Record-low mortgage rates conspired with high rental prices to push additional tenants out of the market in October, as more and more renters looked to purchase homes, real estate executives told The Real Deal.
Overall vacancy in Manhattan was up to 1.39 percent – the highest it has been since February 2010, according to the October rental market report released today by residential brokerage Citi Habitats. Meanwhile, activity was relatively stagnant, with new rental activity increasing a mere 1.2 percent year-over-year, according to figures from brokerage Prudential Douglas Elliman’s report for the same period.
“Certain people are fed up with rental pricing and are going to outlying boroughs or purchasing,” said Gary Malin, president of Citi Habitats. “The economy is still wreaking havoc, there is this fiscal cliff talk, [fears of] capital gains taxes going up … a lot of unknowns,” are in play.
A dip in activity is also commensurate with the season, noted Malin.
However, the decreased activity did not affect pricing, as median rents in October were up 1.6 percent compared to the same period last year, and the average price per square foot increased 3.2 percent, according to Elliman’s numbers. The median rent in Manhattan in October was $3,200, up from $3,150 the year prior; however, the effective rent (which includes concessions) was only up 1 percent, to $2,954 from $2,925 year-over-year, Elliman’s data shows.
“Landords are trying to keep activity up, and I think that concessions helped keep activity consistent,” said Mark Menendez, an executive vice president with Elliman.
The number of transactions that involved concessions went up by about 1 percent in October, according to Malin, who said that that was normal for the season as well.
“There is nothing out there that is not to be expected,” he said, though he conceded that November’s numbers would be “telling,” as they would indicate whether Hurricane Sandy had caused a significant market disruption.
October had been strong before the storm hit on Oct. 29, squelching activity at the end of the month, Malin said.
The average Manhattan apartment rented for $3,444 in October, or $9 less than in September, when the average was $3,453, according to the Citi Habitats report, which compiles data from the firm’s own transactions.
The market was also stratified, with the high-end segments performing better. Prices for doorman buildings outpaced prices for non-doorman buildings, the Elliman report says. The median price for a doorman building was $3,649, up 4.4 percent from $3,495 last October; for non-doorman buildings the median was $2,650, up 1.9 percent from $2,600.
Meanwhile, the median rents in the “luxury” and “super-luxury” segments – the top 10 percent and 5 percent of the market by price, respectively — were up 5.1 percent and 14.9 percent year-over-year, per Elliman’s numbers.
Menendez said the growth in pricier properties was largely because more product had been added at the higher end.
In Brooklyn, the median price for an apartment in October was $2,527, according to the Elliman report, down 0.4 percent year-over-year from $2,600. The luxury market – the top 10 percent by price – outperformed the rest, just as in Manhattan, with the price per square foot gains of 10.9 percent are more than double the 5.2 percent rise of the market overall.
Interest in two-bedrooms in the borough surged, with median prices climbing 6 percent, to $2,989 from $2,650. Meanwhile, the median price for studios plummeted 13.7 percent, to $1,783 from $2,066 and the median for one-bedrooms fell 12 percent, to $2,200 from $2,500.