I’m seeing this funny dynamic of “running away from a transaction” on some rental listings.While contracts signed is still red hot the huge number of off market tells me that agents are telling sellers they aren't going to get the prices they want right now. That would seem to indicate that increased sales volume is still being driven by reduced prices. Personally I think sellers should be striking while the iron is hot. Those who don't may regret passing up the liquidity of the current market.
seasonality during July & Aug tho? https://www.urbandigs.com/marketwide-charts/off-market/While contracts signed is still red hot the huge number of off market tells me that agents are telling sellers they aren't going to get the prices they want right now. That would seem to indicate that increased sales volume is still being driven by reduced prices. Personally I think sellers should be striking while the iron is hot. Those who don't may regret passing up the liquidity of the current market.
Rental market is on fire right now. Sales market is fading from record activity, still strong tho, but rental markets are doing their thing! Just did a podcast with Adrian Savino of Living NY about rental market. He sees an extended summer active season going into 2022, mainly because of back to work movement still to come and other macro forces.I’m seeing this funny dynamic of “running away from a transaction” on some rental listings.
The rental market is definitely moving fast compared to the winter, or anytime for that matter. For example, in my building the number of apts available for rent used to be a dozen (about 10%) but is now 1. As a point of comparison, last winter, some $5.1M-at-new-dev apt started with a $13K ask, dropped to $10K after a month and change, and rented a couple of weeks later. Recently, some $4.8M-at-new-dev apt asked $15K and was gone (listing to contract to declared done) in a week.
I think this frenzied market with pre-pandemic-ish pricing is going to be temporary, as we are looking at the rush of “returners” all returning in time for the fall. But then you see some listings constantly running away from the market. E.g., using the price points of the above example, they listed at $15K last winter. But then, as the market started heating up in the spring, they increased to $18K. And now in the summer, with the market so hot, $22K.
From the sounds of the video with Adrian, many seem to be offering both lower rates and concessions to existing tenants.Anecdotally the rental market recovery is very uneven:
The unit above me has been vacant for 2 years, the unit below me for 1 year, the tenants in the unit across the hall moved out October 1, I've asked just about every month if it's available, told it's rented, yet it still sits there unoccupied.
We just rerented a condo studio on 14th Street and 1st Avenue. The prior tenant was paying $2,350. The incoming one is at $1,600.
I'm hearing multiple large landlords who refused to negotiate on lease renewals last year and lost tons of tenants are negotiating lower lease renewals right now.
hm, interesting. Im hearing the opposite, very active rental season, landlords still down on price from covid, concessions fading fast, no price increases yet thoAnecdotally the rental market recovery is very uneven:
The unit above me has been vacant for 2 years, the unit below me for 1 year, the tenants in the unit across the hall moved out October 1, I've asked just about every month if it's available, told it's rented, yet it still sits there unoccupied.
We just rerented a condo studio on 14th Street and 1st Avenue. The prior tenant was paying $2,350. The incoming one is at $1,600.
I'm hearing multiple large landlords who refused to negotiate on lease renewals last year and lost tons of tenants are negotiating lower lease renewals right now.
yes yes exactly...prices still down, concessions fading + very high lease vol..crazy times - agree on future months closing the gap. Do you think maybe we get another back to work wave in fall?Good stuff, Noah.
“On fire” in terms of activity seems right to me, but not pricing. Some data from Miller Samuel:
I think we’ll see gap from pre-COVID pricing close some more in July & August before fading back some through the winter, despite the extended active season Adrian predicts. The “returnee” effect is super-strong right now: all the people who rolled out of their leases across an entire year are rushing back for Sept because of return-to-work and schools. When that momentum fades, we are going to return to fundamentals: net-net, demand for NYC is down compared to pre-COVID.
David, do you still think winter 2021/2022 may end up with pricing lower than winter 2020/2021? I’m feeling increasingly confident in my call from last year for a winter 2020/2021 bottom.
cool, interesting share. thxAnecdotally, the long-term deterioration of rents at the high end has been impressive. In 2010, I scoured the market (as I’m apt to do) to find the best deal possible for myself. The history of that apt was:
Inflation should have had the ask at 1.21x compared to 2010, so it lost 38% in real terms. It’d take a 60% increase to get to the 2010 rent in real terms.
- 2010: Ask 1.00x, rent after 2 months (at 0.88x).
- 2014: Ask 1.00x, rent after 2 months.
- 2016: Ask 0.91x, rent after 8 months (in 2017).
- 2020: Ask 0.88x, drop to 0.76x after 8 months, rent 2 months after that (in May 2021).
Sure, 2020-2021 was a crap year for the market. But so was 2009-2010, and this was a May 2021 trade when the market was “hot”.
yes yes exactly...prices still down, concessions fading + very high lease vol..crazy times - agree on future months closing the gap. Do you think maybe we get another back to work wave in fall?
That interview with Adrian was almost painful to watch. It seemed like you kept leading him where to go but he wasn't biting. I replayed some parts multiple times and it seemed like he said landlords were still giving concessions on renewals. If that's the case the market isn't nearly as booming as the anecdotes make it seem. Why would they still be doing that if the market was as good as we are hearing?hm, interesting. Im hearing the opposite, very active rental season, landlords still down on price from covid, concessions fading fast, no price increases yet tho
I've seen several articles recently by various talking heads projecting that various threats from companies about forcing workers back to the office after Labor Day aren't going well and if anything are presenting a tremendous opportunity for other companies to poach their talent. Also seeing articles about smaller cities seeing large growth in tech talent from workers returning after realizing they didn't really have to be in NY or SF after all.I think we’ll see continue see churn by people who are either upgrading or giving the finger to prior LL for not reducing rent last year. That means high volume but steady inventory, sorta what it looked like in early 2021.
I don’t think there will be a big back-to-work wave, just something muted and early (Sept) in the non-family segment. Here’s why.
Companies are in one of 3 modes right now:
1) Declared return-to-work this summer (or end thereof).
2) No explicit declaration of return-to-work, but optional work-from-home period was declared to last through end of summer, and there’s been no extension yet. This means they probably won’t extend but want to keep the option open.
3) Some sort of declaration of work-from-home indefinitely.
The common theme is end of summer as a deadline one way or another, to give clarity for those with children regarding the school year. So most families have to decide whether they are returnees this year, or not, by the end of summer.
That leaves the non-family people. Most know they have to decide one way or another by Sept, because that’s how the school year has created a deadline. Those with FOMO about the hot vac summer are back already. Those that want to stay away until the last possible moment will either come back Sept (if ambiguous companies say to come back) or won’t come back at all for now. Ambiguous companies won’t say “Nov” once they miss Sept (see family schedules), and if the non-family people didn’t come back for FOMO about hot vac summer, I doubt they will have FOMO about crisp vac fall.
Long story short, I think we’ll see a Sept rush from the non-family people squeezing it out until the last possible second, and then a fizzling of the rush back. The next natural deadline after Sept is a long ways away.
I'll have to go back and try to find exactly what my prediction was but I thought it was more along the lines that we wouldn't see a rebound by winter 2021/2022 than that prices would be significantly lower. I also think that prediction was made significantly before we saw exactly the extent of the massive concessions which would be offered at the beginning of this year?David, do you still think winter 2021/2022 may end up with pricing lower than winter 2020/2021? I’m feeling increasingly confident in my call from last year for a winter 2020/2021 bottom.
You hit the hammer on many heads.That interview with Adrian was almost painful to watch. It seemed like you kept leading him where to go but he wasn't biting. I replayed some parts multiple times and it seemed like he said landlords were still giving concessions on renewals. If that's the case the market isn't nearly as booming as the anecdotes make it seem. Why would they still be doing that if the market was as good as we are hearing?
He also indicated - which is the same as I'm seeing - that a lot of the leasing activity is tenants trading up quality wise for roughly the same rent. If that's true it is more of an indication of downward pressure on rents rather than upward. And as far as I know we are still seeing thousands of units warehoused by major landlords not even trying to rent them. Again, why would they still be doing that if the market was as good as we are hearing? Note that while "official" listing count is well off the high of January not only do we all know there's thousands of units not counted by that but even at that number it's 50% to 100% higher than historical norms.
It also seems from the Miller Samuel charts that deal volume is levelling off at the time of year it usually has just started picking up. But it's too early to call that trend with any certainty.
As far as I can tell last year's story was tenants not renewing leases because the weren't working, they were leaving NYC, etc. And no one was coming in to replace them. As a result transaction volume plummeted and as a result so did prices. This year's story is that landlords to a large extent capitulated and that while prices are up some from the rock bottom and concessions are down from absolute record numbers, huge amounts of tenants are taking opportunities to trade up to higher quality units (whether that's from walk-ups to doormen buildings, from Brooklyn to Manhattan, from 1 BRs to 2 BRs) because prices are still down.