Brooklyn Is King Of New York When It Comes To Decade Long Price Increases
New York has always been a safe bet when it comes to real estate investing. Now, here are the numbers to prove it.
If you were sitting on the fence a decade ago, wondering whether to buy a property in NYC, you might be kicking yourself now for not doing that. Who could have predicted just how expensive NYC real estate has become? Sure there was a crash in 2008—but NYC, unlike much of the country, seemed to dust itself off quite quickly. Prices soon continued to escalate at breakneck speed—at three times inflation, in fact. Brick Underground broke down the numbers and they make for every investor’s real estate fantasy.
When Jonathan Miller, president of the appraisal firm Miller Samuel (author of Douglas Elliman market reports) gave some hard data on a decade’s worth of change, Brooklyn came out tops. The average price of a property (condo, co-op, one-three family building) at the end of 2006 in Kings County was $563,712. At the end of 2016, it was $947,553. That’s an increase of $383,841, or in percentage terms, +68.1 percent.
Of Brooklyn’s meteoric decade, Miller said, “That had to do with the market skewing more luxury. It’s not super-luxury like Manhattan, but the market essentially reinvented itself from what was formerly a cheaper alternative to Manhattan to a competitor of Manhattan.”
Manhattan wasn’t too far behind, increasing by $833,058 ($1,306,095 to 2,139,153), a rise of +63.8 percent. Although Brooklyn stuttered a bit during the 2008 crash, with many properties in Bed-Stuy and Crown Heights going into foreclosure due to subprime loans and exploding adjustable rate mortgages, generally other parts of the borough weathered the storm well.
In Manhattan, things hit overdrive fairly recently in 2014. “The peak was pre-Lehman, and that threshold was not reached again until almost seven years later,” said Miller.
Things differ markedly in the Bronx with much of the area hit hard by the foreclosure crisis. In fact, the borough’s 2016 average price $393,323 is lower than it’s 2006 high of $407,936, a drop of -3.6 percent. The Brick Underground classified the numbers as misleading, saying, “the last month of 2006 was higher than any other month before or after. The first quarter of 2007, for example, saw an average price of $391,050, which would mean that the 10-year difference was +$20,000. The problem, says Miller, is that “they didn’t have a luxury development boom to get them back” after the market went bust post-Lehman meltdown.
Queens had a rough time time during and immediately after the financial crash with foreclosures and predatory lending hitting poor, minority neighborhoods particularly hard. In fact, as recently as last year, families in Jamaica, Queens were still feeling the ill effects of the crash eight years earlier and struggling to keep their homes. There was a net increase in house prices of +$93,578 in 10 years ($479,877 to $573,455), a +19.5 percentage gain). Queens is a diverse borough. While certain neighborhoods have struggled, others, such as Long Island City, Sunnyside and Jackson Heights, have flourished, leading a new wave of NYC gentrification recently.
“Most of Queens’ growth has occurred in the last two years,” says Miller. “And most of that is because of the Northwest region’s luxury development (though most of that is rental). But I think the bigger issue is what I call ‘Brooklyn spillover.’ Brooklyn is at capacity.”
The numbers make a good case for buying in Queens and the Bronx which have a way to go to catch up to Brooklyn. However, with brownstones in short supply and some renovated townhouses in Bed-Stuy now being listed for close to $3 million, Brooklyn, at least in some quarters, shows no signs of slowing down.
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