Brooklyn Rents Level Off As Manhattan Rents Continue to Rise

Like a vapid popular kid in high school, has the Brooklyn rental market reached its peak? Well, maybe, but probably not. This morning, Douglas Elliman released their numbers for sales in Brooklyn and Queens and rentals in Manhattan, Brooklyn, and Queens, and here's the takeaway: Surprising to no one, September also produced record numbers for both rentals and sales throughout Manhattan, Brooklyn, and Queens. But that doesn't mean it's been a steady, upward trek. In fact, September marks the second consecutive month where Brooklyn, that prized and popular borough, saw declines in rent. The median rental price in the borough dipped $519 lower than the median rental price in Manhattan, compared to $295 one year ago (even so, the narrowness is whoa-worthy). The widening gap can largely be attributed to the bountiful rental stock of Brooklyn·after all, it seems like new buildings in the borough are coming to market all the time—which is slowing the growth of rental prices, while Manhattan's growth of rental stock remains consistent.

The rental market continues to remain competitive because of tight mortgage lending—Can't get a mortgage? Rent instead!—and that's seen in Manhattan, where rents have been rising year-over-year for seven consecutive months. Vacancy rates in the borough also fell nearly one percent to 1.76 percent; no wonder its so hard to weasel a concession out of a broker or landlord. Those who do succeed, a measly 3.3 percent of renters in Manhattan, score on average just one month's rent, says Jonathan Miller, graph guru and compiler of the Elliman reports data. Comparatively in Brooklyn, where stock is up, only about 2 percent of people scored successions.

The Queens rental market—limited in Elliman's numbers to Long Island City, Sunnyside, Woordside, and Astoria—remains stable, but oddly the borough's largest market, the one-bedroom rental, was the only market to decline year over year. On the sales end, prices are up in the borough in Q3 for the seventh time in 8 consecutive months. "Part of the reason for the gain is that people are being priced out of Brooklyn," Miller says. To say no one saw that coming would be a vast overstatement.

In Brooklyn, Q3 median sales prices not only set a new record high, but also rose for the eighth consecutive month and set the fifth record in six consecutive quarters. Here's the craziness: sales are 8.8-percent above the pre-Lehman high in Q3 2007, making Brooklyn the only borough to exceed pre-financial meltdown prices to-date.

"I'd describe all these markets as brisk, but not moving quite as fast as last year," says Miller. The reason? The sense of urgency behind the market—spawned last year by a better economy, record low inventory, and the smoke-and-mirrors illusion that the market was moving quickly created by the huge breadth of new development—isn't quite as intense as last year, but rentals and sales are still very active and availability is still tight.

Beyond Elliman's data, Ideal Properties Group's Q3 sales report found that residential sales prices increased a whopping 24.6 percent in north and brownstone Brooklyn in Q3 compared to last year, with properties selling for $1.192 million on average. 66-percent of properties in the borough sold above ask. Meanwhile, MNS's rental market report finds that average rents in Brooklyn increased year-over-year from $2,655.25 to $2,705.59. Brooklyn is in demand.

While Manhattan is still more expensive than its easterly neighbors, MNS finds that average rents in the borough dropped 3.5 percent in Q3 compared to last year from $3,890 to $3,755. Queens still trails with an average rent of $2,047.
· Douglas Elliman Market Reports [official]
· Ideal Properties Group Market Reports [official]
· MNS Market Reports [official]