Bidding Wars Becoming Normal in Unprecedented NYC Apartment Rental Market
In many parts of the US these days, homebuyers have gotten used to contending with bidding wars. Since the waning of the pandemic, it’s not unusual for properties on the market to generate lots of competition among prospective buyers.
If you’re going to rent, though, you shouldn’t have anything to worry about – right? Unfortunately, you do if you want to lease an apartment in NYC. Since early 2022, bidding wars have erupted for units across the city – including ones that would never traditionally generate such interest.
Fierce Competition for Market-Rate Apartments in NYC
More than 40% of New York City rentals are market-rate units, meaning landlords and property owners can charge whatever market conditions allow. In other words, there are no laws on the books in New York restricting bidding wars for market-rate rentals. Besides regulated, rent-stabilized units, which are extremely difficult to come by even under cooler market conditions, landlords can charge whatever people are willing to pay. These days that can be as much as 25% over the asking price.
Record Lease Signings, Soaring Rents, Plummeting Inventory Levels Prompt Bidding Wars
Many factors have converged to produce today’s unprecedented NYC apartment rental market. A quick look at the statistics reveals just how historic the situation is.
Just a year ago, market conditions were in renters’ favor. Now, the opposite is true.
In January 2022, the median rent in Manhattan increased by 18.3% versus January 2021, arriving at $3,550. The median rent is now just a bit shy of where it was in January 2020, just before the pandemic started, when it stood at $3,535.
At the same time, the number of available apartment rentals in NYC dropped by an incredible 83.3% in January 2022 versus January 2021. In Brooklyn, listing inventory dropped year-over-year by 86.4% -- the highest increase on record. In northwest Queens, inventory fell by 90.6% year-over-year during that same period.
Bidding wars started erupting during the winter, a traditionally slow time for rental markets. In February 2022, 17.7% of all rental listings in Manhattan involved bidding wars; at the same time, in 2021, less than 1% did. In Brooklyn in February 2022, bidding wars occurred for rental listings 19% of the time versus just 0.7% for the same period the previous year. Even in Queens, 9.6% of listings involved bidding wars in February 2022 versus just 0.3% in February 2021.
Since February 2021, rents across the city have increased by 24%. Meanwhile, the vacancy rate has hovered at around 1.5%. These and other factors have prompted unparalleled competition for the minimal number of market-rate options available over the last several months.
Examples of Bidding Wars Across NYC
If you think you don’t have to worry about bidding wars when renting a place, think again. If you need to rent an NYC apartment in 2022, it pays to be prepared to negotiate a bit.
Earlier this year, a 1,500-square-foot brownstone in Prospect Heights, listed for $7,250 per month, generated interest from more than 35 groups. After receiving several offers, the property was leased for $9,000 – more than 20% of the original asking price.
In February, a duplex carriage house in the West Village, listed for $6,000 per month, received more than 200 inquiries within a few days. After just three days on the market and 15 offers, the property was leased for $7,100 per month.
Similarly, a 935-square-foot one-bedroom apartment in trendy Tribeca, listed for $7,895 per month in early 2022, generated more than 100 inquiries within a few weeks. Ultimately, the place was leased for $8,500 per month. The new tenant also signed an 18-month lease instead of a 12-month one, which helped their cause significantly.
The Rollercoaster Ride of the Pandemic
When the pandemic struck in the early spring of 2020, many renters fled the city, seeking more space and taking advantage of being able to work remotely. In turn, vacancy rates rose, and prices stabilized. In fact, many landlords offered pandemic concessions in a desperate attempt to fill vacancies.
As vaccinations became available, people started flooding back into NYC in mid-2021. Many who stayed opted to move to larger places, generating even more demand. By October 2021, rent prices had returned to pre-pandemic levels, with the median price for a one-bedroom apartment standing at $3,945 per month. This reflects an increase of 12.7% over the same period in 2020.
Factors Behind NYC’s Apartment Bidding Wars
The pandemic has played a pivotal role in current rental market conditions in New York. However, other factors have converged to make things especially difficult for people seeking rentals in the city, like the following:
- Longer Leases – During the pandemic, many landlords enticed tenants into longer leases by knocking off a few months’ rent to keep apartments filled. As a result, many properties that would typically become available in the spring won’t be available for another six to nine months. Longer leases have played a significant role in the ongoing rental shortage across the city.
- Rapid Leasing Activity – Since the market started recovering and demand has soared, renters have been moving much faster to secure new homes. In fact, it’s now relatively common for people to rent apartments in NYC sight unseen. Thanks to virtual tours and other high-tech advances made popular during the pandemic, it’s easier than ever for people to jump on listings quickly.
- Remote Learning – Bidding wars are happening even in less popular, traditionally more affordable parts of the city because many students are still not back to school in person on a full-time basis. Remote and hybrid learning continue, allowing students to live in more far-flung neighborhoods. Those areas have seen surging demand for rentals and – you guessed it – bidding wars.
Tips for Securing an NYC Apartment in Today’s Competitive Market
Renting an apartment in New York has never been easy. These days, it can feel like a downright nightmare. If you need to rent a place in NYC soon, accept the fact that you will likely be facing a bidding war to secure it.
As difficult as it can be to find an NYC rental nowadays, there are ways to increase your odds of getting the right thing. Here are some tips for dealing with bidding wars and other issues while trying to find apartments for rent in the city:
- Assess Interest – When you see a listing you like, check how long it has been on the market and how many people have saved it. Many listing sites prominently display this info, and it can be conducive to determining how much interest there is in a particular place. For example, if you see a listing that’s only been up for two days but has been saved more than 100 times, you can be reasonably sure that a bidding war is in the cards.
- Offer More Than Asking Rent – Needless to say, the primary way to cope with a bidding war situation is by throwing your hat in the ring with a strong offer. The question, though, is how much more to offer? Typically, prospective tenants offer 2% to 5% over the asking price. If the asking rent is under market, you should absolutely offer more. If you want to offer $600 more, bump it up a bit more to help your offer stand out; for example, offer $630 more. Even making a symbolic gesture by offering $50 over the listing price can put you on the map.
- Offer to Start Your Lease Early – Another way to stand out in an apartment bidding war in NYC is by offering to move in within days rather than the typical 15 to 30 days.
- Offer to Pay Fees for No-Fee Rentals – Although no-fee rentals are exceedingly rare in the city these days, try offering to pay the broker’s fee for a competitive edge if you are vying for one.
- Have a Strong Application Ready to Go – Before looking at any NYC rentals, have your application package and documents ready to go.
- Be First in the Door – When you see a rental that looks promising, try to be the first to check it out. This may mean showing up on Thursday or Friday instead of waiting for the weekend.
- Get a Broker – Finally, enlisting the help of a licensed NYC real estate broker is one of the best ways to navigate the city’s competitive rental market. BCP Real Estate Group can connect you with brokers in the neighborhoods where you are looking.
Find NYC Apartments for Rent with BCP Real Estate Group
It’s a tough time to find a rental in NYC. Still, with the right help, you can compete with others and emerge victorious even from the most cutthroat bidding wars.
BCP Real Estate Group can help you navigate the city’s complex rental market, allowing you to secure a great apartment as quickly and efficiently as possible. You can check current availability via our online listings, and we can refer you to a broker in the neighborhood of your choice whenever you’re ready. For more information, contact our team today.