What you should know
Manhattan renters may have reached their “affordability threshold” in August, as median rents remained at a record high. The median rent in Manhattan in August was $4,370 a month, unchanged from July’s record high , according to brokerage firm Douglas Elliman and research firm Miller Samuel. Brokers said supply is low due to a lack of new rental buildings, while buyers who would normally look to buy apartments are opting to rent for now given high interest rates.
NEW YORK — Manhattan renters may have reached their “affordability threshold” in August as median rents remained at a record high, according to a new report.
Median rent in Manhattan in August was $4,370 a month, unchanged from July’s record high, according to data from brokerage Douglas Elliman and brokerage Miller Samuel. Average rents also maintained their record, at $5,552 per month.
Brokerages said supply is low due to a lack of new rental buildings, while buyers who would normally look to 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 to go back to school.
Still, there are signs that sky-high rents in Manhattan may be peaking. The number of new leases fell 14% in August, marking the second consecutive month of declines. The drop suggests that although asking rents for new leases are high, tenants are resisting the prices. Brokerages say many landlords are also choosing to renew their existing leases with slightly higher rents rather than aiming for larger increases with new leases.
In short, Manhattan renters may have reached their price limit.
“The market may have entered a threshold of affordability,” said Jonathan Miller, CEO of Miller Samuel. “The market seems to be reaching its top.”
The apartments are also on the market for a slightly longer period of time, which also suggests a market peak. Apartments were on the market an average of 39 days in August, compared to 26 days last year.
“I think landlords are becoming more aggressive in retaining their current tenants because of concerns about the overall economy,” Miller said.
Still, prices are unlikely to drop substantially any time soon. Inventory levels are falling, leaving tenants few options. The number of apartments available for rent decreased 24% in August compared to July, and Manhattan’s overall vacancy rate is only about 2.4%, slightly below the long-term average.
Many apartments are still in bidding wars. About 11% of all leases had a bidding war in August, according to the report. Two-bedroom apartments had the highest demand, and 13% of two-bedroom apartments experienced bidding wars. The average rent for a two-bedroom apartment in Manhattan was $6,300 in August.
Although Manhattan is extreme in rental prices and demand, rents across the country remain strong and are adding pressure to overall inflation. Housing costs rose more than 7% from last year in the latest CPI report.
According to Redfin, the national median rent in August was $2,052, just $2 below last year’s record. Redfin said many landlords are “starting to offer one-time concessions as vacancies increase.”
“The market may have entered a threshold of affordability,” said Jonathan Miller, CEO of Miller Samuel. “The market seems to be reaching its top.”
The apartments are also on the market for a slightly longer period of time, which also suggests a market peak. Apartments were on the market an average of 39 days in August, compared to 26 days last year.
“I think landlords are becoming more aggressive in retaining their current tenants because of concerns about the overall economy,” Miller said.
Still, prices are unlikely to drop substantially any time soon. Inventory levels are falling, leaving tenants few options. The number of apartments available for rent decreased 24% in August compared to July, and Manhattan’s overall vacancy rate is only about 2.4%, slightly below the long-term average.
Many apartments are still in bidding wars. About 11% of all leases had a bidding war in August, according to the report. Two-bedroom apartments had the highest demand, with 13% of two-bedrooms experiencing bidding wars. The average rent for a two-bedroom apartment in Manhattan was $6,300 in August.
While Manhattan is extreme in rental prices and demand, rents across the country remain strong and are adding pressure to overall inflation. Housing costs rose more than 7% from last year in the latest CPI report.
It is article was originally published in English by Robert Frank for our sister network CNBC.com. For more from CNBC enter here.
2023-09-14 21:01:14
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