Brooklyn ended 2018 by following earlier quarters’ trends with overall sales slightly slowing but also shifting to lower-cost areas. With the high prices in neighborhoods close to Manhattan compounded by tax reform and rising mortgage rates, apartment buyers continued to seek value in neighborhoods with more palatable price points; these areas had robust sales activity and further price appreciation. Overall, however, the pace at which value seeking buyers transacted was not fast enough to prop up sales compared to Fourth Quarter 2017, which was the strongest fourth quarter in the last ten years.
Overall sales dipped 6% year-over-year to just over 1,400 closings and all product types saw fewer transactions. While contract activity fell 2% below last year’s number, this modest decline is a demonstration of resiliency compared to Manhattan, where contracts declined 12% this quarter. Compared to the five-year low point of inventory just one year ago, inventory expanded by its highest rate in four years.
Borough wide price statistics decreased during Fourth Quarter 2018, with median price down 3% year-over-year, the fifth consecutive quarter with an annual median price decline, and average price 2% lower. Median and average price declines were mainly driven by the large geographic shifts in the new development market as resale condo prices actually grew and resale co-op prices dipped only slightly.
The Fourth Quarter 2018 Manhattan real estate market faced familiar headwinds experienced earlier in the year as buyers hesitated despite moderating prices and more availability. Market-wide closed sales declined as potential buyers grappled with a confluence of factors that created uncertainty in the market. Buyers’ concerns included rising mortgage interest rates, tax law reform, volatility in the financial markets, foreign capital restrictions, and political distractions. As a consequence, many prospective buyers are choosing to wait on the sidelines until prices adjust to a more accessible level and other market factors calm.
Fourth Quarter 2018 closings fell 7 percent annually to just under 2,800 sales, bringing the total for 2018 to approximately 11,800 transactions, the lowest annual sales figure since 2009. A weaker condo market drove sales lower this quarter as resale condo and new development sales fell respectively by 12 percent and 26 percent, year over-year. Resale co-op closings were essentially level with last year. Contract activity also receded, as 12 percent fewer contracts were signed versus Fourth Quarter 2017. At the same time, fewer sales, anxious sellers, and new development launches have pushed inventory higher. The number of available apartment listings during Fourth Quarter 2018 was nearly 7,000 units, a seven-year high.
As some sellers relaxed their expectations amid cooling demand, median price dipped 2 percent in the final quarter of 2018 to $1.075M. Market wide, median price and price per square foot are below their peak and back to 2015 figures. Nevertheless, average price rose 2 percent to $2.010M largely due to the start of closings at 220 Central Park South and 520 Park. While the year-over-year changes were minimal, these figures were down 10 percent and 7 percent, respectively, versus their peaks reached in 2017.