Manhattan Rents Hit Record High As Lease Activity Slumps, Indicating Deepening Affordability Crisis
New York City is experiencing the worst housing crisis in a generation. The limited supply of apartments led to record high rents in July, the peak rental month of the year, just before the start of the school year.
Data from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate showed Manhattan's median rent topped $4,400, up 2.3% from June. Rents soared 11% in Brooklyn to $3,950 and in northwest Queens. In Astoria and Long Island City, rents rose 1.9% to $3,641. Manhattan rents reached a record high for the fourth time in five months.
Bloomberg quoted Jonathan Miller, president of Miller Samuel, who said, "We're arriving at the tolerance level of the market. Prices are rising, reaching new records. Leasing activity is weakening, likely due to the record rents — tenants aren't getting relief."
Miller said another record high could be seen in August as families and students sign leasing agreements ahead of the new school year.
Despite Manhattan's population plunge of 400,000 between June 2020-22 and half-empty office towers scattered across the area, there still appears to be demand for apartments amid tight supply.
Miller pointed out that inventory is beginning to rise, and the decline of leases might indicate people have hit a breaking point: "It looks like rents are probably close to the tipping point... We're seeing transactions slip because of affordability."
A separate report, published in April by Fund for the City of New York & United Way of New York City, found half of the households in the city barely had enough money to 'comfortably' afford rent and other expenses.
Meanwhile, the latest CPI print shows shelter costs nationwide have not only reached their peak but are now starting to decline.
Housing inflation slowing fast:
— zerohedge (@zerohedge) August 10, 2023
Shelter inflation up 7.69% YoY in July vs 7.83% in June, lowest since Dec 22; also up 0.43% MoM, lowest monthly increase since Jan 22
Rent inflation up 8.03% in July vs 8.33% in June, lowest since Nov 22; also up 0.41% MoM, lowest since March 22 pic.twitter.com/yL5d0RRTx6
If Miller is correct, the rental affordability breaking point is quickly approaching.
