Manhattan rents rose 2% in November, dashing hopes that prices would cool and forcing many renters to offer up their leases or downsize, in accordance with brokers.
The median rent for a Manhattan apartment in November hit $4,033, up from $3,964 in October, in accordance with a report from Douglas Elliman and Miller Samuel. The common rent, which is commonly skewed by luxury sales, fell barely for the month but continues to be up 19% over last 12 months, hitting $5,249 in November.
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The increases proceed to defy predictions that Recent York’s sky high rents would fall after the summer and provides renters some relief after rents hit all-time records. While rents are easing in lots of parts of the country, Recent York’s rents remain stubbornly high and the variety of unrented or empty apartments stays low.
“Rents will not be coming down as quickly as many would hope,” said Jonathan Miller, CEO of Miller Samuel.
The rise in Recent York rents also adds pressure to overall inflation, since rents are a big component of inflation indexes and Recent York is the nation’s largest rental market.
An “Apartments For Rent” sign outside a constructing within the East Village neighborhood of Recent York, U.S.
Gabby Jones | Bloomberg | Getty Images
Manhattan rents are so high that many tenants have began to balk at the costs — either moving out of the town or finding smaller, inexpensive rentals. The number of recent leases signed in November plunged 39% over October, marking the most important decline because the start of the pandemic in 2020, in accordance with Miller.
Brokers and real-estate experts say landlords over-reached after they began renewing the leases signed in 2020 and 2021, often demanding rent increases of 20% or more. With landlords typically requiring renters to have annual income of 40 times the monthly rent, the rising median rents have stretched many tenants to the breaking point.
“There’s some gridlock,” said Bess Freedman, CEO of Brown Harris Stevens. “In 2021, rents took off like a rocket and now tenants are stuck. People aren’t going to sign recent leases at these prices, they’re just too expensive. Landlords need to begin getting more reasonable.”
Freedman said considered one of her friends faced a rent increase of 30% with a recent lease renewal. “She felt like she was being gouged,” Freedman said.
Emptiness rates remain low, putting little pressure on landlords to lower rents anytime soon. The emptiness rate in November was 2.4% — still below the historical norm in Manhattan of about 3%, in accordance with Miller Samuel.
There are some early signs that landlords may start capitulating in 2023. The variety of landlord concessions — which can include a month of free rent and other deals — rose to 16% in November from 13% in October. Real-estate experts say the massive drop in recent leases, if it continues, will eventually force landlords to satisfy renters at a cheaper price point.
Joshua Young, executive vp and managing director of sales and leasing at Brown Harris Stevens, said landlords were overly bullish expecting rent increases of 20% or more, and lots of are actually beginning to lower prices or adding more concessions to maintain their apartments filled.
“A variety of landlords are getting stuck with inventory so and they don’t seem to be getting their increases, in order that they’re reducing price,” he said.