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Three Cents Worth: Manhattan Rental Market is Scattering

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[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller reveals some rental market secrets.]

We just released Douglas Elliman's rental report and one of the key results (aside from rents remaining very high) was that the pace of rental price increases are slowing. For the past two months the year-overt-year rise in median rental price has been at its lowest rate in more than a year. For this post I thought I'd illustrate this easing with a couple of scattergrams but without using price trends.

I used the average days on market (from original list date to rental date) and the listing discount (from original list price to rental price) for November 2012 and compared it to November 2011. I wanted to do this visually (hey, this is Curbed) and force each time period to have the same parameters so we can compare the sweet spot side-by-side.

In this case I define the sweet spot as the largest cluster of transactions in one area of the chart as compared to the other chart. The center of the sweet spot became the point of comparison.

The sweet spot expanded in 2012 from about 20 days on market to about 30 days, and the listing discount expanded from about 3 percent to 4 percent. Not a huge change and the market remains very tight, but we are seeing signs of easing as compared to historical norms. It looks like falling mortgage rates may be taking some of the edge off of the rental market.

However, we've only seen two months of this cooling pace of rising rents. As you probably learned at Curbed University (I'm a tenured professor there), it takes three data points to make a trend and then "the trend is your friend?until it ends."

Now scatter.
· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]