After a pricey early 2012 for renters, the rental market cooled off in the fourth quarter, and that cooling has continued for Manhattan and Brooklyn into 2013. According to the latest rental market report from Elliman, the median rent increases year-over-year ranged from 0.8 percent to 2.6 percent?still an increase, but much smaller than the 7.5 percent average increase of the previous 12 months. In Manhattan, the median rental price is now $3,150/month (an increase of 2.6 percent). In Brooklyn, the median rent is $2,527/month. The news is good for landlords overall, with the vacancy rate continuing to fall compared to the numbers a year ago, from 1.83 percent to 1.54 percent in Manhattan. Only five percent of new Manhattan rentals offered concessions. Month-to-month, according to the Citi Habitats rental market report also released today, Manhattan rents dropped $23, to a new average of $3,211, and the vacancy rate is 1.37 percent, just as it was in December.
The lighter pace of rental market growth, explains Elliman report preparer/resident graph guru Jonathan Miller, is due to falling mortgage rates, which are sending some renters into the first-time buyer pool. The higher-end rental market is the strongest right now, because it's not affected by changing mortgage rates and entry-level renters' switch to the purchase side.
As for the future, JMillz predicts a continuation of this trend this year. "Since the driver of the market is currently tight credit with a splash of improving economic conditions (at a snail's pace), we may see more of the same for 2013. Elevated rents but not much growth assuming mortgage rates stay near record lows, which seems plausible." And there you have it, no crystal balls needed.
· Market Reports [Elliman]
· Rental Market Report archive [Curbed]