Brooklyn Prices, Cash Sales Swell in Third Quarter

Competition for homes in Brooklyn was steep in the third quarter, as cash sales ruled, bidding wars abounded and prices continued to climb.

The borough’s median sale price hit its second-highest level in a decade last quarter, after setting the record in the previous three-month period, according to Miller Samuel’s report for Douglas Elliman.

The median sale price across co-ops, condos and one- to three-family homes rose to $975,000, marking a 4 percent year-over-year increase. In the second quarter, the median sale price was $990,000.

“Brooklyn continues to push the envelope,” said report author Jonathan Miller. “Over the last five years, pricing has been the first, second or third highest almost every quarter.”

One in four sales landed in a bidding war last quarter with homes selling for an average of 6 percent over the last asking price. Last quarter’s numbers didn’t set a record, Miller noted, but the market share of bidding wars was larger than it has been for the last two years.

Deals in Brooklyn continue to trail behind long-term norms, but the tide is likely to turn by the end of the year. Mortgage rates fell below their year-ago levels in anticipation of the Federal Reserve’s interest rate cut last month, which Miller expects to boost transactions. Contract signings are already on the rise in the borough.

“I wouldn’t be surprised to see another price record or some flavor of it,” Miller said of the fourth quarter.

The number of sales dipped 4 percent annually, down from 2,600 to 2,500. Seven-figure sales outpaced the lower end of the market, which is typically more sensitive to a higher mortgage rate environment. Deals over $1 million rose 2 percent annually, while transactions below the threshold dropped 9 percent.

Cash deals accounted for over half of the transactions, marking the highest market share since Miller Samuel began tracking the metric a decade ago. Cash sales were up 20 percent year-over-year, while purchases with mortgages were down 22 percent.

The share of cash deals “just shows you the impact of interest rates on buyer behavior,” Miller said. “Cash skewing higher in price is incentivizing consumers to get around mortgage financing if they can, largely in the form of equity withdrawals from the financial market.”

A shortage of inventory has impeded sales growth in the borough, though a swell of listings last quarter could signal an end to the drought. Listings expanded 13 percent year-over-year, up from 2,600 to 2,900.