Rent prices are falling in much of New York City as residents continue to grapple with the COVID-19 pandemic. In Manhattan, the vacancy rate on rental units is now the highest in more than a decade, at nearly 4%, which is further fueling the decline.
The median net rent price in Manhattan dropped 6.6% in June over the prior year, to $3,242 per month, according to a new report by Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants. Meanwhile, inventory soared nearly 85% to record highs. A similar trajectory is playing out in Queens, where the median effective rent dropped 8.2%, to $2,560.
“What we’ve got is a barely functional market,” says Jonathan Miller, CEO of Miller Samuel. Prior to June 22, real estate agents were barred from showing listings in person, making it difficult for landlords to find renters, and also discouraging residents from signing new leases.
Counterintuitively, Miller expects an increase in real estate activity to lower prices in the New York City area, since it will better reveal the actual state of the economy. “At least at this point, it looks like the rental market might be more impacted than the purchase market,” he adds, “because the skew on unemployment has been more heavily weighted towards hourly wage earners [and] lower wage earners.”
Still, prices are not yet falling everywhere. In Brooklyn, for instance, the median rental price climbed 1% in June (over the prior year), to $2,944, though that marked the smallest increase in 18 months.
Thousands of New Yorkers have fled the city in recent months to less densely populated areas of the country. According to an analysis published by The New York Times NYT +0.5% in May, “In March, the United States Post Office received 56,000 mail-forwarding requests from New York City, more than double the monthly average. In April, the number of requests went up to 81,000.”
That exodus contributed, in part, to the spread of the virus elsewhere in the U.S., a dynamic that is beginning to reverse. The number of new cases in New York has dropped off considerably since peaking in April, while rates are skyrocketing in Texas, Florida and other parts of the country.