Last week we released our February 2017 Market Reports, which highlighted the broad strength of the sales market in both Brooklyn and Manhattan heading into peak home buying season. However, one area stood out as bucking this trend: North Brooklyn, an area which includes Greenpoint and Williamsburg.
Both home sales and rents have fallen steadily since the announcement of the MTA’s plans to close the L train between Brooklyn and Manhattan for more than a year of repairs beginning in April 2019, denying the northern tip of the borough a crucial commuter connection to Manhattan. While the repairs remain two years away, monthly rental rates in North Brooklyn have fallen nearly $275, or 8.6 percent since last May, and sale prices are down more than 5 percent, nearly $50,000 off the median resale price, which now stands at $848,935, according to StreetEasy’s median rental and sale indices.
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Rents Fall the Most in North Brooklyn
The downward trend in the North Brooklyn rental market predates the current downward trend in rents across the city, which peaked in August of last year. However, the trend is more pronounced in North Brooklyn than anywhere else in the city. Northwest Brooklyn — including Brooklyn Heights, Downtown Brooklyn, Boerum Hill, and Fort Greene, among other areas — has had its own steep fall in rents despite an enormous boom in rental supply over the past year, but still managed to surpass its northern neighbor as Brooklyn’s most expensive submarket.
Median rent for a one-bedroom in Williamsburg has fallen from $2,900 in May 2016 to $2,885 in February. Just across the East River in the East Village, rent for a one-bedroom rose from $2,850 to $2,886 during the same period. Rental inventory hit an all-time high of 3,150 units in August 2016 and remains up by nearly 15 percent year-over-year. Facing tough competition for tenants, 17 percent of landlords advertised one or more months free rent, cash incentives, or other concessions in order to attract tenants, versus just 13 percent citywide.
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Prices Fall Despite Appreciation Elsewhere
The fall in sale prices in North Brooklyn stands in contrast to rising prices elsewhere and has also persisted since the announcement of the L train repairs last May. By the end of the summer of 2016, sellers had cut advertised prices on nearly half of all listings in the area. The share of North Brooklyn listings with cuts to their advertised prices on StreetEasy has since fallen to 27 percent, but remains above the Brooklyn total of 26 percent of listing. Sales inventory peaked in June, but remains up nearly 30 percent year-over-year, a sharp contrast with the neighboring submarkets of Northwest Brooklyn and East Brooklyn, where sales inventory is down 20 percent and 12 percent, respectively.
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Signs of Stabilization
Nonetheless, there are some early signs of stabilization in the North Brooklyn market. The median number of days on market for units for sale in North Brooklyn fell sharply in February, and some buildings are still selling new units at a brisk pace. With rents now substantially lower than a year ago and commuting headaches still two years off, we expect rents to stabilize heading into the peak season for leasing. With L train repairs looming on the horizon for more than two years to come, those not dependent on commuting on the L train may find attractive deals in the North Brooklyn area. With some of the city’s most popular bars and restaurants and lower prices to sweeten deals, North Brooklyn presents a solid opportunity for both renters and buyers relative to a year ago.