By Misyrlena Egkolfopoulou
Long lines in the cold, fierce competition and bidding wars.
This has become the reality for New Yorkers who are flooding the rental market in search of apartments, an increasingly scarce commodity less than two years after a pandemic-related exodus had some predicting the demise of the city.
Some people who left New York during the pandemic are moving back. And those who stayed are looking for more space or an extra bedroom they can turn into an office as they continue to work from home. That hunt for breathing room and amenities has led to record-high rents and low inventory, leaving apartment hunters with a new reality that used to be the purview of buyers alone: Bidding wars.
“The rental market is just on a different type of scale right now in terms of how quick paced it is,” said Ava Howard, a licensed real estate salesperson for Berkshire Hathaway HomeServices. “It’s all about who’s fastest and who’s willing to pay the most. It’s like buying a home right now. It’s so competitive.”
Amanda Ellison, 37, started looking for apartments in New York City about a month ago even though the lease on her place in Brooklyn isn’t up until July. But Ellison, who works at a tech consultancy, and her partner are in desperate need of more space. The couple’s 550-square-foot studio has transformed into a full-time office as both of their jobs pivoted to remote work.
“We’re at the point where we need doors,” said Ellison. “We can spend a little more on an apartment and we’re pretty shocked at how little that helps right now. It’s just stunning how little that gets you.”
The couple has placed two desks up against each other in their tiny space. If they have Zoom meetings at the same time, one of them has to take the call from the bathroom, depending on which call is more important. But even with an additional $1,000 in their budget, the hunt for apartments has been brutal.
Last week, Ellison spotted a one-bedroom unit on 69th Street in the Upper West Side. For $3,100 it would get them more space, a dishwasher, big windows, and most importantly, proximity to Central Park. Within hours of it being listed, Ellison emailed the broker of the apartment who responded with a heads up: It appeared to be headed for a competitive bidding situation.
The unit only stayed on the market for a day and a half, according to Corcoran broker Tiga McLoyd. After 61 inquiries, 13 showings and eight offers, it rented for $3,625, 17% above the asking price. McLoyd, who has been a broker in New York for about 20 years, said he’s never experienced bidding wars for rental apartments — until now.
“It’s absolutely brutal,” McLoyd said. “A year ago today, everything was in the renter’s favor. Now, it’s the exact opposite.”
McLoyd first started seeing bidding wars in the summer of 2021. Renters who fled the city started coming back and looking for comfortable spaces that would accommodate a different standard of living, and they were willing to pay more. It was surprising for him but also for potential renters. He proceeded to draft an email template for anyone submitting inquiries, which explained the process of bidding.
He encourages renters to send in their highest offer. McLoyd stresses that it’s not an auction and he doesn’t publicize other people’s bids, but a better offer does tend to win out in the current market. And it’s not just about the amount people are willing to pay: applicants with no credit score, out-of-state guarantors or insufficient combined income often face a harder time. McLoyd encourages potential renters who can to wait until spring to avoid the current market.
Low vacancy rates have led to a rapid drop in listing inventory and to record prices, according to brokerage Douglas Elliman Real Estate. Manhattan median rent jumped 18.3% in January from a year earlier to $3,550, according to a report by appraiser Miller Samuel Inc. and Douglas Elliman. That’s just shy of the median rent of $3,595 reached in January 2020, before the pandemic exodus sent rates sliding.
Meanwhile, renters returning to Manhattan are signing leases at a record rate, helping to populate the mountain of vacant apartments left behind during the pandemic. In January, the supply of available apartments tumbled 83.3% from a year earlier, according to Douglas Elliman.
Brooklyn, a borough where New Yorkers have historically been able to find more space, has seen its listing inventory fall year over year by 86.4%, the highest rate on record, according to Douglas Elliman. Meanwhile, new lease signings rose to the second-highest January level since tracking began in 2008. In Northwest Queens, across the East River from Manhattan, inventory fell by 90.6% year over year.
“It just really highlights how trapped people are in the city,” said Erin Evers, a staff attorney in the housing unit of Legal Services NYC. “How are people going to be able to continue to live in New York City?”
Other than rent-stabilized, regulated apartments, New York doesn’t have have any legal protections in place that would restrict rental bidding wars, Evers said. The current market conditions could push middle- and low-income workers further out of the city, at a time when New York’s economy is trying to rebound from the pandemic. Just this week, Mayor Eric Adams told leaders of major companies it was time to get their workers back in offices.
“Every day we get closer to fully reopening New York City, but we want to bring the city back in a way that works for everyone,” Adams said in a statement. “My administration will continue working hard to ensure New Yorkers, and those who want to become New Yorkers, can afford to live here.”
To be sure, not all apartments are flying off the shelves. Potential tenants in New York City have different needs in the post-pandemic world. Those include outdoor space, good lighting, big rooms, extra space for home offices, and renovated amenities. Apartments that offer any of these features see inquiries flood in.
“There’s a major demand for larger spaces,” said Scott Sternberg, a broker for Corcoran. “People are looking for more space or outdoor space and especially apartments that are carefully renovated are properties that are speaking to them.”
Sternberg listed a 1,500-square-foot, three-bedroom, two-and-a-half bathroom brownstone with a backyard in Prospect Heights last week. About 35 groups showed up at the open house, he says, forming a line that wrapped around the block. Bids for the apartment pushed the original price of $7,250 up by about 20%.
Camila Cabeza, 29, works in finance and just moved to New York from Singapore with her partner. Even though the couple was set up to live in corporate housing for two months, they started apartment hunting immediately. On Feb. 13, they visited a townhouse in Brooklyn. Even though the apartment was listed for $7,200, the couple was willing to bid up to $7,500 because of what it offered.
“It’s big, it has full-size bedrooms where you can fit a king-size bed, which is hard to find,” Cabeza said. “There’s very few apartments that are actually in a convenient location but also have a cool kitchen, a cool living room or bedroom. There’s always something missing.”@ava_howardd
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On a Friday evening in mid-February, Hayden Tyson, 32, and his wife were on their way to an open house for a two-bedroom, two-bathroom, fully renovated apartment with a private backyard the couple had spotted on real estate app StreetEasy. Before any biddings, it was going for $5,300, which the couple considered a steal for an apartment of that size with several amenities in Williamsburg, one of Brooklyn’s trendiest locations. They didn’t even need to make an appointment to show up to the viewing.
As they approached the entrance of the building on Withers Street, they noticed a line of about 20 parties waiting. They waited for a few minutes before changing their mind and walking away.
Mallory Richie was also in line for the same apartment. Simultaneously, she was on the phone with a broker who was explaining that another unit she was interested in had found higher bidders. The 26-year-old freelance video producer has toured seven apartments so far, but nothing has worked out. She’s slowly losing hope.
“The process of finding a place here is like buying a million-dollar house somewhere, which is crazy,” Richie said.
More stories like this are available on bloomberg.com.
