New Yorkers could expect slightly lower rents in 2023
After rental prices hit an all-time high in 2022 in New York, many wonder what 2023 holds in store for renters in New York City? New York has typically been pricier regarding real estate, but the COVID-19 pandemic worsened this.
In 2020, companies implemented “work from home” policies, and people were leaving big cities such as New York in droves to move to quieter and more affordable areas. However, as things began to normalize and companies required employees to return to the office, the demand for housing returned. During 2022, many potential residents were clamoring to try and find an affordable unit to rent in New York.
The “Big Apple” saw a more significant rental price increase than other cities and states across the US over the last few years. According to statistics released in 2021, about a third of renters were spending more than half of their income on rent, and this is likely even higher now, given the shortage of inventory and high home prices.
New York typically issues fewer building permits per capita than most other large US cities. In 2022 there were 69 000 permits for housing units granted by the city, which is a record. This is more than 25 times what was granted in 2021.
As the interest rates have continued to climb, fewer people have been able to afford to buy a home, and renting has become the default choice for many causing a squeeze on the rental market and increasing rental prices. Some property owners with more than one unit are considering renting their second property to cash in on the high rents.
Kenny Lee, a real estate economist, points to both a normalizing of demand and a lack of supply as both pushing the rental prices up. He did note that there seems to be growing traction in trying to increase the housing supply, “there seems to be a growing momentum, at least between city and state officials, to really find a way to increase the supply of housing through regulatory changes, and also tweaking zoning laws that can make diversifying Manhattan’s commercial districts possible.”