“Apartments for Rent” sign outside a building in the East Village neighborhood of New York, USA
Gabby Jones | Bloomberg | Bloomberg | Getty Images
Brokers said Manhattan rents rose 2% in November, dashing hopes of lower prices and forcing many renters to abandon leases or downsize.
According to a report by Douglas Elliman and Miller Samuel, the median rent for a Manhattan apartment in November was $4,033, up from $3,964 in October. Average rents, which are often driven by luxury sales, fell slightly month-on-month, but were still up 19% from last year, reaching $5,249 in November.
The rise continues to defy predictions that New York’s very high rents have fallen since the summer, giving renters some reassurance after rents hit all-time highs. While declining, rents in New York remain high and the number of vacant apartments and vacant homes remains low.
Jonathan Miller, CEO of Miller Samuel, said:
Rents are a big component of the inflation index, and New York is the nation’s largest rental market, so rising rents in New York will put pressure on overall inflation as well.
Manhattan rents are so high that many tenants are beginning to be hesitant about the price. Either move out of town or find a smaller, cheaper rental property. Miller said the number of new leases signed in November plunged him 39% compared to his October, marking the biggest drop since the start of the 2020 pandemic.
Brokers and real estate experts say landlords have gone too far when they start renewing leases signed in 2020 and 2021, often demanding rent increases of 20% or more. I was. Rising median rents are pushing many tenants to their breaking point, as landlords typically require renters to make an annual income that is 40 times his monthly rent.
Bess Freedman, CEO of Brown Harris Stevens, said: “In 2021, rents are going up like a rocket and tenants are stuck now. People are not going to sign new leases at these prices. It’s just too expensive. Landlords need to be more rational. I have.”
Friedman said one of his friends faced a 30% rent increase on a recent lease renewal. “She felt like she was being gouged out,” Friedman said.
Vacancy rates remain low and there is little pressure on landlords to lower rents any time soon. According to Miller Samuel, his vacancy rate in November was 2.4%, still below Manhattan’s historical baseline of about 3%.
There are some early signs that landlords will start surrendering in 2023. The number of landlord concessions (which may include a month’s free rent or other deals) increased from 13% in October to 16% in November. Landlords will eventually be forced to meet renters at lower prices if the sharp drop in new leases continues, real estate experts say.
Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens, said landlords were overly bullish on expectations of rent increases of 20% or more, and many were skeptical. He said they are starting to lower the rent and add concessions to keep apartments full.
“Many landlords are slashing prices because they are stuck with inventory and don’t get price increases,” he said.