Is the rental market going to crash?

David Goldsmith

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Looking at RealPlus Market Activity Report for rentals for March so far (3/28/2020) I'm seeing:
new listings (4016)
price drops (5205)
Permanently Off Market (1605)
Temporarily Off Market (614)
expired listings (150)
lease signed (368)
 

David Goldsmith

All Powerful Moderator
Staff member
I guess it was! Lol.


Manhattan, Brooklyn and Queens saw record low leasing activity in March
"Unusually large declines" across three boroughs, as city becomes epicenter

The 37 percent drop in Manhattan was the second largest annual decline in new leases in more than 11 years, according to a market report by Douglas Elliman. On the sales side, new contracts also fell sharply at the end of the month.

The effect of the pandemic was multilayered, according to appraiser Jonathan Miller, who authored the rental report. In late March, brokers were barred from conducting in-person showings, meaning they could only offer virtual tours to prospective tenants.
Then, for those renters who did find a home, the logistical challenges of moving during a pandemic threatened to jeopardize deals. Miller said he’s heard anecdotal reports of several buildings across the city blocking move-ins out of concern about spreading the virus — despite the state’s classification of moving companies as an essential service.

In Brooklyn, the number of new lease signings was the lowest in four and a half years — down 45.7 percent to 721. In Queens, the number dropped 20.4 percent to 223.


At the same time as new leases were tumbling, rents in all three boroughs were on the rise. In Manhattan, the median rent price rose by 5.6 percent to $3,590. In Brooklyn, it was up 3.4 percent to $3,000. And in Queens, the median rent rose 2.9 percent to $2,881.

“You ask yourself, how’s that possible in this environment?” Miller said. “I think the pricing data like that probably lags.”

Throughout the past year, rents have been rising in New York — a response to the soft sales market — and the latest figures reflect that momentum, rather than the effect of the pandemic, he elaborated.

“I would be surprised if we saw much more rent growth going forward,” he said. But, he cautioned, that did not necessarily mean there would be a drop.
 

David Goldsmith

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Using my own personal bellwether of Stuyvesant Town / Peter Cooper Village, the number of a available listings on their website - which had fallen from around 200 down to around 100 after the statute changes of June 2019 - crossed the 150 mark, representing a 50% increase in barely a month.
 

David Goldsmith

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Coronavirus economy could burst America's big-city rent bubble
But the overall housing crisis could actually worsen as many Americans struggle to pay rent at any cost.
But the overall housing crisis could actually worsen as many Americans struggle to pay rent at any cost.

The gridlocked coronavirus economy could upend housing from coast to coast, bursting national apartment rents that have risen by 150 percent over the last decade, experts say.
Yet the situation will likely do little to alleviate the housing crisis, because the more than 16 million Americans who filed for unemployment insurance in the last three weeks will still need roofs over their heads, say economists and affordable housing advocates.

More than half of the 600 concerned landlords on a conference call Wednesday with the Apartment Association of Greater Los Angeles said they have tenants who haven't fully paid their April rent, according to Executive Director Daniel Yukelson.
"It does show you the impacts the crisis is having on both owners and renters," he said by email.
(More)
 

David Goldsmith

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What Happens to NYC Rents During a Recession?

What happens to NYC rents during a recession? We looked at data from the 2008 financial crisis to find out.
Key Findings:
  • While it’s too early to predict how COVID-19 will impact the NYC rental market, understanding what happened to NYC rents in the last recession can be helpful.
  • Manhattan rents fell nearly 10% during the Great Recession, and rents for the least-expensive apartments in the borough fell the most, by as much as 11%, due to rising unemployment and high vacancy rates.
  • However, NYC has dramatically changed since then, with a strong economy driving tremendous growth in jobs and rents. Before the coronavirus pandemic, rents across New York City were at record highs.
  • The outer boroughs could be impacted more in 2020. The economic fallout from the coronavirus has made a significant impact on employment and industries in the outer boroughs, which could cause larger rent drops there compared to Manhattan.
  • Rents have not changed since the coronavirus struck NYC, but fewer rentals are hitting the market. There was a 57% decline in new rental listings between March 16 and March 27 compared to a year prior.
~
Before the coronavirus pandemic arrived, rents across New York City were hitting record highs. The last time rents fell across the city was in 2008, during the Great Recession. Given that two-thirds of New Yorkers rent their homes rather than own them, many are wondering what effect the current economic disruption could have on the cost of living for New York renters.
With so many variables at play — including how the virus may spread, and policy and economic reactions to it — we can’t make firm predictions yet. Moreover, any comparison between the current situation and the Great Recession can’t be direct because the causes of each are different. In 2008, a crisis in the housing sector led to the collapse of financial institutions and a plummeting stock market. Today, the economic downturn is caused by a global pandemic.
Yet with economic headwinds building, it may be helpful to recall what happened last time. To estimate the impact a lasting recession could have on the current NYC rentals market, StreetEasy created three different rent indices. Each of these represents the high-, low-, and middle-priced thirds of the market. All illustrate how rents at all levels changed after the last recession.
From 2008-09, Manhattan Rents Fell Nearly 10 Percent
In September 2008, the Lehman Brothers investment bank collapsed, setting off a financial crisis. Unemployment in New York, especially Manhattan, accelerated. Starting that month, rents in Manhattan dropped 9.4% over the following year.
One might expect the highest-priced tier rentals to have fallen the most, as their former tenants grew more conservative with their spending. But in fact, the lowest-priced rentals in Manhattan saw the biggest drop in prices.
By March 2010, 18 months past September 2008, Manhattan rents in the lowest third of prices had fallen 11% year over year. Middle-tier rents fell 10%, and top-tier rents dropped 9%.
chart image of manhattan rents during a recession
Job Losses and Vacancy Rates drove rent Declines
Driving Manhattan rental prices to fall the most, particularly those in the lowest price tier was rising unemployment and high vacancy rates. When the financial crisis hit, Manhattan’s jobs sector was dramatically impacted. New York City’s finance and insurance sector lost 31,900 jobs between 2008 and 2010, a decrease of 9.3%.
Compounding the already-high unemployment and vacancy rates, the Great Recession pushed even more budget-conscious residents to flee to other boroughs in search of affordability. Meanwhile, Manhattan landlords scrambled to give discounts and concessions. Manhattan was not only where rents fell the most, but also where landlords gave the most concessions and discounts.
Smaller Declines Outside Manhattan
Overall, rents fell most in Manhattan, less in Brooklyn, and remained relatively stable in Queens. Rents in Brooklyn dropped 4.9% between August 2008 and 2009, almost half the rate at which Manhattan rents fell. Rentals in Brooklyn’s low-price tier fell the least in the same period.
Typically in a recession, the sales market cools, while the rental market picks up, as would-be buyers stay in rentals and previous homeowners turn to them. During the Great Recession, however, both the sales and rentals markets slowed in New York City as people were laid off, new jobs weren’t created, and people moved out of the city. This resulted in fewer renters and high vacancy rates. NYC lost 49,100 private-sector jobs from December 2007 to December 2008, which sent the unemployment rate from 5.1% to 7.4%. The rentals market did not strengthen until the economy, led by the job market, turned around.
Outer Boroughs Could Face Biggest Impact in 2020
Rents in New York City haven’t made any significant movements since the coronavirus pandemic began, and it’s too soon to make any concrete predictions. However, should the city head into a post-pandemic recession, there may be larger rent drops in the outer boroughs compared to Manhattan.
According to a report by the Center for an Urban Future, the coronavirus pandemic may cause deeper losses in the outer boroughs than in previous recessions. During the 2008-09 recession, Manhattan’s finance and insurance sectors saw the biggest increases in unemployment. Today, the outer boroughs have the highest concentration of vulnerable industries, such as restaurants, retail, childcare, and personal services.
Jobs in these industries have also grown the fastest in the outer boroughs, and as a result, may be slower to recover from unemployment. In contrast, Manhattan is home to nearly 83 percent of all office jobs in the city as of 2019, and these jobs have not yet experienced significant losses.
 

David Goldsmith

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NYC Rents During a Recession: Shifts in the Market
Right now, the only notable changes in the rentals market are contractions in both demand and supply. Fewer renters are looking for an apartment, and fewer rentals are hitting the market.
The two weeks from March 16 to March 27 saw a 54 percent decline in new rental listings from the previous two weeks and a 57 percent drop from the same period in 2019.

It is unclear how much of this decline in activity so far is due to social distancing measures — which were not a factor in 2008 — or due to people moving out of the city from unemployment, which occurred during the Great Recession as well. It’s also uncertain whether the rental market will return to normal levels once social distancing measures have been lifted.
Either way, the impact on employment and income loss will likely be large: 1,405,000 people, or 34 percent of the city’s wage earners, may be at risk of income loss from COVID-19. Restaurants and bars in the city employ about 320,000 people, and at least 67,650 were laid off or furloughed in the week after these businesses were ordered closed. Only time will tell if this impact will ultimately translate to fewer renters, higher vacancy rates, and a corresponding decline in rents.
NYC Has Changed Dramatically Since the Great Recession
The Great Recession and the coronavirus pandemic are the only events in recent history where New York City faced a slowdown in economic activity and a rise in unemployment. And between those two periods, New York City changed drastically, with a strong economy driving tremendous growth in jobs and rents.
Until February 2020, New York City had experienced the longest and largest job expansion since the end of World War II. Between 2009 and 2019, jobs in New York City grew 24.3 percent, outpacing the national growth of 15.3 percent.
The creation of jobs is an essential factor for the strength of the rentals market. In a strong economy, many people move to the city for work, and the rentals market sees a lot of demand. In a weaker economy with higher unemployment, renters move out of the city, resulting in higher vacancy rates, which can lead to lower rents.
Ultimate Impact of COVID-19 Depends on Many Factors
The ultimate impact of coronavirus on employment depends on several factors, including how long stay-at-home policies last, and how effectively the $2 trillion CARES Act provides economic relief. If the virus has little impact on job levels once business resumes, rents may not be affected. Conversely, sustained job losses, and slow job growth could move rents down as they did during the Great Recession. We simply don’t know yet.
StreetEasy is keeping an eye on the data as the coronavirus situation continues to develop. During typical seasonal dips, landlords and renters can anticipate that the market will improve in a few months. With COVID-19, as with the Great Recession, no one knows when the economic downturn may end.
Last time, landlords rushed to offer deals. This time, there are already early signs of change in the rising share of rental discounts and concessions. Renters whose leases are expiring soon should plan to negotiate. The rest of us will have to wait and see.
How We Did It
The StreetEasy Rent Indices are monthly indices that track changes in rent for all housing types, and are currently available for Manhattan, Brooklyn, and Queens. Each index uses a repeat-sales method. The repeat method evaluates rental price growth based on homes in a given geography that have listed for rent more than once. More details on methodology here.
The custom rent index is indexed to August 2008=100. For example, a drop to 90 in 2009 means a 10% drop in rents since August 2008. The indices are split into the top, middle, and bottom tiers based on the asking rents of each percentile each year.
 

David Goldsmith

All Powerful Moderator
Staff member
Using the same source as the first post in this thread, updating for June numbers:

Looking at RealPlus Market Activity Report for rentals for June (6/1/2020 through 6/30/2020) I'm seeing:
new listings (8717)
price drops (9207)
Permanently Off Market (1876)
Temporarily Off Market (712)
expired listings (129)
lease signed (588)
 

David Goldsmith

All Powerful Moderator
Staff member
Here’s How COVID-19 Is Affecting New York Rent Prices
Rent prices are falling in much of New York City as residents continue to grapple with the COVID-19 pandemic. In Manhattan, the vacancy rate on rental units is now the highest in more than a decade, at nearly 4%, which is further fueling the decline.

The median net rent price in Manhattan dropped 6.6% in June over the prior year, to $3,242 per month, according to a new report by Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants. Meanwhile, inventory soared nearly 85% to record highs. A similar trajectory is playing out in Queens, where the median effective rent dropped 8.2%, to $2,560.
“What we’ve got is a barely functional market,” says Jonathan Miller, CEO of Miller Samuel. Prior to June 22, real estate agents were barred from showing listings in person, making it difficult for landlords to find renters, and also discouraging residents from signing new leases.

Counterintuitively, Miller expects an increase in real estate activity to lower prices in the New York City area, since it will better reveal the actual state of the economy. “At least at this point, it looks like the rental market might be more impacted than the purchase market,” he adds, “because the skew on unemployment has been more heavily weighted towards hourly wage earners [and] lower wage earners.”

Still, prices are not yet falling everywhere. In Brooklyn, for instance, the median rental price climbed 1% in June (over the prior year), to $2,944, though that marked the smallest increase in 18 months.

Thousands of New Yorkers have fled the city in recent months to less densely populated areas of the country. According to an analysis published by The New York Times NYT in May, “In March, the United States Post Office received 56,000 mail-forwarding requests from New York City, more than double the monthly average. In April, the number of requests went up to 81,000.”

That exodus contributed, in part, to the spread of the virus elsewhere in the U.S., a dynamic that is beginning to reverse. The number of new cases in New York has dropped off considerably since peaking in April, while rates are skyrocketing in Texas, Florida and other parts of the country.
 

David Goldsmith

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https://streeteasy.com/blog/q2-2020-market-reports/

Manhattan Rents Fall as Pandemic Sends Housing Market Reeling StreetEasy’s Q2 2020 Market Reports show interest in the outer boroughs surging as Manhattan rents fell for the first time since the Great Recession. (Getty Images)
As New York City faced the worst impacts of the coronavirus pandemic in the second quarter of 2020, the city’s real estate market reeled. Demand for rentals plummeted at a time when it normally rises, interest in the outer boroughs shot upward, and rents in Manhattan fell for the first time since the Great Recession, according to StreetEasy’s Q2 2020 Market Reports [1].
The period saw a record high for rental discounts in Manhattan. Some 34.7 percent of all borough rentals received a discount, indicating a sharp reduction in renter demand. Landlords cut a record 6.7% off the median asking rent in the borough, equivalent to $221 per month for the median apartment.
infographic of q2 2020 market reports data on manhattan rental discounts

The same drop in demand also caused the StreetEasy Manhattan Rent Index [2] to fall year-over-year for the first time since the Great Recession, sinking 0.9% to $3,236.
Yet while demand for new rentals fell, interest in those same apartments — as measured by anonymized StreetEasy user search data — rose over last year, especially in the outer boroughs. Stay-at-home-orders drove a flood of online home shopping, and StreetEasy searches for rentals in all three boroughs analyzed increased over 2019.

Manhattan 1-2BRs Under $2,700 on StreetEasy
Brooklyn saw the biggest jump in user interest, with 26% more searches than 2019, while Queens searches rose 24%. Even searches for Manhattan rentals increased at 15% year over year. This suggests that in addition to renters seeking new homes, others were watching to see how the pandemic might impact the city’s historically high rents.
Virtual Tours Replace Central Location as a Top Priority
Landlords, meanwhile, responded to the stay-at-home restrictions with a surge in virtual tour offerings. Agents and landlords uploaded 54 times more walkthrough videos on rental listings in the second quarter as in the first. They added 10 times more floor plans as well.
“Commuting to the office and living in the center of the city were simply not on the list of priorities for renters during this past quarter, and landlords reacted by slashing rents and trying new tactics in order to attract tenants,” says StreetEasy Economist Nancy Wu.
“Landlords are in for a much slower than normal summer rentals season, even as the city slowly begins to reopen. Remote work has given many renters the option to live anywhere they please, making it too soon to predict when rents will rebound.”

Rents and Home Prices Fall in Manhattan
The pandemic and surrounding health precautions caused the first year-over-year drop in Manhattan rents since the Great Recession. The StreetEasy Manhattan Rent Index fell 0.9% to $3,236. Rents dropped the furthest on the most expensive apartments, with the priciest 20% of the market seeing a 1.4% decrease in rents to $6,325. Sales prices also fell, with the StreetEasy Manhattan Price Index [3] down 4.1% from last year to $1,062,276.

Brooklyn Home Prices Drop at Fastest Rate in 7 Years
The StreetEasy Brooklyn Rent Index increased 2.6% to $2,728, the slowest pace of growth since the fourth quarter of 2018. More than 1 in 4 (25.6%) rentals were discounted during the second quarter, an increase of 8.6 percentage points year-over-year, according to the Q2 2020 Market Reports. The StreetEasy Brooklyn Price Index fell 1.6% to $687,160, marking the largest year-over-year drop in home prices in seven years. Sales inventory was down 31.5% compared to the second quarter of 2019.
Queens Rents Climb, But More Slowly
Rents in Queens continued to climb, but at the slowest pace in two years. The StreetEasy Queens Rent Index rose 1.2% to $2,196 during the second quarter. More than one in five (22.5%) rentals were discounted in the borough — an increase of 4.7 percentage points from last year, and the largest share of discounts since the third quarter of 2018. Home prices in Queens remained flat compared to last year at $507,321.
 

David Goldsmith

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Staff member

New York’s Rents Drop as Vacancies Increase. Could Rent Regulation be Next Thing to Fall?

Since the pandemic struck the city, mover Dan Menchini has picked up the belongings of 200 New Yorkers and put them in storage as they left town.

The customers, he said, either allowed their leases to lapse or talked their landlords into terminating their leases — but weren’t ready to decide on a permanent place to live.
Dan Menchini, owner of Santini Moving & Storage, has seen a rise in people moving during the coronavirus outbreak, July 24, 2020.
Dan Menchini, owner of of U Santini Inc., has seen a rise in people moving during the coronavirus outbreak, July 24, 2020. Hiram Alejandro Durán/THE CITY
“This has never happened before,” said Menchini, the owner of U Santini Inc., a 90-year-old moving company in Brooklyn. “They send me their keys and say, ‘Pack it up and put it in storage and we’ll figure it out later.’ There are so many people in flux.”

With thousands or more leaving New York, rents are dropping for the first time in years, and residential housing experts say the decline will continue for the rest of 2020. What happens after that is unclear to even the experts.
Meanwhile, vacancy rates are increasing — and if the trend holds, New York’s system of rent regulation could be endangered since it is based on a housing emergency defined as a vacancy rate of 5% or less. A key official vacancy survey is expected to begin next year.

“I view the summer as the spring market that never took off because of the shutdown,” said Jonathan Miller, chief executive of Miller Samuel and the author for decades of the Elliman reports that track the region’s residential markets. “Then after Labor Day all bets are off. I think the rental market hasn’t found its level yet.”
A Downward Trend
Recently released numbers show a dramatic change in the market where rent increases once seemed relentless.
The median rent in Manhattan dropped 4.7% in June, the first decline since 2018 and reversing all the increases of the past two years, according to Elliman. Rents fell a little less in Brooklyn and by more than 5% in northwest Queens. The report doesn’t track The Bronx and Staten Island.
Elliman Report
One-third of Manhattan rents were discounted from their asking price, by an average of 7%, according to data from StreetEasy.

The Manhattan vacancy rate, Elliman found, jumped 2 percentage points to 3.67%, a 14-year high.
The data is only available for new leases and significant concessions on lease renewals would also show declines in rent, Miller said.
Neither Miller nor Nancy Wu, an economist at StreetEasy, was willing to make a prediction of how much more rents will decline.
But Wu noted that many leases are expiring this summer which will translate into lower rents as demand falls and inventory rises. One factor: It isn’t clear how many college students will return with many classes exclusively online.
‘We Love New York’
The key, however, is the decision of many people to leave the city, either temporarily or permanently.

Sean Sullivan and his family made the agonizing decision to leave New York temporarily during the quarantine.
He and his wife, both attorneys, stuck it out working remotely with their 4- and 6-year-old kids in their Prospect Heights two-bedroom apartment until the end of May. That’s when the kids began refusing to go outside, unwilling to suit up with masks and gloves just to play on a small patch of sidewalk near their building.
“They felt a lot of anxiety,” he said. “It was just a lot.”
The couple debated leaving “for weeks,” he remembered. She was born and raised in Manhattan and he had lived in New York for more than 20 years. Neither wanted to flee the city “in a time of crisis,” he said.

Ultimately, they decamped to his in-laws’ house in Vermont. Now, they go on hikes every weekend, and the kids have room to run around. But they plan to leave Vermont in late August.
“We will be back,” he said. “We love New York.”

More and more, however, neighbors in their building in Brooklyn are moving away — for good.
The city’s population had been falling before the pandemic. After initially claiming declines reported by the U.S. Census Bureau were statistical blips, the City Planning Department in March conceded that population had decreased by about 85,000 people between 2017-2019.

Though no one has any data to back up the claim, experts generally agree that people have left the city during the pandemic in large numbers — but disagree on who those people are. Some believe that the move outs and concentrated among upper income families. Others say millennials have fled, most of them to move back in with their parents.
Burbs Boom
All agree suburban areas are benefitting as city residents move to buy homes or rent apartments. Mortgages rates below 3% have given many renters the means to buy.
Miller noted signed contracts in Westchester for home purchased soared 50% in June from the previous month. “On the ground, brokers in Westchester, Fairfield, Nassau and Suffolk have seen a tremendous inbound traffic from residents from the city looking to become first-time buyers,” he added.

Wu notes that while people are moving out across the city, the Manhattan market is the weakest because people no longer are interested in shared amenities like workout spaces that come with pricey rents and instead simply want more space.
Elliman Report
That’s not what she expected: In March, she wrote a blog post noting that rents following the 2008 financial crisis declined the most in the boroughs outside Manhattan and among lower-cost apartments, and said she expected to see the same trend this time.
She now believes that interest in moving from Manhattan to Brooklyn and Queens might help bolster those areas.

Miller predicts rents will soon fall just as much in those boroughs and for lower-cost units because those areas and lower-income service workers who live there have been hurt the most in the economic meltdown.
‘Laundry Room is Deserted’
Developers know they have no choice but to cut rents if they are going to fill apartments.
Camber Property Group is beginning to market a 132-unit market rate apartment building on Starr Street in Ridgewood, Queens, and expects to offer two or even three months free rent to lure people to the building after cutting rents by about 5%. The total discount is almost 20%.
“It is the worst time in history to be leasing up units,” said principal Rick Gropper, said in a webinar on the market last week.

Renters know they have the leverage.
Monish Datta is hoping to find a better deal on rent in SoHo. The start-up vice president moved to the neighborhood just before the virus crisis and has watched his 60-unit complex turn into a “ghost town.”
“I never have to wait for the elevator,” he said. “The laundry room is deserted.”
He’s planning to ask for a decrease in his $3,800-a-month rent. If his landlord doesn’t go for it, he might break his lease. He’s seen a lot of good prices in listings elsewhere.

Joshua Maymir left Brooklyn in March as the pandemic hit to move back to his family in Texas. The 23-year-old data analyst for an educational nonprofit recently decided to return to New York and started searching for a new apartment on StreetEasy, spotting a one-bedroom apartment near Lincoln Center for $1,200 a month.

He and a roommate eventually settled on a two-bedroom apartment near the Parkside Avenue subway stop in Brooklyn for about the same $1,100 each a month they paid before — only with much more space, better views and a more convenient location.
“Because the rent is relatively low, it will be easy to sublease” if his or his roommate’s situation changes, Maymir noted.
Commuting Plans
After the pandemic ends, many real estate executives insist, the city’s economy will rebound, empty units will be filled and rents will move back to pre-pandemic levels. “When you are back in the office four to five days a week, you will want to be back in the city,” said Ariel Property Advisors President Shimon Shkury in the webinar where Gropper talked about his situation.

Miller and Wu are skeptical, saying the transition to working from home for many has raised the possibility that people will not return to the office full time. “Even after we have a vaccine, the ability of technology to lengthen the tether between work and home will allow longer commutes,” Miller said —especially if the commute is for two or three days a week and not five.
‘The ability of technology to lengthen the tether between work and home will allow longer commutes.’
Wu independently used the same word — tether — to describe the likelihood people will choose suburbs if they don’t have to commute every weekday.
If Miller and Wu are right, the city’s system of rent regulation, which imposes price controls on about half the city’s units, could be endangered.

Every three years, the Census Bureau and the city’s Department of Housing Preservation conduct a study of the market to determine the vacancy rate, which must be 5% or less to justify a state of emergency and regulation. The next survey will be undertaken next year with the results available in 2022.
“It is relevant for housing advocates to think about the possibility that if flight from the city continues, there could be a question as to the need for rent regulation to continue,” said Sherwin Belkin, a lawyer specializing in rent law.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Its gonna be a tough down cycle. Wonder if we will see pro growth policy changes in the future due to this new reality?
 

David Goldsmith

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I think there will be some significant adjustments ahead.
1) If rents actually do decrease significantly it could easily make more of a difference in monthly outlay than the decline in mortgage rates because they were already so low. If anyone is actually making "Rent vs Buy" decisions they could flip the other way.

2) With an awful lot of rental buildings in NY being so highly leveraged increases in Real Estate Taxes, real problems with the retail spaces, lower apartment rents, and increased vacancies could really put a large number of buildings under water.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Good points. I would think:

1. we need to reasses based on sales prices too as those have come down, we just dont know how much. We added a cool new tool on UD we are yet to annouce, that lets us see early months sales data in grey (estimated until complete) and here is a quick snapshot:
1596201281375.png

2. Yea, agree on this and think those pressures remain for medium term at least.

Some other points to consider?
1. What about outside investors? Distressed funds? Wondering if opportunistic $$$ will come into this market now that cap rates may look more attractive with equity valutations readjusted on larger scale assets?

2. New devs? what happens here? I think those leveraged like you say, are done. Will we see defaults or under the table restructurings? Those that can wait it out and adjust pricing more easily due to corp structure and loans/investor terms, etc, should be ok

3. Foreign interest? How does nyc look versus the other major international urban hubs?

4. Currency crisis play? Hm, deep one. Those that think there may be a fiat currency crisis at the end of this, think the USD, while pressured now in short term, will be the rising long term king of the terds, so to speak. Will $$ come in to US assets and nyc to protect capital?

Lots of stuff going on, great conversation
 

David Goldsmith

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Re:Outside Investors:
As far as I can tell there is tons of money looking to buy distressed assets. The problem is that as of yet next to no one is letting them go at distressed prices; and why would they when there is so much pressure on lenders not to foreclose, there is tremendous forebearance, etc. But that won't last forever. And if during the time between now whenever that clock runs out rents go down and vacancies go up the prices that vulture capital will be willing to pay could be significantly eroded.
 

David Goldsmith

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Re: New Developments
There is just so much shadow inventory which should have been on the market already and close to zero deals being done you just have to wonder how long developers can hold onto vacant almost completed projects with no income.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Re:Outside Investors:
As far as I can tell there is tons of money looking to buy distressed assets. The problem is that as of yet next to no one is letting them go at distressed prices; and why would they when there is so much pressure on lenders not to foreclose, there is tremendous forebearance, etc. But that won't last forever. And if during the time between now whenever that clock runs out rents go down and vacancies go up the prices that vulture capital will be willing to pay could be significantly eroded.
hmm, very very interesting points David and agree on the first part, sellers just not letting them go at those levels en masse, only few here and there
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Re: New Developments
There is just so much shadow inventory which should have been on the market already and close to zero deals being done you just have to wonder how long developers can hold onto vacant almost completed projects with no income.
Plus govt help allowed whatever that period is to extend longer, so we are in that extend and pretend period now, but its closer to the end and time is a ticking
 

David Goldsmith

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Staff member
I got an email today from the marketing team at The Victory (561 Tenth Ave) offering 2 months free + 2 months OP on 12 month leases. That's 1/3 of the rent.

At The Epic (125 West 31st St) it's 3 months free + 1 month OP.
 

John Walkup

Talking Manhattan on UrbanDigs.com
Interesting. I'm hearing reports of deep price cuts on the portals then quick reversion to the original asking rent before signing.
 
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