Sales activity in Brooklyn remained solid, registering above the five-year average while inventory continued to plummet. The relentless constraint in inventory means many buyers are struggling to find apartments meeting both their price and location criteria, so many buyers took a pause in the First Quarter in hopes of new listings coming on the market in Spring. On the other hand, the more opportunistic purchaser pursued more accessibly priced homes further afield in the borough, which helped to drive contract activity upward. Other potential buyers chose to wait before making a purchase due to continued uncertainty surrounding the effects of tax reform which contributed to a slight decline in overall sales this quarter.
The overall number of closed sales was 3% lower year-over-year. The decline in sales reverberated throughout most of the northern and western neighborhoods of Brooklyn. However, eastern and southern parts of Brooklyn actually had double-digit increases in sales this quarter. Another cause of the overall decline was fewer new development closings compared to First Quarter 2017, when several large-scale buildings were completed.
Inventory was down 14% year-over-year. Due to restricted supply and seeking value, buyers expanded their search into more neighborhoods. The adjustment in the location of where sales occurred, combined with fewer new development sales, triggered a decline in price statistics this quarter. Median price shifted down 2% year-over-year while average price dipped 12% versus the same period. Brooklyn remains undersupplied with barely one quarters-worth of inventory.
It was a mixed quarter for the Manhattan market with reduced sales, inventory on the rise and price statistics settling down. Many potential buyers took a pause as a variety of factors—concerns over tax reform, luxury market over-supply, stock market fluctuations, even March’s nor’easters—deflated a sense of urgency from the marketplace. However, First Quarter 2018 included bright spots as well: days on market actually dropped slightly, indicating that appropriately priced properties are still finding buyers, while mispriced properties linger.
With uncertainty pervading the market in First Quarter 2018, sales dropped. Year-over-year, closed sales fell 11% and signed contracts declined 10%. Sales varied by product type and price range, however. Resale co-ops, which benefit from lower prices, saw sales increase 2% annually. Resale condo sales, on the other hand, declined 12% as prices remained near their record-high level. In the new development market, fewer buildings commenced move-ins, causing a 44% drop in new development transactions.
Listed inventory increased 10% annually to its highest First Quarter level since 2012. Resale co-op and resale condo listings increased, while new development inventory actually notched a 3% decrease. Slower absorption over the last twelve months versus the year prior, combined with the increase in listings led to a higher months of supply figure, which at 5.9 months is just under the supply-demand equilibrium threshold.
Market-wide price statistics this quarter showed across-the-board declines. However, the reality is more complicated: resale co-op prices (p. 6) and resale condo prices (p. 7) are both up year-over-year. Meanwhile, new development prices were down as fewer luxury properties had closings this quarter. Therefore, the drop in market-wide price statistics is mainly a result of the shift in the market of share of sales towards co-ops, which by their nature are generally less expensive.