Brooklyn home prices surged to new highs in the second quarter. Bidding wars have returned, and resale inventory is low, so buyers are increasingly looking to new developments, market reports reveal.
The median sales price rose to a record high of $760,000 in the second quarter, a 27 percent increase vs. the same period a year ago, according to Corcoran’s second-quarter Brooklyn report. The average sales price increased by 24 percent to $937,000 in the same period.
Bidding wars are back, Douglas Elliman said, making up 23.2 percent of all Brooklyn home sales in the second quarter.
The numbers continue a pattern of record breaking sales prices for the borough. It’s the fourth consecutive quarter in which a median sales price record was set, and it’s the third quarter out of the last four to set an average sales price record, according to Corcoran.
Median and average price per square foot increased 1 percent and 8 percent year over year, respectively. Price per square foot is an important measure of value, and 8 percent is a healthy gain. The nearly flat median price per square foot may reflect a rise in price at the bottom of the market.
The number of closed sales rose 17 percent in the second quarter vs. a year ago. The Corcoran report ascribes this to closings in new developments — the number of closings in large-scale developments doubled from the second quarter of 2016.
The driving force behind the increase in closings in new developments was the lack of co-op and condo resale inventory available, alongside a low amount of overall housing inventory in the borough, according to the reports.
“Challenged by limited resale inventory, buyers turned to new development properties in numbers significant enough to boost market-wide sales and prices overall. But more aggressive pricing and the lack of low-priced inventory also generated some buyer resistance; the average days on market increased by two weeks compared to a year ago,” Corcoran said.
Sales in new developments helped boost prices of all homes across the board, according to Corcoran. Three-bedroom-plus homes showed the largest gain in median price, increasing 19 percent year over year to $1.83 million.
Prices increased the most in the prime area made up of Dumbo, Downtown Brooklyn, Cobble Hill and Brooklyn Heights, where the median sale price increased 24 percent from the previous year to $1.238 million. Prices got a boost from the large number of newly constructed luxury units in Dumbo, Brooklyn Heights and Downtown Brooklyn, such as Pierhouse and 200 Water Street.
Listing inventory fell 23 percent year over year, and 16 percent from the previous quarter, showing that while the market remains strong, inventory is increasingly scarce in Brooklyn.
New-development condos had a 41.2 percent market share of all condos in Brooklyn, an increase from 23.6 percent from the previous year, the Elliman report said.
The market shows signs it will remain strong in the immediate future. The number of contracts signed increased 14 percent year over year and 17 percent vs. the previous quarter, according to Corcoran.
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