Median rent in Manhattan reached the highest price point ever, according to the brokerage firm Douglas Elliman.
Average Rental Price in Manhattan Just Under $5,000 in May
The median rent in Manhattan increased almost +2% m/m and more than +25% y/y in May to $4,000. The average rental price came in just under $5,000. Both the median and average rental prices in Manhattan are the highest on record, according to Douglas Elliman.
Renters in Brooklyn weren’t spared such soaring rent price increases. The median rental price in Brooklyn jumped to $3,250/month in May, an increase of +18% y/y.
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Soaring Rents Spurred by Multiple Reasons
Many forecast these enormous rent hikes after so many renters fled New York in droves due to the coronavirus. Of course, rent prices plunged.
Now, many more renters have returned and/or continue returning to the city just in time for higher mortgage rates. Add many new hires and recent graduates into this mix of returning renters and the result is outsized rental demand.
Jonathan Miller, CEO and president of the appraisal firm Miller Samuel, believes rising mortgage rates are incentivizing people to rent in lieu of buying at the moment. Miller said, “This (issue of rising mortgage rates) tips a portion of would-be home buyers into the rental market, which is already tight.”
Likewise, Miller added that remote work is essentially giving people permission to rationalize paying more in rent. “People are living where they really want to live,” said Miller, “…which can also be a driver for paying more than they’re used to paying.”
Have Manhattan Rents Hit Peak Price Points?
Industry experts anticipate that May’s soaring rental price thresholds will continue to remain high, at least through the summer. However, according to many real estate agents and brokers, these high rental prices will prove to be unsustainable for renters over the long term.
Already, potential renters are looking in different, less prime areas of the city and/or are compromising on amenities such as in-building laundry in order to pay more affordable rental prices.
Miller said, “When the consumer can’t afford to pay, they go somewhere else.”
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Thanks to The New York Times.