By Holly Dutton
It’s all about the outer boroughs.
As another round of quarterly reports comes out, the numbers don’t lie; Brooklyn and Queens are becoming go-to destinations for buyers and renters alike.
And with the recent revelation that New York City’s average rent surpasses $3,000 a month, the priciest in the nation, it’s no wonder renters are fleeing to the less-expensive outer boroughs.
New developments in Queens, like the high-rises along the Long Island City and Williamsburg waterfronts, have helped lure those looking for Manhattan amenities and a short commute, but with a lower price tag.
According to a report by the Center for an Urban Future, of all New York City boroughs, Brooklyn has experienced the biggest increase in its share of the city’s employment base since 2000. In 2012, Brooklyn accounted for 15.06 percent of all private sector jobs in the city, up from 13.35 percent in 2000.
The just-released June report from Jonathan Miller of Miller Samuel, who prepares the Douglas Elliman market reports, shows a median rent price of $2,737, the highest number since tracking the Brooklyn rental market since January 2008.
“The drivers of rental increases in Brooklyn are the same drivers in Manhattan, and virtually every housing market in the country,” said Miller. “It’s tight credit. You have a lot of people that don’t qualify for a mortgage or they can’t find something to buy because inventory is so tight on the sales side, so they’re tipped back into the rental market, which affects the shortage of availability.”
Ten years ago, Brooklyn was the “key beneficiary” to Manhattan being too expensive, but now it’s become a destination, with buyers and renters choosing Brooklyn over Manhattan, said Miller.
The median rent jumped 13.5% year-over-year, from $2,412 to $2,737, while average rental price and rental price per square foot increased 13.6% and 9.5% in the same period, respectively. On the sales side, median and average prices for Brooklyn in the 2Q are at the highest levels since they began tracking the borough’s numbers in 2003.
“It’s no surprise because over the last year price indicators have been trending higher,” said Miller.
Inventory in Brooklyn fell to a 5-year low, dropping 18.5% since the same time last year, making it the lowest second quarter since 2008.“There just hasn’t been enough supply entering the market,” said Miller.
“In the boroughs and in many markets across the country, supply is tight because a large swath of people that have a mortgage have either low or negative equity,” said Miller. “In the U.S., 44% of people that own a home with a mortgage have either low or negative equity.”
Another factor contributing to the increasing rental prices is the improving city economy and increasing employment.
And Miller doesn’t see the trends changing anytime soon.
“I don’t think there’s a lot of relief in store for people in need of housing in Brooklyn whether rental or purchase,” he said.
As a result, people are being priced out of Brooklyn and into Queens, a borough which Miller has seen gaining traction over the last couple quarters.
According to the 2Q Elliman Report for Queens this year, listing inventory fell by a record 28.9% since this time last year, from 8,754 to 6,496, the lowest number in the eight years the report has been made.
Sales increased 8.1% year-over-year from 2,306 to 2,493, which translated into an absorption rate of 7.5 months, marking the fastest market pace in six years.
