Q3 2015 Market Report: Manhattan Rent Prices Rise to Record High
- By Alan Lightfeldt October 30, 2015
The StreetEasy Market Reports include extensive data and analysis for Manhattan and Brooklyn broken down by neighborhood, home type, and bedroom size. The analysis below explores top line trends for each borough. For additional data and analysis, download the full report PDF here.
The cost of renting in Manhattan and Brooklyn rose to an all-time high during the third quarter as seasonal competition came to a crescendo this summer. In Manhattan, the median asking rent increased 9.5 percent from last year to $3,339, the largest year-over-year jump seen since StreetEasy began collecting rental data in 2008. In Brooklyn, prices rose to a record-high $2,600 although the year-over-year growth was more modest at 1.5 percent.
Manhattan’s rapid rent growth was fueled by a steep increase in asking prices for one-bedroom units, which grew 10.7 percent from last year to $3,271. Asking rent among studios and 2-bedrooms increased 6.5 percent and 9.7 percent, respectively, while rents for units with 3 bedrooms ore more declined 3.6 percent.
Although Brooklyn experienced slower growth overall, some neighborhoods there led both boroughs in rent increases over the last year. The graph below ranks all Manhattan and Brooklyn neighborhoods by annual rent growth. Four of the top five fastest growing neighborhoods are in Brooklyn, including Canarsie (33.3 percent), Brownsville (28.8 percent), Northeast Flatbush (26.3 percent), and Gowanus (23.1 percent). Murray Hill rounded out the top five, with annual median rent growth of 16.7 percent, the single largest gain in Manhattan.
Big Sales Inventory Gains Across Brooklyn, Not So Much in Manhattan
Manhattan and Brooklyn could not have been more different when it came to sales inventory growth in the third quarter. While Manhattan’s total inventory fell 0.5 percent from last year, Brooklyn inventory increased by 10.2 percent as all five major submarkets posted strong growth. The highest annual growth in inventory was in the North Brooklyn submarket, which saw 25.3 percent growth, followed by East Brooklyn (17.2 percent), Northwest Brooklyn (15.9 percent), Prospect Park (7 percent), and South Brooklyn (5.3 percent).
Manhattan’s Midtown submarket was the borough’s only area to see annual growth in inventory, posting a modest 3.4 percent increase. Evaporating inventory in all other areas of Manhattan dragged on the borough’s total number of listings available. The chart below plots neighborhood sales inventory growth by submarket. While the majority of Brooklyn neighborhoods experienced growth, most Manhattan neighborhoods experienced the opposite.
Resale Price Growth Stronger in Brooklyn than in Manhattan
For the 10th consecutive month, the median resale price of all homes in Upper Manhattan saw the highest price appreciation in the third quarter across Manhattan and Brooklyn, rising 19.0 percent from last year to $638,569 according to StreetEasy’s Manhattan Price Index. Other submarkets that saw strong price growth were East Brooklyn (12.8 percent), Northwest Brooklyn (12.6 percent), Prospect Park (10.2 percent), and Upper East Side (9.6 percent).
Yearly growth in resale price was higher in Brooklyn than in Manhattan in the third quarter, rising 9.0 percent from last year to $545,139 according to StreetEasy’s Brooklyn Price Index. While the median resale value is considerably higher in Manhattan, annual growth was slower, climbing 6.3 percent from last year to $982,958. See all of the StreetEasy Price Indices in the graph below.
Prospect Park and Downtown Neighborhoods Among the Most Competitive
Demand for Manhattan homes has been resilient to the borough’s continuing price growth. According to several key market metrics, Manhattan remains a strong seller’s market. Homes that sold in the third quarter typically spent 3 days less on the market than last year. In addition, Manhattan home sellers are getting more of their initial asking price than they did just a year ago. Homes that sold in the third quarter typically did so for 99.9 percent of the seller’s initial asking price, an increase of 1.3 percent from last year. Buoyed by high competition among buyers and low inventory, sellers conceded fewer discounts than last year as well. Just 26.5 percent of all homes on the market saw a price decline at any point during the third quarter, down from 32.1 percent last year.
Similarly, Brooklyn home sellers could expect to receive most if not all of their initial asking price in the final sale during the third quarter. The median sale-to-list price ratio was 100 percent for the third quarter, unchanged from last quarter and last year. Other key price indicators show that sellers retain more of the bargaining power in Brooklyn. The share of all homes for sale that saw a price cut rose slightly from last year to 23.4 percent in the third quarter, which was still below the Manhattan share (26.5 percent). The median discount between initial asking price and final recorded sales price was unchanged at 6 percent.
The graph below plots all Brooklyn and Manhattan neighborhoods by the time it typically took a home to sell and the median sale-to-list price ratio. Neighborhoods clustered in the bottom right side are the most competitive, since homes there took less time to sell and commanded more than the seller’s initial asking price. Prospect Park and Downtown neighborhoods proliferate this area. Most notably, homes in Prospect Heights took just 35 days to sell and typically received 5 percent above the seller’s initial asking price.
To see additional data, analysis and graphics, download the full report PDF here.