The median rent in Manhattan reached $4,000 in May, the highest price ever reported by the brokerage Douglas Elliman. This was a nearly 2 percent increase from April and more than a 25 percent increase from May 2021. The average rental price in Manhattan was just under $5,000 in May.
The median rental price in Brooklyn also increased to $3,250 in May, an 18 percent rise from the previous year.
Soaring rent rates in New York City have worried residents for months, after people left the city in droves and prices plunged at the beginning of the pandemic. The recent rise has been spurred by more people returning to the city in recent months, high mortgage rates and remote work that justifies paying higher rents for some tenants who have put more value on their home spaces.
At the same time, following the expiration of New York’s eviction moratorium, rising eviction rates in combination with the lack of affordable rents might further exacerbate dislocation. The price threshold reached in May suggests that rents will continue to stay high, at least through the summer, which many real estate agents consider to be peak rental season. But long term, brokers say, renters will not be able to keep up and rates will have to even out.
The influx of renters to the city is the primary factor in the increased demand for apartments. “I’m seeing people who left the city for the pandemic coming back for the first time. And if you throw into the mix the many new hires and recent graduates that are looking for places right now, this is what happens,” said Keyan Sanai, a real estate agent at Douglas Elliman.
Rising mortgage rates are also incentivizing people to rent apartments in lieu of buying property right now. “This tips a portion of would-be home buyers into the rental market, which is already tight,” said Jonathan Miller, of Miller Samuel, the appraisal company.
Mr. Miller added that remote work setups have allowed people to rationalize paying more in rent, as they spend more time where they’re living. “People are living where they really want to live, which can also be a driver for paying more than they’re used to paying,” he said.
As a result of the rent spikes, those looking for apartments are giving up key features or expanding their search beyond their dream neighborhoods. “People are looking at different areas that are not as prime,” said Hal Gavzie, the executive manager of leasing at Douglas Elliman. “They’re making more sacrifices. If they were looking for something with laundry in the building, they’re realizing that’s not happening anymore.”
“Usually, somebody that’s looking in NoHo is not looking in Kip’s Bay, and somebody that’s looking in Gramercy is not looking in Battery Park City. But people are compromising more and more on location,” Mr. Sanai said.
Eventually, rents will either have to come down or reach a stasis, said Mr. Miller. “The best thing for high housing prices is high housing prices,” he said. “When the consumer can’t afford to pay, they go somewhere else.”