Nationwide rents are nearing $2,000. For New Yorkers, that looks like a deal.
In Manhattan, the average rent topped $5,000 for the second straight month in July, increasing 1.1% to $5,113 from $5,058 in June, according to a July 2022 report by Douglas Elliman. A year ago, the average rent was over $1,000 lower at $4,009.
The net effective median rent — which incorporates landlord concessions — surpassed $4,000 for the first time to $4,100 in July. That's up 2.6% from $3,995 in June.
The rent gains reflect a broader trend in the rental market across the U.S. that has gotten increasingly competitive.
“Elevated rents may be here for a while, at least until the Federal Reserve stops pushing interest rates higher, tipping would-be buyers into the rental market,” Jonathan Miller, president and CEO of Miller Samuels Inc. a real estate appraisal firm, told Yahoo Money. “Their efforts to damage the economy to slow inflation have shifted the housing market frenzy from sales to rentals.”
The average studio apartment in Manhattan rents for $3,191, a one-bedroom averages $4,277 and a two-bedroom averages $5,810.
The market share of landlord concessions — such as one month of free rent — fell to 12.8%, marking the lowest level in almost five years.
In one bit of good news, the vacancy rate surpassed 2% for the first time in eight months, inching up to 2.08%.
On the luxury side, data from the Douglas Elliman report showed in Manhattan that the net median rent for luxury apartments increased year over year for the 15th consecutive month, with the net effective median rent surging year over year to the second-highest on record. Bidding wars accounted for 1 out of 4 new luxury leases.
Yes, there are bidding wars for rentals.
Moving to Brooklyn or Queens will soften the sticker shock some. The average rental in Brooklyn was $3,883 in July, while it was $3,426 in Queens, according to Douglas Elliman. That’s up 1.6% and 2.2%, respectively, from July.
Although rents in New York may be among the highest in the nation, cities across the country are seeing rapidly increasing rents.
Nationwide rents increased with the median rent at $1,876 in June — the most recent data available from Realtor.com — marking a new record for the 16th straight month.
One reason behind rental increases is the rise of private equity and real estate investment trusts (REITs) buying for-sale single-family properties, pushing would-be homebuyers back into the rental market, creating more demand.
A Redfin analysis showed real estate investors bought 18.4% of homes sold in the fourth quarter of 2021, up from 12.6% a year earlier.
“The supply shortage is also an advantage for landlords as many people who can’t find a home to buy are forced to rent instead,” Sheharyar Bokhari, an economist at Redfin, said in the report. “Investors are also increasingly interested in higher-priced properties, partly because they’re betting on rising demand for high-end rentals.”
Ronda is a personal finance senior reporter for Yahoo Money and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda