Empire State Rentals: Navigating the high costs of living in New York City

Rents in New York City have broken records as rising interest rates and a reduced supply of apartments have sent prices soaring.

The average monthly rent in New York was $4,400 in July, up 6% compared to the same month last year, according to a report from Miller Samuel and Douglas Elliman. The average rental price jumped 9.3% to $5,588 per month.

This is despite the population decline during the Covid-19 pandemic. The number of people living in Manhattan decreased by 400,000 between June 2020 and June 2022, according to US Census data.

“There is a huge lack of supply in New York,” said Ran Eliasaf, founder and managing partner of the Manhattan-based real estate private equity firm and debt fund manager North Wind Group. “This is the main reason why rents are getting out of control, and this will be the trend in the next few years.”

The way to capture housing supply is to shorten the entitlement process and create incentive packages that encourage developers to build, Elisaf said. This is especially crucial now that the city is starting to grow again.

“We are expected to add 100,000 people in the next five years, but we are only adding 5,000 units annually,” he said.

The ripple effect spreads to neighboring cities

Many nearby cities are no more affordable than New York City. For example, Jersey City, New Jersey, has the second-highest rents in the country after New York City, with the broker asking a one-bedroom apartment to rent for $3,900 a month, according to rental marketplace Zumper. This is up 3.2% from May and 8.8% year over year.

In neighboring Hoboken, New Jersey, some landlords have raised rents by more than 25% — despite a state law that aims to keep rent increases to an amount not considered “unreasonable or unreasonable.”

But one New Jersey city is becoming more attractive as prices for renters rise outside New York. While the median rent in Newark, New Jersey, was up 11% in September from a year ago, at $1,500 a month or a one-bedroom apartment, according to Zumper, it is much less expensive than neighboring communities. Most Newark residents — 77% — rent their homes, according to Zumper.

Northwind recently announced that it has provided a $35 million first mortgage to 440 Elizabeth NJ Urban Renewal LLC secured by Carmel Towers, a 25-story, 216-unit residential building in Newark. The property is undergoing a comprehensive renovation that will upgrade it into a modern apartment building geared toward workforce housing.

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