The Real Deal New York

Residential market report

From Manhattan townhouse reality checks to Bushwick’s mammoth price growth, a look at the biggest trends
By Chava Gourarie | July 01, 2018 01:00PM

12 East 69th Street

Record townhouse deal falls apart, but market is unfazed

June was a tough month for Vincent Viola, whose deal to sell his Upper East Side mansion for $80 million fell through, but it was a good one for Manhattan’s townhouse market overall, according to sources. The Virtu Financial CEO had listed the 20,000-square-foot property for $114 million in 2013 and was in contract to sell it to an unnamed Chinese buyer. The sale would have set a new record for the city’s townhouse market, but it also would have been an outlier and not reflective of the overall townhouse market. Townhouse sales on the Upper East Side, in particular, have struggled at the higher end. The median price for townhouses in the neighborhood fell 5 percent in 2017, according to Corcoran. But Jed Garfield of the townhouse brokerage Leslie J. Garfield said inventory is moving again across the borough — especially in the $5 to $10 million range. According to the Olshan Report, 24 townhouses went into contract in Manhattan between April and June, with an average asking price of $9.6 million. “Uptown, above $10 million, it’s still thin,” Garfield said.

Brooklyn residential building permits hit two-year high

Brooklyn saw a spike in residential building permits in May — the largest monthly increase since December 2015, just before the 421a tax abatement expired. There were 54 permits issued with 1,351 total apartments spanning 1.1 million square feet. The bulk of units are in two affordable housing projects planned for the eastern part of the borough: a 422-unit rental building at 894 Fountain Avenue in East New York and a 417-unit complex at 96 New Lots Avenue in Brownsville. The third largest project is Hope Street Capital’s market-rate warehouse conversion at 98 Front Street in Dumbo, which will have 165 units. David Schwartz of Slate Property Group, an active multifamily developer in the borough, said now is a good time to build in Brooklyn because most of the recent rentals were scheduled for delivery in 2017 and 2018. “There’s not nearly as many new units that are going to be delivered in three years, which is how long it takes to deliver,” he said.

Fewer homes under $1 million impact total sales

The total volume of home sales in Manhattan and Brooklyn has been on the decline for the past five years, according to data from StreetEasy. There were 7,817 home sales in Manhattan in 2018’s first quarter — a year-over-year drop of 18 percent from 9,500 in 2017 and 14 percent from 9,115 in 2016. In Brooklyn, there were 8,287 home sales in the same period, down 20 percent from 9,646 in 2017 and 2 percent from 8,451 in 2016. The total number of sales in both boroughs in all of last year lagged far behind the last peak, in 2013, when 87,653 homes were sold in Manhattan and Brooklyn combined for the entire year. One likely reason for the slowdown, despite high demand, is the significant decline in inventory under $1 million, according to StreetEasy. Listings for two-bedroom apartments in that price range fell by half in 32 neighborhoods in Manhattan and Brooklyn between 2010 and 2017, according to the report.

Median price in Bushwick leaps 84 percent in a decade

The Williamsburg effect is pushing further into Brooklyn and Queens. The most dramatic increases in apartment prices in the city are occurring to the east and north of the hip neighborhood, according to data from Trulia. Bushwick, with a median price of $788,800, topped the list with an 84 percent increase over the past decade. Boaz Gilad, whose development firm Brookland Capital has several projects in Bushwick, said the area’s growth is largely due to spillover from Williamsburg. “It’s a natural progression,” he said. The area is also filled with frame houses rather than brownstones, and there is therefore little motivation to maintain the current housing stock, he noted. After Bushwick, the outer borough neighborhoods that have seen the steepest price growth were Ridgewood, Sunset Park and Jackson Heights, with median prices of $737,100, $541,800 and $548,000, respectively. Meanwhile, several outer-borough pockets broke into the city’s 50 most expensive neighborhoods for the first time; they include Greenpoint and Crown Heights, which are now 36 and 44, and Hunter’s Point in Long Island City, now 23.