Average Rents in Manhattan Hit $5K for the First Time
Barely one year after New York City landlords scrambled to fill rapidly emptying rental buildings, average rents in the city's largest, most popular borough hit $5,000 for the first time in history.
According to a June market report, the average rent in Manhattan in June 2022 – calculated by adding up the total of all rents and dividing them by the total number of units – stood at $5,058 per month. This represents a 29% increase over June 2021, when the average stood at $3,922, and a 1.7% increase over the previous month when it stood at $4,975.
Meanwhile, median Manhattan rent – the midpoint value of all price samples taken in the survey – hit $4,000 in May, representing a 25.2% year-over-year increase versus May 2021, when median rent in the borough stood at $3,195 per month.
June Market Report Highlights Record Rent Prices and Low Vacancies
According to the report, there were 6,433 rental units in Manhattan in June 2022, an increase of around 11.4% versus May, when only 5,776 were available. However, the figure represents a staggering 46% drop since June 2021, when nearly 12,000 units were listed for rent.
Across Manhattan, Brooklyn and Northwest Queens, including Astoria, 10,271 rental units were listed on the market in June 2022; in June 2021, 26,256 units were available for rent across the same area.
Prices Shoot Up in Brooklyn, Northwest Queens
Manhattan isn't the only part of the city experiencing record-breaking rents. According to the report, the average rent in Brooklyn in June 2022 stood at $3,822 per month, a 20% increase over June 2021, when the average was $3,185 per month. Meanwhile, the median rent in Brooklyn stood at $3,300 per month, a 22% increase over June 2021.
In Northwest Queens, the average rent hit $3,352 per month, a 15.1% increase over June 2021, when the average stood at $2,913 per month. At the same time, the median rent in this part of Queens, which includes Astoria, stood at $3,002 in June 2022. This represents an 11.2% increase over June 2021.
Report Reflects Drop in Concessions, New Lease Signings
Additional details from the report reveal just how tight NYC's rental market is these days. It also reflects the rapid drop in landlord concessions, which spiked during the pandemic as property owners scrambled to keep buildings filled while New Yorkers fled the city in droves. For example, net effective median rent – face rent minus landlord concessions – stood at $3,995 per month in June 2022, a 28.5% increase over the same period in 2021.
Meanwhile, although new lease signings increased from May to June, they fell precipitously from last year, dropping 46.7% to just 5,143 in June 2022.
Bidding Wars Surge for NYC Apartments
Bidding wars continue to plague apartment hunters across the city, with 22% of new leases affected by the phenomenon in June 2022 – an increase of 14.5% versus June 2021. Thanks to those bidding wars, the average premium paid over the asking price hit 11.9% in June 2022 versus 8.8$ in June 2021.
Average Rent Breakdowns Show Steep Prices
The report delves into many other rent-related figures, highlighting just how expensive it is to rent anything anywhere in New York City nowadays.
For example, the median price for Manhattan doorman buildings stood at $4,950 per month; for non-doorman buildings, it was $3,395 per month. Loft apartments in Manhattan rented for a median price of $8,023 in June, and units at new developments had a median rent of $5,700 per month. Entry-tier apartments in the borough had a median rent of $2,550, while the average for luxury apartments in Manhattan hit $13,500 per month.
In Brooklyn, where the average monthly rent stood at $3,800, the average rent for a luxury apartment hit $7,150 per month. Meanwhile, in Northwest Queens, the average rent stood at $3,350 per month, while the average price for luxury units stood at $6,200 per month.
Rent-Stabilized Units Not Immune to Increasing Prices
The prices in the report reflect average and median rents for market-rate apartments in NYC, which account for around 43% of all rental units. Rent-controlled and rent-stabilized apartments are facing rent increases of their own, as the Rent Guidelines Board recently approved increases of up to 3.25% for one-year leases and up to 5% for two-year leases.
The Pandemic Put NYC Rents on a Rollercoaster Ride
Now in its third year, the pandemic that emerged in March 2020 precipitated a mass exodus from the city, with more than 200,000 residents seeking more spacious, less crowded homes elsewhere at its height. With that exodus, landlords suddenly had to scramble to keep buildings filled. As a result, renters enjoyed a brief moment in the driver's seat, and landlords piled on attractive concessions to stay afloat. For example, many offered a few months' free rent or more flexible lease terms, including longer leases with locked-in lower prices.
Today, those concessions are quickly fading in the rearview mirror. As they expire, many who took advantage of them are now unable to afford the apartments they leased at the height of the pandemic. This will free up a little bit of inventory, but it doesn't appear to be enough to make a difference in prices or availability.
Just before the onset of the pandemic, the median rent in NYC stood at $2,900 per month. During the first year, the median price dropped by 14%, with the median asking rent standing at $2,700 in the first quarter of 2021 – the lowest figure ever.
In Manhattan in 2021, 42.8% of lease signings included concessions from desperate landlords. In 2022, that figure has dropped to just 13.1% -- and it's apt to get lower still before the year is through. Since last year, the average number of days on the market for NYC apartments dropped by 40%, highlighting the scarcity of options.
Factors Causing Record Rent Prices in NYC
At the height of the pandemic, it looked like renters would be on easy street in Manhattan for the foreseeable future. Today, things haven't just rebounded – they've totally flipped in favor of landlords.
Why are rent prices skyrocketing so fast in Manhattan and New York City? A few factors impacting the situation include the following:
- Expiring Pandemic Leases – Cheaper leases, provided by desperate landlords during the worst of the pandemic, are expiring, and concessions have dropped like a stone.
- Rising Inflation Rates – Inflation rates are soaring, making prices for everything – including housing – shoot up.
- Increasing Mortgage Rates – Meanwhile, The Fed continues to increase mortgage interest rates, prompting many to rent homes rather than buy them. The average rate for a 30-year mortgage has increased by more than three percentage points since the new year. In the first week of June, the average hit 5.8% – the highest rate since 2009.
- The Reopening of the City – As schools and offices reopen, more people are flocking to NYC seeking rentals than at any time in recent memory.
- Lagging Construction – Finally, new construction is not keeping pace with demand by a long shot, keeping vacancy rates low and prices up.
If you need to rent an apartment in Manhattan or anywhere in NYC, you can expect to pay a premium for the time being. Things may level off later in the year, but there are no guarantees.