As we head into the second quarter of 2013, rents continue to press higher. The Elliman rental report for April was released at midnight, and Manhattan rents are rising at the same brisk pace as they were last year. The median rent rose 6.5 percent from the same period last year to $3,195, and Jonathan Miller, appraiser and Elliman report-preparer, found that the rate of increase was consistent across all unit sizes. In Brooklyn, prices cooled a bit, with the median rising just 1 percent to $2,700, but the year is off to a strong start. The average rose a little more in April, seeing a 5 percent bump to $3,071.
In both markets, the number of new rentals (i.e. tenants who decided to not renew their leases) slowed down. “I see this metric as a measure of resistance to a landlord’s rent increase at renewal,” says Miller. “I think landlords and tenants are becoming a bit more in sync on high rents, and more tenants are signing renewals than they were before.” Basically, tenants are starting to face the facts: rents are high everywhere, so why go through the hassle of finding a new apartment when the rent won’t be any lower? Plus, Miller says that landlords are “realizing that they need to reduce some of the churn in recent months,” so they are more favorable to renewals.
The drivers of high rents remain the same. “Rising employment and tight credit,” explains Miller. These factors are “tipping people back into the rental market even though they would have normally purchased, but don’t qualify.” Still, Miller notes that it’s somewhat surprising that the rental market is still strong when the purchase market is also strong: “The improvement in the regional economy probably isn’t being given enough credit (sorry—no pun intended).”
The Brooklyn market remains tight, with the average days on the market falling from 76 days in March to just 37 in April. Last April, it was at 52 days. In Manhattan, the vacancy rate, which Miller notes is a better measure of availability than inventory, is unchanged from the same time last year, thus it’s still below the five year average. The East Side continues to see the lowest vacancy rate; at 1.04 percent, it’s down a smidge from last year. Across the park, the West Side saw the highest vacancy rate at 2.2 percent.
Landlord concessions remain unchanged; they still barely exist. Less than five percent of transaction included a concession, and even then, it was only about equal to about 1.1 months of rent. Long-gone are the good ol’ days when two to three months free rent was offered are nearly half of all leases.