The record price for a Brooklyn home broke the $15 million threshold this summer, and by now it’s widely accepted that New York’s outer boroughs are not much of a bargain, growing further out of reach for the aspiring homeowner. The rush of new construction in gentrifying neighborhoods has pushed up the price of land, and that’s caused construction costs to rise, too. Eventually, to make a profit, developers have to build luxury buildings, according to Jonathan Miller, the president of New York appraiser Miller Samuel.
“We have this perfect storm,” he says. “Everybody gets the same idea at the same time, so materials and labor are at a premium. Throw in the high price of land at each locale, and you’ve got to build a luxury product.”
In the second quarter of this year, the average price of a condo in Long Island City, a neighborhood in Queens, rose 28 percent, to $1.06 million; in Brooklyn, the average sales price rose to $788,529, according to a report issued by Miller Samuel and Douglas Elliman Real Estate. The cause, Miller says, is (relatively) affluent people looking for more space and better deals. “This is that outward radial pattern that is happening across the rental and sales market,” he says. “It’s the Bushwick phenomenon. It’s the Bed-Stuy phenomenon.”
More here – Bloomberg