Rent continued to skyrocket to new all-time highs in Manhattan last month.
The median monthly rent a tenant pays for a Manhattan condo or co-op rose to $4,050 in June, up nearly 25% from a year ago and setting a new record for the fifth month in a row, according to a report by brokerage firm Douglas Elliman. and Miller Samuel Real Estate Appraisers and Consultants. The median income, which is the midpoint of all incomes, just increased above $4,000 a month for the first time in May.
Median monthly rent, which is the sum of all rents divided by the number of rents included in the data, was even higher at $5,058 in June. That’s nearly 30% more than a year ago and marked the first time the average has surpassed $5,000 per month.
Rents have risen, in part, because would-be homebuyers have decided to call off their search and rent instead, said Jonathan Miller, president and chief executive officer of Miller Samuel.
“There are more people turning around, they were on the sidelines to buy a home, but now with mortgage rates going up, they are in the rental market,” Miller said. “The market is already tight. Tyours makes it tighter.”
Those renters typically have more money to spend and often need a larger, more expensive family apartment, driving the average up.
The median price for a three-bedroom apartment in June was $9,469 a month, up from $7,394 a year earlier. Meanwhile, the median price for a one-bedroom apartment was still under $5,000 at $4,278, up from $3,475 a year ago.
And little relief is expected for renters in the short term, Miller said.
“New leasing activity in Manhattan doesn’t peak until the end of the summer,” Miller said. “Barring a recession, we expect a seasonal increase in demand, which will put further upward pressure on rentals.”
Both median and median rental prices have more than recovered from losses seen during the pandemic, according to Miller, with June median rent up 14% from June 2019 and median rent up 19% from pre-pandemic levels.
New leases grew month-over-month in June for the fifth consecutive month and the vacancy rate remained below 2% for the seventh consecutive month. A year ago, the unemployment rate hovered around 7%.
The sweeteners that landlords offered to tenants to take apartments in New York when the market fell off a cliff during the pandemic are now in short supply, the report found. Concessions were offered on just 15% of new listings, down from 34% a year ago.
Bidding wars increased for the fourth consecutive month, especially in the luxury market.
How long will prices continue to rise?
“Nothing goes up forever, but in the short term we are poised for more gains,” Miller said.
Looking ahead to the fall and into next year, he said there will be an affordability threshold that renters will face. But even then, prices are more likely to stabilize than fall.
“The way things are right now, I’m not sure what causes rents to go down,” he said. “But a recession is the asterisk in the conversation. The Fed is hitting the economy with a baseball bat and there are more rate hikes in the pipeline. There is still a lot of uncertainty.”