Brooklyn real estate faced several challenges in First Quarter 2023 that made buyers hesitant.
Higher mortgage rates, economic concerns, and the recent bank collapses gave potential buyers pause, causing the market to continue to cool from its record-high pace of a year ago.
While closings were down significantly, inventory was also down by double-digits, as sellers are waiting to list and less new development comes to market.
There were 1,164 closings in First Quarter 2023, a 46% annual decline, and the lowest figure since the 2020 market pause. However, sales are essentially equivalent to the pre-pandemic first quarter average from 2010 to 2020 of 1,172 closings per quarter.
Contract activity also fell significantly from First Quarter 2022, when there were more reported contracts signed than any other first quarter in the last ten years.
Inventory declined annually for the sixth consecutive quarter, reaching the second lowest number of available listings since 2014 (excluding the pandemic market pause). Since peaking in First Quarter 2021, inventory has dropped 36%. Active listings were down or flat in every product type, price segment, and submarket.
Overall average and median price declined annually for the third consecutive quarter. Price sensitivity driven by higher mortgage rates resulted in an increased market share of sales for smaller, lower-priced residences.
Resale condo and resale co-op median price actually increased year-over-year, while new development fell. However, new development average price per square foot increased 4%, fueled by sales in prime Brooklyn neighborhoods.