Slight Relief for Renters This Summer as Competition Eases in Manhattan and Brooklyn

NEW YORK, July 1, 2016 /PRNewswire/ --

Key facts for May 2016:

• Median time on market for rental units increased in both boroughs, from 21 to 24 days in Manhattan and from 19 to 22 days in Brooklyn.
• More rentals were discounted in May in both Manhattan and Brooklyn. In Brooklyn, one out of three rental units (34.1 percent) were discounted. In Manhattan, 32.4 percent of rentals were discounted.
• In Manhattan, the median rent increased 2.3 percent from last year to $3,280, which is three times slower than the 6.1 percent growth reported the previous year.
• In Brooklyn, median rent increased 1.2 percent since last May to $2,873, compared to a 4.4 percent increase from May 2014 to May 2015.
• Sales price growth is expected to continue to slow over the next 12 months in both boroughs, with slight declines predicted in the Downtown Manhattan submarket.

Though summer marks the start of the usually busy renting season, this May bucks the upward trend of years' past. Last month, the pace of price growth for rental units slowed and the number of days rentals stayed on the market increased in both Brooklyn and Manhattan, according to the May 2016 StreetEasy® Market Reportsⁱ.  

Several indicators, including a recent uptick in the number of concessions offered to renters, suggest competition is easing in the rental marketⁱⁱ. Last month, one out of three rental units (34.1 percent) were discounted in Brooklyn, up from one out of four (26.3 percent) in May 2015. Similarly, in Manhattan, 32.4 percent of rentals were discounted in May, up from 28.6 percent in May 2015.

In another sign of slight relief for renters, rental units spent more time on the market in May. Median time on market increased by three days in both Manhattan and Brooklyn, a significant stretch in a fast-paced market. Tribeca apartments spent the most time on the market between both boroughs at 64 days last month. This is the longest median time on market the neighborhood has experienced since February 2010, and is an increase of 33 days since May 2015. Greenwood's median time on market more than doubled from last year to 45 days. Rentals moved most quickly in Gowanus, where units spent a median of just nine days on the market in May.

"The demand for rentals in New York is as strong as ever. With supply still incredibly low, prices continue to rise in both Manhattan and Brooklyn, but May is setting the stage for a summer rental season that is slightly less frenzied than what we've seen in the past," said StreetEasy economist Krishna Rao. "New York renters have grown accustomed to arriving at open houses with their checkbooks in hand, for fear of losing out on a property. Now, in the face of record-high prices, renters are pausing to weigh their options, easing urgency for summer shoppers in both boroughs."

Though rent prices are still reaching record highs, the pace of price growth is starting to slow. In Manhattan, median rent increased only 2.3 percent since May 2015 from $3,206 to $3,280, according to the StreetEasy Rent Indexⁱⁱⁱ. This is less than half the growth observed in the previous year. In Brooklyn, median rent increased 1.2 percent from May 2015 to May 2016, compared with a 4.4 percent increase the previous year. In South Brooklyn, median rent declined, falling 8.3 percent from $1,786 to $1,638 from May 2015 to May 2016. Among the submarkets still seeing significant growth in prices, Upper Manhattan stands out with an annual increase of 2.9 percent to $2,380. In Brooklyn, Northwest Brooklyn's median rent rose 4.6 percent from last year, followed by a 2.7 percent increase in Prospect Park.

Mirroring the rental market, resale prices in Manhattan and Brooklyn continued to surpass last year's levels, but are rising at an increasingly slower pace. In Manhattan, the median resale price grew at the slowest pace since July 2012, increasing by 2.8 percent from last year to $987,271, according to the StreetEasy Price Indices^iv. Price growth was the highest in the Upper Manhattan submarket, where the median resale price grew by 10.6 percent. In Brooklyn, the median resale price grew by 7.8 percent to $562,256, led by growth in the East Brooklyn submarket where the median resale price grew by 19.3 percent. South Brooklyn also saw double-digit annual growth in May at 11.4 percent.

According to the StreetEasy Price Forecasts^v, sales price growth in both boroughs will continue to slow over the next 12 months. Price growth in East Brooklyn will continue to eclipse all other submarkets: the 12-month growth forecast is 10.9 percent in East Brooklyn, followed by North Brooklyn (9.7 percent) and Upper Manhattan (7.6 percent). Prices are expected to decline in Downtown Manhattan over the next year.

The complete StreetEasy Market Reports for Manhattan and Brooklyn with additional analysis, neighborhood data and graphics can be viewed at streeteasy.com/blog/market-reports.

About StreetEasy:
StreetEasy is New York City's leading local real estate marketplace on mobile and the web, providing accurate and comprehensive for-sale and for-rent listings from hundreds of real estate brokerages throughout New York City and the major NYC metropolitan area. StreetEasy adds layers of proprietary data and useful search tools to help home shoppers and real estate professionals navigate the complex real estate markets within the five boroughs of New York City, as well as Northern New Jersey and the Hamptons.

Launched in 2006, StreetEasy is based in the Flatiron neighborhood of Manhattan. StreetEasy is owned and operated by Zillow Group (NASDAQ: Z and ZG).

StreetEasy is a registered trademark of Zillow, Inc.

ⁱ The StreetEasy Market Reports are a monthly overview of the Manhattan and Brooklyn sales and rental markets. Every three months, a quarterly analysis is published. The report data is aggregated from public recorded sales and listings data from real estate brokerages that provide comprehensive coverage of Manhattan and Brooklyn, with most metrics dating back to 1995 in Manhattan and 2005 in Brooklyn. The reports are compiled by the StreetEasy Research team. For more information, visit http://streeteasy.com/blog/market-reports/. StreetEasy tracks data for all five boroughs within New York City, but currently only produces reports for Manhattan and Brooklyn.

ⁱⁱ http://streeteasy.com/blog/more-signs-of-softening-market-rental-discounts-concessions-and-no-fee-listings/

ⁱⁱⁱ Similar to the StreetEasy Price Indices which track resale values across Manhattan and Brooklyn, the Rent Indices use a repeat-sales methodology but with rentals instead. In short, we track the changes in rent price across several years among unique rental properties that are listed on StreetEasy. For more information, visit http://streeteasy.com/blog/methodology-streeteasy-rent-indices/.

^iv Median resale prices are measured by the StreetEasy Price Indices. Also referred to as the StreetEasy Manhattan Price Index (MPI) and StreetEasy Brooklyn Price Index (BPI), the metrics are monthly indices that track changes in resale prices of condo, co-op, and townhouse units. Each index uses a repeat-sales method of comparing the sales prices of the same properties since January 1995 in Manhattan and January 2005 in Brooklyn. Given this methodology, each index accurately captures the change in home prices by controlling for the varying composition of homes sold in a given month. Data on sales of homes is sourced from the New York City Department of Finance. Full methodology here: http://streeteasy.com/blog/methodology-streeteasy-price-indices/

^v The Manhattan Price Forecast and the Brooklyn Price Forecast predict the change in resale prices 12 months out from the current reported period. Each forecast incorporates the Price Index for each borough as well as a mix of fundamental market factors including: historical recorded sales price, household income, population, and taxes.

SOURCE StreetEasy

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