As interest rates have remained high to combat sluggish inflation, driving away potential home buyers, the rental market has been very competitive.
And while New York City’s Manhattan and Brooklyn boroughs have seen the biggest jumps in competitiveness, neighboring North Jersey is now considered the most aggressive market for renters in the country, according to a new study.
Data from RentCafe’s latest Rental Competitiveness Report shows that northern New Jersey — which makes up Bergen, Essex, Hudson and Passaic counties in the city’s suburbs — earned the top spot for rental demand.
The study found that areas in North Jersey – including Jersey City, Hoboken, East Orange and Hackensack – are twice as competitive as Manhattan due to the severe housing shortage.
Notably, the influx of renters is pushing the occupancy closer to 97%.
Occupancy rates coupled with a record 72% of tenants choosing to renew their leases – and an average of 12 people competing for an apartment – led to a Rental Competitiveness Index rate (RCI) of 67 in early 2023.
For comparison, the national RCI is 60.
Meanwhile, nearly two-thirds of tenants in Manhattan had renewed their leases (64%) and the occupancy rate rose 0.4% year-over-year to 95%. On average, this led to six renters competing for one available unit.
Despite Manhattan seeing the fourth largest increase in competitiveness year-over-year, gaining 30 competitive points, it wasn’t enough to make RentCafe’s top 20 list of most competitive markets for the year.
Brooklyn, however, ranks 14th. Boro received 14 points in the competition.
Housing in Brooklyn can’t keep up with demand, study notes. The newly opened apartments only added 0.3% to what was available on the market – and that was not enough to make up for the 96% occupancy rate.
On top of this, more than two-thirds of Brooklynites renewed their leases (65%), with an average of nine renters applying for the same space.
Overall, eight of the top 20 hottest renting spots in the country are in the Northeast.
The study found that aspiring homebuyers continue to rent in North Jersey, enjoying a relatively affordable cost of living in the area compared to New York City.
In turn, this will allow renters to save more money so they can buy a home when the housing market cools.