New York City’s real estate market has been cooling, and a side effect of that is the gradual nudging down of rental prices in hot neighborhoods. In Brooklyn, which for years has seen torrid growth and soaring rents, the average rent has fallen year over year, according to data from Rentcafe.
Still, strong demand is keeping prices perched at lofty levels — and rapidly gentrifying neighborhoods are slowly transforming areas that were once dominated by working class residents. Constantine Valhouli, co-founder of the real estate analytics firm NeighborhoodX, told CNBC that Brooklyn’s status as a housing hot spot remains a safe bet, thanks to robust growth in certain neighborhoods.
That growth has been driven by certain factors, including the fact that living near Manhattan no longer means what it used to. As a result, places like Sheepshead Bay, Crown Heights, Downtown Brooklyn and even Coney Island are drawing interest from major developers.
“Ten or fifteen years ago, Brooklyn was oriented towards jobs based in Manhattan,” Valhouli said. “Today, that is no longer the whole picture, as there are significant employment clusters in Downtown Brooklyn and Sunset Park.”
In the face of a moderating New York City real estate market, CNBC recently spoke to several real estate professionals about which Brooklyn neighborhoods will stay on the rise. Median prices cited are compiled from NeighborhoodX data.
Median rents: 1BR ($1,750), 2BR ($2,250)
Median asking price: $1.19M ($735/sq.ft.)
A $1 billion redevelopment of Industry City, and demand from people priced out of pricier neighborhoods like nearby Park Slope, is making the working class redoubt of Sunset Park “red hot,” according to Domingo Perez Jr. of Warburg Realty.
“Employment has grown as well, with over 450 companies adding more than 6,500 jobs,” he added.
Median rents: 1BR ($1,700), 2BR ($2,200)
Median asking price: $793,000 ($593/sq.ft.)
Nestled close to the Verrazano Bridge, Bay Ridge homes offer generous elbow room at affordable prices. The neighborhood is a long subway ride from Manhattan, but nearby Industry City’s growth could be enough to entice bargain-hunting residents.
“The pricing for both rentals and sales is attractive for the borough,” said Alex Lavrenov of Warburg Realty. “Some of the bigger draws are things like the parks, the beautiful views, the nightlife and the many amazing restaurants and local business.”
Median rents: 1BR ($1,650), 2BR ($2,150)
Median asking price: $975,000 ($596/sq.ft.)
According to NeighborhoodX’s Valhouli, Gravesend is two neighborhoods in one. The section populated by Sephardic Jewish residents is one of the most expensive in the borough, yet the majority of the housing is inexpensive.
“The rents and purchase prices are very attractive and are on the lower end of the of the borough’s range,” said Warburg’s Lavrenov. “It has a unique landscape that can quickly switch from single-family and two-family homes to large high-rises, and large commercial areas.”
Median rents: 1BR ($1,800), 2BR ($2,250)
Median asking price: $875,000 ($522/sq.ft.)
Flatbush is an attractive neighborhood for buyers and renters. Home to several distinct sections, the architecture ranges from attached row houses and apartment buildings to free-standing Victorian homes.
“Some parts are protected by historic districts, while others are more vulnerable to demolition and replacement with higher-density buildings,” said Valhouli, adding that Flatbush could stand to have more amenities. “Parts of the neighborhood are decidedly residential, with limited options for cafes, bars, and shopping.”
Median rents: 1BR ($1,650), 2BR ($2,100)
Median asking price: $695,000 ($377/sq.ft.)
Change, and quite possibly higher prices, are in the air in both Flatbush and East Flatbush, experts say. According to Lavrenov, “developers have recently had their eye on the Flatbush area” — which includes East Flatbush, a predominantly working class neighborhood that’s home to Brooklyn College, and countless small businesses owned by Caribbean immigrants.
“Many have been buying up medium-sized to large-sized lots that have made way for new condominiums, luxury rental buildings and affordable housing,” he told CNBC.