The Current State of NYC’s Rental Market & Where It’s Headed (Part 1 of 5)
NYC Rental Market Pre-Covid and During Covid
Summer Cycle vs Winter Cycles
Prior to March 2020, the New York City rental market had been consistently on fire for well over a decade. Considered by some to be the greatest city in the world, NYC is also infamous for its exorbitant rental prices and shoebox apartments (Anyone who’s lived in NYC will tell you that you are paying for the neighborhood, NOT the square footage of the unit), as well as high apartment demand, and quick apartment turnover (If you didn’t know NYC rentals moved fast, you quickly learned the hard way.)
To get a full picture of where the rental market is headed, it’s first important to understand the difference between “The Summer Cycle” and “The Winter Cycle” when renting an apartment. Historically, a majority of people moved during the summer months (April-August). During these months, designated by some as “The Summer Cycle”, renters typically faced higher competition, and therefore, higher apartment prices compared to those who moved during the winter. With a large portion of renters locked into 12 month leases, getting trapped into moving exclusively during “The Summer Cycle” was common, and those few renters who were able to get leases to end in Winter, often faced an easier rental experience year by year.
Summary:
Winter Cycle: Less demand, less competition, more bargaining power, less stress, better deals (September-March)
Summer Cycle: More demand, more competition, less bargaining power, more stress, worse deals (April-August)
The 2020 Covid market: A sharp decline in demand.
The Summer Cycles vs. Winter Cycle pattern was relatively consistent throughout the 2010s and up until 2020, when Covid-19 threw everything in NYC out of whack. On March 7th, 2020 then-governor Andrew Cuomo declared a state of emergency in NYC, and between March 16-22nd, a harsh set of restrictions hit the city, and put a ton of people’s plans on hold: NYC public schools closed, NYC bars and restaurants closed (except for delivery), and the NYS on Pause Program began, forcing all non-essential workers to stay home.
As NYC renters headed into Summer 2020, uncertainty was at an all time high, and unlike so many Summers prior, residents were not flocking to NYC. As mentioned, NYC apartments are not typically known for their size, and when renters choose NYC rentals, a lot of times they are doing so not for the apartment itself, but rather for the neighborhoods and/or the NYC experience. With most aspects of social life shut down, work from home in full effect, and no end to Covid in sight, suddenly the standard, tiny NYC apartments were just not the rage anymore. Furthermore, real estate agents were banned from showing apartments in person during these summer months. Rentals halted, and the highlight of everyone’s day became clapping for Healthcare workers every night at 7pm. Apartment demand started to fall across the board.
To further exacerbate the decrease in demand, many recent graduates (who typically fuel the Summer Cycle) had their job offers rescinded or delayed, many employees transitioned to work from home full time, and many residents chose to head back to their parent’s house for more space. Leases were broken, demand continued to fall, and concessions were made by landlords to try to keep residents in their current apartments. Between March 2020 and March 2021, vacancies continued to rise, and the renters who were brave enough to sign new NYC leases got big upgrades. With increased concessions offered by landlords (such as 4 months free in some cases), many renters got better deals than most would’ve imagined pre-pandemic. That fun didn’t last long.
2021 Rental Spike: A sharp increase in demand.
During the summer of 2021, NYC started to feel like NYC again, and the NYC rental market quickly started to feel like the NYC rental market again. Restless renters who had been out of the City since 2020 wanted to get back in, and curious renters, who had heard of awesome deals, wanted to try to capitalize on these deals before it was too late. Furthermore, graduates & young professionals hurried back in, as various employers began putting an end to work from home, and as people who’s job offers had been delayed/postponed were finally ready to start.
All of these factors led to the sharpest increase in demand for NYC rentals in decades. Prices shot up during the summer of 2021, and even as winter approached demand didn’t falter, and has continued to stay relatively high throughout 2022. What do Manhattan and Brooklyn’s neighborhood prices look like Right Now vs. Peak Covid vs. Pre-Covid? Where is demand going and will the NYC rental market slow down?
