New York’s wealthiest renters drive prices to new records

Market’s high and low ends diverge as inflation weighs on low-income tenants

(Illustration by The Real Deal; Getty)
(Illustration by The Real Deal; Getty)

In a literal tale of two cities, New York rents last month revealed the widening gap between the haves and have nots under the stubborn weight of inflation.

Among Manhattan’s wealthiest, rents notched a series of new highs.

The median price for a luxury unit with concessions hit a record $16,119, according to a report by appraisal firm Miller Samuel for Douglas Elliman. The average and median rent for a top-dollar unit also rose to records of their own.

Those gains pushed the entry threshold for the luxury market to a record $9,000, signaling a $500 gain over the previous month.

In all, the average rent for the top tenth of Manhattan apartments has surged over 20 percent since July.

On the other end of the spectrum, rents at Manhattan’s lowest-priced properties have slipped 5.5 percent in the same period.

Units in the bottom third of the market saw prices drop 1.7 percent in October to $2,550.

“The October results do continue to speak to a polarized market,” report author Jonathan Miller said.

That K-shaped split likely derives from inflation’s uneven impact. Households with a higher median income are better positioned to absorb rising costs, whereas lower-income families feel the pain more quickly.

Throughout much of the pandemic, renters, stuck inside and bolstered by stimulus checks, could grow their savings if they maintained their earnings. But after nearly a year and half where wages have not kept place with inflation, lower-earning tenants no longer have the nest egg to cover rising costs.

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The Consumer Financial Protection Bureau reported in June that the credit card debt of lower-income renters, a measure of financial insecurity, had surged 20 percent over June 2019 levels.

Last month, Miller acknowledged that given those spending limitations, rents may have risen as high as middle-and-lower income tenants can bear.

All told, though, those conflicting price movements pencil out to stabilizing rents.

Manhattan’s median rent fell by just 0.3 percent in October from September, a sign that the pace of month-over-month declines has slowed since August.

“When we drill down, the strength of the top 10 percent is keeping the overall market moving sideways,” Miller said.

That trend applies to Brooklyn, as well. The median rent for a unit in the top tenth of the market jumped 7.6 percent month over month to hit $7,500 in October. Meantime, the median rent in Kings County was unchanged.

Luxury rents are bolstering prices overall, but Miller cautions that “without luxury, the remainder is slipping only modestly in aggregate.”

That’s likely attributable to the overall health of the economy: Miller has forecast that rents won’t fall unless a recession drives up joblessness.

Figures reported last Friday showed despite the Fed’s incessant rate hikes, the unemployment rate in October rose a mere .02 percentage points to 3.7 percent, just above a 50-year low.

“Unemployment has been remarkably resilient,” Miller said last month. “In my view that would be the force that would make rents more affordable.”