Manhattan Rents Decline for First Time in 2 Years

This will continue. If we have a harsh winter (weather wise), expect to see pretty significant drops in some areas and for particular apartments. I could see rents dropping by a good 10% over the next 3-4 months. I know one thing is for sure, the market has topped out. Viewing an unrenovated 4th floor walk-up studio in Hells Kitchen going for $1950, that just two years ago was $1450 was by far, the best barometer of what direction things would soon be heading. I expect that same exact studio to drop back in the range of $1700 over the course of the next 6-8 months. The part of the market that will recede first and probably the worst is the market $2500 and under, especially around $2k, which despite all the "wealth" in this city, $2k is still the single professional making $100k a year type of apt and budget. The market above $5k will have adjustments, but it will likely be minimal. If you're in an apartment for $2500 or less, chances are relief is on the way with your renewals. Despite most landlords or management companies giving off the appearance that they have no idea what they're doing, they do follow the reports so you shouldn't expect any increase at all at this point. I'm actually paying $50 currently and probably by December as much as $100 more for the comparable apt in my building. I signed my new lease in April (basically the peak itself) and now we are almost in October and the same apt on the same floor has been sitting empty for a month. Strange, I wrote this exact thing here on Streeteasy about 3 months ago and it all happening exactly as I figured. The market expanded way too fast and I do truly expect to drop back just as hard. I heard stories of peoples rent jumping from $3200 to $4400 a month. Mine jumped $400 this year alone.

Just read the article. It's very accurate and for the first time in months people within the industry are saying publicly what many internally have been thinking. There has been a great deal of resistance to make comments about the market plateauing, but it's a universal belief that we've again reached a peak. Add in buildings like Gotham West and many otters adding hundreds of apartments over the next 6-18 months this will be the inventory the market needed. Studios at Gotham west for example are staring at $2700-$2750, I believe. Expect those studios to be $2350-$2450 12 months from now.

My posts sound rather gloomy, but this is all actually very good news. Add in harsh weather, local elections (DeBlasio), government budget issues, global tensions continuing to get worse, lots of us will be looking back at 2013 as another peak in the real estate market. Thanks god it's almost over too. Not sure I could take seeing another crappy 1200sf crappy 2bdrm come on the market for $3mm-$4mm. I can entirely understand how a buyer for that thinks it will be worth $6mm next year!

I find projects like St Vincent's hospital to be very interesting. $5mm for a 1bdrm and I am beginning to wonder if they will miss the market or to a greater extent, obtaining the p/psf they believe they will.

Nah, one can only hope that St Vincent's misses the market, that would be karma for replacing a much needed resource (only local hospital) with one completely unnecessary (condo for 1% which the city--and that neighborhood--is overrun with). On the other hand the rich NIMBYs in the St Vincents area deserve some of the blame for not supporting a community hospital with a rich history of serving all peoples (for those of you too young to remember, despite the Catholic Church's relentless homophobia St Vincent's AIDs ward, at the epicenter of the epidemic, was legendary for its compassionate care) because it didn't have the cachet of a NY Presbyterian or NYU.

Downtown yes I have seen decreases in prices, but for the rest of the city I certainly don't see prices going down in fact this year seems to have had the highest increase in prices I have seen in years especially on the upper east side with blasting now done for the 2nd ave subway. The units that have seem to have gone up the most is the studios and 1 bedrooms.

One year is not a trend.

How about sales prices, are they also decreasing?

You're right, RS. Seven years is a trend.

"At the same time, they they [sic] are unlikely this year to top the previous peak of $3,265 set in the fourth quarter of 2006."

Welcome back!

Native, aside from the aspect of removing a necessary resource for the area, I'm more interested in seeing how people react when the 2bdrm they purchased for $3k a sf is now worth $1600 a sf, already a historically high figure. The flat out drunkenness of buyers 2nd qtr 2102 through 2nd qtr 2013 has been unsustainable in my opinion.

Intrigued how riverside states "one year is not a trend." I actually agree and to an extent, thats the exact point I am making. There was a surge that began probably late 1st qtr 2012 and picked up massive momentum in to present day with the bulk of spiking happening late 3rd qtr 2012 through present day or late 3rd qtr 2013. I agree one year is not a trend. The massive increases we witnessed over the last 12-18 months hasn't been a trend. It was an anomaly - a blip of extreme excess and demand. It was like tsunami of cash -- too much -- too fast combined with a unique set of factors, notably, an extreme lack of inventory. Feb 2012-present has been a time unlike any other I can remember in NYC and not even remotely similar to 2006/07. That was a peak after years of gradual increases with many ownership incentives dropped in the laps of buyers along the way. There was also a lot of liquidity in terms of housing stock. The real estate market was undermined by an entirely different set of circumstances to what is happening now.

Well financed people are better insulated this time around, but that is also what concerns me. Many of these people who made cash purchases, have done so with other peoples money. I could easily see things taking a turn for the worse and that same person who bought say, a 2bdrm at the Caledonia for $2200 a sf in cash, bailing for $1500 a sf. Taking whatever money is left and running. If a market goes sideways you can be damn sure the person who paid $3.6mm for a place in cash will take $2.8mm. Fact: 75% of the people who have realized or currently have unrealized gains in this market did so by have reasoures and being at the right place at the right time. It's these same people who propped up the market that will be the ones who put downward pressure on it. I've witnessed this in the past. A girl who purchased a condo (rather some guy -- who put it in her name) for a $1mm sell it for $720k when the market went bad. She flat out just wanted the money and of course didn't have stable employment (sound familiar)? Just think of one of your neighbors in your condo. Granted this would never happen in a coop, but the condo housing inventory is large enough now that it would create a black cloud over the entire market. There is concern on my part that sellers would be more inclined to cut their loses with having 100% equity in an apartment versus owing the bank anything. I know from past experiences people who were considering taking a loss where looking at from a monthly figure standpoint of how much (x) would cost in comparison to (y) every month, therefore creating some resistance and people remaining upside down until the market turned. The people who finance their purchases sadly are the minority in today's market place. People have being jumping for joy with all the cash buyers and I've been saying it for a while that I've viewed it more a flaw or problem in the short term above anything else.

Speaking of drunk; I meant 2012 not 2102.

I think your wrong and the market showed this in the last 5 years. The housing that came on the market (not just nyc) was mostly people who couldn't pay the mortgage (bank foreclosures) where as people who owned without a mortgage held on. Owners who paid with cash most likely are not living hand to mouth, people who finance generally are using 25% of income just to pay the mortgage and if they lose a job they generally only have a year or less until they run out of money. Cash buyers can generally holdout until prices recover Cash buyers unfortunately are a part of our debt ridden country where money is becoming valueless since it is merely printed and people want hard assets as its the only way to protect yourself against the real inflation rate which is probably around 8 to 10%. Hard assets may go down temporarily for a few years even a decade, but they always recover where as paper money never does, $1,000.00 dollars in 1920 would buy you an apartment on the upper east side. But the cash is still only worth $1000.00. The apartment today 100 years later is worth $500,000.00 you tell me the better place to put your cash.

There are a number of wb new (or not that new) rental buildings that seem to have very few tenants. Not manhattan, but quite possibly relevant.

I think that's a relevant detail.
Aboutready, why are you so wishy-washy? Take a stand. Be a woman!

I think you kind of misread the article (or you use it to make a totally different point). The article says that rents are flat for one reason, people are buying! That s why the share of the small units in the resale market is so big (we should see the impact in the resale price in a couple of weeks) mainly because they arbitrage between renting and buying (and the drop is attributable to many people buying recently and dropping out of the rental market because mortgage rates went up and people did not want to miss them). The article itself says that rents are unlikely to go down a lot. What I read is basically that people bought because purchase prices were too low compared to the rents...

What is the right ratio between renting and buying?

There is no right ratio, it s two different markets, but are related, there a lots of expectations (about the market, inflation, rates,..) involved, it depends on carrying costs, people desires,... But apparently people decided to purchase recently and in the long-term, that is not bearish on rents.

@TheTourist

The ratio is now approaching or greater than 30:1 (sales:annual rent price) in many markets.

"What I read is basically that people bought because purchase prices were too low compared to the rents..."

So what ratio do you think is reasonable?

Are sales prices coming down in Manhattan, or is the sales market still pretty hot?

The same article said Brooklyn rents were up a lot YOY, again. So its Manhattan, not NYC as a whole.

Rents definitely coming down in Manhattan in all price points even in hot areas like downtown. Just my first hand observation. Could be a 10-15% drop by Jan/Feb.

I'm surprised by this perception that rents are dropping ... not what I'm seeing at all in the starter/studio market.

ali r.
DG Neary Realty

"I'm surprised by this perception that rents are dropping"

I'm not sure it's just a "perception" when the REIS, Citihabitats, and Prudential/M-S surveys ALL say that in fact they did and are and will.

Also, these surveys break it down by apt size so its entirely possible (though I have not checked) that studios ARE doing better than the overall apt market. But there is no doubt that all the market surveys say rents are down in Manhattan, but up in BK YOY.

I forgot - REIS actually has Manhattan rents up 1% YOY for the QUARTER, so they did not opine on the month. But they DID have Queens rents up YOY by the most, more even than BK. So anyway the trend for now seems to be non-Manhattan rents rising, Manhattan rents falling. But Manhattan still by far the most expensive. I'm assuming the M-S talk of Manhattan vacancy rate rising by a lot means that enough people are choosing LIC, Astoria, and various parts of BK over Manhattan to make a dent at the edges.

You will also note that Upper Manhattan rents were up 10% YOY per M-S, while overall Manhattan down 3%. This also seems like people looking at bargains in "fringe" areas.

There is a little weakness in the market at the end of the Summer Cycle this year around. Part of that may just be LL's who have pushed their inventory to the Summer to take advantage of New Hire's and incoming college students causing a short-term glut. Adding to that was 1,000's of brand new units coming online in Long Island City in the TF Cornerstone project at $ 500.00 security deposit and 1 month upfront all in late August (they hit the season at the very end). Last Spring there was a rental squeeze b.c. there were so few options. I am not sure one can project from this result in any one direction but it is definitely true that the strong upward movement very suddenly halted and slid back a little. We will just have to keep watching to see what happens. Nobody here really knows. My best guess is the overhang inventory left over from the Summer season and new units will get absorbed slowly this fall and there will be another shortage next Spring leading into the Summer season. What happens during that Summer season remains to be seen.

The 10% slide people seem somewhat out of touch. Cut a unit's rent a little, say $ 50.00, and it rents immediately thereafter. I think this most recent market adjustment was supply side, the job market and overall outlook for NY economy hasn't changed over this period of time and is still positive.

Ali R you may be right for the moment, but like the stock market there is support at a certain level. That level is $1800-2000. That is the "real" market. The typically single New York working professional and while studio prices aren't dropping as quickly today, they're going to plummet in the coming 4-5 months. The part of the market really doing poorly right now is $2300-$2700 or right around $2500. As those prices (on larger studios and walk-up 1bdrms) continue to drop, that downward pressure will push back walk-up studio prices. Since I know this going to happen without question, I'm hoping for a terrible winter (weather) to really get this process moving along.

ANagin no disrespect, but you're wrong. Salaries are still very low for most people. Most 24-30 years olds in industries other than finance and being an attorney are all under $100k. People aren't hiring attorneys. In fact it's an industry that's all but dead for new hires. Senior management in advertising for example is $130k. Maybe a touch more. The average 25 year old is still making the same $50k -- the same they were 10 years ago. 10% is a guarantee and almost a light estimate at this point. New York went through extreme growth the past 18-24 months. Tons of new housing stock in the pipeline converging with global and local politics, should finally balance things out. Why some people refuse to accept this is beyond me.

Furthermore, having read probably half a dozen articles in 2013 how 1/2 of all renters are spending what? More than 50%-60% of their net income on rent and housing related expenses, the most ever recorded, that is a clear symptom of a very unhealthy real estate market. I can't remember the precise numbers at the moment, but it wasn't good. Lots of people are renting check to check and most landlords wont take a tenant without a guarantor these days. It's all backwards.

Nah, maybe the market you want, and the market that is, will coincide some day.

The "rent burden" statistics you're thinking of vary by neighborhood. E.g., on the Upper West Side the median rent burden in 2011 was 27%, having risen a few points since 2006. For low-income (I forget how that's defined) it was close to 70%.

http://furmancenter.org/files/sotc/SOC2012_Manhattan.pdf

Think that it just reached a bit of a peak, will come down for a bit and then continue up. To Nahs points: I know a bunch of young lawyers who are all receiving the regular starting salary of $160,000 plus bonuses. Everyone of them I know chose Brooklyn because the prices in Manhattan were just too excessive, keeping in mind that most lawyers come to NY for two years or so and then take off, so actually try to pay off debt/save some cash.

"Most" lawyers most certainly do not just stay for two years. They are often horrendously burdened by debt, and mobility in the profession for those with less experience is extremely tight. Everyone wants to take off, land a great in-house job, or a job at a good firm in a less expensive city, but that just isn't happening right now, at least for the vast majority of young lawyers (and not-so-young ones too).

Is that your "legal" observation aboutready?

@Nah

Where are you getting these statistics? I don't think that $1,800 to $2,000 is the "real level" of support for rents. Does anyone have any volume statistics? I would think the rent medians are well over $3,000 and that most people in their 30s living in Manhattan below 96th st (not in subsidized housing) are making over $200k per year, either in finance, law, or business. The group you are discussing seems to mainly be post college students in their young 20s which I don't think is the bulk of the market although I may be wrong. Do you have any solid stats that would explain ur position?

How does this compare to the rental trend in C0lumbia C0unty?

do tell.

It's comforting to know that there are people who think that anyone living below 96th St makes $200k plus per year.

And if they're not, they are either poor and subsidized or a student. What does that make me and most of the other people I know? Remember us NYC1234? I would like to reintroduce myself as middle class.

Wait til debalsio is elected. Rents will plummet along with Re prices

As someone who has been eyeing the downtown market casually for the past couple of years, I have definitely witnessed the extreme run-up earlier in the spring/summer of 2013. I definitely perceive a corner being turned, as evidenced by sales listings that don't seem to move as quickly as they did earlier in the year. The case for a flattening-to-declining market is definitely stronger, now that interest rates have spiked (and will rise even higher after the fallout of the fiscal cliff) and now that the rental market is starting to cool down. The only thing that seems to be propping up or preventing a landslide in prices is inventory, which remains scarce downtown. But decreasing sales prices may be an incentive for people to sell for a couple of reasons: 1) to cash out on a declining asset and/or 2) to move up to a bigger place that was previously out of reach.

I'd love to hear someone make the case that the sales or rental market will rise up again in the near future despite all these headwinds.

"most people in their 30s living in Manhattan below 96th st (not in subsidized housing) are making over $200k per year"

This is the most laughably absurd statement I've ever read here on SE. And that's saying a lot!

Hejiranyc - that comment perfectly illustrates my points up top in this thread. I know for a fact that many of these people are oblivious and that at the first sign of distress, they will leave money on the table. I know this as fact. I just had this exact conversation with someone who owns a $4.5mm place and is pretty sure it's not worth that, despite having closed on it in the last year. There is older money which nickel and dime and are sensitive to the market and the prospect of taking a loss. Then there is new money, the majority of downtown (and most notably, Brooklyn) for example. Many of these people are just along for the ride and don't see purchases as long term investments. The person that purchased the $4.5mm places knows there is a high probability he will not get that money back. Most of it sure, but not all it. So why do it? This individual has a little more than $12mm in assets, so spending that much on one apartment likely wasn't the best idea, but he is financing some of it. He even said should the market turn and he had to sell, he would have no reservations selling it for $3.2mm or $3.5mm and walking away from his equity and paying the bank back. He'll still have $10mm or slightly more in liquid assets and in the meantime have the quality of life he seeks. This is what I was referring to as a "perfect storm" concerning low inventory. People don't have other options and many people don't want to rent as you're not going to get that same quality of life. Many people pay $4mm for 1500sf just because they can and not because it makes sense and a lot of these people have no issue leaving money on the table, even if it's $500k. $500k is a drop in the bucket and two years worth of potential rent that could have been spent (at $15k-20k per month) so it's a wash for these people. You get enough of these scenarios to happen it could be havoc on the market.

@hejiranyc

----This is the most laughably absurd statement I've ever read here on SE. And that's saying a lot!

Ok, well the median rents for downtown Manhattan apts are $3,950 according to streeteasy. Usually apt buildings require 40-50x rent. 50 x $3,950 = $197,500. This does not include bonus money usually. Of course there are a lot of people in their 20s living with multiple roommates and even in their 30s and beyond. It is not as absurd as you think.

@Nah

----What does that make me and most of the other people I know? Remember us NYC1234? I would like to reintroduce myself as middle class.

Please see the above statistics. What does it tell you when median rents are almost in the $4k range? Median US income is about $50-60k, which equates to rents in the $1k range. I'm not passing judgement on anyone but I think it is obvious to most (even without the above statistics) that there are a lot of people making a lot of money in Manhattan. There are an estimated 400,000 millionaires living in Manhattan. There are 1.6 million people living in Manhattan. I don't know what percentage live below 96th vs above. But even including the entire island, 1 out of 4 is a millionaire.

Market-rate rents increased rapidly in the past few years and are now experiencing a minor correction. The fundamental problem of supply shortage continues to exist and will continue for the indefinite future. Reason: public policy discourages the construction of new supply. Stabilization, landmark status, high property taxes, environmental impact studies, community boards, etc have dramatically constricted supply and will continue to do so.

The only thing that will drive rents down to the levels of other cities in the U.S. would be to remove all the obstacles and dramatically increase supply.

> Ok, well the median rents for downtown Manhattan apts are $3,950 according to streeteasy. Usually apt buildings require 40-50x rent. 50 x $3,950 = $197,500.

But is that 197k for an individual or couple?

In addition to dramatic increase in supply, expansion of the transportation system would help drive down rents. For example:

1. More subway lines from Queens to Brooklyn.
2. Pedestrian/bike bridge from Jersey City to Lower Manhattan.

1. Rent stabilization has INCREASED supply for at least the last generation. It doesn't apply to new housing, so it only affects builders to the extent that they opt into it in order to receive subsidies (many do) or it makes the rental market generally more attractive, which it clearly does. (In most American cities, middle class people won't rent, because it is too easy for landlords to jack up the rent just when they can't move; the main effect of rent stabilization is to eliminate that threat. Secondarily, rent stabilization smooths out rent increases, which is good for both landlords and tenants.) The prevalence of rent stabilization in NYC helps even the unstablilized market, because it creates norms and expectations that make landlords less opportunistic and tenants less fearful of opportunism.

But leave aside the complicated economics: NYC has higher rents and prices than most areas. High prices encourage building, not the opposite.

2. Do you have any evidence that property taxes reduce building? The opposite is far more likely to be true: our consistently underfunded government doesn't spend nearly enough on transit, schools, parks, the arts or garbage pickup to make areas outside the center attractive to the wealthy. Create more areas with good schools and 20 minute commutes and builders will build immediately.

3. The census reports median incomes. There is no need to back-calculate it from rents. Manhattan incomes are not high enough for "most" people to be earning over $200k.

4. And, no this is not because vast numbers of people are living in subsidized housing. To be sure, most expensive housing is heavily subsidized: All owner-occupants are subsidized by the exclusion of imputed rent, mortgage holders are subsidized by the personal interest mortgage deduction, virtually all coops pay far less than their fair share of real estate taxes (because they are taxed based on their value as rent-stabilized rentals rather than as coops) and are therefore subsidized by renters, most newer condos have some form of tax waiver. And all landowners are subsidized by the inability of the artistic and productive classes to charge them for making the city a vibrant, exciting place to live and thus increasing land prices.

But there are very few subsidies for the less wealthy. Very little of the Manhattan-below-96-St rental stock benefits from tax subsidies, and there is relatively little NYCHA stock or section 8 -- the only directly subsidized housing since the demise of Mitchell-Lama many years ago.

It is true, however, that most of the Manhattan population -- especially, of course, virtually all coop/condo owners -- could not possibly pay current market prices were they forced to give up their current housing arrangements without compensation.

4. More government investment in transportation and schools would definitely and rapidly increase supply. Now, when the US can borrow at 0% and both capital and labor are sitting idle, would be a great time to begin a national campaign to rebuild and modernize our infrastructure. Unfortunately, one party wants to cut the deficit and doesn't understand that investment is the best way to do that, and the other wants to cut taxes on the rich and doesn't care what the consequences are, so this isn't going to happen.

finance guy you are smart...please run for mayor of nyc!

We'll said, Finance guy. One statement is particularly true:
"most of the Manhattan population -- especially, of course, virtually all coop/condo owners -- could not possibly pay current market prices were they forced to give up their current housing arrangements without compensation."
In addition to speaking with a few people at the top end, I've had this exact conversation with many people who are essentially trapped in their housing situation. I know people that purchased apartments for $35k just as recently as the early 90's and they are now worth $600k and for many it has stunted their personal growth and many have not had families. While this is a personal choice, after 9/11 there was an extreme shift on the middle class in NYC and upward mobility was all but eliminated for many individuals. People could sell, but they can't do anything with that money, other than of course leave the city, which most won't, because they only know one way of life. NYC1234 doesn't realize there are people (more than you think) who have 100% equity in their apartment, but make $50k-$60k per year and just pay maintenance. I actually know lots of people like this to varying degrees. Virtually none of them could last more than 12 months in today's market. They know this.

We'll never see the 7 train extend to Jersey, but it would be a tremendous game changer in my opinion. If it went one stop to port imperial (union city/Weekhawken). This is something I would like to see and I don't think enough people understand what type of positive impact, in many opinion, it would have for everyone's wallets. You'd think developers would be jumping all over this. Views from Union City looking at Manhattan would be incredible.

> Rent stabilization has INCREASED supply for at least the last generation.

Rent stabilization has not increased the supply. It has removed at least 50% of the market in Manhattan. The average stabilized rent in Manhattan is $1100/month below market. This has discouraged development of non-luxury, non-subsidized rental supply since the 1970s. People looking for housing must compete for the remaining 50% of the non-stabilized market, driving market-rate rents up.

> More government investment in transportation ... would definitely and rapidly increase supply

I agree with you on that. There has been a massive under-investment in NYC transportation systems. One wonders why the multi-trillion Federal stimulus program sponsored by both parties didn't produce anything of value to NYC transportation.

> Do you have any evidence that property taxes reduce building?

There is an inverse relationship between property taxes and return on investment.

> most of the Manhattan population -- especially, of course, virtually all coop/condo owners -- could not possibly pay current market prices were they forced to give up their current housing arrangements without compensation.

Agreed. One has to be a fairly accomplished person (or work in an overpaid profession such as finance/law) to afford market-rate rent in NYC.

Nah,

what you write does not make any sense. Why would people buy and be sure the place is worth less (according to what valuation method exactly ?) than what they paid for ? And this:
" Many people pay $4mm for 1500sf just because they can and not because it makes sense and a lot of these people have no issue leaving money on the table, even if it's $500k. $500k is a drop in the bucket and two years worth of potential rent that could have been spent (at $15k-20k per month) so it's a wash for these people"

When you put 5mm in an apt, ok you don't pay the rent, but you have the maintenance and taxes (probably in the 5k range). More importantly, your 5mm didn't yield any interest when you can get easily 3.3% tax free with NY muni bonds for instance, for these people the lost opportunity is equivalent to $370000 of pretax income per year. Over a couple of years that s a lot of money on top of the 10% transaction costs and the 500k they are willing to let on the table... They are either dumb or don't believe what they told you...

I still don't get your prefect storm theory. I mean, perfect storms happen when people are leveraged, what happened in 07-08, but when people paid cash, they are not forced out, they can just enjoy the quality of life of being an owner and wait for the next rise. Even in 07-08, when prices, inflation-adjusted, were higher than now, the market lost what, 25% ? That s what you can loose in a month on stocks, and this was the perfect storm... (everybody talking about the worst crisis in a century in the city at the epicenter at the problem). Prices can go down, it s a market, and maybe they will, but I doubt we ll see a -30% in the next few years (pending we don't see something exterior to NY that makes everything everywhere go down by 30% or more)

"The average stabilized rent in Manhattan is $1100/month below market. This has discouraged development of non-luxury, non-subsidized rental supply since the 1970s."

The logic escapes me. If it were true that stabilized rents have been below unstabilized rents for 40 years, that would mean that developers -- who get UNstabilized rents on their new development -- have been getting higher rents on new development for the last 40 years than they would absent rent stabilization.

Higher prices mean MORE incentive to build. Surely that would mean that supply would be higher, not lower, than if developers made less profit.

In real life, the factual claim is probably wrong too -- stabilized rents go up more steadily than unstabilized ones, but both basically track inflation over time. Stabilized rents are lower than unstabilized ones in the aggregate because the units are lower quality in the aggregate.

But it is still the case that developers have benefited from rent stabilization (that's why they don't seriously oppose RS even though the big landlords would obviously make a one-time profit if it were abolished --it's the small-time grifters, who paid RS prices, want to sell at non-RS prices and don't care about the long term, who are the main opponents).

RS increases supply, but it increases demand even more, by making renting viable for middle class families that couldn't risk landlord opportunism. It's very hard to rent without RS if you need to know that you'll be able to stay in the same apartment until the kids are out of school or the job changes.

The main reason supply hasn't kept up with demand is the same as in every urban area in the US: in the last generation, a huge number of people have decided they prefer walkable cities to car-centered suburbs. But at the same time, we decided to close down public investment in the infrastructure necessary to make new walkable areas to meet the new demand.

Without massive government projects -- as big as the prior generation's interstate highway system, single family mortgage subsidy, car-oriented zoning, and the long list of gas/auto subsidies that made the suburbs possible in the first place -- it isn't possible for the private sector to respond to this shift in demand.

No developer can build the ten new NYC subway lines and the schools and parks we need to meet the demand. (Inter-city trains too -- If we had a Japanese inter-city train system, downtown Philadelphia and Albany would be closer to Penn Station than Bay Ridge.)

So until we get over the "government is the problem" thing and start being willing to pay the price necessary for public services, we'll pay much higher real estate prices instead of somewhat higher taxes.

> The logic escapes me. If it were true that stabilized rents have been below unstabilized rents for 40 years, that would mean that developers -- who get UNstabilized rents on their new development -- have been getting higher rents on new development for the last 40 years than they would absent rent stabilization.

While stabilization does serve to drive up market-rate rents, presumably making building market-rate housing more attractive, this is outweighed by the threat of politicians creating new stabilization programs. The fact that the government has the power to set price ceilings is enough to discourage development, especially since it is still so widespread in NYC.

Stabilization has been a raw deal for many landlords. The increases have not kept pace with inflation, which is why stabilized apartments in Manhattan rent for far below market value.

> So until we get over the "government is the problem" thing and start being willing to pay the price necessary

NYC residents pay some of the highest taxes in the country, especially when you add up medicare, social security (both employer and employee), city, state, federal, sales tax, property tax, etc. I would say that we are already paying a hefty price, and that government budget priorities are the problem. I personally can not afford to pay much more in tax, which is even higher than my market-rate rent.

> Rent stabilization has INCREASED supply

By your logic, we should then expand the rent stabilization and get even more supply. What is the "correct" ratio of stabilized-to-market-rate rental units, and who gets to decide? Would you increase, decrease, or keep the ratio the same as it is now (in Manhattan roughly 50/50)? Are you also saying that if rent stabilization were phased out that supply would decrease?

How frequently will the high speed trains from Philadelphia come to Manhattan? Will they make stops along the way? How many new tunnels will we have to build to accommodate them? Where will they park? How many more people can we fit into Manhattan during the work day? What happens to all of the big businesses in Philadelphia when their workers come to Manhattan instead? What happens to all the small businesses when there is no foot traffic in Philadelphia? Who will pay the taxes in Philadelphia when the big businesses leave and the small businesses are reduced? What will happen to the schools in Philadelphia? Who will pay the pensions of the retired teachers from Philadelphia? What happens to New Jersey if it is easier to get to Philadelphia? How will Newark fare? How about Camden?

http://www.businessinsider.com.au/the-8-reasons-why-new-york-rents-are-so-ridiculously-high-2013-7

Philadelphia is waiting for some answers from financeguy.

any updates?

The rental market appears to have leveled off for now. According to a recent Elliman report: "Overall Manhattan rents softened for the first time in two years. Weaker conditions were seen across apartment sizes as vacancy rates and landlord concessions were than higher than last year’s levels." My most recent rent increase was the lowest in several years.

The highly regulated NYC housing system will continue to restrict supply, so I don't expect any major improvements for market-rate renters in the long term.

Here is the Elliman report: http://www.elliman.com/reports-and-guides/reports/new-york-city/march-2016-manhattan-brooklyn-and-queens-rentals/2-691

It's interesting that although year on year for March the average rental price has decreased the S per square foot is up significantly.