NYC Rents at Record High
A new report from StreetEasy shows the citywide median asking rent rose 10.7% year-over-year to $3,700 in May, right after setting a new record in April this year at $3,650. The new record reached in May is the highest among StreetEasy data, stretching back to 2006.
Asking rents have been setting new records across the city as competition for limited inventory continues to heat up.
Limited inventory however is getting a surprising boost from an unexpected source- condos. With interest rates at the levels they are, and the rental market being so frothy, many owners are choosing to forego the sales market in favor of renting out their units to hold onto their favorable debt terms and protect against the potential loss of equity if they were to wait to sell if rates return to previous levels.
This has been a primary factor driving rental inventory growth that has been accelerating since January. While some of this can be attributed to seasonality, rental inventory was up 18.5% last month compared to May 2022- which is quite remarkable given the absorption rates we have seen this year.
In other words, the demand is still far outpacing the even increased supply as renters show no sign of pushing back against record-high pricing. When we zoom out even further, we find that although citywide inventory is up from 2022, it is still down 22.6% compared to May 2019.
Is inventory really increasing at a fast rate or did many renters who returned to the city in 2021 sign two-year leases at favorable terms and therefore are seeing those leases expire this year resulting in a large increase in available listings?
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As you can see from the chart, the median asking rent in Manhattan was $4,395 in May, holding steady month over month from the record high reached in April. This median asking rent represents an increase of 9.9% from May 2022 and a 27.2% increase from May 2019.
The Upper East Side, where you can usually get the most value for your money was Manhattan’s most popular neighborhood as renters have caught on and protested from downtown rents. The average UES listing received more than double (103.5%) the number of online inquiries from renters it received in May 2019 as the median asking price rose 15% year over year to $3,910. A bargain compared to the mind-numbing median asking rent of $4,995 across Manhattan’s Downtown neighborhoods.
Anyone who has flexibility in move-in dates might find some reprieve in the last quarter of the year, but it is my guess that these asking rents are here to stay- at least for the foreseeable future. ?
President
1 年I think there is a lot on the horizon that is not included in these rents. One is that prices rose as the cost of borrowing rose courtesy of the Fed. That has peaked, with predictions that the nominal rate is 6% and the marginal rate is 4.5%. On the horizon is the conversion of over 50 million square feet of unrented, soon to be defaulted commercial real estate. Once this is converted the prices of rentals will come down faster than a lead balloon. Second there is a recession coming, albeit a hard or soft landing being anyone's guess. Point is recessions of any kind derived from any reason, Fed or economically driven, lasts for 1-3 years. In that time later this year, unemployment will go up more than we imagine. Rentals do not go up in that scenario, they go down, and quickly. All this is waiting for us along with the new Covid shot for B.115, the strain that to date eludes most vaccines. None of the aforementioned, is good for the economy, the city, business, or real estate. Stay optimistic concurrently, stay real. It ain't over till the fat lady sings ( can we still say that expression in our oversensitive transparent world or is that taboo).