The median rent for a Manhattan apartment rose to $4,150 a month in July, up 29% year-over-year, according to a monthly report from brokerages Douglas Elliman and Miller Samuel Real Estate Appraisers and Consultants. Up. Up 2.5% from June.
Average rents that crossed the $5,000 monthly threshold last month also hit a record high of $5,113 monthly.
Miller Samuel president and CEO Jonathan Miller expects rents to rise further in August, the final month of the annual peak rental season.
“It will continue at least until next month as we anticipate more demand and put upward pressure on prices,” he said.
Will rents keep rising?
But what happens after August? Manhattan’s rental market may cool down, but apartments aren’t expected to be so affordable.
“The opposite of ‘rents rising’ is not necessarily ‘rents falling,'” Miller said, adding that prices may continue to rise.
“many people We expect affordability to improve somewhat after rental activity peaks in August. ”
A significant loss of jobs could reduce demand for Manhattan apartments as people double or leave the city, reducing pressure on prices.
But a more likely scenario, Miller said, is that renters can expect rents to continue rising through the end of the year, but prices won’t rise as quickly.
Home buyers are flooding the rental market
The Federal Reserve does not set interest rates that borrowers pay directly on mortgages. Instead, mortgage rates tend to track his 10-year Treasuries. But they are indirectly affected by the Fed’s efforts to keep inflation in check.
Mortgage rates have risen sharply since the beginning of the year, with the average 30-year fixed-rate mortgage rate rising from 3.22% in January to 5.81% in June, and from 5% to 5.5% in July. transitioned between According to Freddie Mac. Last week, the average interest rate fell just under 5% to 4.99%.
Rising mortgage rates have made buying a home out of reach for many would-be buyers, resulting in more people deciding to put their purchase plans on hold and rent instead, leading to a decline in the rental market. Miller said there is more pressure on
“Buy market frenzy has been transferred to rental market frenzy through Fed policy,” Miller said. “I think what happens next comes down to external factors like job losses and hard landings.”