NYC Rents Hit Record Highs in 2022
A few years ago, New Yorkers fled the city, seeking more space during the pandemic. In turn, vacancies shot up, rent prices dropped and landlord concessions surged.
Fast-forward two years to May 2022; things couldn’t be more different.
According to a recent report, median rents in NYC reached a record high in April. They exceeded the previous record, set only a month before – and the rental market’s busy season is only just getting underway.
Lease Prices for Market-Rate Apartments Skyrocket as Pandemic Retreats
In New York City, more than 50% of apartments and other rental properties are rent-regulated. However, approximately 43% -- roughly 2.1 million units – are subject to market forces. In 2022, rent prices for these market-rate apartments are soaring in response to various factors, including increased demand as people return to the city; the ending of pandemic-era leases loaded with concessions; and increasing mortgage rates that are deterring many from seeking home ownership.
Recent Report Highlights Stark Reality of Rent Increases Across New York
A recently published report shows just how quickly rents are increasing across NYC.
The median rent for new leases signed in April 2022 stood at $3,870 – an increase of 6.2% over the previous record, which was set in March. That figure also represents a 39% increase versus April 2021. Between March and April 2022, the median monthly rent increase was $226. The fact that rent prices are surging so early in the year suggests that additional increases are yet to come.
In April, the vacancy rate for NYC rentals stood at 1.55%, the second-lowest since 2014. For the fifth month running, the vacancy rate for the city remained below 2%. To put this into perspective, the vacancy rate in the months leading up to the pandemic stood at just over 2%. By early 2021, it had surged to 12% – a reflection of the exodus prompted by the health crisis.
At the end of April 2021, approximately 20,800 apartments were available in NYC. At the end of April 2022, just over 4,700 were available. With pickings so slim, it’s no surprise that rents continue to surge.
On top of that, listing inventory was down by 22% in April 2022 versus April 2021.
What’s Going On?
Rent prices in NYC have been on a rollercoaster ride for some time, and the end doesn’t appear to be in sight. What gives?
Several factors have converged to create the perfect storm prompting rapidly escalating rent prices across the NYC region. There’s been a bit of a rebound effect post-pandemic, and it looks like this will continue for the foreseeable future.
Factors conspiring to create staggering rent increases in New York include the following:
- Offices Reopening – More than two years since the onset of the pandemic, NYC employers are starting to expect workers back in the office. The city’s business districts were ghost towns at the height of the pandemic. Thousands of employees working remotely fled the city, renting and buying homes in suburban areas with larger homes and more green space. Many of them are returning in 2022 and have the money to pay ever-increasing rents.
- Back From the Suburbs – Many families essentially relocated during the pandemic, renting and purchasing larger homes in places like Connecticut and upstate New York. As companies start requiring workers back in the office, schools reopen for in-person instruction and other effects of the pandemic wane, demand for housing has surged across NYC. The influx of those who fled to the suburbs is wreaking havoc on availability, causing bidding wars for apartments even in less popular areas.
- Students Are Back – Throughout much of the pandemic, most schools – including the majority of colleges and universities in NYC – suspended in-person classes in favor of remote learning. By the fall of 2022, most schools will have primarily returned to traditional teaching. As a result, a major influx of students ranging from elementary to post-grad is streaming back into the city. Students take up much of the city’s housing stock, so their return is sure to keep the market tight for some time.
- Ending of Pandemic Lease Deals – Those who chose to stick around during the worst of the pandemic were often rewarded with concessions from landlords desperate to keep properties occupied. Many tenants saw their rents slashed; others signed leases offering several free months of rent and other perks. Still others signed longer leases with lower rates – and many of those leases are expiring this summer and fall.
- Rising Mortgage Interest Rates – Finally, mortgage rates have increased to more than 5%, and it looks like they will continue going up for the foreseeable future. As inflation continues to be a significant concern, the Fed will likely favor increasing the rates more to keep things in check. However, many who were planning to buy homes in 2022 are now priced out of the market. Instead, they are choosing to continue renting or to rent new places, squeezing the market even more.
Bidding Wars Par for the Course for NYC Apartments in 2022
Across the US, bidding wars for homes on the market have become the norm. In New York City, the phenomenon isn’t limited to houses for sale, however – it’s happening with apartments for rent too.
Indeed, one in five apartments rented in April 2022 went for over the list price. On average, these units were leased for roughly 11% above the asking price. Even properties that wouldn’t traditionally be considered very popular receive dozens of inquiries within hours of being posted.
Thanks to ongoing rock-bottom vacancy rates, the tables have turned on tenants. Landlords now hold the power, prompting prospective renters to find ways to sweeten the deal. For example, many renters in NYC in 2022 are opting to sign longer leases. By signing a two-year lease instead of a one-year lease, a landlord virtually guarantees that the unit will be occupied for the foreseeable future. In the wake of the pandemic, this is of particular concern for landlords.
No-fee apartments are virtually unheard of these days. However, many prospective renters are choosing to offer to pay the commission on such units to get their feet in the door. Others are increasing their availability so that they can tell landlords they can move in right away instead of in several weeks. This can be pretty enticing for landlords anxious to fill vacant units quickly.
Tips for Finding NYC Apartments in a Tight Rental Market
If you were looking for apartments in New York a few years ago, you could take your pick from tons of affordable options. Today, though, things have been flipped upside down. In addition to facing record-high rents, you are competing with countless others desperate to secure apartments of their own.
To navigate the rental market more effectively in 2022, keep these tips in mind:
- Be Flexible – As the saying goes, beggars can’t be choosers. With ongoing vacancy rates of less than 2%, now is not the time to be picky when seeking an NYC apartment. Make a list of must-haves for your rental; for example, if you have a pet, you’ll need a pet-friendly unit. Make another list of nice-to-have features like fitness centers and concierges – and be prepared to forgo many items to secure a place quickly.
- Use Word of Mouth – An incredible number of people land NYC apartments by letting others know they’re looking for one. This technique is especially effective for those who are from the area or who know people from the area. As soon as you know you need to rent an apartment in New York, put your feelers out and let your network know. Someone could come out of the woodwork with a great lead.
- Work With a Broker – Throwing a little extra money at the problem can make a huge difference when seeking apartments for rent in Manhattan and other parts of New York. From the get-go, be prepared to pay a broker to assist you. You can expect to pay anywhere from one month’s rent to 17% of the annual rent, but you’re sure to find the expense well worth it. A talented broker can help you zero in on options that suit your needs quickly, allowing you to save a lot of time and effort.
- Connect with BCP Real Estate Group – If you’re concerned about rent prices in NYC and finding a place to rent in 2022, you’re not alone. BCP Real Estate Group can help. Connect with us for access to NYC apartment rental listings, referrals to licensed real estate brokers across the city and more.
When Will Rents Level Out in NYC?
Across the US, rents rose by more than 18% from January 2021 to January 2022. The issue isn’t limited to NYC but is especially bad here. Most experts expect rent increases to continue throughout much of the year, but things could start cooling down in early 2023. Either way, connect with BCP Real Estate Group for ongoing access to a wealth of helpful NYC real estate resources. For more information, contact us today.