Among the townhouse-lined streets of brownstone Brooklyn, it can often feel like you’re in a New York romantic comedy, one bound to have a happy ending where the happy couple ends up in a 20-foot-wide home.
In the second half of 2024, that’s exactly what happened.
While the residential market in New York sputtered back to life over the year, Brooklyn townhouse contracts took off, according to reports from appraisal firm Miller Samuel.
From July to November, townhouse contracts in the borough nearly doubled to 756 from 402 during the same time frame last year, an increase of 88 percent.
That was roughly two times the growth rate of any other property type across Brooklyn and Manhattan during that span.
The townhouse surge is a microcosm of a broader phenomenon this year, where the luxury market consistently outperformed the broader market in the city as rate insensitive buyers came back into the fold.
This year, those buyers have flocked to prime Brooklyn neighborhoods and continued the upward trend in pricing for the borough.
“I think it was always the value alternative, and that is gone,” said Serhant’s Ravi Kantha. “The $10 to $15 to $20 million buyers who have optionality, who have liquidity, and can make a decision without respect to budget constraints on where they want to live are choosing to go to Brooklyn Heights, Cobble Hill, Carroll Gardens, Park Slope.”
Both buyers for 1 Sydney Place, which sold earlier this year for $22 million, and 30 Tompkins, which went into contract asking $13 million, hailed from Manhattan, according to Serhant’s Abigail Palanca.
“I think we’re not far away from seeing the first $30 million trade in Brooklyn,” Kantha said, who called the 1 Sidney Place sale “pure insanity on a spreadsheet.”
“All of that shows where the market is heading and what the market wants,” he said. “These numbers are fucking insane.” .
Where $2,000 per square foot used to be a benchmark for turnkey buyers, buyers now spend that before a gut renovation that can cost at least as much.
And while the average price per square foot for a 1-3 family set a new record in the third quarter this year at $795, most of that has been driven by the upper end of the market, according to Brown Harris Stevens’ Ari Harkov.
“The buyers who are buying homes in Bed Stuy, Crown Heights, PLG, are heavily impacted by rates,” he said. “Those markets are moving somewhat in parallel, but also distinctively.”
Harkov also noted that in a higher rate environment, townhouses have a relatively lower tax rate, making them more appealing to buyers who are financing and trying to minimize their monthly costs.
The activity has all happened in the face of dwindling inventory. Listings for these properties fell by 22 percent in the third quarter, which has just increased the competition.
Boutique developers like Eckstrom, which converts multifamily homes into townhouses, have reaped the benefit, putting multiple homes into contract asking mid-eight figures.
“One to three families at this point seem to be outperforming everything else, both in terms of pricing and sales and inventory,” said Miller Samuel’s Jonathan Miller.
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