New buyers in Brooklyn certainly don’t appear to be too worried about traveling to their homes in the borough’s most popular neighborhoods in two years’ time.
Demand for Brooklyn homes surged in the final three months of last year, pushing up sales prices to a record high, a report by Douglas Elliman Real Estate and Miller Samuel showed Thursday.
The findings come despite the looming closure of the often crowded L train, which connects some of the most popular parts of Brooklyn, like hipster-filled Williamsburg, to Manhattan through a tunnel underneath the East River.
It will close at the beginning of 2019 for 18 months to repair damage caused by superstorm Sandy in 2012, making many commutes more complicated and time consuming.
“It doesn’t seem to be affecting the market. If it is, it’s hard to detect,” said Jonathan Miller, chief executive of Miller Samuel and author of the report.
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“Buyers are looking at the long-term picture,” Mr. Miller said. “It’s an 18-month window in a 10-year average ownership period and the commute is going to be better at the end of it. If you’re renting in that window there’s no upside”.
Indeed, the median sales price in the overall Brooklyn sales market increased 15.4% year-over-year in the final quarter of 2016 to reach a record $750,000, as demand continued to outpace supply.
The number of sales jumped 22.3% to 2,582 over the same period, while listing inventory fell 31% to 2,232. This was the lowest level since the report started tracking this data in 2008, as new supply was burned off by high sales.
This trend was mirrored in the luxury sector (defined as the top 10% of sales), with the median sales price increasing 28.8% to $2.446 million, while the number of sales were 7% higher at 259.
However, while Brooklyn’s sales market was becoming more of a seller’s market, it’s rental one was starting to favor renters rather than landlords.
Median rent prices slid year-over-year for the fifth time in six months in December, by 3.8% to $2,700, as an oversupply of luxury rentals hit the market.
At the same time, the share of landlord concessions, such as a free month’s rent or payment of broker’s fee, more than doubled from 6.5% a year ago to 13.7%.
Rent discounts and concessions, however, seemed to be working their magic, with new leases surging 52.5% year-over-year to 993 as new developments entered the market and tenants pushed back on rents.
In Manhattan, landlords working harder to get tenants
In Manhattan’s rental market, the proportion of new tenancies with concessions were also on the rise, reaching a record 26.4%, up from 13.1% a year earlier, as landlords continue to work harder to get tenants to sign on the dotted line amid an oversupply and competition from new developments in both Brooklyn and Queens.
This was reflected in the rent figures. While the median rental price edged up 1.1% year-over-year to $3,388, it declined 0.1% to $3,291 when concessions were factored in.
When it came to negotiating rent, the most impacted part of the market was the higher end, with rent growth seen in the bottom 60% of market and declines in the top 40% by price. Indeed, the median rent in the luxury sector, defined as the top 10% of rental agreements, slid 5.9% year-over-year to $8,000.
As in Brooklyn, the concessions seemed to be paying off in Manhattan as the number of new leases jumped 40.7% from a year ago to 3,553, according to the report.
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