Average rental prices across the three boroughs of Manhattan, Brooklyn and Queens have reached a new all-time high.
Beginning last month, several factors contributed to the exorbitant rental market, including a lack of inventory, rising mortgage rates, peak season and the Housing Stability Tenant Protection Act initiated in 2019 – which put into motion new protections against tenant evictions.
Rising interest rates from the Fed have led would-be home buyers to turn to the rental market instead, making a tight market even tighter.
“People who were thinking about moving somewhere else, let’s say in the suburbs, where mortgage rates are 3.1 percent at the end of December, now they are in fives; that is a significant increase,” Jonathan Miller of Miller Samuel who analyzed the findings told The Post. “So those people who were perhaps looking at that as an option might be sitting put. And sitting puts fewer apartments available. So the irony of this Fed move is while it’s cooling the purchase market, it is putting more pressure on the rental market.”
A newly released report from New York brokerage Douglas Elliman analyzes the median costs of the rental market across the boroughs — and it doesn’t appear to be calming down anytime soon.
“It’s a perfect storm coming out of the pandemic,” Hal Gavzie, Executive Manager of Leasing at Douglas Elliman told The Post. “There is a lot of leverage for the landlords, not so much for the renter.”
“We have seen a lot of renters taking apartments sight unseen, which is a direct factor of these renters being just frustrated,” Gavzie explained. “They are losing apartment after apartment. So they are just wanting to apply immediately even before getting into the units.”
Average rental price: $5,058; Median: $4,050
The median rental price for Manhattan is now at an average $4,050, which is $800 over what it was just a year ago, according to the eye-opening June market reports compiled by Douglas Elliman and Miller Samuel.
Specifically, the average rental price in Manhattan has reached $5,000 for the first time in Big Apple History.
Median rent is the mid-point value of the total price samples. Average rent is the sum of all rents divided by the number of the sample size.
An average rental price of $5,058 means a tenant would be coughing up nearly $61,000 a year just on housing as median rent set a record for the fifth straight month.
New leases expanded month over month for the fifth consecutive time, and the vacancy rate remained under 2 percent for the seventh straight month.
For a simple studio, you are looking at an average rent of $3,145, while a one-bedroom runs $4,278, and a two-bedroom averages $5,722.
“We are seeing the demand greatly outweigh the inventory,” Gavzie said. “I think a lot of people were expecting renters that were able to rent during the peak of the pandemic and were able to kind of capitalize on those discounted rates, anywhere from 20 to 50 percent discounts, we expected a good portion of those renters when it came time to renew to be unable to afford or decided to move on.”
“And we didn’t really see that open up a lot of vacancies,” Gavzie continued. “What ended up happening at that point, those renters looked around and realized there was such little inventory and the cost to move and even find something else just didn’t make sense and they decided to stay put and accept the increase whatever it may be.”
Average rental price: $3,822; Median: $3,300
Average rental prices in Brooklyn reached $3,822 per month, up about $100 from last month’s average. That marks a new high for the borough for the second straight month.
A studio now runs an average of $2,284 per month, according to the latest Elliman report. A one-bedroom averages $3,240, and a two-bedroom has an average rental price of $4,040.
Comparatively, around this time last year, the median ran $500 cheaper at about $2,700 a month.
Renters saw significant price drops last summer, with studios offering an 11.2% discount, one-bedrooms having a 25.3% discount and two-bedrooms offering a 26.8% discount.
Since then, prices have risen between 20 to 50 percent.
“There is certainly significance in pricing between the boroughs. Manhattan is seeing the higher rents, while Brooklyn and Queens are battling it out month to month,” Miller explained. “But generally Brooklyn is more expensive than the area of Queens (Northwest Queens) we covered in the rental study.”
Northwest Queens (Long Island City, Astoria, Sunnyside, Jackson Heights)
Average rental price: $3,352; Median: $2,973
Queens still remains the cheaper option when it comes to renting, but is still at an all-time high for a second consecutive month.
Rental prices averaged $3,352 per month with a median price of $2,973. To put it in perspective, around this time last year, the median price of a rental in the Northwest area of Queens was $2,700 — nearly $300 less than what it is today.
An average rental price for a studio costs around $2,782 per month, according to the latest Elliman report. A one-bedroom averages just over $3,000, and a two-bedroom runs around $4,168 per month.
“The lack of inventory has been the recurring problem, which is keeping prices higher,” Miller reiterated. “But the newest wrinkle in this situation is the spike in mortgage rates which is pushing people who are priced out of the purchase market into the rental market.”
And for New Yorkers or individuals looking to wait it out, you might have to hang on for a bit longer, said Miller.
“The opposite of rising rental prices is not falling rental prices. If rents reach a level where there is an affordability threshold where they just can’t go higher, doesn’t mean they fall, it just means they don’t go higher,” he explained.
Miller added that based on the Fed’s continued increased interest rates, office towers at 40 percent vacancy, rising inflation and the ongoing war with Russia and Ukraine, he doesn’t expect affordability to come anytime soon.
“Greater affordability doesn’t seem to be around the corner, barring a recession,” Miller said.
“I think if there is a true recession, a meaningful recession, which would be characterized by job loss. Job loss comes with weakening rents. And with job loss comes weakening rents. That really is the only scenario for the remainder of this year that could bring rents down.
“After August, after peak leasing season, it is just less clear.”