Renters, rejoice: New York City apartment prices are beginning to dip across the board. Douglas Elliman’s February market report shows that even though “rents are still high, we’re seeing an erosion [of rents] across the market,” as Jonathan Miller, the man behind the numbers, puts it.
That’s a different story from prior rental reports, which showed the market softening for primarily new, higher priced developments. “While the higher-end inventory generally remains the weakest, we’re seeing declines across all sizes,” Miller says.
Case in point: the median rent for Manhattan, $3,382 one year ago, is now $3,350. Year-over-year, the median for Manhattan studios decreased 2.6 percent to $2,500; one-bedrooms decreased 1.3 percent to $3,350; and two-bedrooms decreased 5.2 percent to $4,500. Median prices for the luxury inventory decreased a slight 0.2 percent to $7,983. The median for new development apartments, however, increased to $4,963 after three months of price declines.
Concessions in Manhattan and Brooklyn hit an all-time high in January—numbers that were not beat in the following month. “Although there’s no new record with concessions, these are the second highest numbers we’ve tracked,” Miller says. In the Manhattan market, 26.4 percent of leases signed in February; in Brooklyn, it was 26.4 percent. In both cases, that means a month of free rent.
In Brooklyn, all apartment sizes also showed year-over-year declines. The overall median was $2,750—$600 less than Manhattan. Studios declined 1.4 percent over the year to $2,296; one-bedrooms dropped 0.4 percent to $2,600; and two-bedrooms dropped 5.3 percent to $3,000. The median rental price for Brooklyn’s luxury market is $5,411, only slightly higher than one year ago. New development pricing comes in at $3,284, which represents a drop from last year. The market also saw listing inventory expand, as new lease signings declined 6.3 percent from last year.
Finally, in Northwest Queens, the year-over-year median rent declined for the third time in four months, from $2,954 to $2,800. (Still, that’s $50 more than Brooklyn’s median rent!) At the same time, the number of new leases fell sharply from last year, from 301 to 223, as inventory expanded for the 18th month in a row.
Unlike Brooklyn and Manhattan, Queens did not see price drops for all sized apartments. The median rent for one- and two- bedrooms did decrease, but prices on studios and three-bedrooms went up.
Miller says the rental market is “a transition period” and predicts gradual declines across the board will continue. “But it’s not like we’ll see a sharp drop,” he says, “And the rent is still high.”
Citi Habitats also released its February rental report and found that rents declined by a negligible amount for studio and two-bedroom apartments, while they increased by just one percent for one-bedroom apartments. The average price to rent an apartment last month was $3,491, just $6 more than the month before . The borough-wide vacancy rate rose to 1.98 percent.
Incentives were high: 31 percent of rental transactions brokered by Citi Habitats offered a free month’s rent and/or payment of the broker fee, compared to 37 percent in January. Compare that with February 2016, when 25 percent of leases offered an incentive. Gary Malin, president of Citi Habitats, believes landlords may have been a little less willing to offer incentives due to “the declining vacancy rate from December to January.”
And finally, here were the most expensive and cheapest neighborhoods in the city last month. Soho/Tribeca tops the list, with a median rent of $5,225. Gramercy/Flatiron was second with a median rent of $4,100. In Brooklyn, Dumbo was the most expensive neighborhood with a median rent of $5,000, followed by Downtown Brooklyn at $3,600. Washington Heights is the cheapest neighborhood in Manhattan with a median rent of $2,200 while Bed-Stuy got the honors in Brooklyn (out of the 14 neighborhoods studied) with a median of $2,350.