The Manhattan rental crisis appears to be softening, although rents for luxury apartments continue to soar to new extremes.
In October, the median rent on new leases for luxury units in the borough reached a staggering 13% from September to $13,000, according to Bloomberg, citing data from Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
"Luxury is through the roof relative to the balance of the market," said Jonathan Miller, president of Miller Samuel.
Demand for luxury apartments comes as the national average 30-year mortgage rate is above 7% for the first time since 2000, pushing price-sensitive wealthy New Yorkers away from purchasing mansions due to economic uncertainty and or affordability.
Rents for the most expensive apartments are up nearly 50% since October 2019, outpacing the non-luxury rents by 15%.
"That trend is continuing even as the overall market peaks," Miller added.
Median rent prices for the bottom 90% of the market slightly cooled further but off the peak, dropping $21 to $3,850.
After a summer of "record number of records" for the median rent of all apartments, it wasn't until August that prices peaked and then reversed.
"Rents are robust but they are starting to plateau," Miller said in September.
We correctly pointed out that rent prices in the borough would skyrocket this summer in an April note titled "Not A Peak" - Manhattan Apartment Rents Hit Another Record High," informing readers who were looking at renting in the city to hold off because there will be "cooling in the fall."
Again, it appears we were right about the fall cooling if you're signing a lease agreement for a non-luxury apartment.
There's more good news. The share of leases signed after fierce bidding wars fell last month from around 20% to 14.2%. But those signing new deals still paid a 13.1% premium more than the list price, a record.
Data from brokerage Corcoran Group show inventories increased last month, the highest in 14 months. More apartments available will help continue cooling through the rest of the year.
As for the luxury market, well, the bankers on Wall Street can afford it, or maybe not, because their bonuses this year will be slashed. For the average person looking to rent in Manhattan, at least now the cooling period has begun, though perhaps wait until 2023 to lock in a contract when rent prices likely slide some more.