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Goodbye, Seller's Market. Price Growth Cools in Manhattan and Brooklyn

By Amy Zimmer | August 29, 2016 7:19am
 This three-bedroom, three-bath co-op at 57 Montague St., with a 500-square-foot terrace overlooking the New York Harbor and Lower Manhattan, is on the market from Compass for $2.995 million.
This three-bedroom, three-bath co-op at 57 Montague St., with a 500-square-foot terrace overlooking the New York Harbor and Lower Manhattan, is on the market from Compass for $2.995 million.
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Compass

Yes, home prices in Brooklyn and Manhattan are still growing, but not at the clip we’ve been seeing the past four years.

Both boroughs saw the smallest annual price increase since 2012, just before the “frenzied” pace of price growth took hold, according to a report released Monday from real estate search engine StreetEasy.

Manhattan’s median price for re-sale apartments increased just 2 percent over the past year, to $994,458. 

Brooklyn’s median resale price hit $563,416, up 4.7 percent — a bigger increase than its neighbor, but also the borough’s slowest growth in several years, the report noted.

“Prices are still going up and homes are still expensive across the board, but we’re seeing the market settle back into a more balanced pace,” said StreetEasy economist Krishna Rao. “Sellers will need to continue to level expectations amid a less competitive market, while buyers have the opportunity to negotiate asking prices down even further.”

In general, homes took longer to sell last month — giving buyers more of a bargaining chip.

The median number of days Manhattan properties sat on the market jumped by 13 from the year before, to 62 days. Brooklyn’s median rose by nine to 53 days, StreetEasy found.

“After the incredibly hot seller's market of 2015, where buyers' hopes were dashed by multiple bidding wars and escalated prices, buyers became exhausted, and they retreated into their cozy and comfy turtle shells of renewing their rental leases, or staying in their small one-bedroom for another year until the market eased,” said Compass broker Danielle Lurie.

So what does that mean for sellers?

“Now in 2016, with buyers more hesitant and fatigued, it would behoove sellers to have a bit more empathy for the fatigued buyer,"  she said, "and the first way to express this would be with pricing their apartments fairly."

Buyers are still eager to make offers, Lurie noted, but they need “some generosity of spirit from the seller to get them to physically come out to an open house.”

She added, “Everyone wants to feel like they've won in a deal — and even better, everyone wants to feel the deal was fair.”

When Lurie meets with sellers nowadays she reminds them of the importance of having realistic, “down-to-earth” prices that will attract a buzzing first open house.

“Having a packed open house that is priced fairly is so much better for a sale than having an overpriced open house that has little traffic,” she said.  “Sellers need not fear — the price of real estate is still going up, and their sale will still most likely be bountiful compared to what they paid for it whenever they bought; but in today's market ensuring that both a seller and a buyer feels they've won is the best way to get the best price for one's home.”

Certain areas are seeing prices grow faster than others, the StreetEasy report found.

The neighborhoods around Prospect Park — including Park Slope, Prospect Heights, Prospect-Lefferts Gardens and Kensington — were the only ones to see prices decline year-over-year, falling 2 percent to $772,656. Still, these areas were the borough's most likely to see homes fetch above their asking price — so they were still competitive markets.

Meanwhile, East Brooklyn — which includes Bedford-Stuyvesant, Brownsville, Bushwick, Crown Heights and East New York — had the only double-digit price growth in Brooklyn, at nearly 11 percent, to $464,379.

In Manhattan, the neighborhoods spanning from Harlem to Inwood and Washington Heights saw prices hit $639,559. Though Upper Manhattan's prices were the lowest in the borough, they were 6 percent higher than the year before, which represented the biggest gain across the island.