Rising rents in New York City continue to squeeze budgets as November saw increases across Manhattan, Brooklyn, and northwest Queens, despite the entry into the city's typically slower leasing period. According to a report by Douglas Elliman and Miller Samuel, Crain's New York reports that in Manhattan the median rent reached $4,200 last month, this represents a slight decrease from October's numbers, but marks a 5% increase year over year; whereas new leases saw a significant rise of almost 40% compared to the same time last year.
The situation in Brooklyn and northwest Queens echoed Manhattan's, albeit with their own local fluctuations, landlords and property managers sensed echoes of the same trend: a bustling rental market driven by still-high mortgage rates. The Real Deal highlighted Brooklyn's $3,500 median rent, a modest increase from 2023, with new lease signings up sharply; in northwest Queens, the $3,458 median rent not only went up from the previous month and year but also saw a nearly 65% annual increase in new lease agreements, demonstrating a strong demand despite usual seasonal slowdowns.
A contributing factor to these persistent rent hikes is the state of mortgage rates which, although they have seen recent cuts from the Federal Reserve, continue to sideline potential homebuyers. "People on the fence are dipping back into the rental market until there's a little bit more certainty about where mortgage rates are going to go," Jonathan Miller, CEO of Miller Samuel, told Crain's New York. Current economic indicators show mortgage rates holding around 6.6 percent, according to Zillow Mortgage API, significantly affecting would-be buyers' decisions to wait out potential declines.
The future trajectory of mortgage rates is now under particular scrutiny due to President-elect Donald Trump's upcoming term; his proposed policies on tax cuts and tariffs, alongside other economic measures, have generated speculation regarding their impact on inflation and consequently, the Federal Reserve’s response. "Elevated mortgage rates remain a significant factor in pushing rents higher," Miller stated to The Real Deal, underscoring the link between higher interest rates and the rental market’s temperature, this dynamic suggests that if Trump's policies do indeed spur inflation, the Federal Reserve may halt or reverse its rate-cutting cycle worsening the affordability of mortgages and potentially elevating rent prices further.
