June 2023 Brooklyn Real Estate Market Analysis:
Contract Activity and Inventory Decline
In June 2023, contract activity took a hit, dropping by 13% compared to the previous year. This figure signifies the second-lowest annual decrease in sales recorded in a span of 14 months. On a month-to-month basis, contract activity took an even steeper dive, falling by 20%, a decrease that significantly surpasses the usual decline witnessed from May to June each year.
There were, however, two submarkets that witnessed annual increases in contracts signed. Bed-Stuy/Crown Heights/Prospect Lefferts Gardens/Bushwick saw the most remarkable surge, rising by 16%, primarily driven by new development sales. Simultaneously, South Brooklyn, recognized for its value-oriented offerings, saw an increase of 5%.
All price segments experienced a decrease in the number of contracts signed, but the category priced over $3M was hit the hardest, with a substantial fall of 50%, largely due to heightened price sensitivity among buyers. The market saw a 35% year-over-year increase in days on the market, mainly due to the shrinking inventory that led to the sale of lingering listings.
Negotiability Tightened as Inventory Continued to Fall
Inventory decreased considerably, dropping by 21% year-over-year and 10% month-over-month. While it's common to observe inventory decline from May to June, this year's month-over-month fall was more significant than the 6% average seen over the past five years, thereby adding more pressure on an already strained market.
The overall average price per square foot saw a decrease, primarily due to a shift in sales activity towards lower-priced neighborhoods. In this challenging market, 45% of deals sold below the asking price, and 33% traded above the asking price owing to limited inventory. This trend nudged overall average negotiability just slightly above the last asking price, signaling a market that continues to remain dynamic and challenging.