Brooklyn Least Affordable Place to Buy Home
Brooklyn is the “least affordable” home market in the country, followed by San Francisco and Manhattan, in that order. “A resident would need to devote 98 percent of the median income to afford the payment on a median-priced home of $615,000,” reported Bloomberg News. The story made headlines and confirmed what many of us living…
Brooklyn is the “least affordable” home market in the country, followed by San Francisco and Manhattan, in that order. “A resident would need to devote 98 percent of the median income to afford the payment on a median-priced home of $615,000,” reported Bloomberg News.
The story made headlines and confirmed what many of us living here already suspected.
The affordability problem is part of a bigger trend where “one in five U.S. housing markets are now less affordable than their historic average,” said Bloomberg, as housing prices keep climbing even while income stagnates.
Real estate investors and foreign buyers have been fueling the price gains in parts of the country where housing costs are already high, locking locals into high-priced rentals because they can’t afford to buy, in a vicious cycle, said the story.
Across the country, housing prices are up 25 percent since their February 2012 nadir, according to the S&P/Case-Shiller index.
“Incomes have not grown nearly as fast as home prices,” the story quoted an exec from RealtyTrac as saying. “That disconnected home-price growth has been driven by investors and other cash buyers who aren’t as constrained by income.”
Rents have risen significantly in Brooklyn, where the median rent was $2,858 as of October. That’s an increase of nearly 6 percent vs. the same month a year ago, according to data from Miller Samuel and Douglas Elliman cited in the story.
Of course, comparing the median income of a region to the median house price is only one way to measure affordability. It reflects the variability of incomes in an area as well as home prices.
But even as home prices climb in Brooklyn, across the U.S. they have cooled off slightly in recent months, according to published reports, and quite a few REITS — investor backed real estate investment firms — have in the past year said they are pulling back from buying rental properties or getting out of the rental business in the U.S. altogether.
Not Dixon though! We just heard from Dixon Advisory USA Managing Director and CEO Alan Dixon this morning. He is off to Australia tomorrow to raise another round of funding for company’s next investments here in the tri-state area.
As for prices of townhouses in Brooklyn specifically, they continue to rise, according to the most recently recorded sales. New records were set in both Park Slope and Bed Stuy in recent weeks, as we reported yesterday. We have heard scattered reports of fewer people attending open houses and noticed fewer desirable properties on the market but we guess that’s just the usual seasonal slowdown. So far we’ve seen no sign of actual closed sale prices declining.
What do you think?
Brooklyn Worst in U.S. for Home Affordability [Bloomberg]
the problem with the article is that NYC and suburbs are ‘the housing market’….not Manhattan…not Brooklyn.
You can subdivide any housing market and make claim that this zip code or neighborhood or block is most unaffordable…..just means it is more expensive.
If I work and live in NYC — I can look in Jackson Ht, Jersey City, Tribeca or Sheepshead Bay.
I have seen surprising things affect rental prices in Brooklyn, especially in Bed-Stuy in the past 2 years. For instance, AirBnB. An article pointed out that there were a lot of Landlords who would rather rent an apt or rooms to an AirBnB than to rent to the average prospective tenant in those area because of the difficulty of removing troublesome tenants. That reduces the available apartments for rent, increases demand for the ones that are available, moves up the rental price, and therefore, the value of the building must increase. There are probably a lot of these kinds of “surprises” that have moved up the Value of the average house for sale. Others might be that Tolls and cost of transportation has risen, therefore you can deduct that cost to the increase in rent but add the NYC public transportation costs making it more affordable. Then there is the time savings by moving into NYC as well. It seems that if the calculations assume that the residents have not moved INTO NYC, then yep, they are right, it has become more “unaffordable” for those residents. But they also have the option to move. Some will, but most won’t because of the added costs and time value of living further away from work.
Does this mean that there are so few lower-income residents left in Manhattan that the $20 million dollar brownstones and condos that have become typical in neighborhoods like the West Village look more affordable relative to income that their $5 – 6 million dollar Brooklyn equivalents?
Its almost as if people buying in Brooklyn might work in Manhattan!!!!???
This statistic is meaningless.
Nothing meaningless about it: the income stats are pulled from where people live, not where they work. So the data would reflect a lot of Manhattan-earned salaries that rent or own in Brooklyn.
What’s really interesting is that the 14-year average of 95% unaffordable.
Excellent point.