As many Americans finally escape the consistent rent rise, some parts of the country aren’t quite getting the message. In Florida, rents have largely been stabilized following some of the worst rental inflation on record. Yet New York City and its boroughs have painted a vastly different picture of their situation.
Manhattan has been leading the way for the city, per a report from Douglas Elliman, a brokerage, and Miller Samuel, an appraisal and consultant firm. With a 2% hike from February to March and a 12% hike year-over-year, the average rent for an apartment in Manhattan is $4,175, and previously the record was set at $4,150 just in July 2022.
Breaking things down further, a studio apartment came in at a “bargain” price of $3,190, with a 16% jump from the year before. A one-bedroom rose 9.6% to $4,150, and a two-bedroom unit soared up 18.6% to $5,680. This kind of increase isn’t unusual for the city and keeps pace with other booming cities like Miami, Tampa, Austin, TX, and even Boise, ID.
However, Jonathan Miller, president and CEO of Miller Samuel, cautions against looking at this like the rocket ship for rents of 2021. It isn’t a rocket ship. “It is just creeping higher, and every so often it creeps high enough to reach a new high…It is part of a long process since the summer. There was expectation that rents would fall and that didn’t happen. Rents peaked last summer, and every month since then, they’ve been moving sideways. With a modest increase, it was just enough to set a new record.”
With mortgage rates doubling in the last year and making ownership in Manhattan even more of a pipedream than usual, people have had little recourse but to rent. This prime opportunity to raise rents is one that developers rarely get at this level, and they have taken full advantage of it. In March, new leases were up 15.4% from 2022, and 20.5% more leases were inked than in February.
“The drive in more leasing activity is parallel in the rise in mortgage rates that has continued to push people into the rental market. Not just the unaffordability, but also the uncertainty,” explained Miller. He’s not wrong, either. The fear of missing out or FOMO has people across NYC scrambling to find any deal they can swing. For many, this FOMO has meant taking on more significant payments or longer train rides than before.
One unusual part of this increase has been the number of properties on the market. After spending most of 2022 scraping the bottom of the barrel, they saw a 40.5% surge in inventory over last year. This, in turn, got more leases going and helped stabilize the market like, Miller talked about. Yet the inventory is still 10% below average for this time of year. With many taking a two-year lease in March, Miller believes they expect another market jump.
“If you look at market share of two-year leases, 56.3%, that is the highest since June of 2021 during the rocket ship of rental activity. What that says to me is that the consumer expects rents to rise going forward and they are locking in rent now as a protection.” Miller’s expectations that consumers are more intelligent than before aren’t surprising.
After COVID restrictions ended, many people reevaluated their lives. With many Americans fleeing the liberal sanctuaries like NYC and San Francisco for conservative ran freedom hubs like Florida and Idaho, it was natural their market would swell. People saw the violence the left would use to force cooperation with their policies, and they had enough of it.
If the liberals keep it up, they won’t have enough conservatives to squeeze for more money. Instead, they’ll only have each other, and neither makes enough on their liberal jobs to squeeze the other for more money.