A parking space in Park Slope, Brooklyn, recently sold for a whopping $300,000 — more than the cost of a condo in some parts of the U.S. The jaw-dropping price tag doesn't shock experts considering the location; but with increasing interest in ride- and car-sharing, the value of such parking spaces could deflate.
"For that location, $300,000 doesn't surprise me all that much," realtor Anslie Stokes told NBC News. "It sounds like since they tore down another [nearby parking] garage to build residential housing, every other space became that much more valuable because they aren't going to be putting anymore in. Prices are going up because they're losing precious space."
Humble Abode... Not So Humble Pricing
The hefty price is also somewhat put into perspective when you consider the cost of housing in the trendy Brooklyn area.
"According to Trulia, the average sale price of an apartment on that block is around $1.3 million," said Benjamin Glaser, features editor with DealNews.
Keep in mind Glaser isn't talking about sprawling townhouses that can accommodate a large family. He's referring primarily to 2-bed/2 bath coops like this one and units in new condos that sport less than 1,000 square footage, such as this humble abode.
Even renting a parking spot can rack up a big bill, adding substantially to one’s monthly rent rate. A 2016 report by Trulia analyzed the price of parking space rentals in several major cities and found that the Big Apple is the most parking-challenged city, so to speak, followed by Washington, D.C.
Highway Parking Robbery?
But even with scarce public and private parking options in New York City, parking rental prices are not nearly as steep as one would expect given that $300,000 selling figure, according to Trulia's research.
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"Even in Park Slope, parking spots in gated lots are advertised for hundreds, not thousands of dollars [a month]," said David Weidner, managing editor for Trulia's housing economics research team. "Our listings research suggests that homes with parking in that area do not carry such expensive markups just because they include parking. Our advice would be: Buyer beware."
And there are more reasons for buyers to be wary: Chiefly, the fact that if interest in ride and car-sharing continues to pick up, those parking spaces could start to lose value. In fact, Stokes has already seen slight softening in the D.C. area.
"A couple of months ago we sold a condo to a buyer who eight years ago paid $47,000 for her separately gated parking space," said Stokes. "We went to sell it [this year] and priced it at $45,000 — and it ended up selling for around $44,000. So it decreased by almost 10 percent in eight years."
Why Bother? Uber and Lyft Make Life Easier
Thanks to the rise of on-demand ride-sharing services like Uber and Lyft, the need to have a car (and a parking space) is lessening even for daily commuters. A recent study by NerdWallet found that in 7 of 11 cities including New York, Washington D.C., and San Francisco, commuting to and from work using UberPool was cheaper than owning and driving a car.
"We often think that the DIY approach is going to be cheaper than paying someone for a service," noted Amy Danise of NerdWallet. "It's cheaper to fix your own faucet or paint your own dining room, but our study shows that in some cases it may not be cheaper to have a car in order to get to work."
And often, a ride-sharing service doesn't only save you money, it saves you time.
"Many people also greatly value gaining personal time from a ride-sharing commute," Danise told NBC News. "There's time to check your email or catch up on the news when someone else is driving. There's also the advantage of not having to navigate cars and pedestrians yourself."
Millennials Will Lead the Way
Stokes is quick to add that even though ride- and car-sharing seem to be making a slight dent in value, parking spaces are still a hot commodity, which is why a garage can get away with selling a space for $300,000 in a posh hood — for now.
"Parking spaces will always be valuable — for the foreseeable future," said Stokes. "I don't see that falling off, but as people get more comfortable with ride- and car-sharing, it could plateau or soften."
This is especially so if millennials start to step up more as buyers. The demographic is still profoundly lagging when it comes to purchasing a home (at least when compared to previous generations), but when they do buy, they have been known to get rid of their car if it means getting a better deal.
Related: Millennials Would Rather Save for Retirement than Splurge on Clothes
"We see millennial buyers in urban areas selling their cars," said Stokes, adding that these buyers are also more open than ever to living in areas that aren't right next to a metro station.
"Five to seven years ago proximity to public transportation was paramount," said Stokes. "With ride-sharing, car-sharing, and even bike-sharing we see buyers not nearly as needing of being half a mile to a metro."
It should be noted that if you already own a parking space, but want to ditch your car, you could probably make some great money renting the space out.
“In D.C. you can cover the mortgage portion of your housing payment for the space by renting it out,” said Stokes. “That’s why, if it’s available, we always advise buyers to buy the space: There will be value in it.”