It's been a long road, we know that. Have you ever fallen in love one day and your heart is broken the next? If so, then you probably have a good idea of what it's like to search for an apartment in New York City. In New York City, when offers due to the pandemic expired, people who had reduced the price of their apartments were forced to buy new ones, giving landlords the opportunity to further increase rents. This has boosted competition in an already tight market, which has further increased costs.
Crazy, unsustainable and a breaking point is the environment in which I found myself last month when I went looking for an apartment in Brooklyn with two roommates (and a corgi) in tow. As a fan of organizations, my first tactic was to create a spreadsheet that included links to advertisements, neighborhoods, nearby subway lines, prices, moving dates and various services. But just as we started reviewing all the usual apartment listing sites available (StreetEasy, Craigslist, Compass, HotPads, Zumper), it became apparent that we would probably have to be flexible with our budget, especially if we wanted to stay close to Crown Heights. That's because high rental prices in Manhattan over the past year increased demand in Brooklyn and Queens, according to Kenny Lee, economist at StreetEasy.
Another source that tenants can blame for the additional competition? The Federal Reserve, in its attempt to curb inflation through interest rate increases. We threw a wide net and, man, did we catch any dead fish?. Then, there was the House of Horrors on Bergen Street. Since no one had paid the electricity bill, the tour was only illuminated by the flashlight on my phone.
The apartment had an oven leading to the staircase that led to the lower level and two bedrooms (without windows) on the ground floor. There were also two old wooden locked doors; one of the locked doors had no handle. When I asked what was behind the other one, the runner opened the door, opened it slightly and replied, “Oh, just storage,” before hurriedly closing it and closing it again. I suppose it was the final resting place of a sad imbecile who took a step too far in a horrible bakery accident.
All this was combined with the usual charcuterie board in New York City apartments, the peculiarities of the bedrooms that can only be accessed from other bedrooms, the buildings that embraced fire stations (and, in one case, a funeral home), the showers with enough mold to be considered experiments at a science fair, and the floors that made marbles run for their money. Even so, I consider myself lucky in the hunt. It could have been much worse and was nothing like the horror stories I prepared for. In total, I ended up going through about 15 apartments, the vast majority of which were raids.
But there were a few that looked promising. With a 34-foot-long corridor close to green spaces and decent public transportation, the discovery of the entire floor won our hearts. Yes, it was more expensive than we expected, but there were only four units in the building, the first of which the janitor lived. It was close to good public transport, it had a yard where our dog could run as he wanted and they could make it nice with much less time and effort than some of the wells with rent money we saw.
In addition, there is a 24-hour coffee shop one block away. That right there could have sold me on its own. Then, there are systemic issues at play. In addition, fewer affordable apartments are being built because, overall, less housing is being built, said Vicki Been of New York University.
And even if rents start to fall a little more, as recent data shows, that doesn't necessarily mean that rents will fall. This likely means that rents will simply increase at a slower rate, which, of course, is better than the staggering increases that New York City has been experiencing lately. But it's still difficult to convince people when inflation exceeds wage gains for many and means that costs are rising outside of housing. The sources I spoke to largely agreed that the New York City rental market is approaching a breaking point.
But what will that point be? And what happens once we get over it? For a city that is already struggling to adequately address homelessness and evictions, I am concerned. A lot is happening in the world. Despite everything, Marketplace is here for you. You trust Marketplace to analyze world events and explain how they affect you in an accessible and fact-based way.
We rely on your financial support to continue to make it possible. In this need of the moment, federal relief plans can help tenants pay their debts, such as CARES ACT, but there is no relief for them in the form of reduced rents. According to the apartment rental website Zumper, the average rent in New York fell by 2.3% between September and October. It seemed like it would never happen, but after a year and a half of new record highs every month, with average annual increases of 25 percent, broker fees of 95 percent, and a lot of money, rents in New York City may finally be going down.
Due to the lack of availability of enough homes, rental prices skyrocketed as tenants began to devote a significant part of their income to housing. Miller points out that of the apartments rented above the requested price, the amount paid above the requested rent was an average of 13.1 percent. Significantly, there was an increase in the number of apartments rented with a concession, such as the landlord paying the broker's commission or the tenant receiving one month of free rent. According to a recent StreetEasy study, the gap between real wage growth and rental prices in August was 23% if inflation is taken into account.
Earlier this summer, New York City witnessed increases in rents, both for apartments with stabilized rents and for units at market price. In fact, new innovations and advances in artificial technology are already making their way into the rental sector. The real estate business also declined, but strangely enough, its impact on rental properties was short-lived. As rates rise higher and higher, tenants are likely to find it difficult to catch up with higher rents.
The bid-for-rent wars are declining and last month they accounted for 13.7 percent of the rental market share. Anyone who thought that rents in New York City would fall this fall will be discouraged to see that, instead, they remain close to historic highs. The Corcoran Market Report for Manhattan notes that many renters, disappointed by the lack of rent reduction, responded by staying. .