While I generally focus on Brooklyn, it’s always good to keep an eye on Manhattan. After all, no matter how many articles you read about how much Brooklyn has arrived, Manhattan is still NYC anchor, and while Brooklyn real estate may be the first choice for some, there are others who are choosing it because they can’t afford Manhattan.
Recently Corcoran released their Q3 report, and it showed some interesting trends:
- sales remain high, Q3 2014 posted the second highest number of sales in the past five years.
- still tight inventory, especially in the “affordable” market.
- only 6% of sales were new development, a remarkably low number- likely due to most new developments still being under construction.
- average price per square foot continues to climb, up 12% annually, now at $1,300+p/sf.
- resales performed well average ppsf for coops up 12% and 7% for condos. However, both were dramatically eclipsed by new development which posted an increase of 30%
Clients are often surprised by these metrics, especially the condo vs. coop appreciation for price per square foot. They get use to Brooklyn and think Brooklyn is already expensive, they’re flabbergasted that the average price per square foot in Manhattan is $1,300+. Still, it’s worthwhile to keep in mind this is average, not the median, so a couple high priced listings (which Manhattan has plenty of) will skew these numbers up.
Manhattan real estate growth can be summarized by New Developments. There are some very sticker-shocking new developments coming down the pipe. A couple of the new ones that have gotten a lot of press:
- 225 West 57th Street (Nordstrom Tower)
- One 57
- 220 Central Park South
- 157 West 57th Street
- 111 West 57th Street
- 53 West 53rd Street
- 520 Park Avenue
- 432 Park Avenue
57th Street is becoming so populated by the uber rich that it’s become known as billionaire’s row.
One of the most common questions I get from friends and family is, “where would I go if I sell?” People become complacent in their new found homes, and to be fair many people buy a home thinking they would be there for life, or at least a really long time. But, while building roots is beautiful, there’s something to be said about moving to the next area that’s poised to appreciate. Your home doesn’t just have to be where you live, it can also be a kind of investment. But still, where?
I think by now the answers are quite obvious, areas like downtown Brooklyn and LIC (yes Queens!) — while still appreciating are now becoming expensive and established. Homes here easily sell for $1,100+p/sf or more. The next wave of appreciation that’s been on everyone’s lips are Bushwick, Bed-Stuy, and Crown Heights. My favorite of these is Bushwick, but you really can’t go too wrong with any of them. And you best get in on it soon, condo prices in these areas rose a shocking 34% year over year. And townhouses rose even more dramatically, single family houses escalated over 85% year over year. These increases are not sustainable in the long term, wait too long and these neighborhoods will become established, and the opportunity lost. We’ll have to wait for the next NEXT neighborhood, Prospect Park South anyone?
For the past couple of years it seems like everyone has been talking about Brooklyn, to the point of over saturation. By now you would think people would have tired hearing about Brooklyn, but such it seemed was not the case. People actually went deeper into Brooklyn. We saw increased sales in south Brooklyn as people flung a wider net to find quality and affordability. New product remained tight, last year new development comprised over 20%+ of sales, currently it made only 13%. High demand and low supply in new development drove prices even higher, posting 9% gains in median price, and 15% in average price.
But not all prices drove upwards in record breaking numbers. As the market mummers have been saying, we’re seeing buyer fatigue. There’s only so much that buyers are willing to pay, before they decide to either move out, or continue to rent. Market wide, across all sales we only saw a 1% increase in median price year-over-year and a 3% increase in average price. Part of this is due to the increased sales traffic in south Brooklyn, but potentially the market, is becoming fragmented with new development still pushing the envelop, but everything else taking slower steps.
Check out the full Q3 Report.
For many first time home buyers in Brooklyn the task of coming up with the downpayment is so daunting, many give up without even trying. Putting down 20% for a home seems unattainable to many would-be-homeowners, and in this market — where over 50% (nearly 80% in Manhattan) of home purchases are bought with all cash, 20% is too little. How does one compete under these conditions? First, you have to save, and don’t think of saving as a sacrifice, remember money saved is just as good as money earned. There are some low hanging fruit that I think offer good opportunities for young people to save: