Elegran Brooklyn Market Update: March 2022

Overall Brooklyn Market Update: March 2022

Brooklyn Market Update

Brooklyn, coming off a record-setting year in 2021, continues to push higher in 2022, as nearly 3% more contracts were signed this February compared to last year. Rising contract activity coupled with a 17% decrease in supply is leading to a widening supply and demand imbalance and exacerbating a supply constrained market. With overall supply going sideways entering the spring listing season, buyers should brace for a continued tight market in the coming months. This is reflected in the rising Market Pulse, which increased 17% in the last month and 60% in the last year to 1.36, firmly in sellers market territory. The growing imbalance between supply and demand is leading to homes entering contract 11% quicker than last year, and a 55% decrease in the median listing discount. In fact, properties priced between $2–5M and those in Bed-Stuy and Park Slope are trading at or above the asking price on the median.

Brooklyn Supply increased by 2.2% compared to January, bringing the total supply to 2,385 units for sale. In February, 872 new listings came to market, 9% fewer than January and 6% more than last February. Supply currently stands 16.5% lower than the same time last year, which coupled with increased demand has driven the Market Pulse Higher and led to fewer and smaller discounts for buyers.

INVENTORY: Key Takeaways

• In the last month, supply increased most in the $600K-$1M and $2–5M price ranges.
• Supply decreased the most in Downtown Brooklyn and Williamsburg in the last month.
• Three bedroom homes saw the largest percentage increase in supply compared to January.
• In the last year, supply has decreased across all price ranges, neighborhoods and home sizes.

Brooklyn Buyer Activity, as measured by signed contracts, decreased 0.6% compared to January as 722 contracts were signed in February. Compared to last February, 2.7% more contracts were signed this year.

CONTRACT ACTIVITY: Key Takeaways

• In the last month, contract activity decreased in the higher price [$2–5M and $5–10M] ranges, while it increased most in the $1–2M range.
• Downtown Brooklyn experienced a surge of contract activity as 83% more contracts were signed in February compared to January.
• Bed-Stuy and Williamsburg experienced a decrease in contract activity in the last month, in part because of supply constraints.
• More contracts were signed for studio, 1 and 2-bedroom homes in February compared to January and compared to last year, while fewer contracts were signed for 3-bedroom homes over the same time periods.

As supply has declined and contract activity increased over the last year, the Market Pulse is rising, increasing 17% in the last month and increasing 60% in the past year. Brooklyn’s Market Pulse is currently 1.36, reflective of a very strong sellers market.

The Market Pulse [a ratio between pending sales and supply] is an indicator of leverage between buyers and sellers. A Market Pulse below 0.4 is considered a buyer’s market, a Market Pulse between 0.4 and 0.6 is considered a neutral market and a Market Pulse above 0.6 is considered a seller’s market.

MARKET PULSE: Key Takeaways

• The Market Pulse has increased the most, on a percentage basis, in the higher pierce ranges over the last month and year, reflective of the renewed strength of the luxury segment of the market.
• Park Slope continues to have the highest Market Pulse, at 2.86 followed by Williamsburg at 1.98.
• The Market Pulse is also highest for the larger units [2 and 3-bedroom] with the largest percentage increases over the last month and year.

Pricing & Discounts

The Median Sales Price in Brooklyn decreased 1% from last month and increased 6.5% from last year to $939,915 On a price per square foot [PPSF] basis, the median decreased by 5.5% from last month and decreased 7.9% from the previous year, to $898. Meanwhile, the median listing discount continued to decrease, down 15% from last month and 55% from the previous year to 2.3%. In some neighborhoods, such as Bed-Stuy and Park Slope, listings are selling at the asking price or above on the median, reflected by a 0% or a negative median listing discount.

The median sales price and median price per square foot statistics are reflective of both market appreciation and of the overall basket of properties that were sold within a timeframe. As the contract activity decreased in the $2–5M and $5–10M properties over the last month, with fewer townhouses sold and more condos sold, there is downward pressure on the median price statistics by nature of a changing complexion of properties being sold. Brooklyn, as a market, experienced price appreciation earlier than Manhattan did, and although the statistics are presenting a slowed pace of price appreciation as of late, there remains upward pressure on prices given the supply demand imbalance.

PRICING: Key Takeaways

• In the last month, Downtown Brooklyn saw the largest percentage increase in median sale price, although the second lowest percentage increase compared to last year.
• The Median sales price decreased for homes of all sizes except for 3+ bedrooms in the last month and year, reflective of the continued demand for larger properties in Brooklyn.
• Brooklyn Heights and Williamsburg are the two most expensive neighborhoods in the borough as measured by median price per square foot.

MEDIAN LISTING DISCOUNT: Key Takeaways

• Brooklyn condos continue to have the lowest median listing discount of the building types, and have experienced the largest percentage discount over the last year.
• By price point, apartments priced $2–5M have a negative discount of 3.1%, indicating homes in that price range are selling for 3% above the asking price on median.
• Buyers in Bed-Stuy should expect to pay the asking price and buyers in Park Slope should expect to pay nearly 1% more than the asking price, on median.
• In the last month, discounts increased only for 2-bedroom homes.

What this means for…

Buyers:

• This can be a tough market for buyers given increased competition and decreased supply.
• The market remains supply constrained causing prices to rise and negotiability to decrease.
• It’s important to position you and your offer in the most favorable way, consider removing contingencies when and where appropriate to strengthen an offer.
• Buyers should be prepared to act quickly and expect to encounter a multiple bid situation when submitting offers.
• To win bidding wars, buyers should consider paying tomorrow’s price today.
• The luxury market in particular is seeing the largest percentage increase in the Market Pulse, indicative of leverage shifting from the buyer and towards the seller.
• Mortgage interest rates are increasing, and are projected to increase throughout 2022, potentially spurring buyers to act sooner than later.

Sellers:

• While new supply is coming on the market, and overall supply increased in the last month, the strong buyer demand is quickly absorbing any new inventory and the market remains supply constrained.
• While prices are rising, sellers will often fare better by pricing realistically to drive demand, rather than pricing aspirationally.
• When positioned properly, sellers can expect to sell their home in 64 days on median, 11% quicker than one year ago.
• The Market Pulse has increased 60% in the last year, reflective of the continuing shifting of leverage from buyers to sellers.

Renters:

• Rents have increased significantly over the last year and are hitting new records.
• In the face of rising inflation and increased rent renewal rates, now can be an ideal time to consider buying rather than renting.
• Rental supply continues to decline as tenants are often choosing to renew their leases rather than move into a new rental.
• Tenants facing a lease renewal will experience rising rent prices and landlords unwilling to negotiate or offer concessions.
• Competition is fierce amongst prospective renters, with apartments often receiving multiple offers and frequently going to bidding wars.

Investors:

• With attention on rising inflation, real estate offers a hedge against inflation.
• Rising rental rates and increasing cap rates are creating an incentive for investors to explore investment opportunities in Brooklyn.

Please contact us if you would like to learn more…

About Us

Our goal is simple: to humanize the world of real estate. Michael Rossi founded Elegran in 2008 on the dual premise of motivation and innovation, with a third sustaining principle added over the years: care. Unique in the industry, the firm has quietly become a key player in the New York brokerage world. Elegran oversaw well over $500 million in sales volume in 2019, tripled market share in 2020 and sold $1B in 2021. Headquartered in the center of Manhattan, Elegran is solely dedicated to serving the incomparable needs of the New York City metropolitan region.