It’s not a fun time to enter Manhattan’s rental market.
The average rent hit $3,778 a month — the highest in two years — according to Prudential Douglas Elliman’s second quarter Manhattan rental report.
It found the largest gains in studios, where median prices rose 15 percent to $2,395 from a year ago. One-bedrooms saw median prices rise 8.5 percent to $3,250 — driving affordability lower, the report noted.
At the same time prices are rising, inventory is up 27.9 percent to 5,660 apartments over the past year. But as soon as apartments are listed, they’re snatched up, the report found, as the number of days units spent on the market neared 17-year lows.
“You have people moving to the city who are probably having sticker shock,” said Mark Menendez, executive vice president, director of rentals at Elliman. “A $2,500 studio?” — he said, referring to the average studio rental price — “It’s absolutely shocking.”
Menendez suggested that people who received concessions a year ago, when landlords were still doling out things such as a free month’s rent, were finding their apartments were unaffordable once those concessions were not part of their lease renewal.
“People are seeing 10, 20, 30 percent increases in their rent after a year,” he said. “It’s creating a new generation of renters out there.”
More renters are downsizing or moving into shares, often turning a living room into a second bedroom, Mendendez said, noting that the practice was no longer limited to recent college grads.
The vacancy rate, while still low, increased to 0.97 percent from 0.72 percent the year before — an unusual phenomenon in the frenzied summer rental season — to the second quarter report from CitiHabitats released Thursday.
“One hypothesis for the vacancy rate increase in June is that home seekers who have the option may be waiting for the slower fall months to make a move,” said Gary Malin, CitiHabitats president.
He also noted that perhaps more renters are transitioning into home ownership, since “starter” apartments — studios and one-bedrooms — are making up a larger share of sales.
CitiHabitat’s report found that last month, the average Manhattan apartment rented for record $3,443 a month — the highest price since the real estate firm started tracking data 10 years ago, topping 2007’s all-time high of $3,394 a month.
“If you don’t need to move in July and can wait until September, people are saving money and waiting,” Malin said. “If you wait long enough, you might see some prices drop a little.”
Menendez, however, wasn’t sure the commonly-held real estate cycles hold true in this market.
“I don’t think rents will fall back, but level out,” he said.
His philosophy for the current rental market: “If you snooze, you lose because whatever you like, there will be 10 to 15 people behind you liking it, too.”
The other advice he had for renters was the need for “compromise.”
People with their heart set on the West Village, where studios average $2,437 might do better looking in the East Village, where studios average $1,963, he suggested.
“For close to a $400 difference, you’re still in a cool Downtown neighborhood,” he said.
Or better yet, he encourages his brokers to show potential renters neighborhoods they crossed off their list because sometimes have no choice but to move.
“If they have to live on the Upper East Side” — where studio rents average $1,853 — “instead of the West Village, then they’re going to do it,” Malin said. “There’s a breaking point for everybody.”