New York City rents and home prices both dropped at their fastest annual pace on record in January, signaling that the city’s real estate market is still declining sharply, according to the January 2021 StreetEasy Market Reports.
Asking Rents Haven’t Been This Low in Years
Rents in all boroughs analyzed fell at the fastest year-over-year pace on record, dropping 15.5% in Manhattan and 8.6% in both Brooklyn and Queens. The median asking rent in Manhattan was $2,750 — the lowest it’s been since March 2010. In Brooklyn, the median asking rent in January was $2,395, and in Queens, it was $2,000.
A major reason for steep rent declines is the amount of supply available. Despite the fact that the number of new listings being added to the rentals market has slowed compared to the peak in the fall, there are still double the number of rentals available in Manhattan and Brooklyn than there were a year ago, and nearly that many in Queens.
Buyers Have Returned, But Prices Still Have Room to Fall
On the sales market, Manhattan and Brooklyn both saw record price drops, with the StreetEasy Price Index down 6.2% and 5.4%, respectively, year over year. The median asking price in Manhattan was $1,350,000; in Brooklyn, it was $925,000.
These notable price drops occurred even with a continued surge in buyer activity. In Brooklyn, pending sales were up 17.3% year over year. In Manhattan, pending sales jumped 30.8%, led by a huge increase in contracts signed for luxury homes, defined as the top 20% of the market (over $3.7 million). There was a 57% increase in luxury contracts signed compared to last January.
Similar to the rentals market, the uptick in the number of contracts signed was still not enough to offset the glut of sales inventory available, leading to a fall in prices.–>
“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.”
“Asking prices and monthly rents are coming down quickly, which means that landlords and sellers are finally facing reality. With inventory levels as they are, there’s currently no end in sight when it comes to falling prices — good news for buyers and renters hoping to secure a good deal this year.”
Manhattan Prices Fall, But Sellers Made Fewer Cuts
Manhattan led the way when it came to falling prices, with a 6.2% year-over-year decline, but the share of homes that had a price cut in January was lower than it was last year. Of all sellers on the market, 11% cut their asking price — 1.6 percentage points lower than last year’s share. According to Wu, this may be because sellers entering the market are pricing their homes more realistically from the start.
Brooklyn Buyers Snag Homes Faster
Brooklyn homes came off the market more than two weeks faster than last year, as buyers looked to score a good deal. Pending sales rose across the borough 17.3%, led largely by the most affordable tier of homes. Contracts were signed for 141 homes in the most affordable 20% of the market — more than double the number last January, or an increase of 117%. By comparison, the top 20% of the market saw a 10.4% increase in contracts signed.
Rents in Queens Reach Major Milestone
The median asking rent in Queens in January was $2,000 — the lowest since March 2014. The StreetEasy Queens Rent Index fell 8.6%, which was the largest annual drop on record for the borough, matching the decline seen in Brooklyn. Wu says this is a notable milestone for the borough, considering its more affordable prices have kept its market relatively stable compared to Manhattan and Brooklyn.
View all StreetEasy Market Reports for Manhattan, Brooklyn, and Queens, with additional neighborhood data and graphics. Definitions of StreetEasy’s metrics and monthly data from each report can be explored and downloaded via the StreetEasy Data Dashboard.