N
ew York City apartment prices have been dropping, with the median rent falling to $4,200 last month. This marks the fourth time in five months that rents have declined annually, according to a report by appraiser Jonathan Miller for Douglas Elliman. The 30-year fixed mortgage rate has also decreased, creating an opportunity for tenants to switch from renting to buying and freeing up rental units.

    As a result, inventory grew in Manhattan for the 13th consecutive month, while listings surged in Brooklyn and Queens for the eighth straight month. In Brooklyn, the median rent dropped by 1.4% to $3,650, and in Queens, it fell by about 1% to $3,500.

    The Federal Reserve's decision to cut interest rates has contributed to this trend. Mortgage application volume surged after the Fed's rate cut, with the Mortgage Bankers Association reporting the highest level since mid-2022. The Fed has projected further rate cuts, which could lead to lower rents this fall, especially as seasonality typically drives declines in apartment hunting during colder months.

    However, appraiser Jonathan Miller notes that the decline may not be as significant as tenants hope for, as the pace of the Fed's rate cuts is still uncertain and recent economic data has introduced new variables. The stronger-than-expected jobs report in September has led some to believe the Fed might ease up on rate cuts, causing mortgage rates to rise and application volume to decrease.