A “For Rent” sign in front of an apartment building in the East Village neighborhood of New York, USA, on Tuesday, July 12, 2022.
Gabby Jones | Bloomberg | Getty Images
Manhattan renters may have reached their “affordability threshold” in August as average rents remained at a record high, according to a new report.
According to brokerage Douglas Elliman and valuation and research firm, the median rent in Manhattan was $4,370 per month in August, unchanged from the record high in July Miller Samuel. Average rents also held their record at $5,552 per month.
Realtors said supply was low due to a lack of new rental buildings, while buyers who would normally buy apartments are opting to rent for now given high interest rates. August is historically the busiest month for rentals in Manhattan as families prepare for back to school.
Still, there are signs that sky-high rents in Manhattan may be reaching their peak. New rentals fell 14% in August, marking the second straight month of declines. The decline suggests that while asking rents for new leases are high, tenants are wary of the prices. Agents say many landlords are also choosing to extend their existing leases at slightly higher rents rather than seeking larger increases with new leases.
In short, Manhattan renters may have reached their price ceiling.
“The market may have reached an affordability threshold,” said Jonathan Miller, CEO of Miller Samuel. “The market appears to have peaked.”
Apartments are also staying on the market a little longer, which also indicates a market peak. Homes spent an average of 39 days on the market in August, up from 26 days last year.
“I think landlords are being more aggressive in retaining their existing tenants out of concern for the overall economy,” Miller said.
Nevertheless, it is unlikely that prices will fall significantly in the foreseeable future. Inventory levels are dwindling, leaving tenants with few options. The number of apartments available for rent fell 24% in August compared to July, and the overall vacancy rate in Manhattan is only about 2.4%, slightly below the long-term average.
There are still bidding wars for many apartments. According to the report, about 11% of all leases had a bidding war in August. Two-bedroom apartments were in greatest demand, with bidding wars occurring for 13% of two-bedroom apartments. The average rent for a two-bedroom apartment in Manhattan was $6,300 in August.
While prices and demand for rental housing are extremely high in Manhattan, rents remain high across the country – adding pressure to overall inflation. In the latest CPI report, lodging costs rose 7.7% compared to last year.
According to Redfin, the median nationwide rent was $2,052 in August, just $2 below last year’s record high. Redfin said many landlords are “starting to offer one-time concessions as vacancy rates rise.”
https://www.cnbc.com/2023/09/14/manhattan-median-rent-remains-at-record-high.html The average rent in Manhattan remains at a record high