Manhattan Apartment Rents Record First Year-Over-Year Decline Since 2021

November marked the first annual decline in Manhattan rental prices in over two years, indicating the apartment market faces sliding demand and increased supply amid a typical seasonal slowdown. 

New data from brokerage Douglas Elliman Real Estate showed the median rent in Manhattan fell 2.3% in November, from $4,095 one year ago to $4,000. It was the first year-over-year decline in median price in 27 months. 

“Prices hit an affordability threshold and this is the reaction,” Jonathan Miller, CEO of Miller Samuel, told CNBC. 

The wall of affordability was hit in July and August when rents topped a record high of $4,400. Since then, median prices have slid 9.1%. Even though this is great news for apartment hunters, prices are still dramatically higher when compared with pre-Covid levels. 

Source: Bloomberg 

“The decline has been sudden,” said Keyan Sanai, the top rental broker for Douglas Elliman in New York.

Manhattan’s vacancy rate increased for the 14th consecutive month, reaching a level of 2.93% – indicating landlords listed more apartments. Miller explained the boost in supply comes from landlords pivoting from the Airbnb market due to new city restrictions. 

Sanai said landlords are offering better concessions, such as free rent for a month, instead of reducing the list price. He said a recent one-bedroom listing in midtown with an asking price of $4,700 was able to be negotiated down to $3,900 after concessions were factored in. 

According to the brokerage, the number of apartments offering concessions increased from 12% in October to 14% in November. 

This slowdown in Manhattan rents comes as the latest consumer price data shows shelter/rent inflation nationwide is beginning to accelerate to the downside:

Shelter inflation: 6.51%, down from 6.72% and lowest since August 2022

Rent inflation: 6.87% down from 7.18%, first sub 7% print since August 2022

As we’ve pointed out for months, high-frequency rent inflation has been tumbling for much of this year, suggesting even more downside into 2024. 

The housing market could heat up in spring as the Federal Reserve’s rate hiking cycle appears to have ended. Rate traders have priced in 150bps in cuts for next year. 

Sanai explained: “For landlords, I think it could be a dark winter, then things will probably get brighter in the Spring.”