Rent concessions nearly over and prices up

"A Rents are slightly above what they were a year ago: the one-bedrooms and studios are one percentage point up, and two- and three-bedrooms a couple of percentage points."

The HORROR!
Ouch!

Happy Holloween

http://www.youtube.com/watch?v=81duSmkPJ5k

And Jonathan Miller says that adjusted for inflation, rents are where they were in 1995. Thus the price to rent ratio being more than 2X what it was then.

http://ny.curbed.com/uploads/2010_10_13_3cw.jpg

and

http://ny.curbed.com/uploads/2010_4_30_3cw.jpg

Silly Jason, of course it's different this time.

Often noticing something is at a multi-year low, means it is poised for huge gains, not declines.

Was that way with GOLD ten+ years ago(and it rose against a chorus of doubters)

The rental market did a 180-degree turn in late 2008 with the financial crisis being the last straw for an overheated market.

Within 2 months the market went from 50/50 owner-paid broker commission to 85/10 and free months were all of a sudden the norm. Rents ticked down every month.

This trend continued throughout 2009 into Feb/March 2010, with decreasing rents and owner-paid commissions and free months, when the market did another 180, landlords withdrew concessions across the board and rents have been increasing since. Also keep in mind that anyone who signed a lease in the past 12 months got a relatively great deal and will not be moving unless they have to, which is causing a lower than usual inventory of rentals (lower suppy -> higher prices).

Look no further than the federal bailout of the big banks for an explanation. In late 2008 there were a lot of layoffs, a lot of bonuses were slashed/converted to stock options and were thus unable to be splurged on banker cribs (sales and rentals), and throughout 2009 hiring was weak and nil for a lot of operations.

Bailout $ -> banks still in biz -> stock market higher -> hiring resumes -> people feel ok buying/renting apts.

This city goes whatever way the financial sector goes. If we have another blowup, expect to see it directly - and immediately - reflected in the residential real estate market.

*85/15

Against a chorus of doubters the re bubble crashed. What a ninny.

"Was that way with GOLD ten+ years ago(and it rose against a chorus of doubters)"

LOL, gold had FUNDAMENTALS going in its favor! Declining real interest rates, weakening dollar, etc etc. What fundamentals are going in real estate's favor now? Do you even know what fundamentals are? Hint: Just because it has the word "mental" in it does NOT mean it is relevant to you. Also, the last bubble rarely re-inflates for 20 years or more. Japan in the 1990's, NASDAQ stocks ten years ago...i mean, a HANDFUL of tech stocks have returned to their 1999 high, but the vast majority have not. But make no mistake: NYC real estate WILL have a meaningful move up again...in 2029.

high teens? why are they so much? I can't believe people will pay 1.5 times what a studio costs in Long Island for a small crap trap to live in a rat infested dump of a city

LL's are still giving one month free...not sure about paying broker's fee...stuytown just posted one month free and i've seen other listings as well.

"Often noticing something is at a multi-year low, means it is poised for huge gains, not declines."

Conversely, the second chart shows that the price/rent ratio is at a mutli-year HIGH, and is set to go down.

Given the economy, the fact that banking profits will only shrink relative to the rest of the economy, (the best days of Wall Street are behind it), etc, most of the P/R contraction will be on the P not the R side.

From Jonathan Miller - All Manhattan Coop Prices Per Square Foot

89, $252
90, $261
91, $163
92, $194
93, $202
94, $193
95, $189
96, $149
97, $195
98, $232
99, $255

A lot of backing and filling for a decade. Could easily be what's ahead of us now. Including a fair amount of weakness at different points.

As a LL who has NEVER given a concession (just priced fairly) I am always amazed at how many renters end the year and are shocked to discover that "their rent is going up 20%", when it is really just the "free" month going away. A sucker is born every minute I guess...

MAV - yeah, as a renter I am shocked as well. How does one not figure that the amount written on the check each month is going to be related to the number written there in the coming month?

That said, MAV, how have rents been holding up? I am looking now (2BR UWS) and I think they are about where they were same time last year, fewer concessions, but dropping again since summer.

a free month ending raises rents 9%.

I still do not understand the renters that do not get free rent. I know prior to just buying when i called buildings about renting, it was clearly stated to me the terms. For instance i called the new columbus building where whole foods is and they were giving 2 months free on a 14 month lease. While maybe i understood because i am an accountant, but she clearly told me that rent was $5k+ per month, but net effective would be $4400. So either people do not like to hear the $5k+ or people do not read what they sign either.

I feel bad for renters who just do not get it, but i do not feel they are getting taken advantage of. LL's protect themselves by not actually lowering the rent, they are giving a concession, which goes away after year one.

The issue seems to be is that a lot more people at the higher income levels are renting now and willing to pay because it beats the uncertainty of buying. So now they are taking these apartments without concessions and the people who got great breaks last year have seen them disappear.

So really all that happened is individuals who could not really afford these luxury buildings got lucky for a year because the market sucked and ll's took a cut. Now market seems to have stabalized and refuse to take a hit, and renters are upset that they can't live the high life in the apartment that they could not afford.

I still do not understand how someone could be a landlord and not understand the definition of effective rent. Call your accountant.

You are going to spin it your way and the tenant will spin it their way. That's how negotiations work. The better negotiator and/or person with better leverage will win. We are not your tenants so there is really no point in trying to spin it here.

it's not hard for anyone to understand...i received a free month but my rent remained at $2500 with the 13th month free...i never considered that as lowering my rent, just a free month.

people often have trouble understanding that which they don't like.

You guys are blowing this out of proportion. I got 3 months free on a 26 month lease. So I get invoiced the full amount 23 times, and 3 times (first, middle, last month) get an invoice with zero. HOWEVER many - and I mean MANY buildings either automatically or give the option of pro-rating the free months over the entire lease. This is VERY common. So MANY renters do indeed with my situation would see monthly rent statements with 11.54% lower monthly rent.

jason10006
35 minutes ago
ignore this person
report abuse You guys are blowing this out of proportion. I got 3 months free on a 26 month lease. So I get invoiced the full amount 23 times, and 3 times (first, middle, last month) get an invoice with zero. HOWEVER many - and I mean MANY buildings either automatically or give the option of pro-rating the free months over the entire lease. This is VERY common. So MANY renters do indeed with my situation would see monthly rent statements with 11.54% lower monthly rent.

"this is very common"...really Jason? it hardly ever happens. how many landlords can you name that will prorate that free month(s). i can think of one, when they WERE offering it (past tense) that did it. your turn.

columbiacounty
about 2 hours ago
stop ignoring this person
report abuse
people often have trouble understanding that which they don't like.

Wisdom for the ages. Thanks for contributing to this thread. Now renters and landlords know what to do.

Glenwood for one.