US Real Estate Trends: Why Smaller, Cheaper NYC Apartments Are Hot Right Now

US real estate is witnessing a notable shift as demand for smaller, cheaper NYC apartments surges. This trend reflects changing preferences among buyers and renters, driven by economic factors and lifestyle choices.

When it comes to the bustling realm of New York City apartment rentals, it appears that smaller, more budget-friendly units are stealing the spotlight. According to the latest July rental report shared exclusively with The Post by listings portal Realtor.com, the trend is clear: compact living is in vogue.

The report reveals that the median rent for zero- (or studio) to two-bedroom units has seen a year-over-year increase of 2.2%, now sitting at a staggering $3,322. In contrast, the median rent for three-bedroom apartments and larger has taken a nosedive, dropping by 5% to $4,996. This shift indicates a growing appetite for smaller rental spaces, as demand for these cozy abodes continues to rise, particularly in the boroughs that are deemed “relatively affordable”—which, let’s be honest, excludes Manhattan.

Speaking of Manhattan, the borough has experienced a decline in median asking rents for the 13th consecutive month, with July seeing a 2% dip to $4,489—$171 less than what it was before the pandemic turned the world upside down. Meanwhile, other boroughs are witnessing a different story: median asking rents have surged by 3.5% to $3,718 in Brooklyn, 7.7% to $3,175 in The Bronx, and a notable 8.2% to $3,380 in Queens. To afford an average rental in these areas without exceeding one-third of their gross household income, tenants would need to earn a whopping $179,560 annually in Manhattan, $148,720 in Brooklyn, $127,000 in The Bronx, and $135,200 in Queens. (As for Staten Island, the report coyly mentions that the data is “currently under review.”)

Despite the slight dip in Manhattan rents, the overarching narrative remains: New York City is still on the pricey side, a stark contrast to many other American cities. “In contrast to the overall declining trend seen across the top 50 markets, the median asking rent in NYC continues to rise annually, increasing by $73 or 2.2% compared to a year ago,” the report’s authors noted with a hint of bemusement. “Although NYC was one of the rental markets that saw the steepest rent declines during the pandemic, its median asking rent rebounded to pre-pandemic levels by Spring 2022 and has continued to rise annually since then.”

Indeed, the median asking rent for all rental properties listed on Realtor.com across the boroughs in July 2024 reached an eye-watering $3,421, marking a 13.7% increase from the pre-pandemic figure of July 2019. It seems that in the grand game of real estate, New York City is still very much in the lead, leaving many to wonder just how much more they’ll have to shell out for a slice of the Big Apple.