Many potential home buyers in New York City have historically turned to Brooklyn to find more affordable housing. But today’s market has taken quite a turn. The difference in price between a one bedroom apartment in the West Village compared to a one bedroom apartment in Brooklyn Heights is negligible – often not more than ten percent.
In fact, prices for homes in Brooklyn are rising at a higher rate than their Manhattan counterparts. The median asking price for apartments in Brooklyn Heights has risen almost 38 percent in the last five years. Comparatively, the median asking price in the West Village rose just over four percent in that same time frame.
Manhattan vs. Brooklyn
Up until recently, for those looking to save on a home purchase in New York City, the easy answer was to turn their eyes across the river. This is no longer the case. Brooklyn has become a top choice for more and more home buyers. Trendy Brooklyn neighborhoods can now fetch prices that are close to those found in Manhattan.
Prices for rental units in Brooklyn have been rising at a much higher rate than those in Manhattan, which has significantly lowered the price difference between the two boroughs. The current median rental price for a one bedroom unit in a popular Brooklyn neighborhood is $2,560. This is up over 11 percent from the same time last year. In Manhattan the same property would rent for $3,195. That represents an increase of 6.7 percent over last year.
While prices for homes in the Brooklyn sales market do tend to be cheaper than similar areas in Manhattan, the difference is becoming smaller and smaller. The median sales price for a Brooklyn apartment is up 14 percent over last year, at $515,000. The median sales price for a Manhattan apartment is up just 5.9 percent to $820,555.
However, some trendy neighborhoods in Brooklyn are actually more expensive than those in Manhattan. One popular neighborhood in Brooklyn, Williamsburg, is now more expensive than the Lower East Side in Manhattan. The East Village remains more expensive, though.
A Lack of Inventory
Manhattan is currently experiencing a shortage of inventory, leading many buyers to expand their searches to Brooklyn. Listings have fallen by 34 percent since last year, and this is contributing to the shrinking gap in prices between the boroughs.
Many buyers have begun looking at Brooklyn neighborhoods that have a similar vibe to those in Manhattan. For example, Park Slope has often been seen as a less expensive version of the Upper West Side, while those looking for the Tribeca loft lifestyle might find what they are looking for in Dumbo. Because of demand, prices in Park Slope are catching up to those in the Upper West Side. Dumbo is still relatively affordable over Tribeca, which remains upscale and expensive.
The Upscale Market
The best place to find a deal in Brooklyn is in the high end market. The difference in cost between a townhouse in Brooklyn Heights versus a townhouse in the West Village is significant. The most expensive home sold in Brooklyn Heights was for $12 million. By contrast the most expensive home in Manhattan sold for $88 million.
This price gap is largely due to a lack of demand for luxury properties in Brooklyn. Historically, buyers who could afford a luxury property have chosen Manhattan. As a result Brooklyn prices for high end homes have not caught up.