More than a third of new rentals on the market in New York City are likely due to tenants being priced out of homes they had been able to afford in the early years of the coronavirus pandemic, according to a report from StreetEasy released Tuesday.
At least 34% of units on the market last quarter can be attributed to tenants forced to move after being hit by steep rent increases, sometimes totaling in the thousands of dollars each month, after being wooed by bargains, according to the analysis.
The report comes on the heels of a legislative session in Albany, where a bid to pass legislation insulating market-rate renters from large rent hikes failed to gain traction. The findings portend more tough times for renters as landlords regain ground – and then some – lost during the early years of the pandemic, when prices favored renters.
“It’s really frightening to see so many New Yorkers being priced out of their homes due to this sudden increase in the average rent across the city,” said State Sen. Julia Salazar, who co-sponsored the so-called “good cause” legislation pushed by proponents to help stave off a wave of evictions.
In 2020 and 2021, renters across the city were offered deep discounts by landlords seeking to counter an exodus of pandemic-spooked residents, according to the report. With the market in their favor, some renters seized the opportunity to move to neighborhoods or apartments they would be priced out of in normal times.
Landlords have been raising rents more aggressively on units they leased during the pandemic in effort to recoup the earnings they lost.
The posture of landlords has since changed.
“Landlords have been raising rents more aggressively on units they leased during the pandemic in effort to recoup the earnings they lost,” the analysis reads. “On average, rentals that were listed in 2020 or 2021 and relisted in Q2 2022 showed a 20.4% increase in asking rents per year.”
A separate report from Douglas Elliman and Miller Samuel showed the average rent in Manhattan surged past $5,000 in June, a record-setting high.
The number of available rentals in Manhattan rose last quarter compared to the first three months of 2022, according to StreetEasy. But roughly 44% were likely driven by renters leaving their homes in the absence of earlier discounts.
“It’s also possible that some tenants decided to leave for non-financial reasons but would be faced with one of the most competitive rental markets in more than a decade,” the report reads.
Many of those tenants are now seeking more affordable options in Brooklyn and Queens.
“We’re hearing in our district — in north Brooklyn and east Brooklyn — that residents are being hit suddenly with massive rent increases that they can’t afford, and as a result they’re having to relocate again,” Salazar said.
As the city has slowly reopened, the real estate landscape has turned with it. Lines of apartment viewers have been captured in footage shared on social media in recent months. The surge in demand for rental housing has also proven difficult for brokers to keep pace with.
Brandon Abelard, a real estate salesperson with Compass, one of the country’s largest brokerage firms, said he has stopped doing open houses. Instead, he limits showings to an appointment-only basis because of the deluge of prospective renters.
“I have a few rental listings myself, and it is quite overwhelming,” said Abelard, whose rental listings are largely based in Brooklyn and Queens. “The amount of inquiries I get per apartment — I can tell you I have about 10 of them, and I received over 250 emails in about two days for each apartment. Some of them are getting close to 350 emails over a weekend.”
A 'good cause' bill
The StreetEasy analysis shows the number of units in Queens declined by 9% from the previous quarter. Meanwhile, median rent in the borough soared by 13%, compared to a quarter earlier. Available rentals in Brooklyn increased by 5%, but median rent climbed to $3,200 — a 12% jump.
“Unfortunately, the recent improvement in rental inventory has been largely driven by households being priced out of increasingly unaffordable rentals,” the analysis reads. “In addition, as interest rates rise, more would-be homebuyers may be forced to resign themselves to renting, pushing up the demand for rentals even further.”
The “good cause” bill pushed in Albany would entitle renters to lease renewals unless they failed to pay rent, caused nuisance or violated the terms of their lease. It would also give market-rate renters similar protections to those living in rent-stabilized units — by installing safeguards against price increases deemed “unreasonable.”
Under the measure, increases of more than 3% of the previous rent or 1.5% of the Consumer Price Index — whichever is higher — would not amount to “good cause” for eviction.
Salazar said she is continuing to fight for these protections and pressed for more urgency from elected officials around the issue, including from Gov. Kathy Hochul.
“Even though the legislature isn’t in session right now, I think it’s urgent that we return as soon as possible and that in the new session, we really need to prioritize passing this legislation to protect all the renters who don’t even have the protections of rent stabilization or rent regulation,” Salazar said. “If we fail to act, we will continue to see this displacement.”