Manhattan rents rose again this month, with the median rent up 8.9 percent from last year to $3,375 (marking the twelfth consecutive month that Manhattan rents have risen year-over-year), while Brooklyn and Queens rents held relatively steady. But the real story this month, according to Elliman report compiler Jonathan Miller, is that prices for smaller apartments are now rising faster than the top of the market. In Manhattan, the median price for studios and one-bedrooms is now at its highest point in seven years ($2,270, up 11 percent from last year) while in Brooklyn the prices for studios and one-bedrooms also rose, despite overall prices slipping very slightly to $2,863 (a year-over-year decrease of 0.9 percent).
The reason for the jump in studio and one-bedroom prices, Miller explains, is that credit remains historically tight and prices are rising on the sales side of the market, forcing would-be first-time buyers back into the rental market. New York City employment growth is also keeping pressure on the rents. And with potential mortgage rate increases later this year and next year, Miller doesn't see the trend abating any time soon.
Though Brooklyn prices dipped slightly and Queens prices are exactly where they were at this time last year, with a median rent of $2,600, Miller warns that a stabilization in prices after a period of ascending prices doesn't necessarily mean that prices are due to drop. Instead, he sees this as a high plateau where prices are about to edge higher or remain flat.
Citi Habitats President Gary Malin had a somewhat different perspective, contending that an increase in the use of move-in incentives in Manhattan indicates that rents may be near the top of what the market can bear. "Some landlords are using move-in incentives to keep their face rents relatively high, while still providing a sense of 'value' for tenants," he wrote. "In addition, the fact that the East and West Villages, among Manhattan's most popular neighborhoods, have the highest vacancy rates means some tenants have simply been priced out of these areas. Landlords have been looking to maximize their assets, and have likely pushed rents near their breaking point."
Breaking things down by neighborhood, the MNS reports show the largest year-over-year increase in Harlem, with average rents up 8.5 percent from last year, and the biggest decrease in Murray Hill, down 3.1 percent. In Brooklyn, the largest year-over-year increase was Boerum Hill, where rents are up a staggering 14.8 percent. The largest increase in studios occurred in Bushwick, where prices are up to $2,047 from $1,788 just last month. Fort Greene saw the biggest jump in one- and two-bedrooms.
· The Elliman Report [Elliman]
· MNS Rental Market Reports [MNS]
· Citi Habitats Reports [Citi Habitats]
· Previous Market Reports [Curbed]