Last week StreetEasy published their annual quarterly market report for the fourth quarter of 2015 in New York City. Its data compared the real estate markets in Manhattan and Brooklyn, with the findings based on a comprehensive database of both sales and rentals.
Regarding sales, Manhattan’s inventory continued to slide downward to a record low of 10,122 available units, a 3.5 percent decline from the previous year and the lowest quantity ever recorded by StreetEasy. This decline in inventory spiked demand, pushing the median resale price to a record-breaking $1.5 million, a 7.1 percent growth. Upper Manhattan (generally defined as above 110th Street) saw the highest growth, with a 14.6 percent spike in price, followed by the Upper East Side at 9.1 percent.
Additionally, the fiercely competitive market reduced the average days on the market to a mere 51 days from the first day a listing appeared on StreetEasy to the day it entered contract, underscoring a sense of urgency to make an offer before someone else did. Unsurprisingly, price reductions were uncommon for Q4, dropping 3.3 points to 29 percent from last year.
While these record-breaking sales prices may appear to forecast a similar upswing for 2016, there are signs that the demand in Manhattan property from international investors in beginning to wane, which will likely lead to a slower rate of growth in pricing. StreetEasy predicts a significant price reduction of $489,757, bringing the median sales price down to $1,010,243 in 2016.
Manhattan rentals saw a similar decline in inventory, which in turn also fueled an uptick in rental prices. The total inventory fell to 20,589 last year, a 2.3 percent decline which marked the first annual decline in the last five years. The median price in rent rose to $3,112, a 4 percent increase from last year, while inventory decreased by 2.3 percent. As with sales, Upper Manhattan saw the highest rent increase, at 6.6 percent, and the Upper East Side remained in second place with a 5.2 percent raise in Q4.
Brooklyn's sales market saw an even stronger fourth quarter than Manhattan, with a whopping 8.3 percent upswing in median resale price, bringing it to $537,193. East Brooklyn saw the highest increase at 18 percent, especially in Crown Heights and Bedford-Stuyvesant. These neighborhoods have led Brooklyn’s resale growth for the past 17 months, a trend that proves the demand for low and moderately priced housing is very high, especially as prices reach record highs in Manhattan and other parts of Brooklyn. And South Brooklyn took a distant second place with a 8.8 percent median increase.
With all the development projects happening in the borough, particularly in Prospect Park and Northern Brooklyn, sales inventory actually grew last year, and the market overall was slightly less competitive than the previous year, though neither factor stopped the sharp growth in median resale price.
Brooklyn also beat out Manhattan, albeit slightly, in terms of time spent on the market. The average home spent 41 days on the market from first listing date to entering contract. Unlike Manhattan, discounts were a bit easier to come by in Brooklyn’s fourth quarter, rising to 25.7 percent of listings undergoing price deductions.
One thing that Brooklyn has in common with Manhattan is its sales projections for 2016, with a slower price appreciation and less competitive sales market overall, and an estimated median resale growth of 4.2 percent, to $560,000 – the smallest rate of increase since October 2012.
The rental market in Brooklyn took a downward turn in Q4, with the median rent growing just 2.1 percent to $2,630. Prospect Park saw the most growth, at a 4.7 percent gain, followed by North Brooklyn at 3.1 percent. South Brooklyn saw a median decline of of 1.2 percent, bringing rents in that area down to $1,595 on average and representing the only market with in Manhattan or Brooklyn to have an annual decline in rental pricing.
Similar to its sales inventory, the number of rental units increased in Brooklyn by 4.2 percent to 12,403 due to growth and development in East Brooklyn, with a substantial 22.2 percent increase in number of rental units available in that submarket. South Brooklyn took second place in rental availability with a 22.2 percent increase.