Over the last two decades, Brooklyn has become a destination for buyers, rather than they place they leave when they move to Manhattan. As prices went sky-high in the City, people looked to quiet neighborhoods in Brooklyn where they could get more bang for their buck.
Now, in some neighborhoods of Brooklyn, townhome prices are comparable to some areas of Manhattan. That shift can be attributed to several factors; lack of affordable housing pushing median home prices up across the City, the popularity of certain Brooklyn neighborhoods, and the perception that the borough provides a better value than Manhattan.
In April, Streeteasy released its 1Q market report of 2018 that revealed, among other things, that several Brooklyn neighborhoods were among New York City’s ten most expensive in the first quarter of the years, based on median sales prices.
The Brooklyn brownstone neighborhoods of Carroll Gardens and Park Slope, as well as Dumbo and Greenpoint, were in the top ten most expensive in 1Q 2018, edging out perennially pricey nabes like the Upper East Side and the West Village.
For Park Slope, it was the first time the neighborhood was counted in the top ten, with a median recorded sale price of $1,405,000, making it higher than 19 of the 25 Manhattan neighborhoods tracked in the report, according to Streeteasy.
As the luxury market has softened significantly in Manhattan, inventory has increased, and sellers have been forced to adjust listing prices as their properties have sat on the market.
“For townhouses in particular, it’s definitely more of a buyer’s market,” said Philip Henn, an agent with Citi Habitats based in Brooklyn. “Buyers definitely have more leverage now.”
The Douglas Elliman 2Q 2018 market report showed that in Manhattan, townhouse prices continued to decrease, while inventory edged higher and marketing time expanded sharply.
In Northern Manhattan in particular, a market that has been on fire in the last two years, median sales prices declined 8.6 percent in the second quarter, to $2,000,000, while price per square foot fell 29.9 percent, to $661. Listing inventory increased 3.6 percent to 57 and the number of sales declined 11.5 percent to 23.
Meanwhile, in Brooklyn, housing prices have continued to set records. According to the Douglas Elliman Brooklyn 1Q 2018 market report, the median sales price rose year-over-year for twenty-second consecutive quarter and reached record levels in five out the seven most recent quarters.
“It’s almost impossible to attract buyers more to Brooklyn, since like every buyer in history now wants to live in Brooklyn,” said Frederick Peters, founder and CEO of Warburg Realty. “Now it’s more about attracting people to Manhattan.”
Warburg Realty’s latest market report for 2Q 2018 found that the Brooklyn market has remained hot. Lesser-known neighborhoods like Windsor Terrace, located just south of Park Slope, and Prospect-Lefferts Gardens, on the East side of Prospect Park, have seen townhouse prices soar over the last several years, along with neighborhoods even further to the south like Midwood and Ditmas Park.
Homes in Windsor Terrace and Prospect-Lefferts Gardens are now listed in the multi-millions, a “huge change” from five or ten years ago, said Peters.
“Those are properties that have continued to appreciate, even as other parts of the market, especially in Manhattan, have slowed down, and even headed in the opposite direction,” he said.
Peters doesn’t see Manhattan’s larger supply of inventory and longer days on the market changing anytime soon.
“In the end, what will change it is when the prices really are equivalent, and people are just making decisions based entirely on where they’d rather be,” he said. “That’s beginning to happen now. But there is still some sense in the more peripheral parts of Brooklyn, that you get value for your dollar.”
Other factors specific to the townhouse market can make a big difference in terms of pricing. In neighborhoods like Gowanus, there isn’t a traditional grid of uniform blocks like in neighboring Park Slope, and that can save buyers money.
“People who are willing to trade curbside appeal and landmarked and tree-lined streets, can definitely get a better deal, and those areas can have more inventory than other locations,” said Henn.
Many buyers are very specific about what they want in a townhouse. Width is a big factor for many buyers and plays a large role in pricing.
Henn has found that narrow homes—those less than 25 feet wide—are more challenging and trade for less, while 25 feet and wider homes trade at a significantly higher price per square foot.
“A lot of people pay not just for width but style, what block, what schools are in the area,” said Henn.
Traditional limestone townhomes are harder to find than new construction homes, of which there is more inventory. Henn worked recently with a buyer from the UK with a $6 million budget who was looking for a townhouse. They were willing to spend up to a year or two to renovate a home if the home was significantly cheaper, and required a home that was 20 feet wide at a minimum with 3,500 s/f or more.
But whether its Manhattan or Brooklyn, in this market, buyers have the upper hand.
“Sellers have to adjust prices,” said Henn. “Even homes in prime locations that are 20 feet wide. There’s a little more negotiation than in the past.”