The Shaina Mishkin New York City Apartment Rental Sentiment Index fell last month to a level just barely off its record low. Yes, the index has its flaws—it is, for example, something I just made up. But actual data suggest I’m not imagining it: The Big
Apple
apartment rental landscape was brutal this summer.
As the Shaina Mishkin for whom the index is named, allow me to share some pertinent information: You will never meet someone who loves to move more than I do. Every part of the process is a thrill: visiting new buildings, chatting with brokers, even collecting my paperwork and sending in my application. All of that is to say, you know there’s a problem if New York City’s most bullish mover—not to mention a real estate reporter—is reconsidering her apartment hunt.
It seems like nobody had a good time navigating the New York rental market this summer. My search brought me to open houses with lines out the front door, orchestrated by brokers fielding even more tour requests for the same apartment. Searching in August felt notably difficult, although data show the market was even tighter last year. That’s not to mention the cost of renting, which is up about 30% citywide since March 2020, according to median asking rent data from StreetEasy, a New York City-centric rental website.
As it turns out, it isn’t just me: “This year has been very competitive for renters in New York City,” says Kenny Lee, an economist at StreetEasy. Lee says there were over 65% more inquiries per listing from May to July this summer than during the summer before the pandemic, meaning I’m not the only person who feverishly sent requests for tours this summer.
Demand has overwhelmed the scant supply of apartments for rent, Lee explains. Rental inventory has been lower than 2019 levels for two straight years, the website’s data show.
The explanations for New York City’s competitive rental landscape are myriad and complex. On the supply side, new multifamily units are being built, but the inventory they add is a drop in the bucket compared with other metros,
CoStar
data show. Short-term rentals have taken some of the blame, as have rent regulation measures and “warehousing,” meaning landlords keep units empty. StreetEasy data show there’s more demand than supply across all price points, with the lowest-priced third of the market seeing the greatest increase in requests.
A host of factors could be fueling demand. New York City’s unemployment rate is below its long-term average, data show, keeping demand for rentals solid. High mortgage rates and competition to buy homes in the ‘burbs could keep some in rentals they would otherwise vacate—as could lingering recession worries or fear about finding a new unit worth the cost. A white paper published by the Economic Innovation Group in April posited that rent growth during the pandemic remained strong in dense but population-losing areas in part because remote-working roommates went their separate ways, creating new households in the process.
All these partial explanations aside, I couldn’t help but wonder if some of the competition is a sign that people are moving to New York City from other parts of the country. After all, they told me as much: At the many tours and open houses I’ve been to in the past month, I’ve met folks moving from Florida or the west coast about as frequently as I’ve met people moving from elsewhere in the neighborhood or another borough.
For a city that notoriously shed 5.3% of its population after it was hit hard by Covid-19, that struck me as notable. People continued to move to New York City from overseas during the pandemic, but those gains weren’t enough to offset the flood of residents leaving for other domestic destinations, census data show. With vaccines freely available and the Covid-19 State of Emergency in the rearview mirror, is the city attracting more new residents from other metros?
It’s about six months too soon to check in on 2023 population trends using census data, so I reached out to a few moving companies to see if I was onto something. Piece of Cake, a New York-based moving and storage company, told me that it facilitated 87% more long-distance moves into the city so far this year than during the same period in 2022. Some of that increase is due to the company’s growth, founder Voyo Popovic told Barron’s—but not all of it. Moves out still outnumber moves in, the company said, but the gap has narrowed.
There were roughly four-times as many outgoing moves from the city as incoming this year, down from eight-times as many last year, according to Piece of Cake. Excluding Connecticut and New Jersey, southern Florida is both the top destination for outgoing New Yorkers and the origin for incoming ones, Piece of Cake says, followed by California, Texas, and Illinois.
Whether the other 20- and 30-somethings touring Queens apartments are moving from Los Angeles or Long Island City, much of the sentiment has been the same. My competition and I, amassed in small crowds in foyers and on sidewalks, commiserate as we await our turn to loop through yet another one-bedroom, describing our ongoing hunts as “depressing,” “demoralizing,” and “pretty bad.”
That’s why it resonates when Jonathan Miller, the CEO of real estate consulting and appraisal firm Miller Samuel, who compiles the closely watched
Douglas Elliman
rental market reports, tells me he made headlines earlier this year for calling 2023 the “year of disappointment.” Such doldrums aren’t limited to the rental market: “Homeowners aren’t going to get their 2021 price, and buyers and renters aren’t going to see a significant improvement in affordability,” he says, recalling his forecast.
Leading indicators suggest improvement is on its way. One side effect of still-high rents is that some owners might consider listing their units, says StreetEasy’s Lee, meaning more options for renters. The website has seen new rental listings increase recently, “a good sign for all the renters in the city,” says Lee, who adds that new listings could slow the pace of rent increases.
While my slice of the rental market might feel hot, data suggests New York is cooling from its hypercompetitive pace earlier in the pandemic—a time when I wasn’t even thinking of looking. StreetEasy inquiries per listing in August were 37% higher than the same month in 2019 on average—still elevated, yes, but the closest the measure has come to its prepandemic level since mid-2021.
Miller, the appraiser and consultant, says rents aren’t going down from here—but an increase in listings in July combined with lower leasing activity suggests rent hikes could be topping out. “People are reaching their threshold of what they can handle,” Miller says. “In the fall, [rents] are not going to keep rising; they’re going to move sideways.”
The return of seasonality to the city’s rental market could play a part—as could my own adjustment to the market’s fast pace. While I ended August without a new lease lined up, I’ve come pretty close recently. It’s too early to say, but I think the Shaina Mishkin Rental Sentiment index just might tick back up in September.
Write to Shaina Mishkin at [email protected]
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