Moving Day in Manhattan? Median Rents Tumble, Marking a Potential Turning Point

According to a research issued on Thursday, rentals in Manhattan decreased for the first time in more than two years as the number of vacant apartments increased and tenants refused to accept price reductions.

First Year-Over-Year Decline in Median Prices Signals Shifting Dynamics

In November, the Manhattan median rent dropped by 2% to $4,000 from $4,095 as per a research by Douglas Elliman and Miller Samuel. The research states that although the fall is small, it is the first year-over-year decline in median prices in 27 months.

Being the largest rental market in the country, Manhattan's falling rents have significant effects on both the housing market and total inflation.

Although both renters and economists had been forecasting a decrease in Manhattan rentals for more than a year, a combination of limited availability and great demand drove prices to all-time highs throughout the summer and kept them there into the early fall. Brokers now report rapidly declining demand.

Sanai claimed that rather than lowering listing rates, a lot of landlords are covertly providing benefits like a free month's rent. He just listed a one-bedroom apartment in midtown for $4,700 per month. The tenant was able to get concessions through negotiations, which resulted in a monthly rent reduction of $3,900.

Miller Samuel and Douglas Elliman report that from 12% in October to 14% in November, there were more units giving reductions.

According to Sanai, the number of tenants seeking for rental properties has also decreased swiftly. His email in September was overflowing with queries from prospective tenants looking to list in a high-end building where apartments cost $7,500 a month. When a comparable device hit the market in October, no one was contacting the seller. The velocity quickly decreased.

Naturally, Manhattan rentals remain the highest in the nation and have increased by 11% since the epidemic began. Even if rent in Manhattan is down 2% from the previous year, it is still $5,150 per month on average.

Miller Samuel and Douglas Elliman state that inventory is still historically tight, just below the typical 3% level.

Brokers Sound Caution

However, brokers warn prospective tenants that prices may drop far into the following year. It is said that employment losses in Manhattan's IT and finance sectors will reduce the city's desire for young, fresh hires. A decrease in mortgage rates will also begin to improve the appeal of the real estate market, attracting more renters to become purchasers.

In October, Not only is Manhattan experiencing a slowdown. September saw a slowdown in the median rent levels in Brooklyn and Northwest Queens, two New York regions that had seen record-high rental prices this year, while their corresponding leasing inventories increased.

Not just the New York market is exhibiting indications of a downturn.

According to a CoStar research, the multifamily vacancy rate increased by 0.1 percentage point to 6.8% over the last 90 days, reflecting a 2.1 percentage point rise in demand from a historic low of 4.7% set in the third quarter of 2021.