Apartment Leases Surge in Manhattan, Rents Level Off
Rising mortgage rates keep pushing would-be home buyers into rentals.
Demand for apartment leases in Manhattan surged in February while rents appear to be leveling off at near-record levels.
Demand for new leases also surged in Brooklyn and Queens last month, but rents ticked down in the outer boroughs, according to the latest Elliman Report.
New leases were up 17.3%, 38.6% and 31.7% in Manhattan, Brooklyn and Queens, respectively, in February, in comparison to January’s results. The median rental price in Manhattan was $4,095, virtually unchanged from January’s median of $4,097.
While Manhattan’s median rents are leveling off, they remain within striking distance of all-time high rates that were achieved last July, which topped $4,150.
Renters remain skeptical that Manhattan rents will start to descend—one key indicator shows that sentiment is leaning in the other direction: the market share of two-year leases reached 50.4% as tenants pivoted to lock in rents as expectations of higher rental prices returned, Elliman reported.
Median rents in Brooklyn dropped 2.8% last month, to $3,400 from January’s level of $3,499. Median rents in Queens—Elliman tracks Northwest Queens, which is where most of the condos and coops are—dipped 3.9%, to $3,238 from $3,369 a month ago.
“Prices remain at or near record highs as new leasing levels surge and rising mortgage rates push would-be home buyers into the rental market,” said Jonathan Miller of Miller Samuel, author of the Elliman Report.
The vacancy rate in Manhattan remained unchanged in February at 2.52%, almost twice what it was a year ago but still below the decade average of 3.04%
“The market share of bidding wars, a proxy for rents above the landlord’s asking price, rose to 18.4%, returning to levels seen during peak leasing last summer,” Miller noted.
Luxury median rent—representing the top 10% above the $8,395 threshold—came in at $11,000, remaining at the third highest level on record for the third consecutive month.
Sky-high luxury rents are contributing to a new phenomenon the US that emerged during the pandemic: the millionaire renter.
More than 2.6 million high earners are living in rentals across the US, according to RentCafe. The number of renter households with incomes of more than $1 million reached a record high of 3,381 in 2020, a RentCafe analysis shows, triple that of 2015.