Article in Crains says rental prices are going up

Its kind of hard for Inonada and others to argue this point any more. Rents ARE UP YOY by every source, including my own eyes.

That having been said - they are still below 2007 levels, and adjusted for inflation, are unchanged for a decade. So its not a calamity.

beside you and citihabitats, what are the other sources?

Cc, how about anyone with a fucking brain? They've been going up for a year and a half.

stevejhx must be raking it in on his rental website after scaring the julias of this borad to rent forever....

can u say comission..ka-ching$$$$$! go stevey, go

TREGNY also says they are going up. The Prudential rental report. The CPI data for New York City (both rent and owner's equivalent rent). My daily Streeteasy alert says they are going up.

Does everyone believe that higher rent means higher sale prices in the near term?

Here's what I thin will happen in the next few years. I believe rent will increase while sale prices decrease, especially for the less pricey units. While some here CHOOSE to rent, most people in the city likely cannot afford to buy even if prices drop another 10%. For the lower price rentals, the landlords will be able to get away with increasing rent, up to some point of course, but I believe the landlords can squeeze more out of them. Their options are limited due to their finances. The rents will not increase as much for pricier units because these renters have more options in terms of finances and inventory to choose from. I see more individual owners renting their place out as they either upgrade or downgrade without selling.

Finance industry doing well.
New York tech market stronger than all of the 2000s.
Media and advertising industry strong.

it's just basic supply and demand. enough people want something you can charge what you like for it.

Actually HIGH priced rentals are going up faster.

Rents are going up. At this point not much price wise is going down. Increase rents will provide a floor on residential real estate prices, but at this point there is enough shadow inventory that price gains will be very limited. Basically flat real estate prices and renters having to cough up more of their pay check to cover rent. As far as rents going up, this is still just the beginning.

jason10006: "Actually HIGH priced rentals are going up faster."

In terms of percentage? And was it a one time catch-up to make up for the sharp discount in 2009?

Of course rental prices are going up because people are choosing not to buy and to rent instead. This leaves less rental inventory. In the mean time I'm paying less now than I did in 2000 for my rental and I still know that it is cheaper to rent than buy. It really isn't surprising. I wouldn't believe the citi habitats guy though and his statement was incredibly rude, but that is their schtick I hate CH

also, the mix of rentals has changed quite a bit since 2008. huge numbers of brand new units were added to the market, and continue to be added, and obviously these run higher than your standard apartments. just like condo new development skewed psf numbers up in 2006-2008. whether or not your ho-hum one bedroom, or even two, has increased much is likely another story.

i don't buy the vacancy numbers.

in the next few years it all depends on demographics, which depends a lot on our local economy. builders are starting up again, and universities are adding thousands or dorm rooms to the mix, so supply should not necessarily be constrained. but beyond that my crystal ball isn't giving me any clues.

Of course rental prices are going up because people are choosing not to buy and to rent instead.

So lots of room to play catch-up....

AR - I disagree. The center of the metropolis is always in a critical shortage. In plush times the premium for being at the epicenter goes out of control, and in crashes it subsides. But dorm rooms being built by universities are like a finger in the proverbial dike (sp?).

This has been an interesting downturn, and there are striking DISsimilarities from the last one. Interest rates were historically low and the peak and they have remained historically low. Big diff.

Sunday, there has been lots of discussion on SE for three years or more about the relationship between rents and sales prices in prime Manhattan. It's all very logical, rational and tidy, but ignores the emotion/hysteria/fear element of housing in prime Manhattan. People won't wait for prices to come down to an equilibrium point. They'll buy before it gets there.

"and the peak" s/b "at the peak"

While Manhattan's rents softened following the financial crisis, the market is improving as renters feel confident enough to sign leases. In many cases, concessions—the freebies landlords throw in to attract tenants—have disappeared. Year-over-year comparisons show prices up 8.01% on average, according to the Real Estate Group NY's February report. The average rent for a one-bedroom unit with a doorman was $3,560 in February, a gain of more than 10% from a year earlier. Two-bedroom units saw an 8.4% increase.

Investor demand for apartment buildings has been heating up throughout the country, partly because people who were closed out of the home-buying market have turned into renters.

http://online.wsj.com/article/SB10001424052748704504404576184872679965428.html

"Investor demand for apartment buildings has been heating up throughout the country, partly because people who were closed out of the home-buying market have turned into renters"

And will eventually turn back into prospective buyers, because of increasing rents. It isn't the amount of rent, not entirely the rate of increase of rent, but the great unknown of decades of annual increases. That oft-quoted bridge-selling slogan "buy now or be priced out forever" is in fact grounded in the emotional state people go through after about three consecutive years of increasing already-very-high rents. Maybe buying is more expensive, but they'll buy anyway.

And will eventually turn back into prospective buyers, because of increasing rents

sounds circular.

"sounds circular"

That's because it is circular.

It will be interesting to see the equilibrium for home ownership in Manhattan.

yes, Riversider - I've said before, altho I follow all the arguments about equilibrium with keen interest and have an open mind to the theories people present, which make perfect sense, I remember very well the RE market reaching a point in the last deep recession (about which people were saying it was the worst thing ever...) when it was cheaper on a gross monthly out-of-pocket/after-initial-outlay basis to buy than to rent, and this makes me question whether there is any predictable relationship or ought-to-be-rule at all; rather, it seems to me the overshoot on the bottom of the last crash was not any more rational or "efficient" (as in the phrase "efficient markets") than was the preceding '80s peak. Instead, emotion was at play - "Who the heck would buy an APARTMENT? Look at how everyone has lost so much money on them!" The notion that the mean which is always reverted to and that that mean is a perfectly defined ratio is fascinating, but in the long run I think it's another mirage.

Equilibrium rate probably will over-shoot. It's also important to realize every buyer has a different market view, so no one rule fits. That said , I've been an owner for some time now and my cost of carry on my unit is less than I would incur as a renter. The mistake many made pre-bubble was buying with too much debt and too short a time horizon.

The reason high end rents are going up faster in manhattan is

1) the high-end is recovering from the recession much better (i-banking bonuses, etc are higher than say janitor raises)
2) many condos have gone nondo
3) many, many articles have shown higher-end would-be-buyers renting for now to see how things turn out.

Anyway, here is a report on Upper Manhattan only - but if rents are going up HERE YOY, you can believe they are going up below 110th. Ostriches.

http://arielpa.com/download/ArielpaYearEnd2010Rental.pdf

But this report, like the others, shows market rents still below the peak.

I'm in agreement with much said above, but as someone working for http://www.Rent-Direct.com, I see things a bit differently.

First: I see a lot more demand at the low end. By this, I mean people with housing vouchers and various assistance programs. I suspect that many people out of work for many months has created a new group of marginal renters that might have been "making it" during times of full employment.

Second: I see increased demand from young, single out-of-towners starting up again. This tells me people are hoping/planning/thinking of moving to NYC again. Young people in particular are adjusting to the present economic situation as they graduate from college and don't want to put their lives 'on hold' any longer.

Third: I see increased demand from the middle tier renters, single and coupled. They are also adjusting to the new economic reality and don't want to put their lives on hold. Many of these people are creating their own jobs, starting up small companies, or hooking up with ongoing small companies rather than waiting for big companies to hire again.

The actual data so far shows high-end rental prices going up faster. And there are fewer vouchers, not more, AVAILABLE in NYC now. So speaking for MANHATTAN, what you say cannot be true. Yet.

I didn't know what Jason meant by "nondo" so I googled it and urbandictionary.com had this definition, which contains an amusing reference to "Williamsburg":

A building built and advertised as being condos, but because of lack of demand or financial problems, the building turns into apartments.

Came about during the massive real estate downturn of the late 2000's.
That new building in Williamsburg was advertised as $800,000 condos, but because of the downturn, they're now nondos

Don't forget to mention all the rental highrises that have gotten into the very profitable hotel, err, I mean "short term furnished" game. There are buildings, particularly on the westside, that have 10% or more of their units serving as short-stays for tourists and business travelers. If the city's new "no leases shorter than 30 days" law is enforced, expect to see a lot of vacancies in these buildings which will result in downward pressure on rent amounts.

As for sales, when - not if - rates go up, prices will go down. Anyone looking to sell should get on with it asap. (Perhaps the canary in the interest rate coal mine - PIMCO just reduced their US Treasury holdings to ZERO).

Roro, pimco also had zero treasuries in january 2009.

No, a PIMCO FUND. Other PIMCO funds still have lots of them.

The NONDO is not really a story. Condos are planned years in advance. Extell just put up Aldyn and made half the building rental. Condo sponsors reserve the right to rent. By doing a building in this way, they can rent out and sell later as the market improves. If the project is structure properly renting by the sponsor makes sense. Related Cos rented out parts of the millennium properties for years. 3 Lincoln Center also originally rented out some units. I'd focus more on the bigger picture which is that high end rental projects are what will drive the market for the next several years.

We still have sponsors owning apartments in co-ops first converted in the 1980s. Real estate is a slow game and real estate investors know it. Shadow inventory is only a long-term dampener on price increases.

I'm having trouble seeing any warning signs of a double dip from anything any information conveyed above, but I'm sure the onslaught will ensue....

Correct, the Total Return Fund is merely the largest mutual fund in the world. As it pertains to the NYC residential sales market, the question remains; how low will prices go when rates rise?

The Spitzers have rented out a chunk of the Corinthian since it went up.

rates go up - fewer people buy - and rents do what?

I think its more likely that prices remain flat for a few years, and go down adjusted for inflation. This is because rents have been flat adjusted for inflation, and the P/R ratio has to get back into whack.

As in like the early 90s.

in the two years i've lived in a doorman bldg. my rent has gone DOWN by $375...

in the two years i've lived in a doorman bldg. my rent has gone DOWN by $375...

I seldom bet, but that will not be the case two years out.

riversider...i agree

julia, as someone who has had her rent go down, how do you look out into the future - renting's better, or does the prospect of indefinite increases make buying more attractive?

so, julia's rent has gone down. how does this translate into indefinite increases in the future?

lowery...that's going to be the question in two years...maintenance goes up every year about 5% but at least I would know what the increase is...the negative about renting is the LL can do whatever they want...I could have had a $300 increase this year. It's the unknown that bothers me..

nothing ever happens in an coop or a condo thats unexpected.

julia, that's what I think may tip the psychological scales for many people - they begin to plan long-term, and perceive during the rents-are-up cycles that there is less control over their destiny by leasing - it's a psychological factor, perception is reality, much as when people should be not buying, the think "buy now or be...." and when buying becomes relatively attractive they feel "God, how people have been ruined by buying real estate! Never me!" That's where I think economic theories fall short in explaining market behavior.

>nothing ever happens in an coop or a condo thats unexpected.

Did everyone hear about the time that columbiacounty went to visit a rental on Riverside Drive and he got angry at the broker because there was a window in the shower? Oh the horror columbiacounty, after all you've been through that must have been the final blow to your dignity.

> Does everyone believe that higher rent means higher sale prices in the near term?

Nah, likely the opposite.

More people are seeing that buying wasn't quite the party it was sold at, and focusing on renting. AOTHBE, this means lower prices.