The October rental reports are out, and according to data from Elliman, this was the second straight month, year-over-year, that median rents declined, dropping a whole 1.6 percent to $3,150. Woohoo! Right? Not quite. Elliman reporter preparer and market guru Jonathan Miller says the trend likely won't continue. "Much of the weakening of price growth was due to the record sales volume we saw in the past couple of quarters," says Miller. "The surge in sales poached demand from the rental market as fence sitters, who were concerned about the late spring spike in mortgage rates jumped in." That said, average pricesMiller prefers the median, as it eliminates outliersshowed no such decrease. Miller found them to rise a teensy bit, by 0.2 percent to $3,862 (same as last month), and MNS put the average slightly higher, at $3,905.
Miller says rents have plateaued "at fairly high prices" for a variety of reasons. Employment is on the up and up, and "the rental market is immediately responsive to changes in employment," he explains. Plus, "tight credit is expected to continue indefinitely tipping would be buyers back into the rental market because they don't qualify." He added that there's a hefty amount "of mortgage changes afoot from now through early next year that will make mortgage lending more challenging for consumers in addition to regulations that need to be finalized."
Breaking down the date by neighborhood shows a range of price fluctuations. According to MNS, the Lower East Side saw average rents rise nearly 4.29 percent since September, thanks to increases on all types of units in doorman buildings. Battery Park City also saw an increase for the third consecutive month, while rents in Tribeca declined the most, slipping more than 3 percent. The Elliman report found that the vacancy rate increased to more than 2 percent, which Miller credits to robust sales "poaching" renters, but MNS found that inventory slipped by 7 percent.
Over in Brooklyn, median rents rose nearly 7 percent from the same period last year, according to the Elliman report, putting it at $2,699. Averages jumped significantly more, with average prices increasing 12.6 percent and average price-per-square-foot rising 25.5 percent. Miller notes that overall rents have not fallen in 2013, except for in May. MNS also found rents to rise, but at lesser pace, moving from $2,599 to $2,698, or 3.82 percent. The data difference is likely because MNS looks at more neighborhoods, including Bay Ridge and Prospect-Lefferts Gardens, while the Elliman report only considers the north and northwest regions.
The greatest month-to-month price jump, according to MNS, occurred in Dumbo, where the cost of studios increased 6.7 percent to $3,145. From the same period last year, Bed-Stuy, Bushwick, Cobble Hill, Greenpoint, and Prospect-Lefferts Gardens all saw double-digit increases. Miller points out that the price difference between Brooklyn and Manhattan rentals narrowed by 33 percent year-over-year, and that new rentals grew by more than 37 percent as renters searched for the holy grail of more affordability.
· October 2013 Manhattan and Brooklyn Rentals [Elliman]
· Manhattan Rental Market Report October [MNS]
· Brooklyn Rental Market Report October [MNS]
· Rental Market Reports coverage [Curbed]
· All Market Reports coverage [Curbed]