As we approach the six-month mark of the pandemic, the wealthiest neighborhoods in Manhattan are emptying out as young professionals — some newly unemployed, others working remotely — break their leases to move home or to second homes, triggering substantial drops in rents (and home prices). Brooklyn rents have proven much more resilient than rents in Manhattan and Queens. Median rents in July in Brooklyn as a whole were unchanged compared to a year ago, while median rents in Manhattan dropped 7.6 percent, and median rents in Queens — home to a large population of the city’s lower-income residents — dropped a whopping 14.2 percent.
But there are hints that Brooklyn is starting to soften. Rents in the borough have started to trend downward across the board, with some neighborhoods — like Sunset Park and Red Hook — seeing July median rents drop by 20 percent or more year-over-year.
There’s also a glut of available rentals in Brooklyn. According to the appraisal firm Miller Samuel, listing inventory in July was up a whopping 84.2 percent year-over-year, while the number of new leases was down 24.2 percent. This clearly shows that demand is not keeping up with supply, a condition that causes prices or rents to drop in any type of market.
Many of the areas most affected in Brooklyn are those with a higher concentration of lower-income workers, who have suffered heavier job losses than workers with average or high incomes.
According to data from Miller Samuel, Cobble Hill, Boerum Hill, Greenpoint, and Williamsburg were among the neighborhoods that saw modest median rent drops year-over-year. Many of those neighborhoods are full of younger professionals willing to stick it out or work from home. Working-class neighborhoods like Sunset Park, Red Hook, Brighton Beach, and Prospect Heights saw substantial drops (as did prosperous Brooklyn Heights, which is demographically more like Manhattan.) Other gentrified or gentrifying neighborhoods actually saw increases — Clinton Hill, Carroll Gardens, Crown Heights, Park Slope, and Bushwick. That said, neighborhood-level data tend to be more volatile because of the smaller sample sizes, so the actual number is less important than the trend line.
Broken out by number of bedrooms, median rents continue to reflect job losses at the bottom of the income spectrum — or younger people who can more easily pick up and leave town. The median rent for a studio in Brooklyn as a whole was down 12 percent year-over-year in July. One and two bedrooms are down slightly, while three bedrooms or more are up 1.9 percent.
The downward trend will likely carry into the fall and early winter. While the city has been able to resume some of its normal economic activity, the long tail of the pandemic’s economic impact will probably linger as the rest of the country grapples with elevated COVID-19 case numbers.