Sound the alarm: It’s that time of the month when we strap ourselves into a chair, force open our eyes, and gaze into the violence-strewn hellscape that is the monthly Brooklyn real estate market report, courtesy of Douglas Elliman. Someone has to do it.
We’re so used to record high prices that keep ascending inexorably that it’s almost become an axiom of Brooklyn real estate. But…well…March’s rental report and the 2015 first quarter sales report are actually somewhat auspicious! Let’s dive in.
Following five months of year-over-year gains in north, northwest, and east Brooklyn, rent growth has stabilized over the past two months. Median rental price is actually down 0.2 percent since last March, to $2,893 per month. Monthly rents for one-bedroom and three-plus-bedroom apartments are down 1.3 and 3.5 percent, respectively, while studios and two-bedroom apartments are both up about 3 percent. Listing inventory and marketing time both expanded, as did the amount of landlord concessions, although the latter remain at low levels. Median Brooklyn rents were $502 less than Manhattan last month, compared to $300 last year.
Here’s the biggest indicator that ballooning rent growth of the past few years is cooling: for the second consecutive month, the number of new rentals fell—in this case, by 34 percent, to 564 total. This follows a 20-month period in which monthly new rentals rose eighteen times. An increase in the number of new rentals indicates a lot of turnover in the market, typically driven by tenants resisting price hikes forced upon them by landlord and instead choosing to move to a new apartment. The decline of new rentals is congruent with stabilizing rent prices.
Some of the market activity has shifted to sales, though not in the way you might expect. Over the first three months of 2015, the total number of sales declined 4.4 percent from the same period last year, and 11.2 percent from 2014’s fourth quarter, despite inventory expanding. But when properties were sold, they were sold for a lot of money! New records were set for condo sales prices, family home sales prices, and overall median sales prices, rose year-over-year for the 10th consecutive quarter. The average home in Brooklyn sold for $749,269 over the first three months of 2015.
The lesson, as per usual: unless you’re just-about-certain you’re staying in Brooklyn for a very long time, it usually makes more sense to rent than to buy.
Follow Phillip Pantuso on Twitter @phillippantuso.