The borough of Kings may still be the lady-in-waiting when it comes to real estate prices, but the gap between Brooklyn and Manhattan continues to shrink rapidly. Brooklyn saw an 11.6 percent jump in the median home sale price in the third quarter of 2013, to $564,720 from $506,000 in the same period last year, according to the latest Douglas Elliman market report, released today.
The strong demand for Brooklyn homes in the face of an inventory crunch meant that the absorption rate (which measures how long it would take to sell off all available homes) plummeted 29.9 percent to 5.4 months – the fastest seen in the past five years, according to Miller Samuel CEO Jonathan Miller, who authored the report.
“Brooklyn prices broke the peak seen in the third quarter of 2007,” Miller said, pointing to a combination of ever-tightening inventory and the increase of upscale housing stock. “Prices have been rising faster than any other borough.”
The number of sales transactions, however, fell to 2,119 in the third quarter of 2013, representing a 2.4 percent year-over-year decrease.
“Sales were impaired by lack of supply,” Miller said, “leading to sharp gains in price.”
The Corcoran Group’s Frank Percesepe, discussing the brokerage’s own third-quarter sales report, pointed to the same emerging neighborhoods that saw rent growth in the last month – namely Crown Heights, Prospect Lefferts Gardens, Bushwick and Bedford-Stuyvesant — as the symbols of the sales market’s strength.
Indeed, median multifamily sale price in those neighborhoods jumped 43 percent year-over-year to $873,000 from $610,000, the Corcoran data show. And in the neighborhoods of Carroll Gardens, Boerum Hill and Red Hook, median multifamily prices jumped a staggering 66 percent year-over-year to $2.695 million from $1.63 million, the report says.
“I had a little bit of trepidation because I knew inventory was very weak,” Percesepe said. “But as the listings rolled in, everything started to sell – we saw incredible demand.”
He did express concern, however, about the borough’s “terrible inventory crunch.” The new development inventory that hit the market two years ago was all swallowed up.
“Right now we’re waiting for new units,” he said.
Prices in the Queens market, in contrast, stayed relatively stable in the third quarter of 2013, with the median sales price rising 0.5 percent year-over-year to $372,000 from 370,000, according to the Elliman report. Sales activity increased significantly, however – the number of sales jumped 29.6 year-over-year to 3,251 from 2,509. Inventory in Queens, as in Brooklyn, fell sharply 32.3 percent year-over-year to 6,124 from 9,052, while the absorption rate also plummeted 47.2 percent year-over-year to 5.7 months.
In Brooklyn, “supply is much tighter in relation to demand,” Miller said, which is why the borough saw such big price spikes. In Queens, however, the lack of supply in relation to demand was not as extreme, allowing prices to stay stable.