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A few years ago, Michael Graves, a broker with Douglas Elliman, had a young client who’d made a fortune selling his tech company and decided to invest in north Brooklyn real estate. He took a stack of pennies and threw them on a map, and wherever a coin landed, he bought.
“He has made so much money,” Graves says, “because those neighborhoods only go one direction. They only go up.”
Of course, not everyone has millions to throw around. If you're looking for a more scientific approach to determine where to buy, we’ve enlisted the data experts at PropertyShark to crunch the numbers.
By comparing median home sale prices in specific neighborhoods in Manhattan, Brooklyn and Queens to prices for the boroughs overall in 2013,PropertyShark created an interactive map (screenshot above; click here for the full interactive experience) that shows where price gaps are the widest. So, for example, the median price in dark red Tribeca is $2.7 million, or 179 percent of the median in all of Manhattan, which is $975,000.
To help you narrow down your search, BrickUnderground has taken a deeper look at nine New York City neighborhoods where sale prices are substantially lower than other parts of their borough.
MANHATTAN--$975,000 median sale price
1. Battery Park City—19% lower
Battery Park City is a love-it-or-hate-it kind of place, brokers say. “Either you’re open to it and you really want it, or you don’t. That has been the psychology of buyers for many, many years,” says Graves.
There are plenty of reasons to love Battery Park City, from good schools to acres of landscaped waterfront to the compressive subway access. But there are also a few reasons why the median sale price is only about $771,000, 19% below the Manhattan median.
Battery Park City sits on a 92-acre plot of land that’s owned by the Battery Park City Authority, a public-benefit corporation created by New York State. Apartment owners must pay ground rent to the BPCA, meaning their monthly charges tend to be higher. (During the economic downturn, it was also more difficult for buyers to get mortgages because of this arrangement.)
The neighborhood has also fought a reputation of being a ghost town at night and a permanent construction site, as the rebuilding of the World Trade Center has dragged on.
While Battery Park City backers have been avowing for years that the nabe is set for a turnaround, this time it might really happen. Restaurants like Danny Meyer’s Shake Shack have set up shop, and new high-end retailers such as Hermes and the swanky gym Equinox have signed on for space at Brookfield Place, a sprawling office complex on West Street undergoing a makeover.
“I wouldn’t be surprised in the least once the World Trade Center is built and open if you don’t start to see that appreciate better,” says Jason Haber, a broker at Warburg Realty.
2. Lower East Side—42% lower
“The Lower East Side is still seen as a new frontier,” says Graves.
Known for its grittiness, the area is increasingly being colonized by trendy hotels, speakeasy bars, fashion boutiques and contemporary art meccas like the New Museum. Pockets of the Lower East Side, such as the Bowery, are giving way to new condo developments.
“But even with that being the case, it’s still a neighborhood that is a little more detached from the rest of Manhattan than other locations,” Graves says.
Parts of the Lower East Side, particularly closer to the river, have only limited subway access. A large swath of the neighborhood is home to Co-op Village, a 4,500-unit affordable co-op complex. Combine that with zoning laws that restrict how tall developers can build, and you’d be hard-pressed to find a luxury condo building dripping with amenities.
But the $576,000 median price is great for those who want a teeming nightlife on their doorstep rather than a high-end gym in their basement.
In the next two years, Graves predicts, those slices of higher-end apartments will push the overall price of the neighborhood up.
3. Gramercy Park—13% lower
Gramercy Park is synonymous with swank, not only for housing Manhattan’s only private park—you need to own a home on the perimeter to get a key—but also for having copious townhouses dating back to the mid-19th century. So why is the ‘hood on the cheap side, with a median sale price of $852,000? East of the park itself (closer to First, Second and Third Aves.), there are relatively reasonably priced apartments available, brokers say.
“If you’re a deal seeker right now and you want to live in Manhattan, the eastern side of Gramercy is a fantastic value,” says Graves.
The gap is so severe that Graves estimates that an apartment he is selling on Second Avenue and East 23rd Street could fetch at least $1 million more if it were a few blocks west.
The reason boils down to convenience: on the eastern side, transportation options are limited, as are the number of bars, restaurants and shops versus to an adjacent area like the Flatiron District.
That said, within the next few years, the Second Avenue subway is set to come barreling down the corridor, connecting the area to Midtown and, brokers predict, bringing a major transformation. (As of November, MTA officials reportedly said construction was on track for a December 2016 opening.)
“Right now, that neighborhood’s a bit of a value play, and I think it’s going to change,” says Mara Flash Blum, a broker at Sotheby’s International Realty.
4. Kips Bay—27% lower
Hugging the East River between East 23rd and East 34th Sts., Kips Bay suffers from some of the same problems as the eastern part of Gramercy Park. The area is not well served by public transportation, keeping median sale prices to a relatively inexpensive $710,000.
“People don’t want to be over that far,” Blum says.
Another factor keeping prices down is the proliferation of co-ops in the area. “If you have a neighborhood that has more co-ops than condos, your prices are going to be lower,” Blum says, referring to the fact that condos currently cost an average of 40% more per square foot than co-ops.
But the area is popular with first-time apartment buyers who are attracted by the abundance of smallish units. A stretch of the area is also occupied by the NYU Langone Medical Center Hospital.
5. Harlem—37% to 49% lower
As New York City real estate rebounds, Harlem is facing another wave of gentrification, which brokers expect will push prices up further than the current median, which ranges from $507,000 to about $611,000.
Call it the Whole Foods effect, Haber says. The organic grocery juggernaut has the power to remake neighborhoods, and it’s planning a new location at Lenox Ave. and 125th St. That will add to a bevy of bars and restaurants that have opened up in the last few years, like Marcus Samuelsson’s Red Rooster.
On the new development side, “a lot of really good quality, luxury product is coming on, and people are interested,” says Haber, noting that he has some clients who’ve chosen Harlem over the Upper East Side.
If prices are still cheaper, that’s a matter of distance from Manhattan’s core and a lack of ultra luxury options like you might find in Tribeca.
Also, there is some variation across this part of Upper Manhattan. East Harlem has swaths of public housing projects, making it more difficult to build condos because of the relative scarcity of land, while West Harlem is close to the Columbia University campus, and Central Harlem has the brownstones, Haber explains. However, East Harlem’s median price is higher than the rest of Harlem because it extends further south, which may skew the data.
See more bargain neighborhoods at BrickUnderground >
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