Manhattan rents experienced their first decline in over two years, with the median rent dropping 2% year-over-year in November to $4,000, according to a report from Douglas Elliman and Miller Samuel. This marks the first decline in median prices in 27 months and has significant implications for the housing market and overall inflation, given Manhattan’s status as the nation’s largest rental market. The decline is attributed to an affordability threshold and a growing supply of empty apartments, as renters increasingly hold out for price cuts.
While the decline is seen as slight, it suggests a shift in the market dynamics. Brokers note a sudden decline in demand, with landlords offering concessions, such as a month of free rent, to maintain attractiveness. The number of apartments offering concessions increased to 14% in November from 12% in October.
Despite the decline, Manhattan rents remain the highest in the country and are still 11% higher than before the pandemic. The average rent in Manhattan is $5,150 a month, despite the 2% decline over the past year. Inventory remains historically tight, just under the normal 3% level. Brokers predict that renters may see prices continue to fall into early next year, with job cuts in the financial and tech industries limiting demand from young employees in Manhattan.
Falling mortgage rates are expected to make the sales market more attractive, potentially turning more renters into buyers. The advice to renters is to take advantage of the deals while they last.