New York may have a certain reputation for being on the more expensive side when it comes to renting an apartment. But if you’ve always dreamed of living in the Big Apple, there may be hope yet for you–and your wallet.
A recent rental market analysis has shown that the monthly rental rate for a Manhattan apartment fell in September for the first time in two years. The average monthly rent dropped by about 3.1 percent from a year earlier to $3,095, the first annual decline since June 2011. The number of new leases signed in September jumped 36 percent from a year earlier to 3,445, as renters sought cheaper deals. But why the sudden decrease in rental rates?
An abrupt rise in mortgage rates has pushed more New Yorkers into the sales market as they rush to make deals before borrowing costs increase even more. The average rate for a 30-year fixed mortgage climbed to a two-year high of 4.58 percent in August 2013 from a near-record low of 3.35 percent in early May 2013.
Transactions for one-bedroom apartments reached a 15-year high, suggesting much of the influx came from first-time home buyers. People are rushing into the housing market because mortgage rates will continue to rise, reducing affordability for purchases. In other words, people are buying homes, which frees up apartments, thus lowering demand and rental rates.
Bill de Blasio, New York’s Democratic candidate for mayor, argued that wages are not changing and that many tenants are struggling to pay their rent each month. Therefore, he has called for a one-year rent freeze on the city’s rent-stabilized apartments.
Shari Forrest, leasing director at TOWN, explained that rent normally drops about 5 percent in the fall and as much as 8 percent in the winter and then rise back up in the spring once it starts to get warmer. This is especially true in areas where there is a heavy density of rental properties, like Midtown West or Murray Hill.