Sky-high rents in Manhattan and Brooklyn are meeting continued resistance, as the pace of median rent increases slows and an increasing number of renters are choosing to move instead of renewing their leases, reports on November’s rental market show.
In Manhattan, rents, which reached a median of $3,195 in the borough last month, were propelling renters to the sales market, said Jonathan Miller, president of the real estate appraisal and consulting firm Miller Samuel and author of Douglas Elliman’s November rental report.
“The pace of increase [in rents] has slowed in the last two months, year-over-year,” Miller said. “We could be reaching some sort of threshold; we’re getting more resistance to the rising rental market.”
The factors propelling the resistance include record-low mortgage rates, which are drawing more renters to the purchase market, a phenomenon further substantiated by the even weaker studio and one-bedroom markets.
The median rental price for a studio in Manhattan per the Elliman report was down 3.1 percent, to $2,300 in November, and for a one-bedroom that figure was $3,229, up 0.9 percent year-over-year. The median price for a two-bedroom was $4,595 in November, up 1 percent year-over-year, while three-bedrooms were down 0.6 percent, to a median of $7,347.
“Prices are starting to soften a bit which is natural for this time of year,” said Gary Malin, CEO of Citi Habitats. While borough-wide, the vacancy rate for November was 1.38, down slightly from the 1.39 percent vacancy rate the previous month. By Citi’s account, overall rents dropped slightly, to $3,368, $76 fewer dollars per month than in October. Prices dropped across all apartment categories, according to Citi’s report, which compiles data from the firm’s own transactions.
The Financial District had the biggest price drop, with a 12 percent decrease overall, a statement from Citi said. The average price for a studio in the area was $2,037, while the average for a one-bedroom was $3,115, in November. Malin said he did not believe the drop was due to the Hurricane Sandy’s devastating effects on the neighborhood, but said that those displaced by the storm were possibly a contribution to the lowered vacancy rate overall.
Meanwhile in Brooklyn, inventory remains depleted, but renters continue to seek greener pastures in the midst of surging rents. “Rents in Brooklyn are high and rising and there’s nothing too new there,” Miller said. “But what is interesting, is there is resistance, because you can see the number of new rentals are up 59 percent,” meaning tenants are looking, and leasing, elsewhere as rent on their current apartments rises.
The median price for a rental apartment overall in the borough was $2,698, up 10 percent from $2,450 in November 2011, according to the Elliman report.