There’s a new real estate darling in New York and it’s not Manhattan.
House prices in Brooklyn are smashing earlier records, with median sales price rising to more than $750,000 in the first quarter of 2017 while the more glam Manhattan is seeing sellers cut asking prices to seal deals that have been pending for months, fearing a spike in inventory costs and the risk of rise in listings.
Brooklyn’s surge is not atypical, though. House prices in neighbourhoods that attract global talent and cultures have generally outpaced the national average in most countries and America is no exceptions. San Francisco is one other such example. Considering even the minimum lead time for building a house, supply remains relatively inelasctic and short term house price trends are driven mainly by demand factors.
House prices in America, after a relentless 10 year spike, went through the roof in 2006. The crash that followed brought the global financial market to its knees.
For the last few years on a trot, the Chinese and the Russians are together buying up prime real estate at a rapid pace in Brooklyn - the promise of profiteering from a Brooklyn investment remains delicious and the Chinese typically pool in money from extended families into capital intensive real estate purchase given the falling yuan and the ever-strong US dollar.
This investment isn’t all in “houses” but hotels in particular.
Reuters reported that in 2014, for the first time, the Chinese bought more Manhattan apartments than did the Russians. The Chinese community thrives along subway routes in Brooklyn and there their cultural infrastructure is hard to miss in the area - Chinatown, cheap price Chinese run buses, restaurants and the permanent aroma of dim sums.
After five consecutive stretches of resale dips, Manhattan is finally seeing house resales rise but on lower asking rates according to the latest industry reports. Buyers have far more choices in Manhattan than in Brooklyn - there were more than 8,650 listings in Manhattan by March end 2017, almost a 10 per cent percent jump from a year ago.
For a high level view of the all the hot buttons in the New York’s most sought after real estate markets, check out this Bloomberg link.
Manhattan sellers are cutting back on their ambitions and in the first three months of the year, buyers there have got discounts of up to 5 per cent on earlier quoted rates.
Both in the luxury sector - top 10% of sale prices and the more conservative sale prices, demand is now outpacing supply according to multiple industry reports.
Median rents across New York:
Northwest Queens: $2,734
Luxury: $5,596 ( 7 percent increase)
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Updated Date: Apr 14, 2017 23:49:51 IST