From boom to bust and back again: That’s the recent history of home prices in Brooklyn. Since 2006, the height of the last real estate boom, prices have more than doubled in the borough.
Back then, open houses were crowded and bidding wars were common, just like they are now. Also much like today, at the time industry watchers and experts predicted a slowdown — but few predicted the crash of 2008, which really got rolling when Lehman Brothers collapsed in September of that year.
The market pretty much froze after that debacle, with little available except for short sales and few shopping. Prices (as measured by closed sales) decreased 10 to 15 percent in prime areas and as much as 40 percent in central Brooklyn.
The market came back roaring in 2012, particularly in central Brooklyn, where renovated townhouses in move-in condition could still be found for under $1 million. That didn’t last long.
In 2006, the median price per square foot was $320 for townhouses and $343 for condos and co-ops, according to a report from industry trade association Real Estate Board of New York (REBNY) at the time. Compare that to the median price per square foot for all homes in Brooklyn in the third quarter of 2016: $908, according to Corcoran.
Here’s a look back at key moments in the history of home prices in Brooklyn since 2006.
March 17, 2006
Brooklyn Townhouse Prices May Not Rise Forever
What we said: Townhouse sales in Brooklyn surged during the second half of 2005 as a strong economy and low interest rates attracted buyers, according to Halstead Properties report out in 2006. Yet Halstead Chief Economist Gregory Heym predicted the pace would slow soon as supply catches up with demand. At the time, prices for townhouses were averaging around half a million in central Brooklyn, while townhouses in Northwest Brooklyn averaged about $1.5 million.
February 4, 2008
Local Housing Market Headed for the Trash Can?
What we said: Real estate experts were convinced the New York region’s housing market was about to undergo a serious correction. Nonetheless, pricey Brooklyn had so far mostly weathered the national housing meltdown, and the decline in values here wasn’t expected to be as bad as in outlying suburbs. During the year that ended in November, prices in the NY metro area fell 4.8 percent, according to Standard & Poor’s Case-Shiller Home Price Indices.
February 25, 2009
U.S. Housing Prices Down 18.5 Percent, NYC Almost 10 Percent
What we said: Property values in the 20 biggest U.S. cities fell an average of 18.5 percent in the year ended November 2008, bringing house prices down almost 30 percent and back to late-2003 levels. New York City prices declined 9.5 percent in the same one-year period.
What we said: The Brooklyn Heights house at 70 Willow Street where Truman Capote rented while he wrote “Breakfast at Tiffany’s” sold for $12.5 million, setting a new record for a townhouse sale in Brooklyn. The historically significant Greek Revival home was built by Dutch colonial descendant and Revolutionary War era reverend Adrian Van Sideren. Subsequent notable owners included Tony Award-winning Broadway stage designer Oliver Smith.
September 6, 2012
Brooklyn Second Most Expensive Place to Live
What we said: As prices started to rebound, Brooklyn was ranked the No. 2 most expensive place to live in the U.S. in the quarterly Cost of Living Index by the Council for Community and Economic Research, a Washington-based research group. First was Manhattan, followed by Brooklyn, then Honolulu, San Francisco, San Jose, Queens and Stamford, Conn. The report ranks 300 urban areas weighted according to different types of costs for “mid-management households” — in other words, professionals and managers. In New York City, the biggest and most important cost is housing. In Alaska and Hawaii, it’s food. Other costs considered include utilities, transportation and prescription drugs. Housing in Brooklyn costs more than three times the average; a city with average housing costs would be a place such as Erie, Pa., or Charlottesville, Va.
October 10, 2013
Brooklyn Home Prices Set 10-Year Record
What we said: Brooklyn home prices hit a 10-year record high, with the average now $694,777. That may not sound super expensive but the figure included apartments as well as houses in every neighborhood throughout the borough. “Before the economic meltdown, the average price of a Brooklyn home hit $603,428 in 2007 — then sank to $494,720 in 2009 — but has rebounded to a stunning $694,777,” said the New York Post at the time. The paper attributed the rise to “surging demand” and “low-but-rising” interest rates. Brooklyn “isn’t a discount neighborhood anymore,” said Corcoran Group CEO Pam Liebman.
December 5, 2014
Brooklyn Least Affordable Place to Buy Home
What we said: In 2014, Brooklyn had the “least affordable” home market in the country, followed by San Francisco and Manhattan, in that order. Real estate investors and foreign buyers are partly to blame, along with stagnating incomes, according to RealtyTrac. Across the country, housing prices were up 25 percent since their February 2012 nadir, according to the S&P/Case-Shiller index.
What we said: A glitzy townhouse at 177 Pacific Street in Cobble Hill, a former stable with parking, set a new record when it sold to photographer Jay Maisel for $15.5 million. The property seemed an unlikely candidate to beat out the previous record holder, the landmarked Greek Revival mansion at 70 Willow Street in Brooklyn Heights, where Truman Capote once lived. Maisel recently sold his home at 190 Bowery for $55 million, the bank-turned-mansion covered in graffiti that he bought in 1966 for $102,000.
October 8, 2015
Brooklyn Home Prices Surge 18 Percent, Hottest Since Recession
What we said: Brooklyn home prices surged 18 percent in the third quarter of 2015, according to Douglas Elliman. Low supply and increased demand amped up the average sales price to $856,839. Brownstone Brooklyn was particularly hot, with the average sales price jumping 28.9 percent over last year, to $2,704,844. “The Brooklyn brand is taking over neighborhood after neighborhood,” Ideal Properties Group Managing Director Aleksandra Scepanovic claimed.
What we said: Home-price appreciation since 2012 is jaw dropping, but if you look at a 10-year period since the height of the last boom, the appreciation is very good, but not unusual for an area such as New York City. We’re not necessarily predicting a crash — we don’t know — but we won’t be surprised if the market cools when interest rates go up. The recent record-high prices in Brooklyn are partly a return to historic value. It’s an attractive place to live, with jobs, public transit, and relatively low crime.
What we said: Home prices in Brooklyn’s 11216 zip code — which covers the third of Bed Stuy closest to Clinton Hill and also about 40 blocks of Crown Heights — have increased 194 percent since 2004. That’s the largest gain out of any area in the country’s 300 largest cities. The median price for a single-family home in the nabe is now over $1 million, even though the area’s median income is only about $44,000.
- Open House Picks 10 Years Later: Townhouses Cost a Lot More Now
- Claim: There’s a Brooklyn Real Estate Bubble and It Will Never Pop
- Longtime Brooklynites Reflect on a Changing Brooklyn