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As interest rates remain high to combat languishing inflation, warding off potential home buyers, the rental market has been very competitive.
And while New York City’s Manhattan and Brooklyn boroughs have seen the biggest leaps in competitiveness, neighboring North Jersey is now considered the most aggressive market for renters in the nation, according to a new study.
Data from RentCafe’s newest Rental Competitivity Report shows that North New Jersey — which makes up Bergen, Essex, Hudson and Passaic counties in the city suburbs — earned the top spot for rental demand.
The study found that those North Jersey areas — which comprise Jersey City, Hoboken, East Orange and Hackensack — are twice as competitive as Manhattan due to a drastic housing shortage.
Specifically, an influx of renters is pushing occupancy close to 97%.
The occupancy rate combined with a record 72% of renters choosing to renew their leases — and, on average, 12 people competing for one apartment — led to a Rental Competitivity Index rate (RCI) of 67 at the start of 2023.
To compare, the national RCI is 60.
Meanwhile, Manhattan had almost two-thirds of renters renewing their leases (64%) and the occupancy rate increased by 0.4% year-over-year to a strong 95%. On average, this led to six renters competing for one available unit.
Despite Manhattan seeing the fourth biggest increase in competitivity year-over-year, gaining 30 competitive points, it was not enough to make it RentCafe’s top 20 list of the most competitive markets for the year.
Brooklyn, however, ranked number 14. The borough gained 14 points in competitivity.
Housing in Brooklyn cannot keep up with the demand, the study notes. Newly opened apartments added just 0.3% to what was available on the market — and it wasn’t enough to lower the 96% occupancy rate.
On top of that, more than two-thirds of Brooklynites renewed their leases (65%), with an average of nine renters applying for the same place.
Overall, eight out of the country’s top 20 hottest renting spots are in the Northeast.
The study found that aspiring homebuyers continue to rent in North Jersey while 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 for when the housing market cools, so that they can buy a home.