The pandemic has fundamentally changed the way buyers view real estate in New York City, and Brooklyn may be the biggest beneficiary, The New York Times reports. The borough had 812 pending sales in October, the most in a single month since at least 2010, according to StreetEasy, extending a hot streak that began in the summer, after a months-long shutdown that essentially froze the city’s real estate market.
“Brooklyn has become the default choice, for all the factors that have become really important to people,” says Nancy Wu, an economist with StreetEasy. To a lesser extent, Queens has also benefited from the shift, with pending sales in November increasing faster than in Manhattan, and with modest price growth, too. The reasons: more outdoor space, less concern for commute time as work has shifted from office to home, and bigger apartments at lower prices, relative to Manhattan.
Buyers are reconsidering the cost of living in core Manhattan, where, even after three years of mostly sliding prices, the median sale price was still $1.1 million in the third quarter, according to the brokerage Douglas Elliman, compared to $790,000 in Brooklyn.
From March to September, homes in Midtown Manhattan, the center of the real-estate universe before offices and businesses shuttered, sold for the biggest discount of any neighborhood in the city. The median difference between the asking and final price was a hefty 12.4%, or about $250,000, according to StreetEasy.
There were only five neighborhoods in that period where more than half of homes sold above asking, and none of them was in Manhattan. They were: Downtown Brooklyn, Flatbush, Gowanus and Greenwood in Brooklyn, and South Jamaica in Queens.
“People feel that they’re safer in Brooklyn,” says Michael J. Franco, an agent with Compass. “Some of my clients see it as an alternative to moving to the suburbs.” Why? Because their dollars stretch further, and traveling to Manhattan, if and when it becomes necessary again, is convenient.
While discounting was widespread this year, prices did not collapse, as some bargain hunters had hoped – largely because prices had begun to dip long before COVID-19 hit in March. In 2018, new caps on state, local and property tax deductions disproportionately affected high-price markets like New York, and tax changes in 2019, including increased transfer taxes for homes over $1 million, slowed sales further.
Even with the recent surge of sales in Brooklyn, there is a long way to go. The value of commercial and residential real estate sales from January to the start of December, was nearly 50% lower than the same period in 2019, which translated to a roughly $1.6 billion decline in tax revenue for the city and state, according to the Real Estate Board of New York.
Now, with the election settled, vaccines en route and mortgage interest rates expected to remain near record lows, the momentum could carry into next year. “As long as sellers keep giving discounts and are willing to negotiate,” Wu says, “we’re going to see perhaps one of the busiest sales seasons ever.”
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