According to a report, published on July 26 by StreetEasy, New Yorkers are facing the “toughest market in a decade” with rents soaring by over 20 percent in some buildings as landlords attempt to recoup losses incurred over the pandemic.
StreetEasy says that New Yorkers can expect residential rental prices to climb even further over the summer driven by historically low inventory and “unusually tight rental market conditions.”
Rental demand in the Big Apple has remained strong as people gradually return to the city following a spike in outbound migration during the pandemic. Rental concessions, a common sight during the pandemic, are now nowhere to be seen as landlords remain confident that demand will continue to remain high.
Many renters who call Manhattan home are now seeking more affordable rents in areas such as Brooklyn and Queens.
Available rental units in the second quarter rose by 14 percent to 65,697 units available, which would normally create favorable market conditions for renters, however, according to StreetEasy, “many of these rentals are expired pandemic-era deals that re-entered the market with significantly higher asking rents.”
During the pandemic, many landlords offered generous incentives to keep their units filled including steep discounts and free months of rent; deals, StreetEsay says, have now expired.
According to the outfit’s analysis of repeat rentals, the data is suggesting that tenants are being priced out of pandemic-era discounted leases, which generated roughly 34 percent of available residential inventory in Q2 of 2022.
Asking prices for rents, compared to listed apartments in 2020 or 2021 have increased a whopping 20.4 percent. “In comparison, rentals that were listed in 2018 or 2019 and relisted in Q2 2022 showed a rent increase of 4.5% per year,” StreetEasy said.
The massive rent hikes currently being experienced in the city mean that New Yorkers are shouldering nearly four times an increase compared to previous years, which according to StreetEasy “can mean the difference between losing and keeping their current home.”
Manhattan simply unaffordable for many
In Manhattan, rental inventory soared quarter-over-quarter by 33 percent to 31,412 available units. “However, about 44% of this inventory was likely made available due to tenants being priced out of their no-longer-discounted apartments,” StreetEasy explained.
Manhattan’s median asking rent has risen to $4,100 as of the end of the second quarter, the highest StreetEasy has ever seen and equivalent to 55 percent of Manhattan’s median household income.
As renters seek more affordable rents in the other boroughs, Queens saw its rental inventory decline for the fifth consecutive quarter which is putting upward pressure on rental prices in the relatively affordable borough.
“The number of available units in Queens fell 9% to 8,984 from the previous quarter,” StreetEasy wrote, adding that, “The median asking rent in Queens rose to $2,600 by the end of Q2, a 13% jump from the end of Q1.”
In Brooklyn rental inventory rose by roughly five percent to 23,130 in Q2 from Q1 but is still significantly down, 48 percent, since Q2 in 2021.
Brooklyn rental prices continue on an upward trend as well. According to StreetEasy, asking rents have climbed to $3,200 as of the end of Q2, up 12 percent from Q1. “$3,200 is equivalent to 60% of the monthly median household income for the borough,” the report reads.
Low- to moderate-income New Yorkers impacted the most
“Elevated rent burdens pose a severe challenge to low- to moderate-income New Yorkers,” the report says.
Typically, communities want to see the threshold for rent being around 30 percent of household income; however, according to StreetEasy data, in Brooklyn and Manhattan this ratio was well above 50 percent, meaning households have much less available at the end of the month for other necessities like food and medical care.
In Brooklyn the median household income going towards rent is 60 percent. In Manhattan this number drops slightly to around 55 percent and in Queens it is roughly 45 percent, still considerably higher than the 30 percent threshold.
“Unfortunately, the recent improvements in rental inventory has been largely driven by households being priced out of increasingly unaffordable rentals,” Kenny Lee, the author of the report wrote.
Lee believes, as interest rates rise, more and more renters who aspire to own their own homes will be again priced out of the market, resulting in more demand for rentals and continued upward pressure on asking rents.
He sees rent increases continuing through to at least the end of summer and recommends that renters, looking for lower prices, “wait a few months and broaden the scope of their search.”