Are you renting an apartment in New York this summer? Say hello to exorbitant prices and fighting to the bitter end.
Amid the heat and occasional rain, there’s been a mad rush to rent affordable apartments in Gotham, which has been undersupplied for many years. Estate agents describe the pricing chaos.
“It’s crazy,” Jessica Peters, realtor at Douglas Elliman, told MarketWatch. “We can’t even keep up anymore. We’re, like, just put in this crazy number, and we get it.
City offices are trying to bring back more employees: the city is not yet at full capacity – foot traffic to office buildings in New York is still down 40.6% from normal levels before the pandemic. But some workers are returning, restaurants, movie theaters and Broadway are back, and students are getting ready to start school.
As a result, the median monthly rent is up $725 in June on the year and $59 on the previous month, according to Zillow. The median monthly rent in New York is $3,300, 53% higher than the national median of $2,155.
““A lot of tenants will have a rude awakening.””
Peters said the reality was much worse on the ground. “I just rented something… in Williamsburg. It’s a great two-bedroom unit on the ground floor, with a great backyard,” she said. “We were asking for $6,500. We got $7,000.
Peters, who specializes in the Brooklyn area, said while rental prices fluctuate a bit, the reality is clear for someone looking to be in the city.
“If you come back after not renting in either Brooklyn or Manhattan for the last ten years, a lot of renters will have a rude awakening,” Peters added.
(Reminder: Realtors and Realtors make money on a commission basis, which means the hotter the market, the higher their income.)
That said, the rental market in New York reflects a broader intensification of inventory pressures, which is leading to bidding wars among tenants across the country.
But in New York, one of the most expensive cities in the United States, even some rent-stabilized apartment tenants can’t take a break. The city’s rent guidelines board approved increases of up to 3.25% for new one-year leases and 5% for two-year leases.
Mihal Gartenberg, realtor at Coldwell Banker Warburg, said market anger was normal; it simply operated on the basis of supply and demand.
There are people who are just willing to pay more, he said. “It’s getting to the point where we’re not the ones deciding what this is going to do,” Gartenberg added. “It’s a real market business.”
Technology was helping some tenants in their search for housing.
A luxury two-bedroom apartment she rented out two months ago in the Lincoln Square area attracted people during a two-hour open house in ten-minute increments, in addition to potential tenants who joined FaceTime AAPL,
“We set it in my opinion…pretty high,” Gartenberg said, at $7,800, “but we ended up taking even more. The person who ended up taking the apartment offered $400 more …we got an offer of $8,200, and they also offered to pay the brokerage fee, which is an extra month.
““I feel very uncomfortable with this idea that the first person to see an ad is the first to get it.””
Over the past weekend, she hosted open houses for two apartments in Lower Manhattan’s Two Bridges neighborhood.
“I’m only going to show it at the open house. I like to have a level playing field,” Gartenberg said before the event. “I feel very uncomfortable with this idea that the first person to see an ad is the first to get it.”
Buying a home was worth considering, real estate agents said, given the intensity of the rental market.
Peters said many tenants are trying to become landlords because rents have risen dramatically. “People are starting to reevaluate whether or not they should just buy at this point,” she said.
“Why would I want to spend $10,000 a month on a rental if I qualify for a purchase? It might not be exactly what they wanted, it might be a little smaller, but it will still be better than spending $120,000 a year on rent,” she added.
But be prepared for bidding wars when buying a home, Gartenberg warned. She’s put a newly renovated apartment in Hudson Heights on the market, which is selling “way above demand”, she said, so much so that “it freaked me out”. The sale of the apartment is not yet complete, so she said she was unable to discuss how far the bidder went over it.
Gartenberg has priced its Two Bridges apartments at $3,550 for a two-bedroom unit on the top floor and $3,050 for a one-bedroom unit.
On Saturday, its open days were full. Everything went above demand. “We had so much interest that we were able to divert offers to an apartment not yet listed and rent it out as well,” Gartenberg said in a follow-up email.
Half of the offers received were from people who had seen the apartment via FaceTime or from a video she sent them.
Gartenberg offered rental tips for the summer.
Get your documents in order, such as your proof of income, photo ID, tax form 1040, bank statements, and other financial documents. Also, have your work write a letter saying you’re in good standing, Gartenberg said.
Given the number of rentals going above demand, be prepared to look below your price, she added. If you know what building you want to live in, contact the landlord’s agent, she said, and find out what’s coming up on the market.
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