The affordability threshold for Manhattan renters may have been reached in August, as the median rent remains at a record high, according to a recent report.
Data from brokerage firm Douglas Elliman and the appraisal and research firm Miller Samuel shows that the median rent in Manhattan in August was $4,370 per month, the same as in July when it reached its highest level. Average rents also maintained their record high at $5,552 per month.
The shortage of new rental buildings is limiting the available supply, while the high interest rates have led potential buyers to opt for rental apartments. August is traditionally a busy month for rentals in Manhattan as families prepare for the start of the school year.
Despite this, there are indications that Manhattan’s soaring rents may be reaching their peak. The number of new leases fell by 14% in August, marking the second consecutive month of decline. This suggests that while the asking rents for new leases are high, potential renters are hesitant to pay the prices. Brokers also note that many landlords are choosing to renew existing leases at slightly higher rents instead of seeking bigger increases with new leases.
In summary, Manhattan renters may have reached their limit in terms of what they can afford.
“The market may have reached an affordability threshold,” said Jonathan Miller, CEO of Miller Samuel. “The market appears to be reaching its peak.”
Furthermore, apartments are staying on the market for slightly longer periods, another sign of market saturation. In August, apartments were on the market for an average of 39 days, compared to 26 days a year ago.
“Landlords are becoming more aggressive in retaining their existing renters due to concerns about the broader economy,” Miller said.
However, significant price reductions are unlikely to happen in the near future. Inventory levels are decreasing, giving renters limited options. The number of apartments available for rent dropped by 24% in August compared to July, and the overall vacancy rate in Manhattan is approximately 2.4%, slightly below the long-term average.
Bidding wars for many apartments are still occurring. According to the report, about 11% of all leases in August involved a bidding war. Two-bedroom apartments experienced the highest demand, with 13% of them being subject to bidding wars. The average rent for a two-bedroom apartment in Manhattan in August was $6,300.
Although Manhattan stands out in terms of rental prices and demand, rent levels throughout the country remain sturdy, adding to overall inflationary pressures. Shelter costs increased by 7.7% compared to last year in the latest Consumer Price Index (CPI) report.
According to Redfin, the median national rent in August was $2,052, just $2 below last year’s record high. Redfin noted that as vacancies rise, many landlords are starting to offer one-time concessions to attract tenants.
Author: OpenAI
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