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The average apartment rent in Manhattan has risen more than 20 percent over the 12 months ending 31 July, climbing to $5,113, according to brokerage firm Douglas Elliman.
In July 2021, the average rent was $4,009.
Studio apartment rents averaged $3,191, one-bedroom flats $4,277, and two-bedroom units $5,810.
Landlords’ concessions, such as free redecorating or a month’s free rent, were involved in 12.8 of leases, the lowest proportion in five years.
Median net effective rents for luxury apartments rose for the 15th consecutive month to the second-highest ever recorded, with bidding wars figuring in one of every four new leases signed.
The net effective median rent for July, which factors out concessions from landlords, reached $4,100, the first time on record it surpassed $4,000. It was $3,995 in June.
Rents also moved up 1.6 percent in Brooklyn in July to $3,883 and added 2.2 percent in Queens, reaching $3,426.
“Elevated rents may be here at least until the Federal Reserve stops pushing interest rates higher [and] tipping would-be buyers into the rental market,” CEO Jonathan Miller of appraisal firm Miller Samuels, told Yahoo Money.
The Fed’s “efforts to slow inflation have shifted the housing market from sales to rentals,” he added.
Nationwide, the median rent edged up to $1,876, the 16th consecutive month of record-setting rates.
The figure has been driven higher since private equity firms and real estate trusts swooped into the housing market during the COVID War as households migrated from cities to suburbs and beyond.
Investors—defined as people who will not live in the homes they buy—took 18.4 percent of homes sold in 2021’s fourth quarter, a 50-percent increase year on year, Redfin.com reported.
TRENDPOST: It is not only the Fed that is tipping the market from purchases to rentals.
As we said in “Median Home Sale Price Rises 14.2 Percent in Second Quarter” in this issue, private equity firms, real estate trust, and other investors are cashing in on the biggest boom in housing since the suburban migration in the ‘50s and ‘60s.
These investors have scooped up hundreds of thousands of single-family homes and turned them into cash cows, milking rent from families that have tried to buy a home but were unable to.
Those unable to afford premium rents for single-family houses are turned back into the apartment market, flooding it with new tenants and enabling landlords to hike rates high enough that it becomes harder and harder for those renters to save enough to make a down payment on a home.
Now more young people are coming back to cities, not only for their work opportunities but also for the vibrancy of cities’ cultural and nightlife.
All of these factors will combine to keep apartment rents in Manhattan and other iconic American cities rising toward the stratosphere for the foreseeable future.
What may bring prices down are events such as rising crime rates, economic collapse, a 9-11 style terror strike or other wild card events.