And the rents keep going up

New York had the nation's lowest vacancy rate, 2.8 percent, and its highest average rental, $2,794 a month.

"New York had the nation's lowest vacancy rate, 2.8 percent, and its highest average rental, $2,794 a month."

Why was that quote relevant? You could probably drop the rents 20% and increase the vacancy 20% and the sentence would be as true though the implication for the NY market would be HUGE.

Manhattan Apartment Rents Climb as Landlords Curb Concessions
2011-04-07 04:01:00.22 GMT

By Oshrat Carmiel
April 7 (Bloomberg) -- Manhattan apartment rents increased
7.4 percent in the first quarter from a year earlier, as
landlords cut back concessions and newly signed leases more than
doubled amid an improving job market.
Median effective rents, or what tenants pay after landlord-
sponsored incentives are included, rose to $2,808 a month from
$2,616 a year earlier, according to a report today by appraiser
Miller Samuel Inc. and broker Prudential Douglas Elliman Real
Estate. The number of new leases surged to 6,665 from 2,663.
Rising rental demand is leading to tighter supply and
increased competition for apartments, diminishing the need for
landlords to offer concessions such as free rent to lure
tenants. Incentives were included in about 37 percent of deals
signed in the first quarter, compared with 75 percent a year
earlier, according to Miller Samuel and Prudential.
“If unemployment continues to improve, we’ll probably see
a reduction in the market share of transactions that have
concessions,” Jonathan Miller, president of New York-based
Miller Samuel, said in an interview.
New York City’s unemployment rate was 8.9 percent in
February, unchanged from the prior month and a percentage point
lower than a year earlier. Financial-industry jobs totaled
169,400, up 6.1 percent from a January 2010 low.

All Sizes

Apartment deals at least doubled for apartments of every
size in the first quarter. New leases for studios almost tripled
to 1,714, and one-bedroom new rentals more than doubled to
3,224, Miller Samuel and Prudential said. The number of overall
listings available for rent in Manhattan declined to 3,874 in
the first quarter from 5,204 a year ago.
In Manhattan’s sales market, by contrast, first-quarter
transactions were flat year over year, Miller Samuel and
Prudential said in an April 1 report. Apartment prices dropped
9.9 percent as deals for condominiums plummeted.
“The rental market, in my view, tends to lead the sales
market,” Miller said. “It’s more reactive to changes in
unemployment. It doesn’t have that additional drag that the
purchase market does with credit.”
Manhattan’s apartment vacancy rate dropped to 1.08 percent
in the first quarter from 1.45 percent a year earlier, according
to New York brokerage Citi Habitats, which also released a
report on the rental market today. The rate of vacancy for March
alone was less than 1 percent, the lowest since July.

Acting Quickly

“More demand with less product makes a very competitive
marketplace,” said Gary Malin, president of Citi Habitats. “If
I’m a tenant a year ago versus today, there’s more pressure to
act quicker now.”
Kevin Shapiro, 32, said he felt that pressure when he moved
to Manhattan from Cincinnati last month to take a new position
with Procter & Gamble Co. He allotted three days to search for
an apartment and ended up making an offer after less than half a
day of hunting.
Shapiro applied for two apartments in the Hell’s Kitchen
neighborhood. The first was a one-bedroom that fit his price
range and the criteria of being close to the subway, while the
second was a more expensive and remote one that he relied on as
a backup. The backup apartment had an applicant in line ahead of
him, but management assured him he had a chance because the
first applicant had weaker credit, Shapiro said.
Approval for his first choice took two more days of
financial queries by the landlord, with questions ranging from
bank statements and pay stubs to the names and rental agreements
of the tenants who lease a home Shapiro co-owns in Los Angeles.

‘Still Humming’

“I was surprised given how the general economic sentiment
is in the Midwest and on the West Coast, that things are still
humming here,” said Shapiro, an assistant brand manager for
P&G’s the Art of Shaving and Zirh men’s grooming lines.
“Getting approval to rent an apartment in this city was
more difficult than buying my house,” he said.
Shapiro got his first choice, a $2,595-a-month, gut-
renovated one-bedroom on West 55th Street, with stainless steel
appliances, granite countertops and new tiles and light
fixtures. One condition: He had to agree to start the lease on
March 15 instead of April 1, the day he planned to actually move
to New York.
“If you go in and try to negotiate and someone else comes
in with a higher offer, you’re going to lose the apartment,”
said Shannon Aalai, Shapiro’s broker from Citi Habitats.
She said that heightened urgency was the biggest change she’s
seen in the rental market compared with a year earlier.

Broker Fees

Aalai, on behalf of a different client, recently listed an
apartment for rent on 49th Street and Second Avenue and had two
offers within a week. Two years ago, when she listed the same
apartment on behalf of its owner, it took more than a month to
lease and the owner covered the cost of her fee. This time, the
new tenant will pay the $3,600 broker charge, Aalai said.
The average listing discount, or the amount landlords
deducted from originally advertised asking rents, was 2.7
percent in the quarter, compared with 6.4 percent a year
earlier, according to Miller Samuel and Prudential. For
landlords who still offered concessions, those deal sweeteners
declined to about one month of free rent on average, compared
with 2.5 months a year ago.
The average concession in the first quarter was worth
$3,361 in annual savings to the tenant, Miller said.
The West Village was the most in-demand neighborhood, with
a vacancy rate of about half a percent, according to Citi
Habitats. Studios in that neighborhood averaged $2,230 in rent
in the quarter, while one-bedrooms were $3,140, the brokerage
said. Its data don’t include concessions.
The Upper East Side had the highest vacancy rate at 1.7
percent. Studios in that area averaged $1,703, one-bedrooms
rented for $2,254 and two-bedroom units leased for an average of
$3,457.

With rents coming back up some more (though not at peak yet) and with sales prices going down further, I'm wondering how the ratio looks.

Do I need to start telling folks to buy based on the numbers?

But what about the transaction costs?

Where was inonada to help these folks negotiate better terms?