February market data is in: the Manhattan and Brooklyn markets saw continued price growth over last year’s levels although more signs point to slower growth over the coming months. As the winter slow season nears its end, homes spent considerably more time on the market despite unseasonably warm weather. Within the rental market, rent price growth has faltered.
East Brooklyn on a Tear as Price Growth Exceeds 20 Percent
The median resale price in Manhattan rose 4.4 percent from last year to $982,437 in February, according to the StreetEasy Price Indices. Annual growth was led once again by Upper Manhattan, which has recorded the highest growth rate among Manhattan’s five submarkets since November 2014. The median resale price there grew 10.4 percent from last year, followed by Upper West Side (6.6 percent), Downtown (4.3 percent), Upper East Side (3.6 percent) and Midtown (1.6 percent).
The median resale price in Brooklyn rose 6.9 percent from last year to $539,300 in February, led by extraordinary growth in the borough’s East Brooklyn submarket. The median resale price in this area, which includes Bedford-Stuyvesant, Brownsville, Bushwick, Crown Heights and East New York, grew by 20.5 percent from last year – roughly three times the Brooklyn-wide growth rate. East Brooklyn was followed by South Brooklyn (9.4 percent), Prospect Park (8.7 percent), North Brooklyn (4.7 percent), and Northwest Brooklyn (2.3 percent).
Growth in rent price was lower than sales price growth in both boroughs in February. Manhattan median rent grew 3.3 percent from last year to $3,114, according to the StreetEasy Rent Indices. The strongest growth was seen in the Upper West Side submarket (4.4 percent), followed by Midtown (4.3 percent), Upper East Side (4.0 percent), Upper Manhattan (2.7 percent), and Downtown (2.2 percent). Despite higher rent levels than last year, several submarkets have experienced price declines in recent months. In Downtown and Upper Manhattan, for example, the median rent price has fallen each month since September 2015. In Upper East Side, rent has fallen each month since November 2015.
The median rent in Brooklyn grew 0.8 percent from last year to $2,607. The strongest growth was seen in the North Brookyn submarket (2.3 percent) and Northwest Brooklyn (2.1 percent). Median rent declined year-over-year in South Brooklyn (-3.4 percent), followed by East Brooklyn (-1.2 percent) and Prospect Park (-0.1 percent).
Use the chart below to compare price growth among sales and rentals:
[tableau server=”public.tableau.com” workbook=”priceIndices” view=”StreetEasyPriceIndex” tabs=”no” toolbar=”no” revert=”” refresh=”yes” linktarget=”” width=”600px” height=”760px”][/tableau]
Mid-Priced Homes Soar, Luxury Homes Stagnate
Despite healthy annual price growth across Manhattan, the top-end of the market continued to stagnate in February. The median resale price of Manhattan luxury homes[i] fell 0.1 percent from last year to $3,224,589 in February, the only price segment of the market to record a decline in price growth. Meanwhile, mid-priced homes in Manhattan[ii] saw the greatest annual price growth reflecting the strong (and underserved) demand for homes under $1 million. The median resale price of homes in the middle and bottom price tiers grew by 7.0 percent and 5.7 percent from last year, respectively.
A similar trend was at work in Brooklyn. While the median resale price of luxury homes in Brooklyn[iii] grew by 2.7 percent from last year to $1,335,312, median resale price grew by 9.5 percent among homes priced in the mid price tier.[iv]
Homes Linger on the Market Despite Unseasonably Warm Winter
Manhattan homes that went into contract in February typically spent 67 days on the market, 6 days longer than last year.
Similarly, Brooklyn homes that went into contract in February spent slightly more time on the market than last year. The typical time on market was 56 days, four days longer than last year.
12-Month Outlook: What Goes Up Must Come Down
Although prices continue to grow throughout Manhattan and Brooklyn, a slower growth trajectory is expected over the remainder of this year as the real estate market settles into a more sustainable pace of growth.
According to our latest projections, price growth is expected to cool considerably over the next 12 months across all submarkets. The median resale price in Manhattan is expected to grow by 3.2 percent over the next 12 months, according to the StreetEasy Price Forecast. Price growth is expected to cool the most in Upper Manhattan, where the annual growth is forecasted to cool to 5.0 percent between Feb. 2016 and Feb. 2017 (prices grew 10.4 percent over the previous 12 months).
In Brooklyn, the median resale price is expected to grow by just 0.9 percent over the next 12 months, according to the StreetEasy Price Forecast. Price growth is expected to cool the most in the Prospect Park region, which includes Park Slope, Prospect Heights, Prospect Lefferts Gardens, and Kensington. Notably, Northwest Brooklyn is the only submarket in either Manhattan and Brooklyn in which annual price growth is forecasted to be negative (-1.8 percent) over the next 12 months. Northwest Brooklyn includes neighborhoods such as Dumbo, Brooklyn Heights, and Downtown Brooklyn.
See complete neighborhood level data in the chart below:
[tableau server=”public.tableau.com” workbook=”February2016MarketOverview” view=”NeighborhoodData” tabs=”no” toolbar=”no” revert=”” refresh=”yes” linktarget=”” width=”600px” height=”860px”][/tableau]
Note: In a previous version of this post, days on market for Manhattan and Brooklyn were misstated. This data has been updated in this version.
[i] Manhattan luxury homes defined as the top quintile of recorded sales prices, with a price floor of $2.95 million in February 2016.
[ii] Mid-priced homes in Manhattan include the second and third quintiles, encompassing homes sold between $595,000 and $1.5 million.
[iii] Brooklyn luxury homes defined as the top quintile of recorded sales prices, with a price floor of $980,000 in February 2016.
[iv] Mid-priced homes in Brooklyn in this example include the third quintile, encompassing homes sold between $500,000 and $710,000.