Manhattan renters always had the bragging rights since they know the rents are always increasing and it is indeed a privilege to live there. But they might want to give up some of these since the new report shows that the average rent in Manhattan has already drifted down by 5%. This was after it hit a peak in August of the previous year, with the biggest decrease ever recorded for studio and one-bedroom apartments. But still, the luxury market remained as hot as ever.
What’s the Catch?
But rental analysts said despite the fact that most rents are softening up, the market in this place still remain very tight. They said that all these will continue for the years to come, with some of the landlords expected to offer discounts and reduces, as long as the economy both locally and nationally will recover.
According to the president of brokerage Citi Habitats Gary Malin, although the rents decline slightly for most of the apartments in different categories, in the overall real estate rental market, it is still in the favor of the landlord. After all, this is Manhattan we’re talking about, a place where the American Dream comes true for most people.
By August of 2012, the average rent in Manhattan was at a record of $3,461. However, in December, that average was down to $3,284, the lowest figures since March of the year 2011, still according to Citi Habitats. The vacancy rate in Manhattan apartment buildings was at 1.37%, and people can’t see a hug difference there.
The rental market was driven higher in the past few years because of the unwillingness and inability of most of the renters to get a mortgage. The expensive rents and falling rates for mortgages have led to increased sales when it comes to smaller studio and one-bedroom apartments. These factors have somehow ease up the demand for the rentals.
And since there is a great number of people unable to qualify for mortgages because of poor credit conditions, the main effect is the high demand for apartments, limited supply, thus, the prices go up, according to Jonathan Miller, an appraiser and present of the Miller Samuel Inc. But he also believes that today, instead of rapidly rising rents, he can see modestly rising rents. At least, it’s something.
His report is based on the different group of rentals used by the Citi Habitats report. The median Manhattan rent in December was at 0.8% more than the previous year. The studio, one- and two-bedroom apartment rents were quite off, while the three-bedroom units were up to 20%.
In the year 2012, one of the main reasons why the demand for apartment rentals increased was because of the Super Storm Sandy. A great number of people and their homes were affected by the tragedy. But now, as things are stabilizing after the storm, the demand for rentals have eased up, thus the prices are now stabilizing.