Rent prices in the Manhattan borough of New York City soared to another record high, reaching an average of nearly $6,000 per month. It’s a stark contrast from other parts of the country, which are finally seeing some relief.
In July, the average rent price rose 9.3% year over year to $5,588, according to data from brokerage firm Douglas Elliman and appraisal and consultant firm Miller Samuel. Average rent also jumped 2.2% from June when it sat at $5,470.
“The average rent has been flirting with or setting records since February 2022,” Miller Samuel CEO Jonathan Miller previously told FOX Business, adding that it last hit a record in the fall.
On top of that, Miller warned that it’s likely August will be another record-setting month in the Big Apple.
The average rental price for a studio apartment in July reached $3,278, up 1.3% since June and 2.7% from a year ago, according to the data.
For a one-bedroom, the average rent shot up 3.9% from a year ago to $4,443. The average rent for a two-bedroom apartment in July rose 4.7% to $6,084, and up 12.2% to $10,673 for a three-bedroom, according to the data.
The good news is that leasing activity is already slipping, which indicates the challenge facing consumers on affordability, according to Miller. For instance, the number of new leases in July dropped 5.6% from a year ago to 503. It also dropped 2.7% since June.
“This might indicate that rents are getting close to the top of the market,” he added.
Like New York City, Redfin chief economist Daryl Fairweather said rents in the “Northeast are higher than anywhere else, and they’re going up faster than anywhere else.”
For one, an influx of people is heading back to the office in major cities like New York and Washington, D.C., which is pushing up demand. At the same time, there is also a lack of supply. The imbalance is what’s driving prices higher, she said.
Meanwhile, rents are easing in the West. The median asking rent slipped 1.1% in July compared with the same period last year, according to Redfin data.
Even though prices are high, it’s a big area for the tech industry, which typically provides flexibility with remote work. This means that workers don’t have to find an apartment in proximity to the office.
“That has suppressed demand a bit on the West Coast, whereas, on the East Coast, you have more of those old-school industries and government jobs where remote workers have not been as acceptable,” Fairweather said.
The rental market in the South, which has been a huge migration hotspot, is cooling. The median asking rent rose 0.3%, the smallest increase since 2020.
Fairweather said there has been a lot of building in the South, which will bring rents down “or at least allow them to stabilize” even with increased demand.
The Midwest, on the other hand, wasn’t a big draw for remote workers during the pandemic, so rent growth has been relatively “modest,” according to Fairweather.