(ZG) Sellers Temper Expectations as Price Growth Slows in Brooklyn and Manhattan

NEW YORK, May 3, 2016  —

Key facts for Q1 2016:

• Manhattan’s median resale price rose 3.8 percent from last year to $978,765, the lowest annual growth since September 2012.
• The median resale price in Brooklyn grew 7.1 percent from last year to $545,330, the third consecutive month of slowing price growth.
• In Manhattan, sellers received 98.5 percent of their initial asking price, a slight increase from last year; Brooklyn sellers received 98.2 percent.
• The share of Manhattan listings with a price cut decreased from 31.2 percent in Q1 2015 to 27.6 percent in Q1 2016.
• In Brooklyn, the share of all sales inventory with a price cut declined to 22.7 percent, compared to 24.1 percent in the first quarter of 2015.

The Manhattan and Brooklyn sales markets continued to cool in the opening months of 2016. Manhattan’s median resale price grew 3.8 percent year-over-year to $978,765, the lowest annual increase since September 2012, according to the Q1 2016 StreetEasy® Market Reportsⁱ. In Brooklyn, the median resale price increased 7.1 percent from last year to $545,330, with monthly growth slowing since January 2016, as measured by the StreetEasy Price Indicesⁱⁱ.

In Manhattan, sellers may be exhibiting more disciplined pricing strategies to avoid price cuts, aligning their expectations with a market that is seeing slower price growth. The median sale-to-list price ratio in the borough was 98.5 percent in the first quarter, meaning sellers received almost all of their initial asking price, up from 97.7 percent last year. In an additional sign that sellers are exerting more price discipline, the share of all sales inventory that saw a price cut during the first quarter declined from 31.2 percent in 2015 to 27.6 percent. The typical price cut also declined from 6.9 percent in Q1 2015 to 6.7 percent in the first quarter of this year.

Brooklyn mirrored Manhattan, where sellers received 98.2 percent of their initial asking prices in the first quarter, unchanged from last year. Despite this stagnant number, the share of all sales inventory in Brooklyn with a price cut declined to 22.7 percent compared to 24.1 percent in the first quarter of 2015.

“Manhattan and Brooklyn sellers are being more cautious with their pricing and perhaps a little less free-wheeling than they’ve been over the past few years. In order to sell in this market, sellers need to lower their asking prices slightly to see a greater return with fewer price cuts,” said StreetEasy data scientist Alan Lightfeldt. “While price growth is slackening, buyers still face an extremely competitive and expensive market, especially in areas like East Brooklyn and Upper Manhattan where pockets of relatively affordable options are attracting more buyers every day.”

Since October 2014, Upper Manhattan has consistently shown the highest price growth in Manhattan, according to the StreetEasy Price Indices. The median resale price increased 9.7 percent from last year to $629,383 – more than twice as fast as Manhattan overall. Prices in the Upper West Side submarket rose 5.7 percent from last year, followed by Downtown (3.3 percent), Upper East Side (2.7 percent) and Midtown (1.7 percent).

In Brooklyn, price growth in the East Brooklyn submarket surged 23.9 percent from last year to $481,525 in March, the largest annual increase across both boroughs. The resale price in South Brooklyn increased 10.4 percent, followed by Prospect Park (6.1 percent), Northwest Brooklyn (3.4 percent) and North Brooklyn (2.4 percent).

According to StreetEasy Price Forecastsⁱⁱⁱ, all major submarkets will experience lower growth over the next 12 months, some even experiencing negative growth as we move past the cyclical peak of home shopping season. StreetEasy predicts that Brooklyn will continue to see overall price growth decline, most notably in parts of “Brownstone Brooklyn,” including the Northwest and Prospect Park submarkets. Price growth over the next 12 months across all of Brooklyn is expected to slow to 1.7 percent, considerably lower than the 7.1 percent annual growth of the first quarter. The median resale price in Manhattan is expected to grow by 2.6 percent over the next 12 months.

The complete StreetEasy Market Reports for Manhattan and Brooklyn with additional analysis, neighborhood data and graphics can be viewed at streeteasy.com/blog/market-reports.

About StreetEasy:
StreetEasy is New York City’s leading local real estate marketplace on mobile and the web, providing accurate and comprehensive for-sale and for-rent listings from hundreds of real estate brokerages throughout New York City and the major NYC metropolitan area. StreetEasy adds layers of proprietary data and useful search tools to help home shoppers and real estate professionals navigate the complex real estate markets within the five boroughs of New York City, as well as Northern New Jersey and the Hamptons.

Launched in 2006, StreetEasy is based in the Flatiron neighborhood of Manhattan. StreetEasy is owned and operated by Zillow Group (NASDAQ: Z and ZG).

StreetEasy is a registered trademark of Zillow, Inc.

ⁱ The StreetEasy Market Reports are a monthly overview of the Manhattan and Brooklyn sales and rental markets. Every three months, a quarterly analysis is published. The report data is aggregated from public recorded sales and listings data from real estate brokerages that provide comprehensive coverage of Manhattan and Brooklyn, with most metrics dating back to 1995 in Manhattan and 2005 in Brooklyn. The reports are compiled by the StreetEasy Research team. For more information, visit http://streeteasy.com/blog/market-reports/. StreetEasy tracks data for all five boroughs within New York City, but currently only produces reports for Manhattan and Brooklyn.
ⁱⁱ Median resale prices are measured by the StreetEasy Price Indices. Also referred to as the StreetEasy Manhattan Price Index (MPI) and StreetEasy Brooklyn Price Index (BPI), the metrics are monthly indices that track changes in resale prices of condo, co-op, and townhouse units. Each index uses a repeat-sales method of comparing the sales prices of the same properties since January 1995 in Manhattan and January 2005 in Brooklyn. Given this methodology, each index accurately captures the change in home prices by controlling for the varying composition of homes sold in a given month. Data on sales of homes is sourced from the New York City Department of Finance. Full methodology here: http://streeteasy.com/blog/methodology-streeteasy-price-indices/
ⁱⁱⁱ The Manhattan Price Forecast and the Brooklyn Price Forecast predict the change in resale prices 12 months out from the current reported period. Each forecast incorporates the Price Index for each borough as well as a mix of fundamental market factors including: historical recorded sales price, household income, population, and taxes.