Although 2015 was a banner year for growth in some New York City submarkets, 2016 is not staying on the same track. A new StreetEasy report shows that rent prices have slowed to nearly half the pace of the same time last year in parts of the city.
“The rental market was much calmer this summer than in years past. Though rent prices in Manhattan have been rising, this is mainly due to demand at the bottom of the market. Rentals in Brooklyn are following a similar pattern as competition for rentals at the lower end of the market remains tight,” Krishna Rao, economist at StreetEasy, said in a press release. “However, a surplus of luxury units may give negotiating power to those looking within this higher price point.”
Brooklyn and Manhattan still the hotspots
Manhattan’s rent growth in 2016 led to a median rent price of $3,320 in August, with an annual increase of 2.9 percent — roughly half of the rent growth percentage in August 2015. Upper Manhattan and the Upper West Side experienced the lowest year-over-year rent growth rates, at 2.6 percent and 2 percent, respectively.
Brooklyn, on the other hand, continues to be a hotspot despite slowing growth. Of all NYC submarkets, annual rent growth in East Brooklyn was the highest in August, at 5 percent.
Luxury class rentals slowing
StreetEasy points blame to the luxury market for declining rent growth in NYC. The prices of the most expensive rentals in both Manhattan and Brooklyn increased at an annual rate of 2.2 percent and 2.7 percent, respectively. For Manhattan, this is the slowest growth since September 2010; for Brooklyn, it’s the slowest since July 2010.
However, median rent in Manhattan and Brooklyn’s least expensive homes increased 4.4 percent and 6.1 percent in August, respectively.
Brooklyn inventory moves quicker
Homes in Brooklyn moved three days quicker in August compared to last year, at a median of 23 days. Homes in Northwest Brooklyn, on the other hand, took 26 days to sell, which is a year-over-year increase of five days.
Manhattan homes stayed on the market for 22 days, which is one day longer than the previous year. Upper Manhattan saw the fastest movement, with a median of 21 days on the market. Both the Upper West Side and Midtown were the only areas where homes in Manhattan rented faster than the year before.
StreetEasy outlook
Over the next 12 months StreetEasy predicts that median rent in Manhattan will increase 4.3 percent, to $3,461. The same data forecasts median rent in Brooklyn will only increase 2.9 percent, to $3,016.
The report also predicts that Downtown Manhattan will see the most growth. with a 5.4 percent increase though the next year.
