Brooklyn’s Empty Shelves

The Real DealAugust 01, 2014

Bidding wars. All-cash offers. Foreign buyers. Off-market sales. The telltale signs of New York City’s housing crunch have dominated headlines in recent years, as pent-up demand from the financial crisis gave way to a seller’s market — one in which prices have soared.


But in Brooklyn, the steep inventory decline of the past four years is easing slightly, as new developments hit the market and some homeowners cash out.


This month, The Real Deal, using data culled together by the listings website StreetEasy, did a neighborhood-by-neighborhood breakdown of the for-sale inventory in Brooklyn.


The StreetEasy numbers showed that there were 4,202 properties for sale in Brooklyn during the month of June — up 15.9 percent from the same time last year, when available housing stock plummeted to 3,702 properties on the market.


“I would characterize this increase as a slight return, a beginning of a return to normal,” said Alan Lightfeldt, a data scientist who leads StreetEasy’s research efforts. “We still have a long way to go.”


Overall, Brooklyn’s housing inventory is still 25.2 percent lower than 2010, when the number of available properties swelled to 5,737, as the effects of the recession were being felt full force.


In fact, that buyer’s market has given way to an inventory shortage in Brooklyn that’s rivaled that of Manhattan.


Properties in both boroughs spent a median of just 49 days on the market in June, according to Lightfeldt. But while Brooklyn’s inventory shortage is partly the result of development projects stalling in 2009 and 2010, it also stems from an influx of new buyers who are priced out of Manhattan — of course, Brownstone Brooklyn would be an exception — as well as buyers who are just attracted to Brooklyn’s up-and-coming neighborhoods in their own right.


Nonetheless, the buyers and renters venturing into Brooklyn for deals get a rude awakening.


While Brooklyn prices are lower than they are across the river, the inventory squeeze has pushed prices to new highs.


In June, the median sale price in the borough for all sales rose 12 percent to $521,000, compared with the prior year period, according to StreetEasy.


“When someone owns a smaller home and wants to buy a bigger home, yes, they know they can sell their current home quickly in this market and for a great number,” said Sarah Burke, Douglas Elliman’s regional managing director for Brooklyn. “But they’re not necessarily finding or seeing the next apartment. They have nowhere to go.”


For that reason, said Lightfeld, buyers are starting to look with fresh eyes at more affordable neighborhoods — areas that they would not have considered five years ago. “There’s a lot of new buyer interest in outer borough neighborhoods,” he said.


Below is a roundup of some of the largest neighborhoods, showing which areas have been dogged by the inventory crunch — and where the tightness is starting to ease.


Downtown Brooklyn
Inventory change from 2009: 50.5 percent drop
Inventory change from 2013: 6.3 percent drop


Although a batch of new rental buildings has opened in Downtown Brooklyn, developers haven’t caught up with buyers’ appetite for condos, prompting the area’s inventory level to flatline over the past 12 months.


There were 104 properties for sale in Downtown Brooklyn in June — a 6.3 percent drop from 111 properties during the same time last year.


Meanwhile, the median sales price was $405,000, down 29 percent from $572,000 one year earlier, which StreetEasy’s Lightfeldt attributed to new developments that came online in 2013.


More recently, CORE’s Bowen said, “There’s nothing on the market.”


But things could be looking up in Downtown Brooklyn — literally and figuratively. With no height limitations for building in the neighborhood (Downtown was upzoned in 2004) it is one of the hottest areas for real estate speculation.


“This is where developers can go big,” Bowen said. “You can’t go big in Park Slope, except maybe on Fourth Avenue.”


In addition to the upzoning, Downtown has transportation, retail, parks, and other prime neighborhoods nearby, said Roger Fortune, vice president of the Stahl Organization, which developed 388 Bridge, a 378-unit condo-and-rental tower in the neighborhood. There were contracts on 30 percent of the condos within two weeks of the sales launch in June.


Inventory change from 2009: 56 percent drop
Inventory change from 2013: 10 percent increase


Like its neighbor Williamsburg, Greenpoint’s tight inventory reflects fallout from the financial crisis, as housing stock soared immediately after the crisis, only to plummet in subsequent years.


Like other post-industrial neighborhoods, Greenpoint’s 2005 rezoning from industrial to mixed-use has attracted developers.


There were 55 properties for sale in the waterfront neighborhood in June, up 10 percent from the same time in 2013. By comparison, there were 125 properties for sale in 2009, or more than twice the number of listings there are now.


The median sale price of $635,000 was down 14.7 percent year over year, but in a sign that sellers were shooting high, asking prices rose 25.2 percent to $875,000 during that same time.


Brokers said the easing of Greenpoint’s inventory crunch signals developer interest in the neighborhood. According to the real estate brokerage MNS, new development properties accounted for 21 percent of Greenpoint’s sales during the second quarter, the highest percent in the borough.


“Greenpoint is really the next big ‘it’ neighborhood,” said CORE’s Bowen, citing new developments such as 77 Commercial, a joint venture between developers Joseph Chetrit and David Bistricer that includes two towers, one 30 stories and one 40 stories, with 720 units combined. Demolition permits for the existing two-story building on the site were filed in June.