Luxury Rentals Lead Price Growth Slowdown in August 2016
- By Jihee Kim September 30, 2016
After doing a deep dive into slowing sales price growth in Manhattan and Brooklyn last month, this month is focused on similar trends at work in the rental market. In August, rent growth slowed to half the pace recorded in August 2015. StreetEasy economist Krishna Rao says of the August rental market:
“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. However, a surplus of luxury units may give negotiating power to those looking within this higher price point.”
Here’s a look at key themes from StreetEasy’s August 2016 Market Reports:
Manhattan and Brooklyn Rent Prices Increase at Half 2015’s Pace
- As reported by the StreetEasy Rent Index, Manhattan’s median rent increased 2.9 percent year-over-year to $3,320, half the pace of growth at this time last year (5.8 percent).
- The Midtown and Downtown submarkets experienced the greatest annual increase in rent, at 3.2 percent and 3.1 percent, respectively. Upper Manhattan and the Upper West Side had the smallest rent growth at 2.6 percent and 2 percent, respectively.
- Brooklyn’s median rent increased 1.9 percent to $2,932, the slowest annual growth since December 2010 and less than half the growth in August 2015 (4.7 percent).
- East Brooklyn’s rent increased 5 percent, which was the most of any submarket in either borough.
The Slowdown Starts at the Top of the Market; Boosted at Bottom
- The overall declines in rent growth can be attributed to the luxury segment. The most expensive rentals in Manhattan experienced the least growth of all price tiers and the lowest growth since September 2010, increasing 2.2 percent since last year.
- By contrast, rents for the least expensive Manhattan rentals grew twice as fast, increasing 4.4 percent.
- Brooklyn shows a similar trend at work as the price of luxury rentals increased 2.7 percent since last August, which is the lowest growth since July 2010.
- Meanwhile, median rent of Brooklyn’s least expensive homes increased 6.1 percent.
Homes Take Longer to Rent in August, Giving Luxury Renters Room to Negotiate
- Brooklyn rentals sat on the market for a median of 23 days, three days faster than last year.
- Homes in Northwest Brooklyn took the longest to find a renter at 26 days, compared to a median of 21 days in August 2015.
- In Manhattan, rentals remained on the market for a median of 22 days, only one day longer than last year.
- The Upper West Side and Midtown were the only submarkets in which properties rented more quickly, a decrease of 2 and 2.5 days, respectively. Homes in Upper Manhattan rented the fastest at a median of 21 days.
- According to the StreetEasy Rent Price Forecasts, Manhattan’s median rent will increase 4.3 percent over the next 12 months to $3,461, while Brooklyn’s median rent will increase only 2.9 percent to $3,016.
- Manhattan’s Downtown submarket is expected to have the most growth, increasing 5.4 percent.
- The North Brooklyn submarket is forecasted to have the least growth, rising only 1 percent.
Explore the chart below to find out how your neighborhood fared in August: