Renting Rates Skyrocket in Manhattan

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By StreetEasy, Special for USDR

The Manhattan median rent increased 9.5 percent year-over-year to a record high $3,339, the fastest pace rents increased since StreetEasy began collecting rent data in 2008.
Median asking rent for 1-bedroom units in Manhattan increased 10.7 percent to $3,271, fueling Manhattan’s overall rent growth in the third quarter.
According to the StreetEasy Price Indices, Manhattan and Brooklyn resale prices continue to reach new highs, increasing 6.3 percent and 9 percent year-over-year, respectively.
Introduced to the report this quarter, StreetEasy’s luxury price tier found that one in five homes for sale in Brooklyn andManhattan are considered luxury.

The cost of renting in Manhattan soared to an all-time high in the third quarter, growing at the fastest pace in years. Manhattanmedian asking rents jumped 9.5 percent year-over-year in September to $3,339. This is a record high for Manhattan rents and the largest annual increase since StreetEasy began collecting data in 2008, according to the Q3 2015 StreetEasy® Market Reports for Manhattan and Brooklynⁱ.

Manhattan’s rapid rent growth was fueled by a steep increase in asking rent for 1-bedroom units, which grew 10.7 percent year-over-year to $3,271 in September. Asking rents among studios and 2-bedrooms increased 6.5 percent and 9.7 percent, respectively, while rents for units with 3-bedrooms or more declined 3.6 percent. Rents also climbed in Brooklyn, though at a much more modest pace. The monthly median asking rent grew 1.5 percent from last year to $2,600 in September.

“Renting in Manhattan is more expensive than it’s ever been, a fact that weighs heavily on the city’s long-term housing affordability,” said StreetEasy data scientist Alan Lightfeldt. “In the face of overcrowding, high rents, and growing competition in Manhattan and parts of Brooklyn, more New Yorkers will have to turn their attention to South and East Brooklyn, and above 110^th Street in Manhattanto lower their rent burden.”

The New York sales market was equally as competitive in the third quarter with the median resale price of all Manhattan and Brooklynhomes rising to another record high. Manhattan resale prices of all home types rose 6.3 percent from last year to a record $982,958, as tracked by the Manhattan Price Indexⁱⁱ. The Brooklyn Price Index also reached an all-time high in September, increasing 9 percent year-over-year to $545,139. Last year, prices in Manhattan and Brooklyn grew by 8.5 percent and 9.5 percent, respectively.

As resale prices continue to rise, more for-sale homes in the Manhattan and Brooklyn markets are priced within the luxury category. Introduced for the first time this quarter, StreetEasy’s luxury price tierⁱⁱⁱ found that 21.9 percent of all homes available in Manhattanthroughout the quarter were priced in the luxury category, which was above $3.59 million in the third quarter. The price of luxury in Brooklyn rose to $1.39 million, accounting for 20 percent of homes available throughout the quarter.

Looking ahead, resale prices in Manhattan are expected to increase by 0.7 percent to $989,770 over the next month, according to the StreetEasy Manhattan Price Forecast. In Brooklyn, prices are expected to increase 1.9 percent to $555,250 over the next month, according to the StreetEasy Brooklyn Price Forecast^iv.

The complete StreetEasy Market Reports with additional analysis and neighborhood data for Manhattan and Brooklyn 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 Manhattan’s Flatiron neighborhood. StreetEasy is owned and operated by Zillow Group (NASDAQ: Z).

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 Manhattanand 2004 in Brooklyn. The reports are compiled by the StreetEasy Research team. For more information, visithttp://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 The Manhattan Price Index (MPI) and Brooklyn Price Index (BPI) 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 sinceJanuary 1995 in Manhattan and January 2004 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 arms-length sales of homes is sourced from the New York City Department of Finance.
ⁱⁱⁱ The luxury tier cut off price is derived from a 12-month weighted moving average of recorded sales prices at the 90th percentile (the top 10 percent). Price tier cut-offs change each quarter in order to capture evolving trends in homes that are being sold.
^iv The Manhattan Price Forecast and the Brooklyn Price Forecast predict the change in resale prices one month out from the current reported period. Each forecast incorporates the Price Index for each borough, StreetEasy’s comprehensive database of listing prices and days on market – two leading indicators to future resale prices to accurately forecast what next month’s resale prices will be before the release of publicly recorded sales data.