It’s been widely known that rents in Manhattan have been steadily increasing, but there has been a buzz in the industry that the rental market is finally taking a rest for a while.
Rents have been rising 5% consistently year-over-year and then there was a dip in prices between the third and fourth quarters of 2012.
Brokers in the market agree too and they are starting to see stabilization of rents. However, some noted that the market is still strong and argued that the recent change was nothing more than a seasonal downshift. And others say that some renters have decided not to be paying increased prices.
Jonathan Miller, a real estate analyst said that the difference in median rent between Manhattan and Brooklyn has “compressed” slightly last year. There’s a number of Manhattanites who are turning to the outer borough for more affordable rents. And Miller understands that shift, “Anytime you have out-of-control growth that doesn’t self-regulate, it always ends badly,” he says.
Ron Hershco, a property developer in New York believes that the market needs to stabilize itself for a while. Renters don’t want to be always pressured for that 5% increase each year.
Another tactic some renters are doing is that they may attempt to buy a property versus renting, but their lack of qualifying for a loan ends up being a barrier to purchase. Douglas Wagner of Bond New York Properties noted that renters who were fleeing the market in the fourth quarter of 2012 are now returning to our rental offices to sign another lease for a property.
The Manhattan rental market needs a break for a moment, but there’s no doubt that it will pick up and that rents will increase again.