NYC rental market on the upswing as lease signings pick up

It’s been called The Great Migration of 2020: As the Covid-19 pandemic intensified in the spring of 2020, more and more people left densely packed urban areas for family homes, suburbs, and rural outposts. In Manhattan, the vacancy rate had jumped to a 14-year high of 3.67% by July 2020. As recently as April 2021, the Manhattan rental unit vacancy rate was 11.6%. 

On the other hand, while moves from large cities were often permanent, many relocations from New York City were temporary, and the city is on the upswing. Those who stayed or are returning are prioritizing amenities like apartment gyms, roof decks, and additional space. 

According to a Bungalow Covid rent trends analysis, rents in New York City began softening in July 2019, reaching their bottom in November 2020, when the average rent price per room sank 5.9% compared to the month before. Prior to the summer of 2019, rents had increased steadily for two years, according to market report data by Douglas Elliman and appraisal firm Miller Samuel. 

Image of the Manhattan skyline.

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What does a rebound look like?New York City in context

What does a rebound look like?

As Covid vaccines became available, renters began returning to New York, signing leases at record rates and lowering the vacancy, if not to pre-pandemic levels, then to rates that have been far below the April 2020 high.

The number of available units in Manhattan dropped 38% in June 2021 from the previous month to 11,853, according to an Elliman report. That’s a reduction of more than half since January. Many speculate whether this signals a rebound. What seems clear is that people are coming back: It’s a good time to come to New York, and those who want in might want to sign leases before that window begins to close.

According to Elliman data, median rental prices were down 18.5% year over year in April 2021. Brooklyn was down 16.2% and Queens fell 13.1%. All this led to a record number of lease signings. The number of new leases signed in April 2021 was 9,642—triple what it was in June 2020. 

The lease signings in April of 2021 signify a 546% rise from the year before, when the real estate market seemed frozen because of the pandemic. Those new leases helped bring down Manhattan’s vacancy rate to 6.7% in May. 

Zumper, which represents citywide data across all rentals listed in the city, recorded a rise in average price per room of 3.9% from April to June, 2021. Bungalow, which rents rooms only in prime neighborhoods (where vacancies are lowest and the market is rebounding most quickly), recorded a 4.5% increase during the same period. Like so many solid investments, properties in prime neighborhoods fluctuated less drastically and retained their value better than the numbers for the entire city would suggest.

Yellow taxi driving through New York City streets.

New York City in context

New York City’s rental market during the Covid pandemic and in the rebound so far roughly parallels price dips and rise in other expensive urban centers, like San Francisco. New York City experienced more dramatic dips than San Francisco, but the trend was similar, according to Bungalow data.  Both markets are now rising to pre-pandemic levels, recording month over month increases of 1-2%. 

According to U.S. Postal Service and U.S. Census data, New York City’s Covid-related moves varied from some other large markets in a couple of key ways. In the country’s 50 most populous cities, 84% of the people who moved relocated within their own metro area, and most who moved rather stayed within 150 miles. But Manhattanites’ moves looked a little more like vacation: 19,000 Manhattan residents moved to South Florida, according to the USPS, but 9,000 said their moves were temporary. According to the data, some Manhattan neighborhoods—particularly those in the most affluent areas— might have seemed deserted, but they’re filling up quickly with their same residents: people who changed their address temporarily with the explicit intention of returning. 

 As analysts weigh the net effect of Covid-related moves, the data shows that urban centers aren’t dead.  “People are more mobile and have more flexibility than ever and we are seeing migration trends in our data, both for short term moves to experience a new city or longer-term moves to relocate,” says Andrew Collins, CEO of Bungalow. “But our demographic is energized by urban living and the access, innovation and networks urban hubs afford.  Major cities like New York and San Francisco will always epitomize this dynamism of urban living and we expect a full market recovery in these cities.”

Bungalow is the best way to invest and manage your real estate portfolio. We work with you to identify, purchase, fill, and manage residential properties—so that you can enjoy up to 20% more in rental income with a lot less stress. Learn more about Bungalow.

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