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Housing: Average Manhattan rent tops $5,000 for 2nd month

Yahoo Finance's Ronda Lee joins the Live show to discuss rents in NYC topping $5,000.

Video Transcript

BRIAN SOZZI: All right here, let's switch gears. Manhattan rental prices are continuing to rise, topping an average of $5,000 a month for the second straight month, according to a report by Douglas Elliman. Yahoo Finance's Ronda Lee joins us with the details. Ronda--

RONDA LEE: So here we are again. Last month, it was horrible. And this month, it's worse. We have rents topping $5,000 in New York City. Across the nation, it's higher, it's around $2,000.

But for New York City the bigger issue is the fact that we have a lot of buildings that are owned by real estate investment companies. So when you have those holders, you're probably going to see a higher increase also, due to the housing market. You have a bunch of people who have been pushed out of the market, and they are in the rental market and that makes higher rents.

BRIAN SOZZI: What? OK, what's the reason for this rent hike?

RONDA LEE: I think we had this discussion last month, and you guys had someone on earlier this week. When you have homebuyers that have been pushed out of the market, now they're in the rental market and they're probably looking for more luxury, top-end things. But also, rental prices tend to follow home prices. So we've had high home prices, which is going to translate into higher rental prices. So that's what we're seeing.

Another expert said that, with the Fed's hiking rate hikes, as these mortgage rates continue to fluctuate up and down and buyers are pushed out of the market, they're heading to the rental market. So it's going to increase your rental prices.

BRIAN SOZZI: Ronda, are there any bidding wars happening here?

RONDA LEE: Yes and that is where, if you're a luxury buyer, people who were probably bidding for their homes are now bidding for those apartments. So in New York City, you are going to see bidding wars out of one of four leases. They are bidding, asking more, for an apartment that they don't get equity in. So yes, if you had the money to spend like that, be prepared for a bidding war.