Is the rental market going to crash?


This scorched-earth insanity shows how truly bad the rental market is, as well as how a lot of these landlords view themselves vs tenants. Firstly, these are not units which just became vacant - they have been vacant since at least January 1st and in most cases longer, some significantly. Example: the unit across the hall from mine vacated October 1st. It has never been listed on the market and even when I called the leasing office was told it is not available, yet there it sits. So even if prices rise 20% how long will it take to make up 9 to 12 months of vacancy rather than just rent at current market? (Also factor in that if prices rise they would have been able to increase rents on these units anyway). I think this shows these landlords believe "market" to rent out all their units is worse than the reports are saying.

I also think it is a game of brinkmanship to try and trigger the vacancy provision in the New York State Rent Stabilization statute. I predict this is another tactical mistake because in my opinion the same coalitions that handed the Real Estate industry it's head with the totally tenant sided version of the Housing Stability and Tenant Protection Act of 2019 will most probably just change that provision. I also think that Cuomo won't be in a position to prevent it given his recent issues.

Secondly, even if demand does increase significantly, what happens when these units all come flooding back on the market within a short time frame? Supply vs demand in pricing still holds. It won't be worth losing these huge amounts of rent.

Thirdly I think this proves my statement that the uptick in deal volume in January and February is more evidence of market churn rather than "improvement." That is to say rather than tenants moving back I think most of these deals are:
Landlords are giving both discounts off rents and concessions to new tenants but largely refusing to budge on renewals. So a lot of tenants who had no intention of moving but are being given extreme financial incentives to move and disincentives to stay are pulling the trigger. Often times moving very short distances (like the building next door, around the block, etc) to larger spaces for less money. This yields a false narrative of volume meaning the market is "improving." If the market was improving would you ever see this warehousing?

Also note the reaction from legislators and housing advocates. This is not great PR for an industry facing a pretty big "cancel rent due to pandemic" movement. It totally contradicts the narrative of "poor landlords can't afford to lose rents" and "we will go back to 1970s with mass property abandonment." If they can afford to willingly carry large amounts of units vacant with no rent how can they argue that forgiving rent to some occupied units will bankrupt them?

But it's the same in the sales market: if developers really believed how great the sales market was doing what are we still seeing with projects like One Wall Street? It was scheduled to launch sales over 2 years ago and wrap up in 2020. They announced Core as the sales agency but still haven't launched sales. If Macklowe believed the current hype why not? And that's not the only one.
Would be interesting to plot monthly subway ridership against rental activity. The former being a proxy for getting back to work and some level of improved overall activity in the city. Your point about churn makes a ton of sense. I'm also seeing a decent amount of activity crossing back into Manhattan from Brooklyn when it comes to rentals. Especially from areas that are farther in.
 

David Goldsmith

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Staff member
Even with record new activity the hole seems too deep still.

April leases soared across city; so did concessions​

Rental signings hit record highs but prices fell as landlords cut deals​

Manhattan, Brooklyn and parts of Queens saw record residential lease signings in April, the latest indicator of the market’s steady rebound. But overall rent prices also fell, as landlords across the city were still willing to offer concessions to close deals.
In Manhattan, there were 9,087 leases signed last month, while Brooklyn had 2,175, according to Doulgas Elliman’s rental market report. In the Queens areas of Long Island City, Astoria and Woodside, there were 570; those Queens signings were the most since 2011.

The eye-popping year-over-year signing increases — 546 percent in Manhattan and 395 percent in Brooklyn — highlighted the record low numbers in April 2020, when Covid lockdowns slammed the brakes on leases.
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Jonathan Miller, who authors the Elliman report, said college students are contributing to what he called the “unbelievable surge in activity.” As schools prepare for in-person classes, rental demand has picked up.
But the jump in leases has not driven up prices. Rents declined at the highest rate on record, as concessions boosted activity.

Manhattan’s net effective median rent — which factors in concessions — was $2,791 in April. That was 6.2 percent less than the month before, breaking a four-month streak of rising prices. It was also the largest month-over-month price decline in a decade, Miller said. The April rent price was a 21.2 percent drop year-over-year, marking the second sharpest dip since 2008. The sharpest drop was in November.

“The metrics are still too weak,” Miller said. “The good sign for landlords is that there’s been a significant surge of activity, but at the same time, there’s still high vacancy, a large use of concessions marker-wide.”
The 2.2 months of free rent Manhattan landlords offered in April was the second highest concession total that Miller’s appraisal firm Miller Samuel ever recorded.

In Brooklyn, net effective median rent was $2,614, essentially flat from March. But that was an 18.2 percent drop year-over-year. And the 1.9 months of free rent landlords offered was also the second highest total since June 2010, according to the report.

In the three Queens neighborhoods, net effective median rent rose 3.4 percent from March to $2,370. Still, that price was 15.7 percent below April 2020. Tenants last month also received 2.6 months of free rent, the highest amount Miller Samuel has recorded.
The high number of new developments to hit the Queens market has also given tenants more options, Miller said. A third of leases signed in that area last month were for new construction buildings, though most of the deals were the result of landlord concessions.

Despite the deals, there is still an inventory glut in the three boroughs.
The number of units on the market in Manhattan stood at 20,743 in April, 5.7 percent more than March. But the total was far above the roughly 4,700 units on the market in April 2020. In Brooklyn, the 16,154 units on the market last month fell by 8 percent from March. But that didn’t tell the whole story. Last month’s total compared to just 1,350 units on the market in April 2020.

And in the Queens neighborhoods, available inventory stood at 3,598 last month, a 10.5 percent drop from March. But that compared to just 336 units on the market in April 2020.
 

David Goldsmith

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Staff member

NYC Apartment Rents Plunge 21%, Even as New Leases Hit Record Highs​

The median rent for a New York City apartment posted the biggest monthly decline in 13 years, even as new leases hit a 12-year high​

Rents Drop, But Lease Signings Are Up in NYC

Rents in New York City are falling – even as lease signings make a huge jump. Lynda Baquero reports.
Everyone's coming back to New York City ... and they're paying less than they have in years.
There were just over 9,000 new apartment leases signed in the city in April, the highest number ever recorded in a month, according to the new monthly market report from brokers DouglasElliman and appraisers Miller Samuel.
But all that demand came at a cost to landlords. The "net effective median rent," or rents minus landlord concessions, fell to $2,791.

That's down about 21 percent year over year, and it's also a drop of more than 6 percent in just one month -- the biggest month-on-month decline in NYC apartment rents since 2008. Some of that may be due to a flood of empty apartments raising the vacancy rate that is now nine percent higher than 2020.
The surge in demand as the city reopens is evident - just from March to April, the number of new lease signings surged 82 percent in Manhattan, 71 percent in Brooklyn and an eye-watering 224 percent in Queens.
What may be driving some of that demand is a little cabin fever. After a year of largely being stuck inside for most of the time, New Yorkers have grown weary of their cramped quarters and are on the hunt for new digs.
"You think to yourself, wow, maybe I can get a bigger apartment," said real estate broker Nikki Beauchamp. "Maybe I can get an apartment in a different neighborhood that was out of my reach before."
No matter the borough or apartment size, though, rents are plunging as landlords both cut prices and sweeten the pot with deals to entice tenants. With the exception of three-bedroom units in Queens, where prices actually rose slightly year over year, median rents are otherwise down double digits across the board.

Coming Back From a Pandemic
It seems hard to imagine when life in New York will get back to normal but at a museum dedicated to the city, its history shows how New York City came back from another pandemic one century ago. Michael Gargiulo reports.
While it's been a buyer's market for some time now in regards to apartment hunting in NYC, that may not last long. With offices reopening and more cultural draws coming back — Broadway, museums, sports, etc. — haggling over pricing may become more challenging as the city that never sleeps wakes up from its pandemic slumber.
 

David Goldsmith

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Staff member
"But despite record lease signings, rental prices are still falling hard. Or should I say, because rental prices are still falling hard, new lease signings are rising sharply."

The NYC Rental Market Saw Record New Lease Signings And Significant Price Declines​

This week Douglas Elliman published our April rental market research for Manhattan, Brooklyn, and Queens. This is part of a growing Elliman Report series I’ve been authoring since 1994.

Over the four months, prior to April, it was beginning to look like rental prices were beginning to stabilize. After all, net effective median rental price did not see a decline for four straight months and the rate of annual declines, while still huge, at 16%, were down significantly from 20%+ in the fall.





But despite record lease signings, rental prices are still falling hard. Or should I say, because rental prices are still falling hard, new lease signings are rising sharply.



Elliman Report: April 2021 Manhattan, Brooklyn and Queens Rentals

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“The highest number of new lease signings on record spurred on by continued price declines.”

  • The highest number total number of new lease signings and the highest annual rate of growth since monthly tracking began in 2008
  • Month over month net effective median rent declined annually for the first time in five months and at the highest rate in a decade
  • The second-largest year over year decline in median net effective rent in more than a decade
  • Landlord concessions rose to their second-highest level, falling just short of the record set back in January
  • Both doorman and non-doorman rentals saw their largest year over year declines in nearly a decade of tracking
  • Existing rentals saw their largest annual decline in six and a half years and were twice the rate of new development rentals
  • The market share of luxury market concessions continued to be less than the remainder of the market






______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“The market was characterized by record new lease signings combined with a record decline in net effective median rent.”

  • The highest number total number of new lease signings and since monthly tracking began in 2009
  • Landlord concessions rose to their second-highest level, falling just short of the record set back in January
  • While median rent for all apartment sizes fell year over year, 1-bedrooms and 2-bedrooms fell at record rates






______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region]
“The numbers of leases surged to a new record as net effective median rent fell month over month for the twelfth time.”

  • Landlord concessions jumped to their second-highest level, falling short of the record set back in January
  • The highest number total number of new lease signings and since monthly tracking began in 2011
  • Highest market share of new development listings in eighteen months




 

David Goldsmith

All Powerful Moderator
Staff member

With inventory high and landlords needy, NYC renters are upgrading​

The rent was too damn high — and now New Yorkers can live it up in nicer apartments.

“This is a golden age to be a renter in the city right now,” said John Walkup, 47, co-founder of real estate data and analytics platform UrbanDigs.

“You have a ton of inventory so you have great choices, you’ve got landlords who actually need you, and so they’re offering concessions and they’re offering lower rents.”
During the COVID-19 lockdown, a wave of apartments hit the market, bringing rental-home availability to record highs. Eventually, landlords slashed prices to lure in tenants.

In the first quarter of 2021, according to StreetEasy, median Manhattan rents reached a new low of $2,700 per month, down from $3,417 a year earlier. Brooklyn median rents fell 10 percent to $2,390 year-over-year and those in Queens slipped below $2,000 for the first time since 2013.

“The pandemic was really the shock that cracked this open,” said Walkup.

How long will the deals last now that the city is in recovery mode?

Despite “fear that rents are going to start spiking,” supply remains high. “I honestly don’t see that happening for at least a year,” Walkup said.

Here are three locals who snagged bigger and better flats for themselves — either for a price similar to their previous one, or less.

He got twice the space for less​

Old rent: $2,550 per month
New rent: $2,350 per month


Software engineer Raylen Margono, 26, traded a 450-square-foot one-bedroom in East Williamsburg for a 900-square-foot one-bedroom in the heart of Williamsburg — and is paying $200 less in monthly rent.


“There’s just so much space that you can finally make it an apartment,” said Margono.

It’s also nicer.

At his previous building, issues mounted during the pandemic. There was a fly infestation — and when his air conditioner broke in the sweltering days of summer, building management told him he’d need to wait a week for a new one. Ongoing construction on the property’s facade made matters worse.

“I was hearing drilling on the side of the building, and it would shake the apartment while I was working from home — it was horrible,” he said.

So he took advantage of pandemic pricing and scoured listings.

“You’re looking at what you have right now and you’re looking at what you can have at a better rate — and what you can have is a better apartment at a better rate, [so] why not jump on it?” he said.

In January, he negotiated two free months on a 14-month lease on his new place, which also has high ceilings and an “enormous” bathroom. Like at his former pad, Margono’s air conditioner broke this week, but the new building’s management told him they’d fix it that day.

“This place really has their s–t together,” he said.

They scored luxe amenities such as a roof terrace for $55 more
Old rent: $2,395 per month
New rent: $2,450 per month

Connor Verde and Alanna Kaminski will soon move across the street to a luxury Astoria building whose roof deck looks out to the Manhattan skyline.
Connor Verde and Alanna Kaminski will soon move across the street to a luxury Astoria building whose roof deck looks out to the Manhattan skyline.
Stefano Giovannini
When high school sweethearts Connor Verde and Alanna Kaminski, both 22, moved into their roughly 500-square-foot Astoria one-bedroom last July, they immediately noticed one thing. The building across the street was much nicer.


“It’s got a gym, it has a rooftop, an elevator, more responsive management … how do we get over there?” said Verde, who works in finance.

Since they had moved to New York during the pandemic, they had rented the walk-up pad — with no building amenities — sight unseen. They soon realized it wasn’t worth the expense.

“I was unhappy with the condition of the apartment in terms of issues with roaches … management was pretty unresponsive, leaks in the ceiling would take weeks to fix,” said Verde. “It was impossible to justify that price any more.”

Aided by their agent, Triplemint’s Theresa Persaud, they asked management for free months and a lease break, but nothing worked.

So they kept an eye on listings across the way as prices slipped. A similarly sized one-bedroom popped up for $2,500. The couple negotiated the price down and move in Tuesday.

“Moving here was the right choice because we have all these amenities and we’re paying relatively the same price,” said Kaminski, a nanny.

“I love looking at the skyline and watching the sunset,” said Kaminski. “Now we can go to the rooftop and watch that every night.”

She scored a second bedroom for the same price

Old rent: $2,995 per month
New rent: $2,995 per month





“This place really has their s–t together,” he said.

They scored luxe amenities such as a roof terrace for $55 more
Old rent: $2,395 per month
New rent: $2,450 per month


Connor Verde and Alanna Kaminski will soon move across the street to a luxury Astoria building whose roof deck looks out to the Manhattan skyline.
Connor Verde and Alanna Kaminski will soon move across the street to a luxury Astoria building whose roof deck looks out to the Manhattan skyline.
Stefano Giovannini
When high school sweethearts Connor Verde and Alanna Kaminski, both 22, moved into their roughly 500-square-foot Astoria one-bedroom last July, they immediately noticed one thing. The building across the street was much nicer.


“It’s got a gym, it has a rooftop, an elevator, more responsive management … how do we get over there?” said Verde, who works in finance.

Since they had moved to New York during the pandemic, they had rented the walk-up pad — with no building amenities — sight unseen. They soon realized it wasn’t worth the expense.

“I was unhappy with the condition of the apartment in terms of issues with roaches … management was pretty unresponsive, leaks in the ceiling would take weeks to fix,” said Verde. “It was impossible to justify that price any more.”

Aided by their agent, Triplemint’s Theresa Persaud, they asked management for free months and a lease break, but nothing worked.

So they kept an eye on listings across the way as prices slipped. A similarly sized one-bedroom popped up for $2,500. The couple negotiated the price down and move in Tuesday.

“Moving here was the right choice because we have all these amenities and we’re paying relatively the same price,” said Kaminski, a nanny.

“I love looking at the skyline and watching the sunset,” said Kaminski. “Now we can go to the rooftop and watch that every night.”


The pair outfitted their former apartment nicely, but knew the building across the street was nicer overall.
The pair outfitted their former apartment nicely, but knew the building across the street was nicer overall.
Courtesy of Anna Kaminski and Co
She scored a second bedroom for the same price
Old rent: $2,995 per month
New rent: $2,995 per month


Having upgraded to a much larger two-bedroom apartment in the same building, Hannah Shatzen now has the space to seat five guests for a dinner party.
Having upgraded to a much larger two-bedroom apartment in the same building, Hannah Shatzen now has the space to seat five guests for a dinner party.
New York Post
“Instead of being, ‘I wish I had this, I wish I had that,’ I live comfortably now — and I have all the amenities that I need,” said 31-year-old Chelsea resident Hannah Shatzen, who traded a roughly 600-square-foot one-bedroom for a nearly 1,000-square-foot two-bedroom one floor below.

That includes more space for entertaining.

“I’ve always wanted to be able to have a dining room table that can fit four to five people,” she said, but the space in her old unit didn’t allow for it. (A table with a leaf couldn’t expand.)

Now it’s out, and set with three new chairs and a bench — all under a vibrant work by the late painter Jules Olitski.

“This is my goal: to be able to have a dinner party in my apartment — and I can do it now,” she said.

She nabbed the larger unit for the one-bedroom’s original $2,995 rent — she had gotten a brief COVID concession — after seeing it list on StreetEasy and working with Corcoran agent Trina Cooper to make it hers.

Shatzen, who works in marketing, moved in Valentine’s Day..
Now, she uses the second bedroom as a wardrobe and home office.

“When I’m done, I can walk out and actually have a moment of serenity in another area of my apartment that doesn’t symbolize work,” she said. “That wasn’t the case before. I was always staring at my desk.”
 
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David Goldsmith

All Powerful Moderator
Staff member

Tenants locking in longer leases as apartment rents rise​

Brooklyn and Manhattan see most leases signed since '08​

The days where you could easily score a Manhattan apartment for under $3,000 may be almost over, but tenants have a plan: Sign longer leases.
As concessions fade and rents creep up in Manhattan, Brooklyn and Northwest Queens, tenants are signing longer leases to lock bargains in, according to the latest rental market report from Douglas Elliman.

In Manhattan, 9,491 new leases were signed in May, while Brooklyn saw 2,506 new leases. It was the highest number of new lease signings either borough had seen since 2008, and a strong sign that the pummeling the city’s rental market took during the pandemic is coming to an end.

In Northwest Queens — which includes Long Island City, Astoria and Woodside — 510 leases were signed. It’s the second-highest number of new leases signed in the borough, after last month’s record.
This surge in activity has pushed rents up. Median net effective rent, or rent that factors in concessions, was $3,037 in Manhattan in May, the first time the number crossed $3,000 since falling under that threshold in September.

In Brooklyn, net effective rent was $2,644 in May, and in Northwest Queens it was $2,304.
Tenants are signing longer leases to lock in the current rents while they still can. In December, 77.6 percent of leases being signed were for one year. In May, that number fell to 37.6 percent, according to Jonathan Miller, who authored the Elliman report. The average lease term in Manhattan was 15.6 months in May, compared to 13.3 months in February.

“Tenants are showing through action that they don’t anticipate a sharp drop in rental prices in the near term,” Miller said. “They’re signing longer leases to lock in the savings.”

The same trend is playing out in Brooklyn, which had an average lease length of 15.1 months in May, compared to 13.6 months in February. In Queens, tenants signed an average lease length of 16.2 months in May, compared to 13 months in February.
That’s not to say that concessions have completely disappeared. The two months of free rent that landlords gave tenants in Manhattan was the third-highest it’s ever been. Though that’s 33 percent higher than it was a year ago, it’s a decrease from the 2.3 free months the borough saw in January.

In Brooklyn, the amount of free rent fell by 5.3 percent to 1.8 months in May. In Northwest Queens, that number fell 7.7 percent to 2.4 months.
 

David Goldsmith

All Powerful Moderator
Staff member

Manhattan Is Cheap Again, and Brooklyn Isn’t​

This past year Brooklynites have been time traveling back to when Manhattan rents were $1,600 or $1,700 for a one-bedroom apartment in the West Village or the Upper East Side.

A 27-year-old woman who sells advertising for NBCUniversal gave up her apartment in East Williamsburg and lived with family for a year in Florida. When she returned, prices hadn’t dropped in Brooklyn but they had in Manhattan, she found, and she nabbed a sunny, well maintained one-bedroom in the West Village in April of this year for $2,050 and two months of free rent, reported the New York Times.

A 23-year-old restaurant manager snagged a rent-stabilized one-bedroom on the Upper East Side for $1,600 in June 2020. “I was like, ‘This has to be one of those fake listings,’” he told the Times. “When I went to see it, it was also no-fee. It blew my mind. I was like, ‘Jackpot!’”

“For those who had always hoped to secure a foothold in the priciest borough, the past year presented a rare opportunity: Apartments in prime Manhattan neighborhoods were, in some cases, cheaper than comparable spaces in Brooklyn or Queens,” said the Times. “In Brooklyn, rents dropped by about 11 percent during the pandemic; in Manhattan, they dropped 22 percent.”
 
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