by An Apartments For Rent sign in front of a building in the East Village neighborhood of New York, USA
Gaby Jones | Bloomberg | Getty Images
Rents in Manhattan rose 2% in November, shattering hopes of a slowdown in prices and forcing many renters to give up or downsize their leases, according to realtors.
According to a report by Douglas Elliman and Miller Samuel, the median rent for an apartment in Manhattan was $4,033 in November, up from $3,964 in October. Average rent, which is often distorted by luxury sales, is down slightly over the month but is still up 19% year over year, hitting $5,249 in November.
The increases continue to defy predictions that sky-high New York rents would fall after the summer and give renters some relief after rents hit all-time records. While rents are falling in many parts of the country, rents in New York remain stubbornly high and the number of unlet or vacant apartments low.
“Rents aren’t falling as fast as many hope,” said Jonathan Miller, CEO of Miller Samuel.
The rise in New York rents is also putting pressure on headline inflation, as rents are a large component of inflation indices and New York is the nation’s largest rental market.
Rents in Manhattan are so high that many renters are beginning to shy away from the prices — they’re either moving out of town or looking for smaller, cheaper rentals. The number of new leases signed in November is down 39% from October, the biggest drop since the pandemic began in 2020, Miller said.
Agents and real estate experts say landlords went too far when they started extending leases signed in 2020 and 2021, often demanding rent increases of 20% or more. Since landlords generally demand an annual income of 40 times the monthly rent from their tenants, the rising average rents have pushed many tenants to their limits.
“There’s a stalemate,” said Bess Freedman, CEO of Brown Harris Stevens. “In 2021, rents have skyrocketed and now renters are stuck. People won’t sign new leases at these prices, they’re just too expensive. Landlords need to start being smarter.”
Freedman said that one of her friends faced a 30% rent increase on a recent lease extension. “She felt like she was being outdone,” Freedman said.
Vacancy rates remain low, putting little pressure on landlords to lower rents any time soon. The vacancy rate was 2.4% in November — still below Manhattan’s historical norm of about 3%, according to Miller Samuel.
There are some early signs that landlords could start capitulating in 2023. Landlord concessions – which may include a month of free rent and other offers – rose to 16% in November from 13% in October. Real estate experts say the big drop in new rentals, if it continues, will ultimately force landlords to meet renters at a lower rate.
Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens, said landlords are overly optimistic about expecting rent increases of 20% or more, and many are now starting to lower rates or make more concessions to keep their dwellings filled.
“A lot of landlords get stuck with inventory and don’t get their raises, so they lower the price,” he said.
