Rents in Manhattan hit a record high for the sixth month in a row

CNN Business

Rents in Manhattan hit a record high for the sixth month in a row.

The median rent for a Manhattan apartment rose to $4,150 a month in July, up 29% from a year ago, according to a monthly report from brokerage Douglas Elleman and Miller Samuels of real estate appraisers and consultants. It rose 2.5% from June.

Median rent, which crossed the $5,000 a month threshold last month, also hit a record $5,113 a month.

Rents are expected to rise further in August, which marks the last month of the annual rental season, Jonathan Miller, president and CEO of Miller Samuel, said.

“It will continue, at a minimum, over the next month, because more demand is expected to put upward pressure on prices,” he said.

But what happened after August? While the rental market in Manhattan may cool off, apartment prices are not expected to become more affordable.

“The reversal of ‘rising rents’ is not necessarily ‘low rents,'” Miller said, adding that prices can continue to rise, but not as fast or that rents stabilize and remain constant.

“Many people They hope that after peak rental activity in August, there will be some improvement in affordability,” Miller said. “But the only way I see that happening is if the Fed baseball bat causes more damage in the form of job losses. This is not a desirable scenario.”

In an effort to curb inflation, the Federal Reserve aggressively raised interest rates. But the central bank will have to strike a delicate balancing act: If it raises interest rates too much, the economy could plunge into a recession, which could lead to layoffs and layoffs.

If job losses become significant, demand for apartments in Manhattan could fall as people double or leave the city, putting less pressure on prices.

However, Miller said the most likely scenario is that renters can expect rents to continue to rise through the end of the year, but prices won’t rise quickly.

Also, rising mortgage rates have an impact on the rental market.

The Federal Reserve does not directly determine the interest rates that borrowers pay on mortgages. Instead, mortgage rates tend to track 10-year US Treasuries. But they are indirectly affected by the Fed’s efforts to tame inflation.

Mortgage rates have risen rapidly since the beginning of this year, with average 30-year mortgage rates moving at a flat rate from 3.22% in January to 5.81% in June, before hovering between 5% and 5.5% in July, according to Freddie Mac . Last week, the average rate fell 5% to 4.99%.

Miller said the rise in mortgage rates has made home buying unattainable for many potential buyers, adding to pressure on the rental market as more people put their buying plans on hold and decide to rent instead.

“The buying market madness has been converted by Fed policy into the rental market madness,” Miller said. “I think it will come down to external factors like unemployment and a hard landing to see what happens next.”

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