Sale Prices of Townhouses in "Emerging" Brooklyn up 86 Percent in One Year
When will the madness stop? The median sale price of a townhouse in Crown Heights, Bed Stuy, Prospect Lefferts Gardens and Bushwick leapt 86 percent in one year to $1,850,000, according to a third quarter market report just out from Corcoran. “Buyers seeking townhomes have pushed east, driving up prices in neighborhoods farther from Manhattan,” said…
When will the madness stop? The median sale price of a townhouse in Crown Heights, Bed Stuy, Prospect Lefferts Gardens and Bushwick leapt 86 percent in one year to $1,850,000, according to a third quarter market report just out from Corcoran. “Buyers seeking townhomes have pushed east, driving up prices in neighborhoods farther from Manhattan,” said a story in Bloomberg.
Just because prices have almost doubled in one year does not necessarily indicate a bubble, although it could. Prices were doubling every year in the early 1970s on the Upper West Side of Manhattan, and we don’t recall that they have ever returned to their 1960s levels.
The median for all types of homes in the borough is now at $587,515, a four percent increase over the year before and a record for Brooklyn, according to Douglas Elliman. It is also 8.8 percent above the high before the financial crisis — and Brooklyn is the only borough where sale prices are now higher than they were before the crash. (As far as we can tell, this report covers the entire borough, including the south.)
Astounding, no?
The news on the rental front was less dramatic. Prices in the north, northwest, and eastern areas of Brooklyn “slipped for the second consecutive month after 14 months of increases,” said Elliman. The median Brooklyn rent dipped 3.8 percent and is now $2,743.
Q3 2014 Brooklyn Sales [Douglas Elliman]
September 2014 Brooklyn Rentals [Douglas Elliman]
Brooklyn Home Prices Reach Record in Third Quarter [Bloomberg]
My reasoning for the increase in prices:
1. FiDi salaries/bonuses are picking up again and a lot of those people are looking to buy housing on the 2/3/4/5 lines, which run through the middle of Crown Heights.
2. There are very few condos being built because developers can’t get bank financing for condos, rentals yes, condos no.
3. A townhouse means you own the land, you get that little patch of dirt.
4. Most Brooklyn townhouses don’t come with regulated tenants, any tenant present can be dispatched at the end of their lease.
Who is making that type of money to purchase homes at those prices or rent the units to help out with the mortgage?
Anyhow, homes in Crown Heights were expensive when the neighborhood was your initially built.
“Just because prices have almost doubled in one year does not necessarily indicate a bubble…”
Actually, it’s kind of is the very definition of a bubble.