The housing crash of the late 2000s was supposed to have decimated property values across the nation. But in Brooklyn, the housing market barely broke its stride. Supply and demand is supposed to be an immutable truth, yet a well-documented boom in development has done little to stop spiraling prices. Every few weeks, a different neighborhood in New York City's most populous borough seems to break its own record for most expensive sale. Intuitively, it feels like the borough is at a breaking point. If something goes up, must it come down?

"There's no end in sight," says Jesse Keenan, the research director at Columbia University's Center for Urban Real Estate, referring to Brooklyn's obscene housing market.

Currently, the monthly payments on a median-priced home in Brooklyn eat up 98 percent of the borough's median income of $46,000. The median sales price in the nation's "most unaffordable city," just passed $600,000 for the first time. The 70 percent of Brooklyn residents who rent aren’t faring any better—average rent in the borough rose by 77 percent between 2000 and 2012. According to a March report by StreetEasy, "the typical new renter will spend 60 percent of their income on rent in 2015," the highest rent-to-income ratio in all of New York.

And the Times is running trend pieces about how Brooklynites are moving to Manhattan because it's cheaper, which means the trend started at least five years ago.

In order to bring housing prices down in any significant way, Keenan told me, the city would need to massively expand its housing stock. That's especially true of Brooklyn, whose historic neighborhoods are largely made up of townhouses and not apartment buildings.

A 2013 report Keenan co-authored estimates that 300,000 to 350,000 new units must be built to house the next generation of New Yorkers, nearly double the 200,000 affordable units that Mayor Bill de Blasio has pledged to build or preserve.

"I know that sounds crazy and there are significant sensitivities there, but we're so far in the hole that it's a long-term challenge to our labor economies," Keenan said.

New York lags behind other cities in construction of new housing units. According to figures from the Department of Housing and Urban Development, 20,483 new housing permits were issued in the five boroughs in 2014, or about 2.4 units for every 1,000 people. While this represents a strong improvement over the city's paltry permitting pace during the '80s and '90s, it's still low compared to other cities, including San Francisco (3.2) and Washington, D.C. (6.4), to say nothing of famously pro-development cities like Seattle (11.5 permits per 1,000).

A housing expert who works for a prominent real estate investment company who asked to remain anonymous because he was speaking so candidly, agreed that New York has a chronic supply shortage that will take decades to fix. Even if the housing market cools off, he said, "when the bottom falls out ... you will only see massive rent decreases in marginal neighborhoods."

Even if Brooklyn's housing sales end up being a bubble, the expert says, it's unlikely that renters will reap the benefit of it bursting, as "rents are not speculative, whereas housing prices are."

(Douglas Elliman)

Jonathan Miller, a real estate appraiser for Douglas Elliman who authored two recent reports on the borough, believes that Brooklyn is in an unusual position right now.

"Brooklyn is the only one of the five boroughs where the median price borough-wide is higher than the pre-Lehman-collapse high. Manhattan is still below that peak," Miller told me.

The first report, on Brooklyn sales in the first quarter of 2015 [PDF], shows skyrocketing real-estate prices. The median sale price of a Brooklyn apartment was $611,000, an increase of 17.5 percent over last year. Two-family homes in Brownstone Brooklyn, the genteel northwestern corner of the borough, saw price gains of 46.2 percent in one year, which the Elliman report attributes to a chronic lack of supply. The second report, on Brooklyn rental markets [PDF], has what seems like a rare bit of good news: Rents are actually staying flat. (The median rent of $2,893 was down 0.2 percent year over year.)

Despite rising home values, though, credit remains tight. Many families that would have bought a home before 2007 now lack the ability to get a mortgage, Miller said. Those families are then pushed back into the rental market, increasing the competition for a limited supply of rental stock.

And while Elliman's most recent report may show rents staying steady, Miller said that should be seen as a "high plateau," not an apex.

New York is not alone in having an extremely competitive rental market. Credit and lending standards are national, and for this reason, surging rents have become a nationwide problem in the years since the housing crash.

But because more than 65 percent of New Yorkers are renters, the highest percentage of any major American city, they are unusually exposed to volatility in the rental market. This is compounded by the high price of land in New York, where almost all the new development in the last decade has skewed toward the high end of the market.

"When everybody builds at the same time, land prices go up, and when land prices go up, the only kind of housing you can build is luxury," Miller said.

The most obvious symbols of this process are the several middle fingers to the city being hoisted up in Midtown. Brooklyn's new housing stock isn't quite designed for Saudi princes and Russian oligarchs, but it's still not affordable by any reasonable metric. "Luxury condos" have become a ubiquitous punching bag, but the lack of new affordable housing really stems from the fact that most of Brooklyn's newest apartments were built to be high-end rentals.

"When you think of the new product coming out ... in Brooklyn it's a wider bandwidth," Miller says. "It's still skewed toward the upper end of the market, but it's much wider." Perhaps only the superrich can afford Manhattan nowadays, but the merely rich can still afford Brooklyn.

For those who aren't rich at all, and therefore couldn't even dream of owning property in New York, this is the recipe for a new kind of housing crisis. The real-estate bubble of the 2000s was about homeownership: providing it for as many people as possible, letting people finance mortgages on credit, and hoping the bottom would never drop out.

What's happened since then is different and, in a city of renters, arguably much worse: A more restricted, much more expensive sales market is forcing high earners to keep on renting, putting upward pressure on rents across the city. Given the region's strong employment growth and chronic supply shortage, Miller says, the best we can hope is that rents in Brooklyn will remain steady and predictable instead of shooting upwards.

A community development specialist at a citywide affordable housing nonprofit told me that the last few years have led him to accept an idea he'd long resisted: that the image of a neighborhood can affect the market, not just vice versa.

The expert, who asked to remain anonymous because his predictions were so pessimistic, pointed to Bushwick and Bedford-Stuyvesant, two neighborhoods that have traditionally been poor and lacking in amenities but have undergone rapid gentrification. There's no rationale for paying top dollar to live in either of these neighborhoods, he said, unless you're so desperate to live in Brooklyn that you don't care how much it costs.

"There's a 112 premium," my source explained, referring to the first three numbers of Brooklyn ZIP codes.

"It's not like Bed-Stuy or Bushwick are good investments anymore. If you look at existing rents versus existing sales prices, you’re losing money," he said, pointing to listings in the neighborhoods that exceed $1 million. "It boggles my mind."

Bed-Stuy's rapid gentrification is a central theme in The Edge Becomes the Center, a new oral history written by DW Gibson. In order to understand Brooklyn's high prices, Gibson told me, one must understand that New York real estate has become just another asset class in investors' portfolios.

Because of the city's high land values, buying property in New York has always been an investment. What's shifted in the last decade is how that property is being used.

"When a dilapidated brownstone goes on the market," Gibson told me, "the people who are interested in bidding on that ... it's not end users, a family looking for a place to live. It's an investment group looking for a building to add to a portfolio."

Once buying property simply becomes about maximizing value, rather than providing somebody with housing, investors have a resource that beats out families every time: cash.

"The person who has 10 percent down and great credit for a mortgage, that just isn't going to do it, because if the sticker price is $800,000, the seller is always going to take the person who's offering $800,000 cash," Gibson says. "That's the game right now."

(Furman Center)

Bed-Stuy was the first Brooklyn neighborhood to be gentrified en masse using this technique. It has beautiful housing stock in the form of its famous brownstones, but as Alex Pareene noted in a recent review of Gibson's book, investors who buy those brownstones have a choice: rent them out to families, or sit on them and bid up the value. It is in their interest to let the housing sit vacant.

It's this problem of perverted incentives that Ronald Shiffman wants to tackle. Shiffman, a city-planning professor at Pratt University and the co-founder of the Pratt Center for Community Development, has decades of experience looking at New York housing prices. Property in the city has steadily been getting more expensive since the late 1970s, he said, and the current Brooklyn "boom" is a logical extension of that trend.

"I'm sure it will eventually abate but I don't see it bursting the way the housing bubble burst," he told us. It's not the appreciation of property values itself that concerns him so much as the city's failure to capture some of the revenue from that appreciation.

He pointed to several ways this problem could be solved: Getting rid of tax breaks like 421a, which has been criticized for allowing developers to build luxury housing tax-free; a heavy tax on so-called "flipped" houses; stronger use of inclusionary-zoning policies; and levying higher property taxes on luxury condos, which tend to be undervalued for tax purposes.

Above all, Shiffman says, "the issue of harassment, some of it organized, really has to be addressed by the mayor, and very strongly addressed."

So far, de Blasio has proposed spending $36 million on anti-harassment and anti-displacement measures. Shiffman believes he should spend five or six times that.

Leaving aside legal measures like these, none of the sources I spoke to were optimistic that housing prices would come down anytime soon, for renters or buyers. Miller, the Douglas Elliman rep, remarked to me that whatever happens to new units bought and sold, fundamental realities about the Brooklyn rental market remain: Rents have outpaced inflation for years, it's harder for middle-class people to get the credit to buy a home, and the borough is no longer seen as a second choice for new arrivals to New York.

Keenan, the research director at Columbia, suggested an even more frightening way of framing the issue.

Brooklyn is not going through a boom as much as it's swinging back to what it always should have been worth. The fact is, the borough is fundamentally an attractive place to live. It's in the country's financial and cultural capital, is traversable by excellent public transit, has a lot of historic neighborhoods, and boasts relatively low crime.

"Many neighborhoods in Brooklyn have been undervalued for a long time," Keenan says. "And areas are starting to be more consistent with what one would value the properties at, both in rental terms and at land prices."

As if on cue, the next month's rental report from Elliman proved his point. Where March 2015's median Brooklyn rent, $2,893, had declined slightly year-over-year, April's was $2,961—up 5.6 percent over the year before.

Jordan Fraade is Brooklyn-based freelance journalist. His work focuses on urban-planning issues and has been featured in The Baffler, CityLab, and BKLYNR.