Fourth Quarter 2019 in Brooklyn stayed on trend with the rest of this year as sales activity moderated versus a strong 2018 while home values continue their upward climb. Buyers confronted both limited inventory at lower price points and increased transfer taxes at the high end, causing activity to moderate versus prior quarters. Meanwhile, as prices and inventory continued to increase, buyers, now with more choices, grew more patient, causing average days on market to lengthen.
After last year’s prices hit nearly a three-year low, there were minimal year-over-year median and average price increases this quarter. Median price of $678K was 2% higher year-over-year. Average price was only slightly above last year’s figure yet average price per square foot increased 11% to $943, reaching a near three-year high.
This dynamic reflects the shift towards more efficiently sized apartments being purchased as buyers chose to hold the line on price while relenting on space, the outcome of much price sensitivity in the market. Studios and one bedroom sales combined represented 46% of sales, the highest in four years while three plus bedroom residences shrank to its lowest share of sales in over two years. The composition of supply did not match demand since two and three plus bedrooms listings expanded while studio and one bedroom listings contracted.
Fourth Quarter 2019 showed some signs of a stabilizing market, as sales moderated, signed contracts improved, and supply growth slowed. Yet such shifts also signal that buyers remain cautious, committing only when a property demonstrates clear value. Prices, in turn, continued to decline, falling to levels last seen in 2014 and 2015, but supporting activity in the Manhattan market in the face of ongoing supply, affordability and tax headwinds. In a market eager for improvement, this quarter’s results provide a constructive yet tentative backdrop heading into what’s sure to be an eventful 2020.
Fourth Quarter 2019 sales fell just 2% annually to 2,717 closings, bringing the 2019 total to 11,660 transactions. Despite a 1% uptick in resale co-op and an 11% boost in new development sales, closings still fell this quarter due to a 13% drop in resale condo sales. Signed contracts, however, were level with 2018 for a third consecutive quarter—improving 1% annually to nearly 2,500 contracts—suggesting that demand, after four years of declines, may finally have stabilized.
Yet the small increase in contracts signed couldn’t keep inventory from climbing. Supply in Manhattan rose for a 17th consecutive quarter this fall, up 5% year-over-year to 7,332 listings, a nine-year high. As inventory grew and prices fell, buyers remained patient, pushing days on market higher by ten days from a year ago to an average of 123 days, a seven-year high.
Unsurprisingly, more supply, a “wait and see” approach to lower prices, and anxious sellers continued to weigh on prices this fall, as did Manhattan’s luxury market, which saw sales over $5M drop 41%. As a result, Fourth Quarter 2019 price figures settled to their lowest year-end levels in five years, with average price falling 11% to $1.832M and median price—less skewed by high or low priced—slipping 3% to $995K to remain below $1M for a second quarter in a row.