More Bad News For Renters...................

Riddle me this. Here's an apt that went for $3750 in mid-late 2009 after 1 month on the market.

Fast-forward to 2011, it sat more than 4 months with no takers even after an offer of owner paying the brokers fee, priced at $3750. Finally, it seems someone took it at a $3650 last asking rent:

http://streeteasy.com/nyc/rental/797396-condo-riverside-boulevard-lincoln-square-new-york
http://streeteasy.com/nyc/rental/832290-rental-220-riverside-blvd-lincoln-square-new-york

So:

- lower rent
- paid brokers fee
- lost 4 months of rent over a 2-year rental period, plus a broker's fee, making it less than $2900 effective
- monthlies close to $2K
- a net of $10K a year on an asset priced close to $1M
- take out transaction costs, net yield is 0%

If sales stay down and rents keep going up, I think thats put a premium on post bubble ownership (purchase after 2009 IMO). Without tax benefits Im -300 carry to rent. with taxes , Im in the money.

06-07 2600
07-08 3150
09-10 2800
11-12 2900

Sure, we had a spike in years 2 and 3, but currently we're up only 12% from 2006. We were hearing about rents spiking back when we renewed in August for an extra $100. I'm no math whiz, but my guess is that the surging number of super-luxury rentals are the main factor in driving up he average. There's a lot of wishful thinking as to the gloom-and-doom these numbers spell for all renters.

Sorry...the timeline is:

06-07 2600
08-09 3150
10-11 2800
12-13 2900

Told you...numbers not my thing.

So a 1.8% annual increase on average for Spartacus since 2006. And only 1.8% annually since two years ago, despite market reports claiming 10%. What gives? I know, your LL must dislike money. Better watch out though, you have a 10% increase coming next year.

Im at the low end of the market so unless ppsf goes to 300 im gonna be ok.

Following Spartacus's example, here's what I've been paying over the past years. A "----" indicates a change in apts, and the numbers are normalized to $1M of apt price in today's terms. Rents are for the calendar year indicated.

2005: $3880
2006: $4030
2007: $4180
----
2008: $3570
2009: $3680
2010: $2980
----
2011: $2420
2012: $2500
2013: $2580

Inonada. Are those numbers for the same place in the same area? The only way I could imagine 2500 per mil is perhaps 25K a month for a 10 M apt. No 1M place in manhattan rents for 2500. At least I haven't seen it.

what about this one?

http://streeteasy.com/nyc/rental/796943-condo-25-columbus-circle-lincoln-square-new-york
http://streeteasy.com/nyc/sale/479929-condo-25-columbus-circle-lincoln-square-new-york

Uh oh, columbiacounty and apt67thstreet are out in full force again.

Columbiacounty's trying to justify that living in Columbia County is the same as living in Manhattan because he has a really nice car to ride around in. I wonder, is 67th's Porsche faster and more expensive than Columbiacounty's expensive car?

"New York landlords will be laughing their way to the bank in 2012.

Apartment rents are expected to skyrocket by as much as 12 percent by year%u2019s end, according to a new report from the brokerage firm Bond New York.

Analysts predict that landlords will hike rents by 6 to 10 percent on current tenants and 8 to 12 percent on vacancies in 2012.

%u201CVacancies remain extremely low and landlords [are] offering very few incentives,%u201D said Noah Freedman, founder of Bond, the largest independent brokerage in the city.

Last year, the average monthly rent in Manhattan reached an eye-popping $3,309 %u2014 just one dollar short of the 2007 pre-crash record, according to another report released this week, from Citi Habitats

http://www.nypost.com/p/news/local/rents_to_rocket_oPuEkZS0TtYVCLpVIy7QsI#ixzz1jRCRkFMu

Typical broker talk being quoted in the paper. Even in the peak of the housing bubble it's always been an excellent time to buy with prices always going up. duh.

>what about this one?

http://streeteasy.com/nyc/rental/796943-condo-25-columbus-circle-lincoln-square-new-york
http://streeteasy.com/nyc/sale/479929-condo-25-columbus-circle-lincoln-square-new-york

Columbia's point being that all you people renting places for $10K per month and otherwise considering a $4MM apartment, it's better to rent. How many of you are renting $4MM apartments? Columbiacounty we know isn't, given that he was taken by a broker to see a rental with a window in the shower, and has to justify his decision to leave NYC by telling everyone that he has an expensive car.

Yeah sure seems like 4 mil is nuts. I do think that renting definitely makes a lot more sense in the higher end market. Do you know if those listings are for the same floor?

I think wealthy investors have a touch more flexibility than other buyers which probably explains why the rent vs buy discrepancy is still so wide in some market segments.

If the owner bought for 4 mil using an IO portfolio margin loan at say 1.80% the place costs him 109,260 plus insurance to carry it. If he brings in 120K in rent maybe he can sleep at night.

That looks like a real bad one for the owner.

I even think 10K per month is nuts for that rental. Ha 4 mil. Ouch.

They're the same place: #58F.

inonda where do you live.. is it 1br/studio? thanks.

No, inododo doesn't live in a 1 bedroom or studio. I'm obviously not sure the size of his apartment, 2 bedroom or greater. Inododo is "normalizing" to a 1MM purchase price, and his statistics are taking advantage of the fact that at the higher end, the rent to buy ratio is more in favor of renting, if that ratio is all you are looking at. At that higher end, owners are parking money including as inododo is pointing out - many foreigners who view the U.S. and NYC real estate as safe - they are less worried about cash flows more about preservation and diversification, and an ego piece of the Apple. And similarly, at that high end, few actual families are living in these places for the long-term, because they can't. Young 30 somethings without kids can do it, and don't have to be worried about moving every 2-3 years and in fact may enjoy moving every 2-3 years.

>2 bedroom or greater

or a big loft equivalent

To clarify: And similarly, at that high end, few actual families are living in these places for the long-term AS RENTERS, because they can't. Young 30 somethings without kids can do it AS RENTERS, and don't have to be worried about moving every 2-3 years and in fact may enjoy moving every 2-3 years.

Flmaozz. Du yu understannnnd multiples of $1mm? Flmmzzz

Possibly. Why don't you re-enact your days as a teaching assistant at Columbia Business School and explain what you know so that I can know if I was correct or now.

not

According to Whom? of course, a brokerage firm that no one ever heard of. Good way to get your name out there

Inonda, give it up. Every data point says rents have been up net of concessions and year-over-year every month since May 2011. Seven months in a row of YOY rent increases means you are wrong. Rents are going up.

The place I'm currently at is on the higher end of things. A family rented it for 7 years before me, I hope the kids weren't traumatized by the scarlet R imprinted on their foreheads.

I don't think you can find $2500 per million on bread-and-butter apts. But is it possible in a 1BR or studio? In some exceptional circumstances only as far as I've seen. For example, this 1BR comes in around $1900 per million unadjusted for condition:

http://streeteasy.com/nyc/rental/795243-rental-25-central-park-west-lincoln-square-new-york
http://streeteasy.com/nyc/sale/556206-condo-25-central-park-west-lincoln-square-new-york

Put in an adjustment for condition / broker's use of ALL-CAPS / whatever else, you're in the neighborhood of $2500 per million.

A note on my $3880 per million rent that I paid at the start of 2005. If you go in that building today, you'd have no problem finding similar condos renting for around that same $3900 per million today despite 7 years of inflation. CPI would put the rent almost 20% higher at $4600, but there it is still at $3900.

As far as I can remember brokerages touted rent increases of 10% a year in 2005, 2006, and 2007. In 2008, they admitted flat and in 2009 they admitted a 10% drop. In 2010 & 2011, again with the 10% gain each year. By their proclamations, the rent should be 40% higher at $5700 per million. But there it is, still at $3900 per million.

So, you'll excuse me if I roll my eyes at yet another report / prediction of 10% rent increases by some brokerage. Those 2005 purchasers who bought with imaginations of rent increases as proclaimed by the brokers are coming up very, very short.

inonada.. I agree... v big eye roll. where is your building?

>So, you'll excuse me if I roll my eyes at yet another report / prediction of 10% rent increases by some brokerage. Those 2005 purchasers who bought with imaginations of rent increases as proclaimed by the brokers are coming up very, very short.

So if ACTUAL rents are up, in the SAME apartment by a professional management company / big landlord from 2010 to 2011, that doesn't count because between 2007 and 2010 there was a decline?

Brooks2, no comment on location other than saying prime Manhattan.

Shoe salesman 'they'll break in'.

What they don't tell ya -> after your foot becomes hamburger meat.

$100 or $300 lower rent is a rounding error for a landlord who is RAKING IN $40,000 in rent roll from 1 property. RENTERS LOSE.

Inonada, for the 800th time - I have over and over posted NY Fed Beige Book notes and NYC CPI data showing that the OFFICAL stats say NYC rents have been up YOY both for renters and OIC for more than six months in row. Give it up.

Rents up MOM and YOY

http://www.bls.gov/ro2/cpinynj.htm

I don't know about 12% but with interest in buying down, that's more people trying to rent...Something about Supply & Demand and demand going up.... I seem to recall

how did land leases even come into effect ? seems like any property on a land lease would always be for rentals.

FLMOAZzzzzz.. MOST LLs are leveraged to the hilt, it probably takes $39K a year to overhead.... that last $100/$300 is the return on equity.

just STFU dealboy. YOU'VE NO CLUE how "tight" these fkers run their operations. The days of Helmsleys and old time NYC RE money where they had 40% leverage is GONE. Just like the overleveraged prepaid renters, the last paycheck you make or break ya.

FLMAozzzzzz..

>just STFU dealboy. YOU'VE NO CLUE how "tight" these fkers run their operations.

But you do?

>The days of Helmsleys and old time NYC RE money where they had 40% leverage is GONE. Just like the overleveraged prepaid renters, the last paycheck you make or break ya.

NYC doesn't have old time landlords anymore?

Jason, read the rent entry from that link you posted. It has YOY up 2.2%. Compare that to 10%, on top of 10% last year. Is your rent 20% higher than it was 2 years ago?

"$100 or $300 lower rent is a rounding error for a landlord who is RAKING IN $40,000 in rent roll from 1 property. RENTERS LOSE."

Let's see. $47K in rent. Minus $50K interest on $1M. Minus $18K in cc/taxes. Minus $5K upkeep and renovation every 15 years. Minus $4K vacancy. Minus $10K to transaction costs.

Down $40K a year, but you're right: $100 or $300 is a rounding error. I'm sure it'll all be made whole with 4% annual appreciation. Scratch that, make it 8% so that we end up with your $40K profit.

as an old friend told me.....if you're talking to someone who doesn't get it....they never will.

I wonder why your old friend told that to you.

CC, I like testing the bounds of willful ignorance.

touche.

well put, as always.

(i must admit that i often disregard my friend's advice.)

Most landlords own the property free and clear or from the 1990s when they paid 15% of today's price.

>Most landlords own the property free and clear or from the 1990s when they paid 15% of today's price.

You don't think they refinanced to take a dividend and take advantage of the tax shield on the interest payments?

Nah...Only a dumb renter would do something like that. And that's why they're renters.... money burns a hole in their pocket as soon as they have $10k in the bank. That's why they can never save up enough for a downpayment. Impulsive renters!

Aaargh. If it's any consolation, the rising number of foreclosures in the United States has increased the number of people looking to rent, depressing rental supply and raising rents. For once, New Yorkers aren't alone. The rest of the nation will probably face hikes as well. http://bit.ly/A5y9J9. Even so, annoying. Makes you want to live in a hut on a beach in Thailand. nyrentalbible.com

>>Most landlords own the property free and clear or from the 1990s when they paid 15% of today's price.
>Only a dumb renter would do something like that. And that's why they're renters

Landlord = renter?

"Jason, read the rent entry from that link you posted. It has YOY up 2.2%. Compare that to 10%, on top of 10% last year. Is your rent 20% higher than it was 2 years ago? "

You are retarded. The link I provided over and over for many months shows YOY rent increases for the Greater NYC-NNJ-LI-CT metro area. This thread is on Manhattan rents. Its beyond obvious that Manhattan rent increases would be higher than the average for the whole metro area.

Answer the question. How much more are you paying for your Harlem apt than 2 years ago?

Sigh. You are a very, very tired indovidual by now. As I went on and on about in the otehr thread on this same topic, Harlem rents are up NOT on a same unit basis, but because the vacant stock is so much NICER than it was 1 or 2 or 5 years ago. When I first started looking when I moved here in 2000, there simply were no new doorman units with WD in unit in Harlem. Every year there are more and more. So its just like comparing the prices or re-sold apartments versus the price of new development, and looking at the mix of each and how much is luxury etc.

In rental terms, re-rents in harlem are not up nearly as much as new developments versus the old stock that used to be just walk ups. Now you have all sorts of $3000-$6000 per month rentals below 125th.

Having said all that - and I don't see the question asked earlier - my bldg opened in 2009. Asking rents are about 10% higher, and then they were offering 3 free months on a 26 month least. Now they only offer i month on a 13 month.

I personally am paying the same nominal rent of $3045, but no longer have free months included on the renewal.

The nearby Glenwood is also asking about 10% more than it was in 2009. So net effective its up.

However, to my first point, there are at least six brand new doorman high rise rental buildings in East Harlem that were NOT here in 2009, and a disproportionate amount of that inventory is said new (and much more expensive) buildings.

And I went with a co-worker who wanted support when looking at some of these new East Harlem places (the ones just above Carnegie Hill) and they were not fooling around. They were asking for (and in the end got) the same rents they ask for in brand new doorman units in Hells Kitchen. When I first moved to Harlem, no such places existed, though that one on 110th and Morningside had a website.

I am talking ONE bedrooms for $3000-4000 and 3 bedrooms for over $7k. You can't compare that to anything purely rental in Harlem in 2008 and only 1 building like that in 2009.

"Sigh. You are a very, very tired indovidual by now. As I went on and on about in the otehr thread on this same topic, Harlem rents are up NOT on a same unit basis, but because the vacant stock is so much NICER than it was 1 or 2 or 5 years ago."

So, this seems to imply that people are spending more on rent, but they're getting more for it? That's a bit odd given the economic environment, but makes sense in a gentrifying neighborhood. Less clear how that patter would/could hold up elsewhere, though.

He asked about Harlem where rents are up by the most - 25% YOY. What I said does not apply to the whole island.

Thanks for the thorough response, Jason.

Hey, Jason's no dummy, and he's willing to elaborate...he just gets angry now and then

I could be entirely wrong, Inonada. However, harlem YOY increases really sound like your own (and Jon Miller and UrbanDigs) explanation for certain quarters a few years ago for why Harlem (or sometimes Manhattan) sales prices were up so much YOY - they (and you) often explained it away with 15 CPW or in the case of harlem the building at 110th/Lenox.

> Sure, we had a spike in years 2 and 3, but currently we're up only 12% from 2006

That, plus prices falling AGAIN last quarter.

Seems like pretty great news for renters...

What? Rents have been up YOY for like six months in a row. Unless you mean SALES prices, in which case it corrects the long-time out of whack price-rent ratio. Seems like that makes buying relatively more attractive - rents up, buying cheaper.

Yes, sales prices dropped again.

Buying is relatively more attractive, but it might be only a slightly less ugly girl.
Rents aren't that far from 90s levels, but sales prices are double (per the decade analysis someone posted last week).

> rents up, buying cheaper.

Again, rents still down in real terms vs. some past periods... question is buying cheaper... enough. We shall see..

The harlem discussion is interesting because -- remember? Rents will plummet because of all the new luxury rentals in fringe neighborhoods. Now that they're on the market - oops. Averaging the rents overall, they're skewed because of those same new luxury Harlem rentals that were supposed to flood the market with inventory and bring rents down.

I don't think there was enough inventory in Harlem, LIC, Wburg, Hoboken etc to drown the insatiable demand for Manhattan from Canal to 96th RE. You would need 10X as much.

I do think what some have said re: the difficultly in getting a loan - and frankly, uncertainty both in terms of keeping your job/getting a bonus and house prices is making renting more attractive, thus increasing the demand for rents all else equal.

Finally, as many have said - rents go down enough in manhattan (which they did for a long time) and people from metro area outside it want to move here. Want proof? CPI data shows NYC greater metro area rents up 2% YOY. The various brokerage reports have Manhattan rents up 5-10% YOY. Ergo, rents may still be DROPPING the farther out from the Island you go, or at least are still flat.

Ergo, you can probably get fantastic deals still on brand new doorman buildings in Newark (they exist!) or medium-rise brand new Suffolk county apartments.

I'm thinking about predictions by various posters about shadow inventory screwing up markets. It's been a few years now. The shadow inventory has most likely shifted to the rental market, and ..... well, it hasn't worked out to be an insidious, invisible catastrophe yet.

DOWN 50% on an real basis is NOT A DISASTER? 3+ bdrm markets have been hammered...

FLMAOzzzzz... another holocaust denier.
WE circle the SUN.
The PLANET is round.
YOU can't cure AIDs by having sex with a VIRGIN.
Going to VEGAS is NOT a retirement PLAN.
$50K in credit card bill DOES NOT GO AWAY bc you got MILES to go to MIAMI.
$10K 50 foot Sailboats ARE NOT CHEAP, when your SLIP FEES ARE $1K/month, can't use in the WINTER and BOTTOM PAINT COST $20K.

http://streeteasy.com/nyc/sale/655006-condo-45-west-67th-street-lincoln-square-new-york

BUT YA CAN RENT IT FOR $4.9K/month. Well fka me.. I'll take the "just have sex with my wife w/o the baggage trade."

Your wife is a rental too, right?