According to Manhattan-based Prudential Douglas Elliman, New York City’s residential rental market performed well in the fourth quarter of 2011.
All rental price indicators showed gains over prior year quarter. The median net effective rent (face rent less landlord concessions) jumped 9.5% to $3,121 from $2,950 in the same period last year. The year-over-year-gains were consistent across all rental price indicators as no apparent shift in apartment mix was responsible for the increases.
The 2-bedroom and 3-bedroom rental market showed the most gains in activity. Market share for studio and 1-bedroom rentals showed 4.9% and 10.7% year-over-year growth but lost market share to larger apartments as the sharp decline in mortgage rates pulled some potential renters into the sales market. The 2-bedroom and 3-bedroom markets outpaced their smaller counterparts increasing 14% and 18.1% respectively over the same period as well as gains in market share.
Despite the general rise in rental prices over the year, listing inventory expanded. While the rental listing inventory of 4,721 remained 10% below the five-year average of 5,245, inventory has been rising. The number of apartments available for rent was up 22.2% from 3,862 in the prior year quarter and has edged higher for four consecutive quarters. However, pressure is expected to continue on prices as long as credit conditions for mortgage lending remains tight.