Rents are up, vacancies are down all over Manhattan and Brooklyn. And it’s all downhill from here as we head into summer, according to monthly market reports recently released.
Real estate experts anticipate a vacancy rate below 1% very soon. In Manhattan, it was at 1.46% in March then abruptly dropped to 1.28% in April, a sharp decline of 12%.
Rental transactions there in April were up 1.4% over the previous year and numbered 4,287. The median monthly rent for a Manhattan apartment that same month was $3,195 compared to $3000 last year – a jump of 6.5%.
Demand is high, supply in the sales market is low and severe restrictions on mortgage lending are keeping prospective buyers renting for longer than they’d like.
Summer is a busy rental season. Heading into this one, there’s no sign of relief for price increases and lack of available properties, especially for people seeking smaller units downtown. The forecast is calling for slow but steady price increases.
Experts point to the demand for downtown studios, especially in the West Village and primarily coveted by newcomers to the City, as the driving force in the current Manhattan rental market.
Prices for such entry-level digs showed the steepest rent increases in both March and April.
Despite last month’s bull rental market in Brooklyn, rental price hikes have been more modest. However, rents are still creeping upward. For instance, the median monthly rent in the trendy borough increased to $2,700, up only 1% over last year’s rate of $2,673 for the same month.
Still, rental transaction volume was up 10.9% in Brooklyn. This could be the result of “renter resistance”, with tenants preferring to find new digs rather than put up with rent increases.
Extremely low vacancy rates and lack of inventory are causing the whole industry pain. The only cure is to add more units, although any that become available always enter at the highest end of the marketplace.