Inside young New Yorkers' 'wild ride' of Delta-era apartment hunting as they swarm 80-person open houses, realtors ghost, and rents skyrocket
- The NYC rental market is a nightmare right now - more so than usual.
- After plunging during the early days of the pandemic, it's heating up with surging demand and soaring prices.
- The competition is cutthroat, with open houses 80 people long and unresponsive brokers.
All Lisa Rennau wanted in her New York City apartment was a window.
The 23-year-old anticipated spending long hours at her desk completing a masters in business and economic reporting at NYU - something more easily done with sunshine.
In August, she created accounts on StreetEasy and Zillow, joined Facebook groups, and reached out to real-estate agents, hoping to find a shared, windowed apartment walking distance to campus for $1,000 to $1,200 a month - the same prices she'd seen back in March, when she was accepted into the program.
The entire experience became a "wild ride," she told Insider. As she tells it, brokers stood her up for viewings, landlords lied about the location of properties, and ads featured misleading images of apartments. Only 10% of real estate agents she contacted ended up responding, she estimated.
"I have previously lived in Shanghai, Berlin, and other big cities, but I have never struggled to find a place as much as I did here in New York," she said.
She soon realized that she would also have to pump up her budget, first by $200, then by $400. "I caught myself thinking last week, 'It'd be great if I could find something for under $2,000 - but at this point, whatever.'"
Any New Yorker will tell you apartment hunting is stressful, especially during the summer busy season. But after the pandemic sent the city's rental market plunging, and some young professionals got a taste of luxury NYC living on a pandemic discount, real estate has bounced back. Workers returning to the city are unleashing a wave of pent-up demand. Listings are few, brokers are unresponsive, and prices are high as young professionals and students vie for a pad in the concrete jungle.
A flurry of renters
By last winter, NYC's rental market had become every New Yorker's dream.
In January, prices fell the furthest on record - a whopping 15.5% in Manhattan and 8.6% in Brooklyn and Queens, per StreetEasy's Rental Report. The median asking rent in Manhattan was $2,750 - the lowest since March 2010, when rents dropped during The Great Recession.
Such COVID pressures enabled urbanites to lock in full amenity buildings in prime locations with $1,000 discounts and concessions. Young professionals, in particular, saw luxury apartments finally fall within their budgets.
That rare window of opportunity began to close after the city reopened in May and residents who'd fled began to return.
Take July, for example: New leases in Manhattan were up 54.7% compared with July 2020, per a Douglas Elliman and Miller Samuel report, which found New Yorkers signed more new leases signed that month than in any other July since at least 2008. StreetEasy's activity exceed pre-pandemic levels - 59% more visitors, 63% more rental-listing views, and 76% more inquiries on rental listings than the same month in 2019.
Jay Parsons, vice president and deputy chief economist at real estate software company RealPage, told Insider the demand snapback is a sign that the market is correcting itself after last year's activity.
"You had a lot of pent-up demand from people who either temporarily left or were planning to move to the city at some point and put those plans on hold," he said, citing college graduates as an example. "It's always been a magnet for young adults."
"I was obsessively refreshing the StreetEasy app," Lagos said. "I think my screen time on the phone went up."
She said it was frustrating to find herself as the fifth person in line applying for a place just listed. Her search was made even more difficult by the fact that she's from Honduras and is in the US on a work permit, without a US-based guarantor to help her sign the lease.
The demand fueled by Lagos and her peers has sent rents skyrocketing by about 70% compared to a couple of months ago, according to Ramzis Hadzki, a broker at Compass.
"Rents right now are higher than pre-COVID because there are no availabilities," he said. "A two bedroom in the East Village on Avenue B was renting for $3,895 [before the pandemic] and now it's $4,495."
He also noted broker fees, which were temporarily banned during the pandemic, are back at higher levels than pre-COVID.
Everyone's making up for lost time
The flurry of activity also has a lot to do with the lease cycle. Renters who scored a 12-month lease during the pandemic this time last year but didn't sign for longer are now seeing their rent shoot up, forcing them to pay up or move out.
As Hadzki said, "It's been very challenging because all the clients that I rented to last year, they have to move now and they want to help me find them another apartment at that price, but it's just impossible."
Look no further than a viral July TikTok video that featured a $5,250 three-bedroom, two-bathroom listing in the East Village, which then had a rent increase of $1,500 "due to the enormous amount of interest" in the unit. Another featured a line of 80 people to view a $2,950 two-bedroom unit in Chelsea.
Nancy Wu, a StreetEasy economist, recently explained to Insider's Taylor Borden that landlords are raising prices and scrapping discounts to make up for time and money lost during the pandemic's lull. In August, New York City surpassed San Francisco as the most expensive place to rent an apartment in the country.
RealPage data indicates that rent is still slightly cheaper than it was before the pandemic, although it was only looking at professionally managed departments and not walk-ups, a big part of the NYC rental market. In March 2020, Parsons said, the average rent for the segment was $3,697, compared to today's average rent of $3,613.
The soaring prices are no match for young professionals' budgets, forcing some to turn to their Plan B.
Jazmin Beltran, 28, moved out of the city last March to work in LA, but ended up living with her parents in Arizona when the pandemic hit. Now, the communications manager has landed a new job with an office in Soho, but she's been scouring StreetEasy since July, and is no closer to finding a place under $2,500 in downtown Manhattan or Williamsburg.
The high prices, she said, may push her to delay her plans unless she finds a deal when visiting the city at the end of September. "I really want to live alone so I may just wait out the 'hot vax summer' hype months and look into moving in colder or less desirable months," she said.
NYC rentals bounced back more swiftly than anticipated
Both Hadzki and Parsons noted that NYC's rental market has picked up faster than expected.
"We never bought into the New York is dying theory, but it's been a remarkable rebound for the city to see it start to come alive again," Parsons said.
Rental markets in other cities are heating up, too. A measure called true rent growth hit an all-time high in August at 18.5%, per RealPage data. And, though NYC lags behind other rental markets such as West Palm Beach and Phoenix, Parsons added, it's significantly stronger than this time last year, creating a feeling of normalcy.
"It's New York," Parsons said. "A lot of people want to be in the city."
He pointed out that while the NYC market took a hit, it didn't die: Apartment vacancy in New York typically hovers around 3%, and didn't exceed 6% vacancy during the pandemic.
The current state of the rental market may bode poorly for young professional's finances, but it's certainly good news for the city's economy. Formerly the epicenter of the coronavirus during the spring, NYC was hit hard last year as its wealthiest residents fled and local businesses shuttered their doors temporarily and permanently. A thriving real estate scene is injecting some much needed money back into the economy.
Rennau, the NYU grad student, was able to find a month-to-month lease for $850 a month near campus. The only catch: it doesn't have a window.
"But hey - I'm in NYC!" she said, adding that the move buys her time to save more money and find something better. As for that elusive window, she's still searching. "Nevertheless, my search definitely goes on."