For instance, listings inventory topped out at 2043, which is a fall of 10.8 percent. The luxury market is currently making headlines. Although all indicators point to a decline in Brooklyn luxury real estate over the next few years. Luxury product in Brooklyn actually fell during its record-breaking quarter to 197 total properties. This is a fall of 21.8 percent.
The moral of the story is very simple – get in quick before Brooklyn shuts itself down to new investors. Because fewer sales are occurring at many price points, any slowdown in Brooklyn is going to occur across the entire market.