Summer has arrived in New York, and so too have summer prices.
Median Manhattan rent reached a new all-time record in June, the fourth time that’s happened this year. At $4,625 for a brokered apartment, the median rent in the borough rose 7.6 percent from last June, according to the monthly report from appraiser Jonathan Miller for Douglas Elliman.
Rents typically rise in the summer. But Manhattan’s latest streak started in February, spurred by elevated mortgage rates and economic uncertainty. So even when the temperature breaks, Miller said, the streak will likely continue.
“I can’t think of a reason for rents to come down significantly, for tenants to get a real break,” Miller said.
One new factor at play this month is the FARE Act, a city law that makes landlords, not renters, pay commission for rental brokers they hire. That’s likely resulted in higher monthly prices, Miller said, as owners try to recoup the new expense. Using some back-of-the-envelope math, he estimates the law has pushed rents up by 1 percent monthly, meaning about 12 percent annually. That tracks with recouping a fee that is typically 10 to 15 percent of annual rent.
The report pulls its data from brokers, so it doesn’t have insight into what’s happening outside that market. But inventory in Manhattan fell steeply last month, by 12.4 percent from May. Landlords, not wanting to pay the fee, could have delisted their apartments or marketed them themselves.
But the rental market behind Manhattan’s median rent is also simply hot. One in four Manhattan tenants agreed to pay more than the asking price. And demand remains high. Renters signed 8 percent more leases this June than the same time last year.
The luxury submarket, however, has had more inertia. For the top 10 percent of listings by asking price, rents have been stuck at around $10,000 since last year.
Brooklyn has continued to see slower rent growth. Median rent in the borough rose only 1 percent from last year, reaching $3,733. Renters there paid an average of about 4 percent more than the asking price for their units, indicating availability is still tight. Inventory was unchanged from May but has risen 22 percent year over year.
In Northwest Queens, median rent fell from the previous month but is still higher than last year at $3,600. The area, which includes Long Island City and Astoria, saw listing inventory fall more than 16 percent.
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“Knee-jerk reaction” or permanent shift: How is NYC’s FARE Act actually impacting the rental market?
