Rents and home prices in New York City fell at the fastest annual rate on record in January, largely due to an inventory glut that may take the city’s housing market years to recover to pre-pandemic levels of activity.
Rents in New York City dropped by the largest year-over-year pace on record in January, plunging 15.5% in Manhattan and 8.6% in both Brooklyn and Queens, according to StreetEasy, an online real estate marketplace.
The median asking rent (the rate offered by a landlord to a prospective tenant) in Manhattan amounted to $2,750 in January — the lowest level since March 2010, when the city’s economy was emerging from the financial crisis.
The median asking rent in Brooklyn in January was $2,395 while in Queens, it was $2,000.
StreetEasy attributed the falling rents to excessive supply, as there are twice as many rental properties available in Manhattan and Brooklyn compared to a year ago, and almost that many in Queens.
With respect to home sales, Manhattan and Brooklyn again witnessed record year-over-year price declines in January — down 6.2% and 5.4%, respectively.
The median asking price for a home in Manhattan was $1,350,000 in January; in Brooklyn, $925,000.
Despite the significant drops in prices, pending sales activity – meaning property transactions that have entered into a contract – have jumped 17.3% and 30.8% year-over-year in Brooklyn and Manhattan, respectively, due to a 57% year-over-year surge in contracts for luxury properties (defined as the top 20% of the market, or valued at a minimum of $3.7 million). However, the rapid increase in signed contracts still failed to offset the rise in available inventory, meaning the average price on homes still declined. Even at the luxury tier, there’s 25% more inventory than last year. “It’s rare that we see record high price drops in both the rentals and sales market, but landlords and sellers are dealing with the same issue right now: a surplus of competition and not enough demand,” said StreetEasy economist Nancy Wu in a statement. “Asking prices and monthly rents are coming down quickly, which means that landlords and sellers are finally facing reality. With inventory levels as high they are, there’s currently no end in sight when it comes to falling [New York City] real estate prices — good news for buyers and renters hoping to secure a good deal this year.”