Brooklyn Rents Rise While Manhattan Gets Cheaper, Report Shows
MANHATTAN — The sky is not the limit.
If anyone thought Manhattan rents would rise without stopping, the past few months show prices may finally have reached their ceiling — for now, anyway.
Median prices — the amount being paid at the midpoint of the market — dipped for the third consecutive month in terms of year-over-year rents, according to a report released Wednesday by Douglas Elliman.
Median prices in November slipped to $3,100 a month, down 3 percent from November 2012, and were expected to level off, according to the report's author, real estate expert Jonathan Miller.
Across the river, however, in Brooklyn's trendy northwest neighborhoods and brownstone enclaves, median rents continued their upward swing, rising 3.8 percent to $2,800 a month.
Rents in parts of Kings County will continue to rise, Miller predicted.
"The good news for tenants is that rents aren't rising like they were in Manhattan, at least. But the bad news is that rents aren't going to fall precipitously because of improving employment and tight credit," Miller said.
Employment growth means more renters enter the market, and tight credit keeps tenants in rentals since they're unable to buy.
Manhattan's average rent inched down a mere 0.6 percent to $3,890 a month, and Brooklyn's average rent ticked up just 1 percent to $3,060 a month, the report found.
"We're entering this period of plateau," Miller said, "and will probably see rents sustained at high levels until the easing of credit."
Manhattan's dip in rents along with its 7.2 percent rise of using concessions (such as a month's free rent), plus the increase in vacancy to 2.8 percent — the highest in the seven years Miller has been tracking vacancies — was likely due to a surge in sales during the summer, "poaching all of the fence-sitters," Miller said.
The threat of rising mortgage rates may have convinced some potential buyers to make their move, he said.
The types of apartments that had the biggest rise in year-on-year rents were two-bedrooms in Manhattan, where average prices jumped by 6.3 percent to $5,811 a month. Brooklyn's one-bedrooms also jumped 6.3 percent, to $2,546 a month. The borough's studios spiked nearly 12 percent to $2,067 a month.
"That's a significant jump: $2,000 on average for studio apartment," Douglas Elliman's Mark Menendez said. "Brooklyn is not about the bargain anymore. It's a lifestyle choice."
Menendez predicted that prices in both boroughs would rise again in the spring, as they usually do.
"If a renter asked me right now, 'what should I do?' I'd say prices may seem high right now, but this may seem low, come spring," he said, although he cautioned landlords from getting too aggressive about pricing.
"It's still a market where product has to be priced correctly or people will walk away," Menendez said.