With rents reaching unprecedented levels in Manhattan, Brooklyn, and Queens last month, many tenants with expiring leases opted to stay put rather than venture into the unpredictable rental market.
While there is no comprehensive data on lease renewals, a substantial drop in new lease signings suggests that many renters chose to extend their current leases for another year or two.
According to the Miller Samuel Rental Report, April marked the second consecutive month of record-breaking median and net effective rents in Manhattan. The median rent surged by 8.1 percent, reaching an average of $4,241 compared to April 2022.
However, new lease signings experienced a year-over-year decline of 13.9 percent, with a staggering 20.4 percent drop from March. The current spring rental market is defying conventional trends due to soaring rents and dwindling lease signings.
Jonathan Miller, the report’s author, noted that one would typically anticipate a gradual increase in new lease signings each month until August. However, an unexpected surge in lease renewals has disrupted this pattern. Renters are becoming increasingly aware that rental prices are unlikely to decrease shortly, influencing their decision to stay put and renew their existing leases.
A significant portion of today’s renter population comprises individuals who initially planned to purchase homes. These potential buyers sold their properties during the market’s peak but found themselves caught in a predicament as mortgage rates began to rise last spring due to the Federal Reserve’s measures to combat inflation. Even after a year, they are still waiting for mortgage rates to decline. Moreover, the recent banking crisis has further fueled uncertainties among potential buyers, leading them to opt for lease renewals. It is widely anticipated that mortgage rates will not decrease until the end of the year