New York City rents are shattering records as high interest rates and low apartment supply drive up prices.
The median monthly rent in New York was $4,400 in July, up 6% compared to the same month a year ago, according to a report from Miller Samuel and Douglas Elliman. The average rental price jumped 9.3% to $5,588 per month.
And that's despite a population that declined during the COVID-19 pandemic. The number of people living in Manhattan dropped by 400,000 between June 2020 and June 2022, according to U.S. Census data.
"There's a huge shortage of supply in New York," said Ran Eliasaf, founder and managing partner of Manhattan-based real estate private equity firm and debt fund manager Northwind Group. "That's the main reason rents are spiraling out of control, and this will be the trend for the next few years."
The way to gain housing supply is to shorten the entitlement process and create incentive packages that will entice developers to build, Eliasaf said. And it's especially crucial now that the city is starting to grow again.
"We're expected to add 100,000 people in the next five years, but we're only adding 5,000 units per year," he said.
Ripple Effect Spreads To Neighboring Cities
Many neighboring cities aren't much more affordable than New York City. Jersey City, New Jersey, for example, has the second-highest rents in the country behind New York City, with the median asking rent for a one-bedroom apartment leasing for $3,900 per month, according to rental marketplace Zumper. That's up 3.2% from May and 8.8% year over year.
In neighboring Hoboken, New Jersey, some landlords have raised rents more than 25% — despite a state law that's aimed at keeping rent increases to an amount that's not considered "unconscionable or unreasonable."
But one New Jersey city is becoming more attractive as renters are priced out of New York. While the median rent in Newark, New Jersey, is up 11% in September compared to a year ago, at $1,500 per month or a one-bedroom apartment, according to Zumper, it's far more affordable than neighboring communities. Most Newark residents — 77% — rent their homes, according to Zumper.
Northwind recently announced it provided a $35 million first mortgage to 440 Elizabeth NJ Urban Renewal LLC loan secured by Carmel Towers, a 25-story, 216-unit apartment building in Newark. The property is undergoing a comprehensive renovation that will upgrade it into a modern apartment building geared toward workforce housing.
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This article Empire State Of Rent: Navigating The Sky-High Costs Of NYC Living originally appeared on Benzinga.com
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