In stark contrast from the various economic indicators surrounding it, the Manhattan rental market showed remarkable stability and strength in the third quarter. The price of an average Manhattan rental unit increased about 7 percent from the prior year quarter and remained consistent with the impressive levels achieved in the second quarter, according to market reports released today by residential brokerages Prudential Douglas Elliman and Citi Habitats.
“I used to see the rental market as a leading indicator of changing economic conditions because of how nimble it is,” said Jonathan Miller, CEO of appraisal firm Miller Samuel who prepared Elliman’s report. “But here the economy is struggling — or at best, is flat — and conditions are tight in the rental market.”
That’s because the economy has been so volatile that people are putting off their purchasing decision and instead choosing to rent. Even those who are inclined to buy, Miller noted, are encountering such strict mortgage underwriting standards that they’re forced to reconsider.
To wit, Elliman’s report shows rental activity during the typically active summer months slipped 6.9 percent from the same period a year ago to just 7,998 transactions, and 6.7 percent from the second quarter. Combined with the rising rents, the data suggests many renters are staying put and delaying decisions to move to another rental or buy, Miller speculated.
Factoring in concessions, the average monthly rent for a Manhattan apartment increased 6.9 percent from the third quarter of 2010 to $3,491, Elliman data shows. The rental price per square foot skyrocketed 13.6 percent in that timeframe to $50.60, according to the report.
— A personal perspective: Over here at RDNY.com, we’ve seen the market get tighter and tighter throughout the summer. We’ve seen week after week of price increases. The statistics may show overall rental prices up by 7%, but in reality, it’s more than that. At the doorman building level, prices have not gone up as much. Instead, incentives have stopped. But below the doorman level, the market has gotten a lot tighter and prices have gone up much higher than 7%. Even saying 10% feels to conservative. My evidence is all anecdotal, but I deal with this stuff every day and I have a gut instinct about it. All in all, I’d say the market for rental below the doorman building level is up over 15% from last year. That’s my take on it.