Now that 2021 has come to a close, we can look back at the real estate market in Brooklyn for the last year and see what actually happened, and where we stand now. So, in this post we’ll look at the numbers to better understand how the advent of the COVID vaccines and the easing of pandemic restrictions in the first part of 2021 impacted the Brooklyn real estate market, and how the market differed from 2020. And we’ll try to understand, given the available information, where we might be headed in 2022. So let’s dive in!
The Key Headlines
The major story in Brooklyn Real Estate was the amazing strength of the market there, continuing on from the trend in 2020. Of any place in New York City’s 5 boroughs, Brooklyn seems to have fared the best throughout the pandemic and is just building strength upon strength. In 2020, despite Manhattan being shut down and seeing price drops of as much as 20-25%, Brooklyn experienced a “buying frenzy” (StreetEasy, Sept 24, 2020). And in 2021, that didn’t stop. In a November 3 article on StreetEasy.com detailing the top 10 markets in NYC, nine of them were in Brooklyn. And in an article posted December 3 on the same site detailing the 10 NYC neighborhoods to watch in 2022, half of them were in Brooklyn (3 were in Manhattan, and there was 1 each in Queens and the Bronx). Clearly, Brooklyn is enjoying a moment in the spotlight. Now, let’s look at some numbers!
Number of Sales
For the entire borough, Q4 sales were 3,580, which was a substantial decline from Q3, which had 4,248 sales and set records for quarterly sales. Even so, Q4 of 2021 was still stronger than Q4 of 2020 — which registered 3,145 sales — or Q4 of 2019, when there were 3,007 sales. Let’s dive deeper and see how those numbers break down in each of the major property categories.
In residential 1- to 4-family homes, the number of transactions in the 4th quarter declined about 9% relative to the 3rd quarter. A lot of this is to be expected moving from Q3 to Q4 as the holiday season generally brings a slowdown to the market. Year on year, which is a better indicator of the relative strength of the market, Q4 of 2021 had an increase in number of sales of 14% relative to 2020, and 6% relative to 2019 in the 1- to 4-family segment.
In the condo segment there were 1157 sales registered in Brooklyn for the 4th Quarter of 2021. This was a decline of 21% from the 1469 sales registered in the 3rd Quarter, but, again, that’s largely attributable to seasonal swings. Year-on-year, the number of 4th quarter condo sales increased by 15.8% from 2020, and 38% from 2019.
There were 647 co-op units sold across Brooklyn in the 4th quarter of 2021. That compares favorably to 596 sales in the 4th quarter of 2020 (8.6% increase) and 515 sales in the 4th quarter of 2019 (25% increase). Again, compared to the feverish peak in the 3rd quarter, sales were down 20%, but were still above the levels of 2019 and 2020. As we can see, sales have been up year-on-year across all property types, indicating a pretty healthy market in Brooklyn. Now let’s look at everyone’s favorite stat — median prices!
Median Prices in Brooklyn
In December, the median price for Brooklyn real estate on the whole stood at $962,500, which was a new all-time high and an increase of just under 9% from December 2020. For the 4th Quarter as a whole, the median price for Brooklyn real estate was $934,167. This was an increase of 7% from the same quarter in 2020, when the median price was $870,084. In December of 2019, the median price across Brooklyn stood at just $800,000, showing just how strong the Brooklyn real estate market was throughout 2020 and 2021.
Townhouses and 1- to 4-family properties largely represent the high end of the Brooklyn real estate market, and saw strong growth throughout the pandemic as the exodus from apartment buildings took place. By December of 2021, the median price for this segment of the Brooklyn real estate market hit $1,128,000 which, again, was an all-time high and was 15.7% higher than the same time the previous year. Going back to 2019, the median price in this segment of the Brooklyn real estate market was just $920,000, showing just how incredible the price growth was in this sector.
In comparison, the condo sector saw only modest gains in the Brooklyn real estate market, showing us once again how specific the real estate market in New York City can be. Condo prices in Brooklyn reached their high back February of 2017, when condos reached a median price of $984,000. By August of 2020, however, condo prices were sitting at a median of about $820,000. But throughout the rest of 2020 and all of 2021, condos in Brooklyn experienced consistent growth to end the year at $960,000. That number was a year-on-year increase of 3.2% from December of 2020, which illustrates clearly how much less demand there was for apartment-style inventory compared to townhouses and 1- to 4-family homes over the same time-frame.
As anyone who is familiar with the New York City real estate market might expect, the co-op sector was quite different from the condo and residential sector in Brooklyn throughout 2021. In fact, the co-op market in December was the only sector that saw a price decline year-on-year. The median price for co-op apartments across Brooklyn in December stood at $466,000, which was 7% than the same time the year before, and down substantially from their highs of $551,000 in July of 2021. It’s too early to tell why this cooling is taking place, but one interpretation is that, just as in Queens and Manhattan, the pandemic is driving people out of co-ops and into 1- to 4-family homes, or into suburbs.
Inventory of available units in Brooklyn through the 4th Quarter of 2021 was down across all the property sectors from the same time the previous year, and was moving down quickly, which echoes the rapid increase in sales activity that we discussed in the first part of this article. As of December 2021, Co-op inventory was down 22% year-on-year, condo inventory was down 23.7% year-on-year, and residential inventory (townhouses and 1- to 4-family) was down 28.2%
Months of Supply
Given the inventory of a touch over 2000 available properties, and contract activity of about 1000 closings a month, we can infer there is about 2-3 months of supply currently available in the Brooklyn real estate market. This puts it squarely in seller’s market territory. While it’s always wise for sellers to price realistically based on recently closed sales, in a seller’s market they can afford to stand firm, and buyers should expect to be in competitive situations having to outbid other buyers. Multiple offer situations will work to the benefit of sellers and allow sellers to find not only the best prices for their property, but also the strongest terms.
The big topic on everybody’s minds and lips right now is inflation and interest rates. The Fed uses interest rates to control inflation or stimulate the economy depending on what they are seeing. As we have seen recently, inflation has been creeping up (though it’s nowhere near historic highs and still at very manageable levels), and it seems likely that the Fed will raise interest rates in order to keep inflation under control. According to an article in the Wall Street Journal, at least one member of the Fed is anticipating four interest rate hikes throughout 2022. This will impact the buying power of homebuyers, which may then have a cooling effect on price growth in the Brooklyn real estate market.
Where Are We Headed in 2022?
No real estate agent has a crystal ball or can predict the future, but most professionals expect the trends of Q2-Q4 of 2021 to continue, albeit at a slower pace. There are several reasons for this. The trend is expected to continue because the underlying economy and the demand for Brooklyn real estate remain strong. Despite some of the headlines that might lead one to believe otherwise, employment and salary figures are strong, the stock market continues its bullish trajectory, and the recovery will continue. That being said, the rate of growth in the Brooklyn real estate market will probably slow and plateau as the year progresses. Interest levels are set to rise several times over 2022, and that will inevitably moderate the feverish housing market as it impacts buyers’ purchasing power and their perceptions. Slight inflation is likely to continue, which, as we’ve seen, impacts consumer perception on the economy (even though inflation remains at historically low levels and there’s no need to panic). In addition, the feverish buying frenzy in New York City was largely the result of pent-up demand and depressed prices. As that inventory gets soaked up (which it largely has been) and prices rise to normal levels (which they largely have), there is likely to be a natural tapering off of the activity, as the Brooklyn real estate market gets back to a state of equilibrium. The Spring sales market is likely to be strong and active. Price growth, however, might be more moderate, and some outlets are predicting moderate price growth of just 2-3% over the course of the year.
One big question looming over everyone’s heads is what effect the surge in COVID cases as the result of the Omicron and Delta variants will have on the NYC real estate market. The CDC and Dr. Anthony Fauci have both indicated that, while the Omicron variant is extremely infectious and is placing strain on the hospital system, the very rate of infection that is so alarming may actually shorten the surge as it burns through the population faster. In addition, we have more knowledge on COVID treatment now, many more people are vaccinated, and governments and the medical establishment are telling us that the effects of the Omicron variant do seem to be milder. All this taken together makes it less likely that we’ll see the same sorts of shutdowns that we saw in 2020 and into 2021. We’re more experienced and better equipped to deal with a COVID-positive world, and sales in Brooklyn, if they are impacted at all, might be impacted only for the first month or two of 2022. Time will tell!
What Does This Mean For You?
The million dollar question, of course, is what does this all mean for you if you’re a Brooklyn homeowner thinking of selling in 2022? As we mentioned previously, the Brooklyn real estate market is hyper-specific, so while the numbers discussed here give one a broad overview of the health and state of the sales market overall, they don’t necessarily speak directly to YOUR home and YOUR situation. Pricing and statistics in Brooklyn are sensitive to a multitude of factors, including property type (co-op vs condo; resale vs new development), location (down to what floor an apartment is on and what direction it faces), and many many other factors. For detailed information on your neighborhood and property type, please reach out to us using the form below, and we’ll be able to provide you reports of the latest data for your property type and neighborhood!
For ADA assistance, please email email@example.com. If you experience difficulty in accessing any part of this website, email us, and we will work with you to provide the information you seek through an alternate communication method.