Is the rental market going to crash?

John Walkup

Talking Manhattan on
What's the spread between actual and net effective rents right now? 3-months free, Amex cards, etc sound great, but how many are actually getting meaningful reductions in actual rent? I wonder how many lenders are starting to rethink the math on rent rolls.

David Goldsmith

All Powerful Moderator
Staff member
I wish StreetEasy would force everyone to use their new, much more transparent format for representing base and effective rents. I agree re:lenders - these buildings aren't keeping these tenants. People in Stuyvesant Town are moving out in droves because they are offering incentives only to new tenants. I got in a cab this week and the driver told me he just dropped off someone who told him they worked in management and there were over 1100 vacancies.

David Goldsmith

All Powerful Moderator
Staff member
Rental listings in Manhattan hit 14-year high as vacancies soar
Median rental price fell 11 percent as residents retreat from Manhattan

Looking for a new apartment to rent in Manhattan? You’ve got options.
The number of listings in the borough hit a 14-year high last month. The total of 15,923 is more than triple that of the same period last year, according to the latest Douglas Elliman rental report from appraiser Jonathan Miller.

The vacancy rate hit 5.75 percent — for New York City, a stunning figure.
Concessions in September also reached a record high, as landlords compete for tenants in a city struggling with mass unemployment and the departure of several hundred thousand residents.
Another factor working against landlords is that many New Yorkers are no longer tethered to their apartments: Remote work remains the norm and most schools are still operating virtually.

The median net-effective rent, which is rent with concessions factored in, fell to $3,036 in Manhattan, an 11 percent drop from $3,411 in September 2019.
The type of properties renters are choosing sheds light on the effects of the pandemic. Leases for two- and three-bedroom homes went up year-over-year, for example, while the number of new leases for studios fell by 6 percent. Leases for one-bedrooms also dropped.
The median net-effective rent for studios and one bedrooms saw the largest declines in four years that Miller has been tracking them. Rent for studios fell a staggering 17.1 percent.

“The unemployment situation that we’re seeing now is heavily skewed to lower-wage earners,” Miller noted.
In Brooklyn, the real estate market is down overall on the previous year, but the borough has come out far less bruised than Manhattan, in part because the greater space and cheaper rent in Kings County has attracted boxed-in Manhattanites.
“It’s performing much better than Manhattan is, and this is the same parallel with the sales market,” Miller said.
Last month, new leases in Brooklyn hit the highest level in 14 months. The median market rent was down from last year, but the median price for luxury rentals increased 7 percent to $6,500. That figure was $6,076 in the same period last year.

Listing inventory also climbed, reaching a high of 4,235, compared with 3,890 listings the month before. In Queens, the rate of rental inventory was the highest in five years.
Net-effective median rent also declined in Queens for the fifth month in a row. Miller said the declines were tied to the shift in sentiment about Manhattan.
“If you look at the Queens results, they’re more negative than Brooklyn because this is Northwest Queens, not the whole borough,” Miller said of the study area. “One subway stop away.”
“So it has more to do with Manhattan than it does with Queens.”

While the rates of available units in Manhattan will likely alarm homeowners and landlords, Miller said nuance within the figures may offer some comfort.
Notably, the growth rate for new listings appears to be leveling off: After new listings shot up 57 percent in May, that trend has been cooling ever since, with new listings growing by just six percent in September.

David Goldsmith

All Powerful Moderator
Staff member
Empty rental apartments in Manhattan triple, nearly hitting 16,000
  • The number of apartments for rent in Manhattan tripled in September, with nearly 16,000 apartments sitting empty, according to data from Douglas Elliman and Miller Samuel.
  • The vacancy rate in Manhattan, which is typically 2% to 3%, is now just under 6%.
  • The median net effective rents — those that include concessions — fell by 11% to $3,036.
The number of apartments for rent in Manhattan tripled in September, with nearly 16,000 apartments sitting empty, according to a new report.

There were 15,963 apartments for rent in September, up from 5,299 a year earlier, according to data from Douglas Elliman and Miller Samuel. The vacancy rate in Manhattan, which is typically 2% to 3%, is now nearly 6%.

Prices are also dropping. The median net effective rents — those that include concessions — fell by 11% to $3,036. The big question for New York City, which is facing a population decline, higher crime rates and high unemployment, is whether prices can fall enough to lure residents back to the city.

“I don’t think we’re there yet,” said Steven James, president and CEO of Douglas Elliman’s New York City brokerage. “I think we have a little ways to go. The consumer knows the landlords are on the ropes and they know they’ve got them.”

Manhattan rents remain high by national standards. The average rent for a one-bedroom in September was $3,307, while rents for a two-bedroom average $4,817. The low end of the market has been hit especially hard, since lower-paid workers in service industries and restaurants have borne the brunt of the economic pain in New York. Rents for studio apartments have fallen by 14%.

Rentals account for two-thirds of the apartments in Manhattan, which is the largest rental market in the country. As rents fall, and more apartments sit empty, the pain could begin to cascade down to smaller, less capitalized landlords and to mortgage lenders and banks. It could also start to impact property tax revenue — which is the largest source of revenue for New York City — as landlords don’t have rental income to pay their taxes.

“The chain reaction is going to be difficult, especially for newer landlords that haven’t been through something like this before,” James said.

David Goldsmith

All Powerful Moderator
Staff member
NYC rents continue to drop, and landlords are feeling the crunch
Small property owners will take to the streets to demand action from City Hall

UPDATED, Oct.16 2020, 10 a.m.: Rents across the city continued their downward slide in September, and hundreds of frustrated landlords are feeling the crunch — and demanding relief.
Median rents in Brooklyn, Manhattan and Queens all fell in September, according to an analysis of active apartment listings as of Sept. 30 by The Real Deal. The largest decrease was Queens, where the median rent fell nearly 12 percent, from $2,600 to just $2,295. The drop was slightly less steep in Brooklyn; there, rents fell 7 percent, from $2,914 to $2,700. It was the same story in Manhattan, where the median rent fell 5 percent, going from $3,418 to $3,200.
Manhattan did see an improvement in inventory: Active apartment listings in the borough decreased in September, from 21,736 to 20,182. That trend didn’t bear out in the other boroughs: In Brooklyn, apartment listings increased by nearly a third, from 4,628 to 5,945. In Queens, listings increased 71 percent, from 1,307 to 2,238.

Since Covid-19 struck, the vacancy rate in Manhattan has climbed to historic highs. In August, the vacancy rate reached 5.1 percent — the third record-breaking month in a row since appraiser Jonathan Miller started keeping track many years ago.
Landlords continue to lower rents in a bid to keep their tenants and salvage their investments, but the loss of revenue, along with nonpayment from some renters — plus limits on evictions that are in place through the end of the year — is putting pressure on smaller property owners, who want City Hall to take action.

A coalition of groups representing smaller landlords plans to take to the streets on Friday to demand that the city slash property taxes, eliminate property tax late fees altogether, or delay the tax lien sale, which is currently scheduled for Nov. 3.
Joanna Wong, a landlord who represents one of the groups organizing the rally, Small Property Owners of New York, said that many smaller landlords are frustrated at tenants who are able to pay rent but choose not to because they cannot be evicted, while owners’ property tax bills pile up.
“I understand there are serious issues out there, but that doesn’t mean they should have a free ride,” Wong said. “Just because people are hurting doesn’t mean it’s a free-for-all.”

One bill that sought to provide a subsidy for low-income renters came with too many eligibility requirements, Wong said. One of her tenants was not able to receive a state subsidy because part of her income was in cash.
Jan Lee, a member of NY Chinese Property Owners Alliance whose family owns about 25 units in Chinatown, said that small landlords have different issues from those of larger ones, and need to “have some distinctive voice.”
Lee said a rental voucher program, sponsored by Manhattan state Sen. Brian Kavanagh, was not sufficient to meet landlords’ needs. Kavanagh’s bill allocated $100 million from federal funds to provide subsidies to landlords whose tenants are eligible, but the state agency tasked with doling out the funds was overwhelmed by requests when the program went live, and questions remain over how much money has been allocated.

“Everyone knows it’s not enough, but the idea that canceling rent is a solution because property owners have this big pot of money that we can dip into is fanciful and illogical,” said Lee. “We’re not for anything that severs the economic stream.”
CORRECTION: An earlier version of this article misspelled the name of a member of NY Chinese Property Owners Alliance. It is Jan Lee, not Jim Lee.

David Goldsmith

All Powerful Moderator
Staff member
Median rent in Manhattan falls below $3,000 for first time in nearly a decade

The median asking rent for a Manhattan home has fallen below $3,000 per month for the first time in nine years, according to a report released Friday from New York City real estate firm StreetEasy.
The firm’s third-quarter report also marked the first time Manhattan, Brooklyn and Queens all recorded year-over-year rent declines since 2010.

The report comes amid increased vacancies and a struggling rental market since the coronavirus pandemic hit New York City hard earlier this year.

While the average asking price has decreased, StreetEasy recorded that rental inventory in Manhattan increased by 69.8 percent in the third quarter, with 72,267 new listings added. According to the firm, this figure is nearly 30,000 more than it was at this time last year.
Rental discounts have also increased, with the median rental discount in Manhattan hitting 9.1 percent, 5.2 percentage points higher than in 2019.
“Renters are no longer willing to pay the commute premium of living in Manhattan when they do not need to commute to an office five days a week,” StreetEasy economist Nancy Wu said in an announcement on the report.

“Landlords across the city, but particularly in Manhattan, have to be willing to face some really hard hits if they want to fill their units,” she added. “They’re being forced to cut the location premium out of their asking price in order to compete with larger and more affordable apartments in the outer boroughs.”
New York was one of the states ravaged by COVID-19 in early months of the pandemic in the U.S., with daily increases in the number of infections reaching as high as nearly 10,800 in April, according to The New York Times coronavirus database.
Since COVID-19 first hit the city earlier this year, Broadway shows, restaurants and other tourist attractions have been forced to shut down, leading to 896,000 private sector jobs lost between February and April, according to the city’s comptroller office.

The city’s unemployment rate reached as high as 20 percent in July, although the New York City Department of Labor reported that this had fallen to 14.1 percent in September.

While the city has been able to significantly limit the number of new infections in recent months, certain areas, including in Brooklyn and Queens, have had new spikes, prompting New York City Mayor Bill de Blasio (D) to implement a two-week closure on nonessential businesses in those communities earlier this month.
As of Thursday, the New York City Department of Health had recorded a total of 250,489 coronavirus cases, with 58,512 hospitalizations and 19,299 confirmed deaths.

David Goldsmith

All Powerful Moderator
Staff member
Looking at the chart for Manhattan I was a bit surprised at the spike at "over $10,000"

Dead weight: A breakdown of NYC’s rental listing glut
Manhattan listings make up the bulk of NYC rentals on the market

The pandemic and subsequent shutdowns have dealt a serious blow to New York City landlords, sending vacancy rates soaring and rents to the ground.
Manhattan rental vacancies reached 5 percent in August, the highest level in 14 years, according to Miller Samuel. That coincided with a surge in listing inventory, which shot up to 15,000 listings, a 166 percent jump from August 2019. In August and September, citywide rents fell compared to last year.
Manhattan’s contributions to the city’s inventory glut are colossal, according to The Real Deal’s analysis of LavaMap’s active rental listings as of Sept. 30. With 20,147 listings, that borough took up 72 percent of all listings in the city. Brooklyn came in a distant second with 5,938 listings, while Queens had 2,231 listings.

The five neighborhoods with the most active listings — all of which were in Manhattan — were the Upper West Side (1,539 listings), Hudson Yards-Chelsea-Flatiron-Union Square (1,452 listings), the West Village (1,332 listings), Soho-Tribeca-Civic Center-Little Italy (1,243 listings) and Turtle Bay-East Midtown (1,223 listings).
In Brooklyn, Park Slope-Gowanus had the most available listings, with 539, while Hunters Point-Sunnyside-West Maspeth had 454 in Queens.
One-bedroom apartments accounted for the largest share of listings by apartment size, with 10,129 active rentals making up 44 percent of all listings citywide. That was followed by 8,291 two-bedroom apartments and 4,467 studios. The size of apartments on the market varied by borough, with larger apartments easier to find in Brooklyn and Queens.

Citywide, rentals with prices ranging from $2,000 to $2,499 made up about 20 percent of all listings. That’s followed by those in the $2,500 to $2,999 range, with about 19 percent of all listings. The $3,000 to $3,499 bracket had about 12 percent of all listings.
Like apartment size, the price distribution of active listings varied considerably per borough. The pricing of rental inventory in Manhattan was more spread out — and more expensive, with 7 percent of listings asking upwards of $10,000 per month. In Brooklyn and Queens, the price distribution was heavily concentrated in the $1,500 to $3,500 range.