Back HomeNew Development’s Effect on Resale Condo Sticker Prices
New York City’s proliferation of new condo development is scarcely news. The skyline is changing everyday, in every borough, and in record-breaking form for tallest residential buildings (432 Park Avenue and One57). Moreover, buyer demand for apartments at various price points is as lit as a California wildfire; Brooklyn, Queens, and Harlem are all undergoing new development projects with relatively affordable, Manhattan-adjacent pricing. Of course, every action has a reaction, so it follows that pricing of new development condos will ultimately affect pricing of neighboring resale condos across the named boroughs.
Condo development throughout the outer boroughs has escalated enough that reporting outlets like Curbed, Brick Underground, and The Real Deal are referring to it as a housing boom. The source of demand typically comes from newly established professionals and couples with budgetary constraints that take them out of Manhattan’s market. With news of a Trader Joe’s coming to DoBro, or Downtown Brooklyn, and new affordable-esque condos being built in places like Greenpoint, Queens, and Harlem, buyers have good reason to expand their search and consider the plethora of options offered to them today.
There is one small caveat to purchasing in an outer borough, and that is, ironically, escalating price. Every borough’s rate of appreciation is compared to Manhattan in market reports.
Corcoran Group’s own Q2 market report points to new development as an overall point of price takeoff for resale condos in the New York City market. When comparing new development to resale condos, new development’s competitive price points are often higher than resale’s, so it follows that “new development sales translated to higher pricing market-wide.”
As a result, buyers benefit from taking note of what is happening on the island, because more often than not, outer borough property prices will escalate in step with Manhattan’s.
Manhattan development, particularly in Midtown, has effectively served as a price lever, pushing other condo development’s prices in the outer boroughs to comparable highs.
According to StreetEasy’s spring analysis on New York City condo development, “Manhattan’s Midtown submarket is booming. [It’s] the only submarket to experience a yearly gain in inventory.”
With said supply growth has come added appreciation. Midtown condo prices have appreciated at a rate much faster than the Manhattan average: sprinting at 1.9 percent compared to Manhattan’s 0.7 percent appreciation. Appreciation spreads, and it is affecting surrounding neighborhoods.
Noted in a July market report by market analyst Alan Lightfeldt, buyers are increasingly looking to expand past 96th Street and enter into areas of Upper Manhattan, such as Marble Hill, Washington Heights, and Harlem. Since last year, property growth has appreciated 11.9 percent, or about twice Manhattan’s rate.
Lightfeldt comments on the price hikes experienced by the region. “With homebuyers being priced out of not only Manhattan but many Brooklyn neighborhoods as well, these northern neighborhoods are attractive now more than ever. Upper Manhattan is a new battleground for bidding wars.” In other words, the outer boroughs are not immune to the basic equation: price is a function of popularity, and popularity is nowhere near its descend.
Brooklyn’s Williamsburg and Greenpoint neighborhoods, notes real estate columnist S. Jhoanna Robledo in New York magazine, have bested Manhattan’s $960,000 median price with their $1.05 million. “Affordability,” says appraiser Jonathan Miller in the same article, “Is a problem across the board. [Brooklyn] is now a bigger competitor of Manhattan than probably any other time.”
Written by Alexandra Gámez New York
