In 2014, low supply, high demand, and increasingly expensive rent were the biggest trends in the New York City real estate market. What is in store for 2015? StreetEasy analyzed sales and rental data across the city to predict three key trends that are likely to shape the New York City real estate market in the year ahead.

Manhattan condo prices will grow at half their 2014 pace. 

Condo price growth will slow to just 3.9 percent in 2015, according to the StreetEasy Condo Price Forecast, which is roughly half the growth rate experienced in 2014. Stubbornly low inventory fueled high price growth last year, but steady growth in the last few months is expected to provide some relief to Manhattan buyers. While slowing price growth signals a significant cooling of the market, Manhattan continues to be among the most expensive markets in the country. By the end of 2015, condos are expected to be trading at nearly 13 percent above the market’s previous peak prices back in 2007.

Brooklyn and Queens will see the most for-sale inventory growth in New York City, luring more buyers away from the limited supply in Manhattan.

This year marked the fifth consecutive year of total inventory decline in Manhattan, with total 2014 inventory nearly 19 percent below the borough’s peak in 2007. Expect inventory of homes for sale in Manhattan to grow the slowest among the five boroughs in 2015. An 8.4 percent reduction in inventory in 2014 fueled price growth and lowered the median time on market, creating a challenging environment for buyers. This years-long deficit is unlikely to be corrected in a single year, leaving Manhattan homes in relatively short supply in 2015.

Across the East River in Brooklyn and Queens, however, inventory is poised to grow considerably. In 2014, the number of homes for sale in Brooklyn and Queens grew by 8.6 percent and 8.5 percent, respectively. We expect this growth to carry through in 2015. With buyers squeezed out of the Manhattan market, expect many of them to look eastward in 2015.

No relief in 2015 for New York City renters – and Brooklyn will be the least affordable borough to rent.

For the 66 percent of New Yorkers who are renters, the costs of housing will continue to command a large share of incomes in 2015. The median asking rent in New York City was $2,840 in 2014, making it one of the most expensive and challenging rental markets in the country. As income growth lags far behind rent growth, affordability will remain a serious issue in New York City.
Rents will be the least affordable in Brooklyn, where the median asking rent in 2015 is expected to command more than 60 percent of the borough’s median household income. The affordability outlook is slightly better in every other borough, but only slightly. In Manhattan, the Bronx, and Queens, renters are expected to pay more than 40 percent of their income on rent, well above what is traditionally considered “affordable” (30 percent). By that measure, Staten Island will be the only borough in 2015 that will be affordable for renters.

New York City’s Hottest Neighborhoods in 2015

To determine which neighborhoods in 2015 will be the “hottest”, or will experience the most demand from renters and buyers, StreetEasy scored every New York City neighborhood based on annual growth in median asking rent and actual sale prices of homes, as well as its 10-year growth in population – three indicators of increased demand to live in a specific neighborhood. A “hot” neighborhood was identified as one that showed relatively high growth rate in sale prices, rents and total population. Which New York City neighborhoods will be the most in-demand for renters and buyers in 2015?

Vinegar Hill, a tiny enclave next to the Brooklyn Navy Yard, known for its industrial feel, is attracting a lot of interest. Vinegar Hill’s median sale price rose nearly 40 percent in the last year and rents have also edged up 9 percent. Spuyten Duyvil, just across the river from the very tip of Manhattan, is the only Bronx neighborhood on our list and looks to be a very popular destination for renters. Although the median asking rent of $2,100 was well below the city’s median, it grew by nearly 23 percent in a single year.