After a decade of rent increases in Brooklyn and across the city, the COVID-19 pandemic has caused a sharp drop in rental prices — more than those seen after the financial crisis of 2008.
Brooklyn has seen average rents drop by 6.3% since last year to $2,400, according to StreetEasy’s November 2020 Market Report. After the 2008 recession, rents dropped an average of 5% citywide, and the same number for Brooklyn.
Rents fell furthest in the borough’s most expensive neighborhoods, categorized as Northwest Brooklyn and including Downtown Brooklyn, Fort Greene, Clinton Hill, Brooklyn Heights, Boerum Hill, DUMBO, Vinegar Hill, Red Hook, Gowanus, Carroll Gardens, Cobble Hill and Columbia St. Waterfront District. Average rent in the area dropped to $2,800, the lowest it has been in eight years, down 5.1% on November last year.
In East New York, rents dropped by 9.1% to $2,000, while the median asking price went up 3.1% to $799,000. In Bed-Stuy, rents dropped by an average 12.7% to $2,300, but house prices continued to increase with the median recorded sales price up 29.1% on last year. In Flatbush, rents dropped 10.8% to $2,050 and the median asking price for a house dropped 4.1% to $599,500.
Across Brooklyn, there were 21,670 rentals on the market in November, an increase of 134% from last year. Across the city, there was an increase of 37,000 homes on the market this November compared to last year.
StreetEasy Economist Nancy Wu said she expected the rental market to match the weakness seen during the Great Recession, “but the fact that the market has surpassed that level in less than one year shows how serious the crisis caused by the pandemic has been.”
“The rollout of COVID-19 vaccines and plenty of great rental deals will be the catalyst for many to return to the city, but we’re still a long way from the city’s return to normal,” she said. “Until that happens, inventory will remain high and renters will continue to enjoy deals that were unheard of a year ago.”
Out of the three boroughs analyzed – Manhattan, Queens and Brooklyn – Manhattan saw rents drop the most at 12.7%. In Queens, rents declined by 5.7%
Although Manhattan saw the largest drop in rent prices, it still has the majority of the city’s most expensive neighborhoods to buy into. Property Shark’s annual NYC’s Most Expensive Neighborhoods list, released last week, highlighted all but two of the city’s costliest neighborhoods were in the borough.
The remaining two are here in Brooklyn and are DUMBO and Cobble Hill. Although transactions fell by 31% in DUMBO, a price growth of 8% repositioned it as the priciest neighborhood in Brooklyn and the 8th priciest in NYC with the average house price sitting at $1,625,000.
Cobble Hill came in as the city’s 10th most expensive neighborhood with the average house costing $1,491,000, a 9% decrease on last year.
Of the 50 neighborhoods ranked, Brooklyn represented 39% of the city’s priciest neighborhoods and made a historic first by overtaking Manhattan in the number of neighborhoods in the list in Q2 of 2020. As a whole, the borough’s median sale prices increased by 4% to $710,000.