Washington, DC
CNN
—
Even as rents are cooling in some parts of the country, renting an apartment in Manhattan has never cost as much as it did in March.
Typically, rental activity picks up from spring to peak in late summer, but last month’s median rent was the highest ever recorded, according to a report from Douglas Elliman, a real estate firm, and Miller Samuel, an appraisal and consulting firm.
The median cost of renting an apartment in Manhattan was $4,175 in March. That’s 12.8% more than a year ago and 2% more than in February, the highest since last July, when rents hit $4,150.
A one-bedroom apartment had an average rent of $4,150, an increase of 9.6% from last year, while a two-bedroom apartment had an average rent of $5,680, an increase of 18.3% from last year. a year ago. A studio apartment is rented for an average price of $3,190, up 16% from last year.
While median rents for apartments of all sizes combined have reached a new all-time high, this is not the skyrocketing rent increase in 2021, said Jonathan Miller, president and CEO of Miller Samuel.
“It’s not a rocket,” he said of average rents. “It just creeps higher and every now and then it creeps high enough to reach a new high.”
The opposite of rising rents isn’t necessarily falling rents, it’s rents stabilizing, Miller said. The price for new rental homes floats along, not up or down.
“It is part of a long process since the summer. The expectation was that rents would fall, but that did not happen. Rents peaked last summer. They’ve been moving sideways every month since then,” he said. “With a modest increase, it was just enough to set a new record.”
A key reason Manhattan rents remain strong in March is that mortgage rates have doubled from a year ago, making buying a home unaffordable for many buyers. In addition, the bankruptcy of some banks in March created uncertainty that may have encouraged some people to buy to rent instead, pushing prices higher, Miller said.
According to the report, new leases in March were up 15.4% from last year, and rental activity was up 20.5% from February.
“The push for more rental activity parallels the rise in mortgage rates that continues to drive people into the rental market,” said Miller. “Not only the unaffordability, but also the uncertainty.”
Listing of rental housing inventory in Manhattan was near a record low a year ago and has risen. Inventory rose 40.5% year over year, allowing for more rentals.
While the stock has risen significantly, it is about 10% below long-term norms, Miller said.
Some renters seem to expect prices to rise, as more than half of renters in March opted for a two-year lease instead of a one-year lease, Miller said.
“If you look at the market share of two-year leases, 56.3%, that’s the highest since June 2021 during the rocketship of rental activity,” Miller said. “What that says to me is that the consumer expects rents to go up in the future and they lock in the rent now as protection.”
Renters may be on to something there and can probably expect more highlights.
“We are entering the most important leasing season in an already tight market and seasonal pressure could lead to new records being set,” said Miller. “I wouldn’t be surprised if we see a few months where we see more record highs.”