Average Manhattan rent hits another record high of $5,113

The average rental price in Manhattan hit another all-time-high last month, as higher mortgage rates and home prices drive potential homebuyers into rentals.

Average rents in the nation’s most densely populated county rose to $5,113 in July, a 28 percent increase from a year ago, according to a report on Thursday from real estate brokerage firm Douglas Elliman.

Median rent, which is a better reflection of the prices a typical renter would face, hit $4,150, a 2.5 percent increase from June and 29 percent bump from last year.

Most Manhattan landlords require annual income of 40 times the monthly rent, meaning renters would need to bring home a salary of at least $166,000 to secure the median apartment.

The average rental price in Manhattan hit another all-time-high last month, as higher mortgage rates and home prices drive potential homebuyers into rentals

High demand for Manhattan apartments is keeping the market tight, with July’s listing inventory for rentals down 44 percent from last year’s level.

The typical apartment spends just 26 days on the market before being snapped up by a renter, down 48 percent from June and less than a third of the standard turnaround seen a year ago.

The median rent for a studio apartment stood at $3,000, up 23 percent from last year, while median rent for a one-bedroom rose 30 percent on the year to $4,000.

Two-bedrooms had a median rent of $5,000 in July, and three-bedrooms typically went for $6,500, increases from a year ago of 22 percent and 18 percent respectively. 

In recent months, rising mortgage rates and sky-high home prices have deterred many prospective homebuyers from the market.

Last week, the average 30-year mortgage rate was 4.99 percent, down from recent highs but still nearly twice the rate seen in January, before the Federal Reserve began raising benchmark rates to fight inflation.

Meanwhile the national median home price jumped 13.4 percent in June from a year earlier to $416,000, the highest on record, according to the National Association of Realtors. 

One study found that San Jose leads the nation in unaffordable homes, with the median home priced at $1,875,000, requiring a salary of at least $330,758 to afford the expected monthly payments of $7,718

National home prices increased 19.7 percent in May from a year ago, after surging 20.6 percent in April

According to a report from Realtor.com in late July, renting is now cheaper than buying a starter home in three-quarters of the top 50 US cities — a stark change from a few months ago, when buying typically cost less. 

Median rent hit a record high of $1,876 in June, up 14 percent from a year ago — but that still represented a monthly savings of $561 from the monthly cost of buying a first home, which jumped to $2,437, the report found.

As recently as January, buying a starter home was the cheaper long-run option than renting in more than half of US cities.

In New York City — across all five boroughs, not just Manhattan — the median rent of $2,989 compared to the median monthly home payment of $5,081, meaning the typical renter paid $2,092 less every month.

During the COVID-19 pandemic, many New Yorkers fled the city, and rental prices plunged as desperate landlords tried to lure willing renters into their units with special deals.

Many property management firms offered deep discounts or sweeteners, including multiple months of free rent, to entice renters to sign new leases.

As rental prices broke records in May, New Yorkers also began sharing videos of long lines stretching across street corners of people looking to view some of the more affordable apartments in the city

Real estate consultant Jonathan Miller, who prepared the Elliman report, said last month that once the vaccine came out and disrupted the narrative that the city was ‘unsafe,’ not only did some residents choose to return, but so too did other New Yorkers who had been driven out by previous rent hikes looking to take advantage of the new discounts.

Miller added that as mortgage lending remains tight, there are fewer people able to qualify for homes in the suburbs around the city, forcing people to join the crowded pool of apartment hunters in the city.

‘More and more people have been pushed into the rental market, bringing up competition and rental prices,’ Miller explained.

As rental prices broke records in May, New Yorkers also began sharing videos of long lines stretching across street corners of people looking to view some of the more affordable apartments in the city. 

The competition for apartments is only exacerbated by a decrease in supply, as the listing for apartments in Manhattan continue to remain low. 

In July, the listing inventory of 6,669 was far below last year’s level of 11,794, according to the Elliman report. 

The vacancy rate of 2.08 percent was also well below last year’s rate of 6.07 percent.

Discounts have become almost non-existent, with the average discount from listing price at 0.2 percent, down from last year’s rate of 1 percent.