Renters in Manhattan are now expected to pay an average of $5,000 to rent an apartment, representing a record high for rental apartments in the city.
What’s more, brokers say demand for Manhattan rentals will increase even more this fall, most likely pushing rental prices up even more.
The average apartment rent in Manhattan was $5,058 per month in June, the highest on record according to a new report from Miller Samuel and Douglas Elliman. Average rental prices in the city are up 29% from a year ago, while median rents are up 25% to $4,050, the report said.
The increased rental prices are not only pricing many renters out of the market. They could also have a knock-on effect amid broader inflationary pressure. Rent is a key component of the government’s consumer price index, which has increased 9.1% from a year ago. New York is the country’s largest rental market.
The ongoing price pressure in Manhattan rentals could lead to higher inflation in the coming months, putting yet more pressure on the Federal Reserve to increase rates to tame prices.
“There are no signs of a slowdown,” said Miller Samuel CEO Jonathan Miller.
The CEO said higher mortgage rates and fears of a slowing housing market are driving more people to look for rentals. Adding to the rental price pressure is that available rental units are now close to a record low. In June, the vacancy rate dropped to just 1,9%, with just 6,400 apartments available. That’s down 46% from a year ago.
Valirjana Gashi, a broker at Serhant, told CNBC that many families and renters who left New York amid the pandemic are now returning to the city. In addition, younger renters are also pouring into the city. Many millennials and even some working members of Gen Z are heading to New York after finishing college or working remotely, to take advantage of the city’s nightlife and culture.
July and August are traditionally the busiest months for rentals in the calendar year as tenants look for September start dates prior to returning to school or work. Gashi said that while many for sale listing open houses are empty, open houses for rental properties are incredibly crowded.
“When a good rental comes on the market there are lines down the block,” Gashi said.
Because of this, Gashi said many rental listings are subject to bidding wars between prospective tenants. She said one of her clients recently offered $6,750 per month on a one-bedroom downtown apartment that was listed at just $6,000 a month.