It’s no secret that Manhattan real estate prices are high. According to StreetEasy’s latest market report, the median resale value of all homes in Manhattan reached $986,314 in August while the median asking rent is forecast to reach $3,092 in 2015.
For people seeking relief from Manhattan’s perennially high prices, the common belief is that cheaper rent and home prices can be found in “the outer boroughs.” New StreetEasy data, however, reveals that this is not always the case. While the vast majority of neighborhoods in Brooklyn and Queens are less expensive than Manhattan, it is not true for all of them.
Four Brooklyn Neighborhoods Surpassed Manhattan Rents
If you’re not already convinced that Brooklyn is catching up with Manhattan rental prices, look no further than Dumbo. The warehouses and industrial outfits that once defined the now bustling neighborhood have given way to some of New York City’s most expensive rental properties. The fourth-most expensive, to be exact. The median asking rent in Dumbo is expected to reach $4,079 in 2015, roughly 31 percent higher than Manhattan’s median asking rent and behind only three other neighborhoods in the city: Central Park South ($5,898), Tribeca ($5,542), and Flatiron ($4,177).
See the chart below for a full ranking of neighborhoods in Manhattan, Brooklyn, and Queens according to 2015 median asking rents.
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Just three other Brooklyn neighborhoods have rents that are higher than Manhattan: Williamsburg ($3,229), Cobble Hill ($3,220), and Downtown Brooklyn ($3,210).
There are, however, a handful of neighborhoods within 10 percent of Manhattan prices that are primed to overtake it, including Park Slope ($2,914), Brooklyn Heights ($2,880), Boerum Hill ($2,877), Carroll Gardens ($2,856) and Greenpoint ($2,856). Rent prices in these neighborhoods, which are clustered in the borough’s North and Northwest submarkets, are nearly indistinguishable from rent prices in the East Village, Upper West Side, or Carnegie Hill.
In Queens, the most expensive rental market is Long Island City, which has a median asking rent of $2,756. Although this is roughly 11 percent below Manhattan’s median rent, it’s on par with neighborhoods like Gowanus, Manhattan Valley, and Clinton Hill. Floral Park, which is the second-most expensive neighborhood in Queens, is on par with Red Hook, Fort Greene and Prospect Heights.
Another key trend displayed in the graph below is the fast pace with which rents have grown across New York City in the last five years. Most neighborhood growth rates fall within 10 percent and 40 percent, although some neighborhoods have seen rents rise in excess of 50 percent. Astoria and Morningside Heights have each seen rents increase by a staggering 78.6 percent in the last five years, followed closely by Clinton Hill (76 percent). Only two neighborhoods saw rents decline: Woodside and Forest Hills.
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Manhattan Sales Prices Still Well Above Brooklyn
While there has been a lot of growth in rent prices in Brooklyn, sales prices there still live in the long shadow cast by Manhattan. According to the StreetEasy Price Indices, which tracks median resale prices of all homes in both boroughs, the median resale price of Brooklyn homes reached $538,563 in August, roughly half the median price in Manhattan. While sales prices across the full borough lag well behind Manhattan, neighborhoods in North Brooklyn and Northwest Brooklyn are the closest to eliminating the price gap.
The median resale prices of homes in Northwest Brooklyn, which includes neighborhoods like Dumbo, Brooklyn Heights, and Cobble Hill, reached $891,278 in August, just 9.6 percent below Manhattan. In North Brooklyn, which includes Williamsburg and Greenpoint, the August median resale price ($860,956) was 12.7 percent below Manhattan.
Homes in the remaining parts of Brooklyn typically sell for just a fraction of Manhattan’s median resale price. In the less dense neighborhoods of South Brooklyn, for example, the median resale price of homes was $376,505 in August, roughly a third of Manhattan prices. See the historical performance of Brooklyn’s median resale prices and how they compare to Manhattan in the graph below:
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As Rent Levels Rise, Burden Looms Large
There is one area in which Brooklyn has Manhattan beat: household rent burden. According to a StreetEasy study conducted earlier this year, the typical Brooklyn household will need to spend 60 percent of its annual income to afford the median asking rent in 2015. In no other borough is the rent burden as high as it is in Brooklyn. In Manhattan, where household income is higher, the typical household will need to spend 48.8 percent of its annual income to afford the median asking rent.
As with many large cities across the country, rent prices in New York City have increased at a much faster rate than incomes. As a result, the imbalance between what New Yorkers make and what they must pay in rent has created an enormous burden for many households across the city. Unfortunately, this burden is both a persistent one that many face each month in writing their rent check and a growing one that is not expected to abate.