The high demand for rentals following the downturn has driven New York City rents steadily upward over the last several years, but there are now signs that the trend could be slowing down, according to the New York Times. Rents in Manhattan dropped to an average price of $3,368 per month in November, $76 less than in October. Rental prices have now dropped for three consecutive months, according to Citi Habitats data cited by the Times, although the rental market is generally softer in winter months.
And year-over-year, median rents are only 1.5 percent higher, compared to the 10 percent increase in rents posted two years ago and the 15 percent jump of three years ago. Inventory has also grown, with 13,618 Manhattan apartments for rent in November, a 21 percent increase over November 2011, according to Streeteasy data cited by the Times.
“The market is at an all-time high,” Gary Malin, president of Citi Habitats, said. “How much higher can it go in an economy that is still weak in many sectors? To think that the rental market could keep having record-breaking growth is just not realistic.”
Other factors that are slowing down rental price growth are the greater number of first-time homebuyers entering the market as low interest rates and affordability remain enticing, and resistance from tenants, who are willing to leave their homes rather than pay higher rents.
“We have clearly seen a wave of people trying to become buyers, and this is taking the steam out of rentals,” Jonathan Miller, of Miller Samuel, said. “There hasn’t been a flood of buyers, however, because lending standards remain tight. All things being equal, if lenders weren’t being so irrationally conservative, you would have a housing boom at the expense of the rental market.” [NYT] —Christopher Cameron