The average monthly rent — which is the sum of all rents divided by the number of rents included in the data — was even higher at $5,058 in June. That’s up nearly 30% from a year ago and marked the first time the average has gone above $5,000 a month.
Rents were pushed higher, in part, by would-be home buyers who decided to put their search on hold and rent instead, said Jonathan Miller, president and CEO of Miller Samuel.
“You have more people pivoting, they were on the margin to buy a home, but now with mortgage rates spiking, they are in the rental market,” said Miller. “The market is already tight. This makes it tighter.”
Those renters typically have more money to spend and often need a larger, more expensive family apartment, pushing the average higher.
The average price for a three-bedroom apartment in June was $9,469 a month, up from $7,394 a year ago. Meanwhile, the average price for a one-bedroom was still under $5,000 at $4,278, which was up from $3,475 a year ago.
And little relief is expected for renters in the near term, said Miller.
“New leasing activity in Manhattan doesn’t peak until the end of the summer,” said Miller. “Barring a recession, we’re expecting a seasonal increase in demand, putting more upward pressure on rents.”
Both the median and the average rent prices have more than recouped the losses seen during the pandemic, according to Miller, with June’s median rent up 14% from June 2019 and the average rent up 19% from pre-pandemic levels.
New leases grew month-over month in June for the fifth month in a row and the vacancy rate remained under 2% for the seventh straight month. A year ago, the vacancy rate was close to 7%.
The sweeteners landlords offered renters to take New York apartments when the market fell off a cliff during the pandemic are now scarce, the report found. Concessions were offered on only 15% of new listings, down from 34% a year ago.
Bidding wars increased for the fourth straight month, especially in the luxury market.
How long will prices continue to climb?
“Nothing goes up forever, but in the near term we are poised for more gains,” said Miller.
Looking toward the fall and into next year, he said there will be an affordability threshold that renters will come up against. But even then, prices are more likely to level off than drop.
“As things are now, I’m not sure what causes rents to drop,” he said. “But a recession is the asterisk in the conversation. The Fed is taking a baseball bat to the economy and there are more rate increases in store. There is still a tremendous amount of uncertainty.”