Kat Logan moved into a spacious studio apartment in Gramercy Park in 2018 for $2,500. During the pandemic, her rent held steady. Now, Logan is considering leaving New York City because of skyrocketing rents.
“There’s this thought at the back of my mind like, what if they actually decide not to agree with my new lease and they put my rent above $3,100?” Logan said. “Then, I don’t know. It might be that push I need where I’m like, I’ve been in New York for 11 years. It’s now not worth me staying here.”
Like Logan, many New Yorkers must face a similar challenge: surviving in an increasingly unaffordable city where rent prices continue to grow faster than most of the country. Manhattan’s median rent price is the highest it has ever been – $4,175 – surpassing the record set last July – $4,150. The market is only expected to get hotter as it usually does in the summer, raising the possibility that New York City rents will continue to climb.
“It’s just a severe disconnect between supply and demand and that keeps rents elevated,” said Jonathan Miller, President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm. “You have people putting up with a lot just to be here, and it’s not good for a municipality if their workers can’t afford to live in the city.”
According to a recent report by Miller for Douglas Elliman, Manhattan's record-breaking median rent is a 10.7% increase from a year ago.
But nationwide rents aren't following the same trend.
Realtor.com's March Rental report found that March marked the fourteenth consecutive month of slowing rent growth nationwide and the eighth month in a row with a single-digit rate of increase for 0-2 bedroom properties at only a 2.5% rise from March last year.
While New York City follows a different trend, its housing market differs significantly from the rest of the country.
The city’s homeownership rate – about 30% – is roughly half the national rate. High-interest rates brought up by the Federal Reserve as it tackles inflation are now preventing would-be home buyers from purchasing homes, keeping them tied in the rental market.
Other housing factors unique to the city help keep rents elevated: New York City’s housing development lags behind population and job growth. Almost a third of units are rent-stabilized, decreasing the stock of market-rate units, and with very low turnover, forcing more people to compete for market-rate units pushing up rents. The city's lack of home-buying options also makes the rental market more competitive.
Rentals make up two-thirds of New York City's occupied units. In Manhattan, around 75% of residents rent rather than own. Still, about a third of units are market-rate, meaning the market determines the cost. With fewer market-rate apartments available, supply dampens, which keeps rent elevated.
While the rental stock has begun to increase recently, it hasn’t grown fast enough to deliver meaningful relief to New York City renters. Rental inventory remains around 19% lower than in 2019, according to an analysis of Street Easy’s rental inventory data.
"There are renters who are signing leases without even looking at the rental home because the competition is so stiff," said Kenny Lee, an economist for Street Easy.
New York has long tried to fix its lag in building new housing units. Most recently, New York Governor Kathy Hochul’s housing plan got left out of the state budget after swift opposition, stemming from a provision that would have increased the density of towns and suburbs.
The package would have given Mayor Eric Adams a boost in making progress on his goal of 500,000 new units over the next decade.
While the new housing units could have helped renters, rents could still fall, but it would come at a cost – a cooling of the labor force.
Economists say a recession would cool off the rental market enough for rents to drop. In other rental markets, job losses have already affected rent prices.
For example, the median rent in Los Angeles and San Francisco fell for the first time in nearly two years, likely because of layoffs in the tech industry easing rental demand. However, such layoffs have yet to hit New York City in the same way, which will keep rents high for now.
"All lights are green right now," said John Walkup, Co-founder of UrbanDigs, a real estate technology company. "We're looking at a very busy season coming up with higher rents."
The rental market usually reaches its hottest point during the summer, as demand for apartments rises as families look to settle into a new place before the start of the school year.
Typically demand starts to cool during the fall and winter months, but economists say it would take a significant slowdown in demand for rents to fall. Instead, rents moving “sideways,” meaning rising slower is a more likely outcome.
But those unable or unwilling to pay the rising cost of living in New York City must grapple with what their next move should be.
"I don't really go out. I'm really trying to save," said Logan, the advertiser from Gramercy Park. "I'm 37. I don't own anything, and I'm trying to get ahead, and I just feel like I'm in an impossible situation."