NYC's high-income renters eyeing Brooklyn and Queens

Dive Brief:

High-earning renters in New York City’s Manhattan are increasingly migrating to other boroughs as rents there continue to climb, according to a new report from apartment-listing website RentCafé.
Brooklyn more than doubled its count of high-income renter households since 2011, growing at a faster clip than the number of homeowners there with similar incomes during that time.
Queens has also seen the number of affluent renters migrating to the borough surge in the last decade, with the total rising from 8,500 in 2005 to 29,500 in 2015, a figure that is expected to rise in the coming years. However, the number of owner-occupied households in the borough is almost double, albeit growing at a slower rate.

Dive Insight:

The rental property market continues to explode across New York City and RentCafé’s latest report shows that the number of high-earning renters there has shot up 137% in the past decade, while owner-occupied households have risen by 64% during the period.

A recent forecast by StreetEasy predicted that rents in Manhattan will rise at a 2% rate this year following a 1.9% increase last year, while rents in Queens are set to grow 2.4% this year after shooting up 4.1% last year. Rents in Brooklyn are expected to rise by 1% following a 0.9% jump last year. And in the Bronx, rents should increase 3.7% in 2017 after climbing 9.8% in 2016.

With rent increases set to continue in New York City this year, there is a growing sense that more renters will turn to homeownership as prices for homes are expected to ease in certain segments of the market. StreetEasy also recorded changes in home-price growth from 2016 to 2017, finding home price increases this year forecast to be on par or below last year.

Demand at the top-tier of the city’s luxury home market is expected to continue to weaken this year amid a glut of supply hitting the market.

As a result, some developers are switching their focus. Toll Brothers CEO Douglas Yearly said on a conference call last month that the company’s City Living business unit is now set to target the middle-luxury market in New York City.

The trend is evident nationally. MPF Research recently reported that an oversupply of luxury apartments nationwide will halt a multi-year trend of price increases and force landlords in many large metros to lower rents.

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