Brooklyn house prices hit new record high as buyers jockey for deals

An inventory shortage and developer focus on high-end rental properties are putting pressure on prospective buyers and driving up prices

PUBLISHED : Wednesday, 15 April, 2015, 6:00am
UPDATED : Wednesday, 15 April, 2015, 6:00am

Home prices in Brooklyn jumped to a record in the first quarter as buyers competed for the limited supply of listings on the market.

Condominiums, co-ops and one to three-bed family homes sold for a median of US$610,894 in the period, up 18 per cent from a year earlier and the highest in 12 years of data-keeping, according to a report by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. The median price has reached a record six times in the past eight quarters.

Developers capitalising on the borough's growing cachet have focused on building rental properties, drawing in new residents but leaving a void for those who wish to own. The 4,331 homes listed for sale in Brooklyn at the end of March was the second-lowest total for a first quarter in records dating to 2009, according to the firms.

"We're not creating new housing stock that addresses the largest portion of housing demand," said Jonathan Miller, the president of Miller Samuel. "We're seeing expanded emphasis on the upper end of the market through new development, but also pressure in the resale market as people are being priced out of Manhattan."

The inventory shortage depressed the number of purchases in the quarter. Sales fell 4.1 per cent from a year earlier to 1,507, according to the report. New condominium developments helped fuel price gains, even though they accounted for only 10.6 per cent of sales in the first quarter, Miller said.

Deals for newly built properties closed for a median of US$829,500, up 24 per cent from a year earlier. The median for resale condominiums climbed 11 per cent to US$670,931, Miller said.

Ryan Fisher and his wife started searching for a place to buy when the changes sweeping Brooklyn landed at their Greenpoint doorstep. The building where they had leased a US$2,000-a-month studio for almost five years had been sold to a developer, and the couple, faced with a looming deadline to move out, realised they would not find a comparably priced rental property in their neighbourhood.

They bid on a 615-square-foot two-bedroom condominium on Greenpoint's Kingsland Avenue that was listed for US$628,000. They found themselves in a bidding war for the second-floor walk-up that lasted three rounds.

A personal letter to the owners helped seal the deal for the Fishers, who agreed to pay US$650,000 - almost 70 per cent more than the sellers paid three years ago.

More than half of the people who were interested in the property were renters living nearby in Brooklyn who were seeking to buy their first home, said Scott Klein, the Douglas Elliman broker representing the sellers.

"It's become an extraordinarily desirable place to live," Klein said of Greenpoint. "There's also a big inventory problem because almost all of the new construction is luxury rentals."