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Gentrified Brooklyn Neighborhoods See Home Prices per Square Foot Shooting Up

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Gentrified Brooklyn Neighborhoods See Home Prices per Square Foot Shooting Up

Call it gentrification or “Manhattanization,” several parts of Brooklyn have been going through significant urban changes for more than a decade.

What this means for folks from Manhattan and elsewhere who search for a home in Brooklyn is that they can continue to enjoy life in all its cool aspects south of East River as well. The New York Times’ coverage of certain Brooklyn neighborhoods in its Fashion and Style section testifies to it.

It’s true that generally speaking, gentrification is understood as the revival of urban areas through the arrival of higher-income residents, coffee shops, upscale eateries, artsy galleries and the like. They have been flooding certain less affluent areas in Brooklyn since the beginning of the 2000s.

But that’s not all. It’s also home price per square foot going up by a dramatic 174% since 2004, as is the case with Williamsburg. And not only there.

Parts of Fort Greene, Clinton Hill, Bushwick, Prospect Lefferts Garden and other neighborhoods have been experiencing the same effects. In fact, research published on the Fordham Institute’s blog reveals that Brooklyn has 4 zip codes in the top-25 fastest gentrifying neighborhoods in the US.

In light of this, we ran our own analysis to see how home prices have varied in all Brooklyn neighborhoods between 2004 and 2012, and especially in those neighborhoods that are going through a speedy gentrification process.

To get a quick view of these changes across all Brooklyn neighborhoods, check out the map below*:

*For the most accurate results we have adjusted home prices per square foot from before 2012 with the inflation rate.

Top 3 Brooklyn neighborhoods with the biggest increases in home prices per square foot (2004 vs.2012)

#1. Williamsburg

Once a typical industrial Brooklyn area, Williamsburg has now become one of the hippest neighborhoods in the nation. Over more than a decade, former warehouses and factories were converted into trendy apartment spaces surrounded by an array of glossy hotels, restaurants, sidewalk cafes, night clubs and shopping centers, which are attracting big crowds of the city’s young artists.

Does this remind anybody of SoHo several years ago? Quite possibly. Nevertheless, during the past 8 years, average home prices have also jumped from a low $269 to a soaring $736 per square foot (a 174% increase)! The biggest home sale in the neighborhood is a condo unit at 22 North 6th Street  which sold in September of this year for a whopping $2,840,918.

#2. Prospect Lefferts Garden

Its proximity to Prospect Park, the really nice turn-of-the-century homes and the high-quality public school system have made this neighborhood a true attraction for many NYC home buyers. As a result, growing crowds of young former Manhattanites wanting more home space for their dollar have called this neighborhood their home in the past decade.

The average home price per square foot is up by 63% in 2012 compared to 2004, from $235 to $382. The largest sale recorded in the neighborhood is the single-family home at 20 Midwood St., which sold in February 2012 for $1,650,000. The transaction also topped the neighborhood’s home sales in 2005.

#3. Gowanus

The neighborhood is home to the notorious canal that has raised plenty of concerns regarding toxic waste during hurricane Sandy. It’s also aneighborhood on the rise for many, due in part to the proximity to Carroll Gardens’ hot spots.

The local crowd is made up of young artists, similar to other parts of Brooklyn, but the neighborhood has also seen a good share of upper-middle-class people, such as investors and doctors.

Home prices have been fluctuating after the 2008 housing market crash, but compared to 2004 they have increased by 52% in 2012. Home buyers now pay $668 per square foot to call Gowanus home. Or more. In April 2012 Sam Dolnik, the grandnephew of Arthur “Punch” Sulzberger, former Times publisher, bought the two-family home at 473 Sackett St. for the record price of $1,825,000, $200,000 more than the original asking price.

Top 3 Brooklyn neighborhoods with the biggest drop in home prices per square foot (2004 vs. 2012)

#1. Cypress Hills

According to our data, Cypress Hills is the neighborhood that has seen the most significant drop in home prices since 2004, a 30% one. Being part of the East New York neighborhood of Brooklyn, Cypress Hills shares the neighborhood’s bad reputation for high crime rate and poverty, keeping home buyers at a distance.

Those who do settle in the area are first and second generation immigrants especially from Ecuador, The Dominican Republic, El Salvador and other Latin American countries, mainly attracted by home prices they can afford.

In 2004 the average home price per square foot in Cypress Hill was $209; now it is down to $147.

#2 & #3 East Flatbush and Flatbush

The two neighborhoods are quite similar in terms of demographics (mostly a mix of African Americans and West Indians) and real estate. Both of them have seen a decrease in home prices per square foot from around $200 in 2004 to approximately $160 in 2012.

Nevertheless, there are signs that Victorian Flatbush is already going through an urban revival. It’s attracting a larger white population and seeing more locals drinking $2.50 lattes and tapping on their laptops while waiting to be served.  The locals welcome the changes with mixed feelings as they fear that diversity and affordable home prices will soon be a thing of the past.

Home prices keeping steady

However, not all Brooklyn neighborhoods are seeing home prices going noticeably up or down. The map has many light-gray parts standing for areas where variations in home prices per square foot are very small.

Prospect Heights, Red Hook, Windsor Terrace and Manhattan Beach are some examples of well-established Brooklyn neighborhoods which managed to maintain a more stable real estate market since 2004 and through the 2008 market crash.

The average home price per square foot in Prospect Heights is down 4% since 2004 (from $634 to $606), while in Manhattan Beach, one of the most expensive neighborhoods in NYC in Q3, 2012, it went up from $402 to $442, a 10% increase.

 

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4 Comments

  • User says:

    Is this based off the sale or listing price?
    How far in 2012 is this calculated?
    Thank you

  • calin says:

    The analysis is based on closed sales

  • liam says:

    A LOT of that data is skewed by renovation and/or new construction. Tons of shells were bought, renovated and flipped in Bedstuy, Prospect Heights and Bushwick, while commercial buildings were sold as development teardowns. The 1 story building (if I remember right) that used to sit where “The Edge” condo is today was undoubtedly sold for far less than the combined value of the condos that were built there. SRO’s and multifamilies are often converted to 1 families in the pricier neighborhoods like Brooklyn Heights or Park Slope, and mansions were landmarked and brought back from despair in Ditmas Park, Lefferts and Crown Heights.

    If you bought something for 600k in 2004, put in 400k for renos and sold for 1.2 million in 2012 the numbers look a LOT better than a direct comparison between a gut-renovated building/apartment in 2004 and the same renovated unit in 2012.

    I’m not denying there has been straight-up price appreciation: I know a guy who bought a 1400 sq.ft. coop in Prospect Heights in 1997 for 200k and sold it for 1 million this year who only put in 200k for reno’s, but making everything more upscale has a cost which isn’t included in your stats.

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