The Manhattan and Brooklyn sales markets continue to cool, according to StreetEasy’s latest Q3 2016 Market Reports. Both markets present opportunity for prospective buyers as Manhattan’s median rent rises faster than median resale prices and buyers in Brooklyn see the tipping point – the number of years New Yorkers need to own a home before they break even on their investment – tilting in their favor. StreetEasy’s economist, Krishna Rao gives the following analysis:
“Uncertainty surrounding the presidential election and rising interest rates are likely having a cooling effect on the New York market,” said StreetEasy economist Krishna Rao. “While people generally don’t like to make big financial decisions in volatile times, it may help buyers to know where their investment will pay off more quickly. In parts of Brooklyn for example, a home buyer could break even in under three years.”
See below for more details about key themes from StreetEasy’s Q3 2016 Market Reports.
Manhattan and Brooklyn Sales Markets are Still Slowing
- As reported by the StreetEasy Price Index, Manhattan’s median resale price increased 1.1 percent year-over-year to $990,805, marking the 11th consecutive quarter of slowing annual price growth and the slowest pace since Q4 2010.
- Manhattan resale prices rose the most in the Upper Manhattan (3.6 percent) and Midtown (2.2 percent) submarkets.
- The most expensive submarket, Downtown, was the only submarket with declining prices year-over-year (-0.5 percent).
- In Brooklyn, median resale prices increased 4 percent year-over-year, marking the slowest annual increase since Q3 2012.
- Prices in the South Brooklyn and Prospect Park submarkets increased the most over the past year, rising 6 percent and 5.8 percent, respectively.
Rents in Both Boroughs Are on the Rise
- Manhattan’s median rent increased slightly faster than resale prices for the first time in four years, rising 2.9 percent year-over-year to $3,309.
- Upper Manhattan’s median rent increased the most in the borough (4.0 percent), followed by Downtown (3.2 percent).
- Upper West Side’s median rent increased the least at 2.1 percent.
- Brooklyn’s median rent increased 1.8 percent to $2,929, led by East Brooklyn (3.9 percent).
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Buying Beats Renting in Brooklyn in Under Four Years
- According to the StreetEasy Tipping Point, Brooklyn buyers can break even on their home purchase in under four years.
- In Q3, the Brooklyn tipping point fell slightly year-over-year from 3.8 to 3.6 years.
- South Brooklyn had the shortest tipping point (2.8 years), followed by East Brooklyn (3.5 years) and Prospect Park (5 years).
- Manhattan’s tipping point is 9.2 years – three times that of Brooklyn.
- In Upper Manhattan the tipping point is 3.4 years, making it a sound investment for those who plan to live in the area for at least 3.5 years.
- On the other end of the spectrum, the Downtown submarket’s more expensive housing stock stretches the tipping point to 19 years.
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12-Month Outlook:
- According to the StreetEasy Price Forecasts, Manhattan rents will continue to outpace resale prices, with rents rising 3.9 percent compared to sales rising 1.2 percent over the next year.
- Upper Manhattan’s median rent is expected to increase the most at 5.5 percent.
- Brooklyn’s median resale price will increase 3.7 percent over the next year.
- Median resale price will increase the most in Prospect Park (8.1 percent).
- North Brooklyn and East Brooklyn are expected to see resale prices drop by 0.6 percent and 3.8 percent, respectively.
- Median rent price in Brooklyn will increase 3.0 percent. North Brooklyn’s median rent will rise the least at 1.1 percent.
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