By John Engel
We can see in this chart that in Manhattan the discount on rents has been close to zero since the beginning of 2024, while across the East River in Brooklyn and northern Queens the discount has been negative for three years, at times quite extremely negative at -8%. Note, a negative discount means that the average property rented at a premium to its asking price. Just like we’ve been experiencing in the suburbs.
New York City apartment rents are currently hovering just below the record highs they achieved last August. And that’s true in all 3 boroughs. New lease signings have been rising all year. New leases account for one third of all activity, while renewals account for two thirds. Leasing is rising because potential buyers are giving up in the face of rising mortgage rates, and existing renters are testing the market in response to rising renewal rates. These two factors combine to stimulate the rental market. Rents tend to rise when mortgage rates rise and fall when mortgage rates fall. When mortgage rates rise the high end of the market responds earlier than the bottom half of the market. This pattern is most clear in the 2021 to 2023 dramatic rise in rates, and flatter pattern of the last 18 months.
New York City has the highest rents in the nation (according to Zumper), substantially higher than #2 Jersey City and #3 San Francisco, and rising seven times faster than wages. While the national index ticked up 1.2% in May, it was the first time in 20 months we have seen a monthly increase above 1%. California seems to be bucking the trend, with 7 of the largest cities reporting a decrease in rents over the last 2 years led by Oakland which experienced a -9.1% decrease.
Read RobertoCabrera.com’s market reports for insight on the New York City market: “rentals, that’s where the concentration of deals is actually happening . . . stress, right now, is on the rental market.” Roberto says that rental prices are likely to surpass last summer’s highs. Opportunity is in the sale market where competition is “tepid at best”. He goes on to say that historically the uncertainty of an election means that deal volume will slow until November, and then pick up again right after the election.
Back to rentals. In Great Britain we saw divergent signals in May as both prices and inquires fell in the same month that tenant demand rose dramatically. The Royal Institution of Chartered Surveyors reports that demand more than tripled in the past two months as landlord supply of new properties fell flat. Prices are surging at an annual rate of 8.9%, down from a record high of 9.2% recorded in March. The two political parties are responding ahead of the July 4 elections: the Tories are proposing to abolish a tax on first-time homebuyers with homes worth less than $500,000 while Labor has proposed a government mortgate guarantee scheme called “freedom to buy”
What about Fairfield County, Connecticut? The number of properties leased fell in May and for the year to date, -4.1% and -5.8% respectively. The average monthly lease price has fallen for the second year in a row, down -9.3% in May to $4,070.
Greenwich paints a similar picture where 230 rentals is up 11.7% from 206 last year, but the average rental is $8,047, down -3.54%, and median rental price is $4,988, down -7.08% year over year. It’s worth noting that lease prices appear to be higher in May and during the busy summer leasing season than at any other time, a fact true in Greenwich, New Canaan, and for the broader Fairfield County, Connecticut market.
Notes from the Monday meeting. The team just produced 3 new property videos this week with a professional crew out of New York City: 23 Benedict Hill, 153 Sunset Hill and 60 Ferris Hill. It begs the question what is the purpose of video, and does video really sell houses in a market with scarce supply? In mathematics we learn the Property of Proportion (a/b=c/d) tells us that when our last 3 professionally shot and edited videos reached 25,000 views, but our home-made videos reach only 1,000 views, that good video must be effective for us and increases reach. But does it sell houses? No. There is a disconnect between where we consume video, and where we shop for houses. Of the 65 single family homes for sale in New Canaan on the SmartMLS I was not able to find any videos attached to the listings. On the New Canaan MLS 30% of listings had a video or tour attached. A simple Google search revealed most of the high-end houses do have professionally shot videos hosted on Youtube, Tiktok and Instagram but some of those videos were shot years ago and those houses have sold. During the pandemic we relied on video to a greater degree. Since that time the tools have improved, and the video portals have grown, so the lack of video content on major real estate portals like Zillow, Realtor.com and Homes.com in 2024 comes as a surprise.
John Engel is a Realtor on The Engel Team of Douglas Elliman in New Canaan and he is sure June is the busiest month of the year, so much competing for our time and attention: graduations, weddings, proms, Caffeine & Carburetors, The Glass House Summer Party, The Historical Society’s Ice-Cream Social, Juneteenth, Carriage Barn Art Show, the Special Olympics Torch Run, the Nature Center’s Great American Campout, NCHS’s production of Cinderella, Staying Put’s Summer Soiree, the NC Land Trust Firefly Viewing and the beginning of Wednesday Waveny Park Concerts. The sidewalks of New Canaan are packed with diners, neighbors greeting neighbors, and the traffic about town is way up. John’s going to need a summer vacation.
