Manhattan Median Rent Maintains Record High of Almost $4,400 per Month
According to a recent report, it appears that renters in Manhattan may have reached their affordability limit. Median rents remained at a record high in August, with the median rent standing at $4,370 a month. This figure has remained unchanged from the previous month. Similarly, average rents also held their record at $5,552 a month. Experts point out that the shortage in supply is primarily due to the absence of new rental buildings. Additionally, potential buyers are opting to rent apartments instead of purchasing them due to the high interest rates. August tends to be the busiest month for rentals in Manhattan as families prepare for the back-to-school season.
However, there are indications that sky-high rents in Manhattan may have peaked. The number of new leases fell by 14% in August, marking the second consecutive month of decline. This drop suggests that, although asking rents for new leases are high, renters are hesitant to pay the prices. Many landlords are also prioritizing lease renewals at slightly higher rents rather than aiming for significant increases with new leases.
In summary, it seems that Manhattan renters may have reached their limit in terms of pricing. Jonathan Miller, CEO of Miller Samuel, suggests that the market may have entered an affordability threshold and it seems to be reaching its maximum.
Furthermore, apartments are spending a slightly longer time on the market, suggesting a potential market peak. The average time apartments spent on the market in August was 39 days, compared to 26 days a year ago.
While some landlords are becoming more proactive in retaining existing renters due to broader economic concerns, substantial price reductions are unlikely to happen anytime soon. The inventory levels are decreasing, leaving renters with limited choices. In August, the number of available apartments for rent declined by 24% compared to July. The overall vacancy rate in Manhattan is approximately 2.4%, slightly below the long-term average.
It is worth noting that many apartments are still experiencing competitive bidding, with 11% of all leases having bidding wars in August. Two-bedroom apartments showed the highest demand, with 13% of them facing bidding wars. The average rent for a two-bedroom apartment in Manhattan was $6,300 in August.
Manhattan’s rental market exhibits extreme prices and demand, contributing to the overall pressure on inflation. However, rental costs across the country remain robust. The latest CPI report reveals a significant increase of more than 7% in shelter costs compared to last year.