Bada Boom, Bada Bust! These NYC Neighborhoods’ Prices Are Rising—and Falling—the Fastest

Clockwise from left: littleny/iStock; Google Maps; JayLazarin/iStock; Westend61/Getty Images

Forget politics, the buzziest chefs, or who’s wearing what this season. In New York City, all anyone really wants to know is where the next hot neighborhood will be.

That’s because when you live in the ninth most expensive city on the planet—a place where world leaders, celebrities, and artists routinely cross paths with trash collectors, students, and lowly internet editors—how much you’re paying for a roof over your head matters. New Yorkers are known, after all, for reading the obits to get the scoop on open apartments. And they want to get in on the action before prices in the next trendy hood rise to skyscraper levels.

So we took a deep dive into this unique, bellwether real estate market, which leads the rest of the country in urban everything. We teamed up with national real estate appraiser Jonathan Miller, co-founder of Miller Samuel, to figure out which NYC neighborhoods were experiencing the biggest median price hikes and which were seeing the biggest falls.

Because, of course, New York is actually many cities in one—five separate boroughs filled with dozens of neighborhoods, each with their own distinct personality. You’ve got Manhattan and its high-rises, always hogging the spotlight; uber-trendy Brooklyn with its craft brews, hipsters, and working-class communities; predominantly middle-class, suburban Queens and its immigrant enclaves; the gritty Bronx, perennially touted as “the next big thing”; and oft-forgotten (and oft-maligned) Staten Island.

“It’s such a magnet,” Miller says of New York City. “There’s such an extreme range of properties within the five boroughs, from modest single-family, suburban homes all the way up to $250 million penthouses. There’s not much that isn’t covered here.”

Some of the results of our data breakdown of winners and losers in New York City real estate shocked us to the core.

It turns out, some of the most famously fashionable neighborhoods, where folks pay astronomical sums for the tiniest studios, are statistically on the downturn. Meanwhile, some of the hottest neighborhoods now are little-known enclaves in the Bronx, Brooklyn, and Queens, experiencing booms as more are priced out of more sought-after parts of the city.

The main culprit behind both trends is the slew of ultraluxe developments that have come online in the past few years as the city pulled out of the recession. Sales in a high-end building with every imaginable amenity (Stroller valet service! Private Imax theaters! Concierge jet service!) can send a neighborhood’s median prices through the roof.

By the same token, once sales in those new developments slow, there aren’t as many big purchases driving up the median prices in a neighborhood. That leads to steep overall drops even if the cost of the rest of the housing stock in the area stays roughly the same. That’s why once-red-hot hoods such as legendary Greenwich Village and Soho show price declines.

But don’t take up the collection plate anytime soon: Everyone still wants to live there. “These markets are still very sought-after and in demand,” Miller says.

To come up with the rankings, Miller compared all the residential sales for each New York City neighborhood in the third quarter of 2016 and compared them with all purchases in the third quarter of 2017. The data came from public records and included all co-ops, condos, and one- to three-family homes that closed in the third quarters.

So what are the next hottest neighborhoods in New York City? Is downtown up? Uptown down? Let’s go to the data and dive into the trends!

Neighborhood	Median Price	Median Price Increase
1. Little Italy (Manhattan)	$3,212,127	147.1%
2. Flatiron District (Manhattan)	$4,100,000	130.1%
3. Little Neck (Queens)	$652,400	128.9%
4. Bedford Park/Norwood (Bronx)	$359,000	125.1%
5. Highbridge/Morris Heights (Bronx)	$536,750	124.6%
6. Douglaston (Queens)	$780,000	97.5%
7. Upper East Side (Manhattan)	$2,050,000	92.2%
8. Ocean Parkway (Brooklyn)	$885,000	75.2%
9. Fieldston (Bronx)	$445,000	74.5%
10. Cobble Hill (Brooklyn)	$1,340,000	70.7%

Trend No. 1: New luxe developments are skewing prices up

Little Italy and the Flatiron District, both in Manhattan, topped our hot list due to all of the new, luxury housing that’s gone up in recent years. The ascension of Little Italy may come as a shocker to many New Yorkers, who only know the place as a once-gritty, Mafia-esque hangout-turned-tourist trap, filled with overpriced red sauce joints and cannoli shops. Chinatown has been encroaching upon it for years.

But the small neighborhood, which real estate agents now whimsically refer to as “Solita” (it includes parts of Soho and Nolita, or “north of Little Italy”), is becoming a bona fide real estate destination. Take the newly renovated condos at 133 Mulberry, where a two-bedroom loft is selling for $1,995,000. Or look at plans developers filed to put up a seven-story condo building that will house the Italian American Museum on the ground floor.

“Little Italy really only has room to grow. There’s a lot of older buildings down there,” says Daniel Neiditch, president of New York City–based River 2 River Realty, a luxury real estate brokerage and developer. “There’s a lot of new construction coming up.”

Little Italy, Manhattan

wdstock/iStock

Meanwhile, Flatiron—named after the famous triangular building that’s one of the city’s first skyscrapers and known for the ginormous Italian-food mecca Eataly—has seen its own share of development. Former office and other commercial buildings have been converted or torn down as of late to make way for swankier pads. The most striking is the newly completed 65-story Madison Square Park Tower, where one-bedrooms start at $2.5 million.

This new development has made Flatiron the most expensive neighborhood in New York, at a whopping median $4.1 million price in the third quarter, according to Miller.

And yet “the prices are [still] increasing in that area like crazy,” Neiditch says.

Madison Square Park Tower

Will Femia for M18

Trend No. 2: Some buyers will pay more to live in the city’s suburban enclaves

The idea of living in a large, single-family house with a yard out back in a suburban community while remaining within New York City limits may seem paradoxical. But that’s exactly what more families are choosing to do.

In neighboring Little Neck and Douglaston, which sit along the Northern Queens–Long Island border, buyers are competing for a limited number of homes that guarantee access to good public schools—without the high property taxes and the long commutes they’d be saddled with if they left the city. And that’s driving prices up.

“Little Neck has very good schools. That’s what brings people to this [neighborhood],” says longtime real estate broker Toula Polios, whose eponymous office is based there. “The next county over is Long Island, and their [property] taxes are higher.”

Little Neck neighborhood, Queens

Google Maps

The communities also offer easy commutes to Manhattan.

Most of Polios’ clients usually want one- and two-family houses in the $900,000 to $1,200,000 range. More and more, they’ll purchase a property just to tear down the home on it and build a larger one. Her clients also seek out lower-priced co-ops in the $285,000-and-up range.

“Buyers are in line waiting for something they can afford,” Polios says. “Sometime you get four or five offers, sometimes more.”

Trend No. 3: The Bronx is on the rise, really

After the recession, developers raced to put up pricey new buildings they could charge a bundle for in Manhattan, Brooklyn, and even Queens. But they’ve gotten so expensive that developers have begun turning to the Boogie Down Bronx. Yes, this long-suffering, oft crime-plagued northern borough—once synonymous with “urban blight”—is finally coming into its own as a viable real estate destination. Parts of it anyway. And developers are gambling that more neighborhoods will follow.

“Anywhere in the Bronx [is] considered valuable. … They’re making a bet that that will be the next trendy area,” Neiditch says.

Highbridge neighborhood, The Bronx

Ken Lund via flickr

He pointed out that the borough, sandwiched between Manhattan and uber-pricey, suburban Westchester, has attractive selling points, including some of the nation’s top high schools and the famed New York Botanical Garden and Bronx Zoo. And did we mention the prices?

“It has plenty of room to grow [as] prices are very low,” he says.

Real estate appraiser Miller calls the gentrifying borough the “new Queens.” Some developers are building upper-end rental buildings and more affordable housing developments from the ground up. Meanwhile, smaller mom-and-pop contractors and flippers are renovating older one- and two-family homes and then selling them for a sweet profit, says real estate broker Andrew Lichtenstein of LichtensteinRE.com.

Trend No. 4: New subways put prices on the fast track

It was three new public transit stations, not a ton of new construction in the older neighborhood of mainly lower-rise, multifamily buildings, that turbocharged Manhattan’s storied Upper East Side.

After nearly a century of stalled plans and delays, the Second Avenue subway opened in January to much fanfare. The extension added stops at 72nd, 86th, and 96th streets, connecting this swath of the city to the subway grid. It’s caused prices to shoot into the stratosphere. And that’s forced some longer-time residents out of the neighborhood since they can no longer afford the increasing rents.

“In New York City, [subway access is] essential,” says River 2 River’s Neiditch. “It’s your lifeline to get anywhere.”

Neighborhood	Median Price	Median Price Increase
1. Kingsbridge Heights/University Heights (Bronx)	$250,000	-54.5%
2. Greenwich Village/West Village (Manhattan)	$1,975,000	-38.6%
3. Soho (Manhattan)	$3,400,000	-33.8%
4. Midtown Central Business District (Manhattan)	$1,223,500	-30.8%
5. Todt Hill (Staten Island)	$1,125,000	-29.7%
6. Belmont (Bronx)	$369,500	-28.9%
7. Wyckoff Heights (Brooklyn)	$790,000	-28.2%
8. Bathgate (Bronx)	$327,500	-26.4%
9. Greenpoint (Brooklyn)	$1,006,079	-24.8%
10. Downtown Brooklyn	$1,487,500	-23.7%

Not all New York City neighborhoods are growing ever more expensive. What comes up does eventually have to come down. And ironically, many of the same trends responsible for a boost in median prices are also to blame for their eventual drops.

Trend No. 1: After a few years, luxe developments can skew prices down

In Greenwich Village, Soho, and midtown’s Central Business District, sales are slowing in some of the newer, luxury buildings. That doesn’t mean that prices are coming down (dear God, if only…). It’s just that there aren’t as many gazillion-dollar sales skewing the median prices of those areas now.

Sales closings along midtown’s Billionaires’ Row, the stately area surrounding 57th Street stretching from Park Avenue to 6th Avenue, peaked in 2016. Since then, sales of these exorbitant co-ops and condo units have fallen off as the prices are just so darn high, real estate appraiser Miller says.

Washington Square Park in Greenwich Village, Manhattan

wdstock/iStock

For example, prices fell 25% at the ultraluxe One57, a 90-story skyscraper on 57th Street that was completed in 2016, says Miller. A three-bedroom, 6,240-square-foot unit in the building is going for a jaw-dropping $70,000,000. (Any takers?)

Developers “are realizing the aspirational prices set in 2014 [when the building was planned] aren’t realistic today,” Miller says. “Buyers are just waiting for sellers to come down to where the market is.”

Other areas like once-upon-a-time-bohemian Greenwich Village and Soho, home to hip galleries, hip eateries, and hip everything else, simply haven’t had nearly as much new development come online this year.

“The new development wave that came through the neighborhoods” have largely played out, Miller says.

Trend No. 2: More homes on the market makes buyers even choosier

Todt Hill, an affluent suburban neighborhood of large, single-family homes and mansions on Staten Island, was an unexpected addition to our list. Most New Yorkers aren’t even familiar with it. But an influx of inventory coming onto the market at the same time led prices to fall, says local real estate broker Laird Klein.

There are currently 27 listings for sale—which is about a dozen or so more than normal. That’s primarily due to baby boomers who were longtime residents now retiring or downsizing, Klein says.

Miller believes the neighborhood is a bit overvalued for what it is—it is on Staten Island, hardly in the middle of things. But it has features that keep median prices at $1,125,000.

“It always commands the highest prices in Staten Island,” says Klein, who touted the city and ocean views from the neighborhood. “It’s very upscale with tree-lined streets. … [And] the majority of homes are on big properties.”

But because prices are so high, there’s often wiggle room for them to come down. If homes don’t sell immediately, there are usually price reductions of around 5% or so. Klein advises his clients to accept offers within 10% or so under asking price.

Trend No. 3: Less inventory can lead buyers to hold off or look elsewhere

We just told you how the Bronx is moving up. But it’s actually a tale of two markets: In certain neighborhoods, there simply aren’t many desirable properties left to go around. And instead of pushing prices up, aspiring homeowners seeking affordably priced properties just aren’t buying.

That’s what appears to be happening in the Kingsbridge area and other similar parts of the Bronx. The gentrifying area borders Riverdale, an upscale enclave with cute shops and good restaurants that has long been home to wealthier families. But Kingsbridge homes cost about 20% less.

Kingsbridge neighborhood, The Bronx

Google Maps

“One of the challenges in that area is that it’s prime for buyers seeking affordability,” says real estate appraiser Miller. “But there isn’t a lot of turnover.”

For example, sales really picked up in 2014 and 2015, says Chintan Trivedi, a longtime Kingsbridge resident and real estate broker at Re/Max. But these days there aren’t enough homes at the right price on the market.

“A lot of people from Queens, Long Island, and Brooklyn, who were priced out in their neighborhoods and wanted to be close to the trains, parks, and amenities like gyms and supermarkets … did buy a lot of properties in Kingsbridge last year,” Trivedi says.

Compared with much of the rest of the city, “it’s a good value for people,” Trivedi says.

The post Bada Boom, Bada Bust! These NYC Neighborhoods’ Prices Are Rising—and Falling—the Fastest appeared first on Real Estate News & Insights | realtor.com®.

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