Winter 2023 Brownstone Brooklyn Real Estate Market
Though the global market (and even Manhattan market) paints a less desirable picture for sellers, we predict a slow but steady spring sales season in our borough of Brooklyn.
According to recent data from Urbandigs and Marketproof, as measured by the number of signed contracts pre-pandemic to now, current buyer demand has increased by a whopping 60% in Brooklyn while decreasing by 20% in Manhattan.
Though we are currently in a buyer’s market overall, it can be hard to know which party holds transactional leverage in Brooklyn today. Hiring an experienced Brooklyn broker who can offer hyper-local real-time data can be hugely beneficial to both sellers and buyers.
Sellers
Proper pricing and patience are critical for Brooklyn sellers now. Inventory remains low and with a scarcity of properties bidding wars are still generated for certain desirable and/or well-priced homes.
Depending on a seller’s circumstances and staying power, some listings are facing steep price cuts or languishing on the market. For a stagnant listing, we recommend home staging and fresh, expert marketing to boost your listing’s profile and garner new attention.
Buyers
Although there may still be competition, it is far less than in a seller’s market where cash is king and zero concessions or even standard contingencies are entertained. A smart, nimble Brooklyn broker can help buyers identify relative values and properly advise them how best to leverage their buying power and negotiate to their advantage, on a case-by-case basis.
Opportunity exists in any market. Even if rates are higher than the wildly low rates during the height of the pandemic, they’re still relatively low (currently in the 5s/6s, on average) and buyers can always refinance when rates dip again.
As the saying goes, “You marry the property and date the rate.”
NYC Housing Market
As it’s generally more cost-effective for developers to build condos, houses remain a finite product. For many homebuyers, a house epitomizes the pinnacle of home ownership and has therefore increased in value more rapidly than any other sector of the Brooklyn sales market. According to PropertyShark, the median sale price of a house in Brooklyn has increased by 6% year-over-year.
Rental prices have cooled since they set all-time records in August 2022 and began slipping in October 2022 after months of bidding wars (at that time, 21.3% rented above the landlord’s last asking price). New York will now lead the nation in its supply of newly built apartments in 2023, for the first time since 2018, which should bring renters a slight reprieve from such intense competition.
NYC office occupancy is at a post-pandemic high of 48%. The implementation of hybrid and remote work options has had a lasting effect on commercial spaces and impacted recovery for retail, restaurants and storefront businesses that rely heavily on foot traffic. Subway ridership is still down to roughly half of pre-pandemic levels and has been strongest in the outer boroughs as fewer people are heading into Manhattan daily.
Commercial prices overall are down by 13% (double digits for office space), which costs the city a significant amount of revenue in property taxes. Some politicians, such as Mayor Adams and Governor Hochul, are exploring transforming vacant commercial space (nearly 13% of the market) into residential housing. The business sectors that have been most damaged by the pandemic are leisure and hospitality (e.g., hotels, restaurants and tourist attractions), while other commercial enterprises have expanded (e.g., warehousing—Amazon and other fulfillment jobs—and TV/film production to meet our binge-watching demands).
The Year Ahead
Rolling global recessions throughout the developing world are expected this year. A “soft landing” or “immaculate disinflation” is tricky to pull off, though the Federal Reserve remains optimistic for that outcome in the United States, which would mean inflation would recede sooner than anticipated and central bankers’ tightening of the economy would fulfill its goal without provoking a full-fledged recession.
Inflation peaked in June 2022 at 9.1% and the year-over-year rate of inflation has fallen to 7.1%. The Fed will be meeting again on January 31 to address their goal of bringing inflation back down to 2%. Though inflation appears to be on a downward trajectory, according to U.S. central bank projections, we are unlikely to achieve the 2% target by the end of 2023 and are therefore likely to see interest rates further increase, which is an obvious driving force in the sales market.
As always, we welcome any opportunity to offer you confidential advice and support on your real estate endeavors, whether you are buying, renting or selling in Brownstone Brooklyn—contact us today.
