New York's rental market cooled slightly in January, but in February it picked up some steam again, with median rental prices increasing 4.7 percent in Manhattan and 7.2 percent in Brooklyn compared to the same time last year, according to the latest rental market report from Elliman. In Manhattan, the median rental price is now $3,190/month; over in Brooklyn, the median rent is $2,590/month.
The news may elicit a groan from your belly and place an extra squeeze on your wallet, but let's break it down, shall we? The February numbers are somewhat surprising, given that in the fall and early winter some would-be renters were lured to buy because of the fall in mortgage rates. "But February eked out a higher increase in rents in Brooklyn and Manhattan. Since credit didn't change, the improving local economy probably had something to do with the rise," explains real estate guru Jonathan Miller, who prepared Elliman's report.
February rental data from Citi Habitats showed a similar trend, with Manhattan rents rising month-over-month (by an average of $32/month) for the first time after five consecutive months of decline, making the average Manhattan apartment rent total $3,243. But that increase for renters was tempered by some extra costs for landlords?CH found that owner-paid concessions increased from January, with 8 percent of landlords out of all of Citi Habitats' February rental transactions offering a free month's rent and/or payment of the broker free to lure new tenants. Meanwhile, according to CH, Manhattan vacancy rates climbed slightly to 1.4%, up slightly from January but significantly from a year ago, which means that renters in general have more to choose from.
In Brooklyn, apartments are getting snapped up faster as the average number of days on the market contracted, both month-over-month and year-over-year. Since the same time last year, the rental price per square foot has also grown, to $35.36, up 15.4 percent from the year before. Despite the increased number of new rental units hitting the market, rents?unfortunately?are not very likely to fall in the immediate future.
"Renters that organically would have moved into the purchase market to take advantage of low rates no longer qualify, because credit standards have overcorrected and are irrationally tight due to the legacy of bad lending decisions during the boom. The other reason rents are high is that employment is slowly rising, and rents respond much more quickly to improving economic conditions than sales do?sales are big, lumbering, inefficient transactions," says JMillz. "Credit is expected to remain tight for a while, and employment is expected to continue to slowly rise, keeping the pressure on." Not all news is bad news... for what are New Yorkers if not inured to pressure? Bring it.