Brooklyn: Foreclosures Climb in the East and Home Price Gaps Deepen

Among headlines that crown Brooklyn as one of the most expensive real estate markets in the US and that announce record-breaking sales of luxury properties, PropertyShark’s 2016 foreclosure report revealed quite an intriguing trend: the number of new foreclosures in the borough has been steadily climbing for the past 5 years.

We decided to investigate further and see where this spike in new cases comes from. The numbers show that the source of the rising number of new foreclosures is not the Brooklyn of pricey brownstones or luxurious new condo developments. It’s in the eastern part that more home owners struggle to pay back their mortgages.

In order to further check what is happening in the borough, we did not stop at checking only foreclosure numbers. We also took into account median sale prices and income stats at ZIP code level to illustrate the stark gap in the borough’s real estate market, especially between the northwest and the eastern parts.

Key takeaways

  • Looking at home prices, foreclosure stats, and income, we discovered that the western half sees high home prices and little to no foreclosure activity, while the eastern half is affected by higher foreclosure rates and home prices well below the borough’s median
  • The number of new foreclosures in Brooklyn kept climbing over the past 5 years but unevenly across the borough – 5 ZIP codes in the eastern half are the source of 208 of 417 total cases
  • Home prices show a gap that is deepening between the top and bottom areas: in 2012, the price gap was around $500,000 but as the least expensive areas in the eastern part failed to keep up, the gap only increased, now hitting $700,000
  • Increases in median home prices in the past 5 years reveal another trend: the wave of gentrification has been spreading in Brooklyn towards Bushwick, Bed-Stuy and Prospect-Lefferts Gardens
  • Wealthy renters have taken over Brooklyn – renter households earning over $150k per year increased 324% since 2011 – however this increase is unequally distributed, most of them having moved into the northwest

Eastern Brooklyn fuels the spike in foreclosures

In 2016, 417 homes in the borough were scheduled for auction for the first time, compared to 176 in 2012. Plus, 3,681 homeowners received a notice of pre-foreclosure in 2016, mostly concentrated in the eastern part of the borough as our pre-foreclosure map shows.

We’ve created a new map that tracks the changes in number of new foreclosures.  Some areas have seen little to no increase while others are flooded with new cases. It turns out that just 5 ZIP codes in Brooklyn’s eastern part covering Canarsie, Flatlands, East NY and East Flatbush are the source of 208 of the total 417 new cases.

Click on the image to access an interactive map that tracks changes in numbers of first-time foreclosures –  Zoom in on the map to check detailed stats for each ZIP.

Canarsie (ZIP code 11236) had the highest number of auctions scheduled in all of Brooklyn as 52 homes were foreclosed in 2016, followed by East New York (ZIP code 11207) with 47 cases. Looking back to 2012, 11236 had only 4 homes scheduled for auction while 11207 recorded 5 auctions.

Income stats for owner-occupied households also help expose the same contrasts in Brooklyn’s housing market as the ZIP codes with the highest number of new foreclosures also have the biggest numbers of households with an income of under $50,000. For example, looking at income in the top ZIP code by increase in number of foreclosures scheduled, it turns out that in 11236 there are 4,318 owner households with a median yearly income under $50,000 and the median income per owner household went down $1,238 since 2011. Compare this to the evolution of income in ZIP 11231 (the most expensive in the borough, covering Carroll Gardens and Red Hook) where income went up $31,239 since 2011 and no first-time foreclosures were scheduled in 2016.

Here are Brooklyn’s top ZIP codes by number of first-time auctions scheduled in 2016:

Home price discrepancies across Brooklyn tell the story of an uneven market and the price gap is deepening

In 2016, Brooklyn’s median sale price reached $610,000. However when zooming in on smaller areas within the borough, there’s clearly a fracture between northwestern areas where prices at ZIP code level hover around $1,000,000 and other neighborhoods mostly in the eastern part that have fallen way behind the borough’s median. Thus, a gap of around $700,000 exists between the most and least expensive areas of the borough, but what caught our attention is that this gap has actually deepened in the past 5 years and the least expensive areas are falling behind even more instead of catching up.

We decided to look at the top 3 most expensive areas versus the top 3 least expensive areas in order to capture how the price gap has simply increased in the past 5 years.  For example, even if prices in East New York’s 11207 increased 45% since 2012, that still translates into a modest $104,858; meanwhile the similar 44% increase in 11231 translates into a $318,613 growth so the gap is simply deepening between the top and bottom of the market. In 2012 the gap between the two areas was close to $500,000 and now it almost reaches $700,000.

The situation is quite similar when looking at the other ZIP codes that represent the market extremes as the price gap increased since 2012. Check out the table below where we calculated the price gaps between the top and bottom of the market:

Income stats for owner households also show a clear correlation between home prices in a ZIP code and the level of owner income recorded. To exemplify this, let’s take a look again at how the most expensive ZIP in Brooklyn compares to the ZIP at the bottom in terms of median income and owner wealth. In ZIP code 11231 the median income reached $145,769 in 2015 and a total of 48% households earn more than $150,000 per year here and there were no new foreclosure scheduled in 2016. At the other end of the spectrum, in East New York’s foreclosure-ridden 11207 only 9% of owners fall into the wealthy category and median income reached $68,237.

Evolution of home prices shows the wave of gentrification spreading in Brooklyn

Our analysis of home prices in Brooklyn revealed another interesting trend, as the areas with the biggest price increases in the past 5 years show how the wave of gentrification has been spreading in the borough.

We’ve created a map to help you visualize how the wave of home price increases is advancing. While in some places in Brooklyn home prices are shooting for the sky and the pace in change is accelerated, other areas are barely moving, or even stagnating, allowing for the price gap we previously noted to go up.

Click on the image to access an interactive map that tracks median home price changes – Zoom in on the map to check detailed stats for each ZIP.

Brooklyn price changes 2012 vs 2016

Rapid growth in home prices characterizes Prospect-Lefferts Gardens, Bushwick, and Bed-Stuy as ZIP codes 11225, 11233, and 11221 all increased over 100%. The star of price hikes in Brooklyn is ZIP code 11225 (Prospect-Lefferts Gardens) where in 2012 the median sale price was $314,340 and it clocked in at $780,000 in 2016 – that’s a $465,660 increase in only 5 years. While in 2012 this area ranked 27th among all 37 ZIPs in Brooklyn by sale price, it climbed towards the top over the past 5 years and it now ranks 9th in Brooklyn, an example of an area that actually managed to catch up with the top areas instead of falling behind even more.

Northern Brooklyn continued on an ascending trend: in Williamsburg’s 11211 prices went up 86% since 2012, translating into a $307,500 growth and in Greenpoint’s 11222 prices went up 86%, from $495,500 in 2012 to 923,750 in 2016.

Affluent renters take over Brooklyn, infiltrating from Northwest towards the center

If you’re wondering where wealthy renters are moving, our colleagues at RENTCafé ran an analysis that tracks the areas with the biggest influx of wealthy renters. They dug through Census data and discovered that Brooklyn has 52,000 renter households with an income of over $150,000, that’s a steep 324% increase compared to 2011.

The distribution of wealthy renters confirms that the highest numbers are recorded in established neighborhoods like DUMBO, Brooklyn Heights, Park Slope or Cobble Hill. The biggest influx in the past 5 years may be noticed in other ZIP codes, corresponding to Bed-Stuy, Crown Heights, Bensonhurst, and Bushwick, showing the eastward expansion of wealthy people looking to rent, similar to the path of price increases that we’ve noticed advancing from the northwest. Each of these ZIP codes has seen an increase of over 200% in wealthy renters choosing to live there since 2011.

Check out more findings on Brooklyn’s wealthy renters from our colleagues at RENTCafé here.


When compiling foreclosure stats for each year, we took into account properties scheduled for auction for the first time. They are residential properties that are either single-family or two-family homes, or condo or co-op units.

The median sale prices were calculated based on residential property sales closed between 2012 and 2016. The residential properties included in the stats are single-family homes, condos and co-ops.

Median income data was extracted from the US Census Bureau 2015 ACS.

Andra Rus

Andra Rus

With 10+ years of experience at PropertyShark, Andra covers the latest product updates and market reports for our blog. Her work has been featured in The Real Deal, Curbed, TimeOut, The Daily Mail, Business Insider, Crain’s New York.

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