Brooklyn: No Longer A Bargain

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Brooklyn rents swing upward as Manhattan gets cheaper, leaving only a $300 gap between the two.

Rent price surge in Brooklyn leads to narrowing price gap between Brooklyn and Manhattan. Photo: Priscilla Riojas 

 

Brooklyn, once a favorite alternative to Manhattan’s top-of-the-line real estate prices and escalating rent costs is now the second most expensive place to live.

As Manhattan’s prices continue to fall, dropping 3 percent in November, Brooklyn’s costs continue to increase. The price gap between Manhattan and Brooklyn is currently $300, which is the second-narrowest on record. According to the latest Brooklyn Rental Market Report from brokerage firm MNS, which has two Brooklyn locations, the average rent costs have increased 2.5 percent throughout the borough from this time last year, up from $2,553 to $2,617. The price of a studio rose from $1,916 to $2,601 and the costs of a two-bedroom went up to $3,304.

David Kafko, who has been a real estate agent at Skyline Group Real Estate for four years, says his firm has seen this trend for the past couple of years and that the rent hikes are mostly in downtown and in prime areas like Brooklyn Heights, Park Slope, and Fort Greene. Kafko also says that it’s now possible to get better deals in the Upper East Side than in the popular areas of Brooklyn that people want to be in.

“People just want to be close to Manhattan, and have a commute not too far and get your office in 10 fifteen minutes. You know these neighborhoods that are close to Manhattan that start off with cheaper rents-they’re obviously all going to grow at some point,” said Kafko.

The most expensive neighborhood in the borough is DUMBO. The average rent in November for the neighborhood increased 4.3 percent. The rent for a studio in DUMBO jumped 17 percent from this time last year. Costs went from $2,650 to $3,113, according to MNS. The current price now out-prices all Studios in Manhattan except for doorman units in the East Village and non-doorman units in Tribeca.

Rising prices are leaving a lot of people behind, says Sha-nae Anderson, The Brooklyn Community Project Director with Catholic Charities Brooklyn and Queens, an organization that helps provides affordable housing to residents with links to social services. Anderson said the organization is apart of New York’s Emergency Rent Coalition. Anderson said that housing and helping folks avoid eviction is it’s biggest challenge. She says the most calls for help come from residents in Eastern Brooklyn.

“It’s our biggest challenge. 80 percent of the cases we see are around housing issues. Whether it’s helping them with their existing housing, helping them pay towards rent and avoid eviction, or with someone who has to leave their current residence and is on a fixed income and who has low wages to navigate the housing market and find more affordable housing,” said Anderson

Anderson says the trend she has been noticing is that families have been doubling up or tripling up in apartments in order to split the rent. She also says that she is starting to see more older adults facing housing issues, which she says concerns her because some of them have fixed incomes and face health issues.

Bedford-Stuyvesant had the largest rent surge of any Brooklyn neighborhood. Average rent costs there increased 15.6 percent from this time last year, rising from $1,587 to $1,835, according to the MNS report.

Jonathan Miller president and CEO of Miller Samuel, a real estate appraisal company and author of the Manhattan Brooklyn Rentals Elliman Report says the housing price surge in Brooklyn has accelerated the pass two years because Brooklyn has redefined itself as a destination. People want to be in Brooklyn. He also credits an improving economy, as well as rising employment throughout the city.

“The Brooklyn Market is about a year behind the Manhattan in the cycle,” Miller said. “Manhattan is starting to level off and has seen a little weakness but is still at very high levels. Brooklyn is probably going to see a continue rise in rents in 2014, so the gap could narrow further, but I don’t think it will pass Manhattan.”

As rent prices in the new “it” borough continue to increase, Brooklyn’s reputation as the more affordable alternative will continue to dwindle. It’s trendy neighborhoods will no longer be seen as a bargain.

“Enough attention isn’t being put on the issue, it is also forcing people out of New York City, and some people are relocating.” Where are they moving? “It could be upstate New York or completely out of state,” said Anderson.

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