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Brooklyn New-Development Condo Sales End Year on High Note: Median Closing Price Up 49 Percent
Brooklyn’s known as one of the most expensive places to live in the entire country — but the million-dollar question at the start of 2017 is: How was the market for new-development housing in the borough in 2016 and what’s the outlook going forward?
In a year-end report by Halstead Property Development Marketing, the median closing price of units in new developments reached $1.4 million in 2016, up nearly half a million dollars from the year before and a 49 percent increase. Another indicator that Brooklyn’s new development units are selling well came from the percentage of new units closed or signed: 60.9 percent of new development units were closed on or signed in the borough, compared to just 47 percent across the East River in Manhattan.
Chart via Halstead Property Development Marketing
A mere 855 units were available by the end of the year, vs. 5,540 in Manhattan. Overall, the report shows Brooklyn remains one of the most desirable real estate destinations in the country.
New development is nothing new in Brooklyn — over the past decade or so, it’s reshaped the face of the borough. Contract prices and closing prices are up in Brooklyn on the whole for 2016 over 2015, which Halstead ascribes to the success in selling units in such new properties as Pierhouse, The Hendrik, and 190 South 1st.
Pierhouse in Brooklyn Bridge Park. Photo by Susan De Vries
Some other interesting figures from the study:
- 93: the percent of new development units that closed at or under $3 million in Brooklyn during 2016. This is up from 84 percent the previous year
- 1,362: the average closing price per square foot for new development units in Brooklyn. This was up 2 percent from the previous calendar year
- 1.5: the years of supply of new development property available in Brooklyn.
The percentage of closed sales priced at or above $5 million increased 25.4 percent in 2016 vs. the prior year. The reason: More high-end developments. “This reflects delivery of higher-priced new development product that entered into contract 12 to 18 months ago,” said the study.
The report tracks sales only in new developments, no resales. Because the time from signing the contract to closing the sale can be 12 to 18 months for new developments, “to fully understand this market it is critical to track active listings, listings in contract, closed listings, as well as total inventory, which will provide an overall snapshot,” the report said.
The market for new-construction and new-conversion condos in Brooklyn doesn’t appear to be slowing down too much just yet, despite some earlier warnings that there might be a market glut of new developments. Most of these are rentals.
There continues to be relatively little condo development in the borough, despite high demand. Banks prefer rentals and are reluctant to lend for condo developments; if that were to change, it could unleash a spate of new-condo construction.
Even with so much financial and political uncertainty heading into 2017, there seems to be no lack of demand for condos in Brooklyn — but limited supply.
190 South Street under construction. Photo by Field Condition