Brooklyn is now the priciest housing market in the nation when considering percent of income spent on housing, according to real estate data company RealtyTrac. Brooklyn residents making the median income must devote 98 percent of their take-home pay on housing to afford a median-priced home, and median-priced homes are currently sitting at $615,000, as outlined in a recent report on Bloomberg.
According to RealtyTrac, San Francisco and Manhattan are the second and third least affordable markets in terms of housing-to-income ratios. Although these two markets are pricier in terms of median home prices than Brooklyn– San Francisco’s median sales price is currently $1,250,000 and Manhattan’s median sales price is $965,000 — the income in each of those markets is much higher, deeming them slightly more affordable.
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So why are Brooklyn prices rising so suddenly? Experts attribute sudden surges in Brooklyn home prices to international luxury condo investors, who are saturating the Manhattan market with multi-million dollar units. Manhattan buyers in the moderate to median range are forced out of the borough, predominately gravitating toward trendier Brooklyn.
“Disconnected home-price growth has been driven by investors and other cash buyers who aren’t as constrained by income,” RealtyTrac Vice President Daren Blomquist said about Brooklyn’s expensive market.
The Douglas Elliman quarterly report shows housing prices rose 11.1 percent to hit $650,000 in Brooklyn at the close of last year. This is the second highest in Brooklyn history and the thirteenth successive quarterly increase. Listing inventory dropped 21.8 percent between quarters over the second half of 2015, indicating that inventory in the borough has tightened and demand is potentially increasing– creating a more competitive market amongst Brooklyn buyers.
[graphiq id=”fKBopN77f” title=”Median New Home Sale Price in the U.S.” width=”600″ height=”608″ url=”https://w.graphiq.com/w/fKBopN77f” link=”http://places.findthehome.com” link_text=”Median New Home Sale Price in the U.S. | FindTheHome”]
As Brooklyn real estate trends summarize, rents are also on the rise. Average rent increased 1.5 percent since 2014 in Brooklyn, hitting a peak of $2,716 last year. Williamsburg points to the most popular neighborhood for single renters, with a 9.81 percent increase in studio apartment rent prices in 2015. Overall, though, two-bedroom units saw the highest price growth across the borough with a 2.1 percent hike in 2015.
Brooklyn’s for-sale market has become increasingly more expensive and its incomes seemingly stagnant, moving residents to keep leasing and allowing demand to thrive. With an abundance of Brooklyn residents leasing – presumably to stay within budget – will apartments and single-family rentals in Brooklyn become just as unaffordable?
