Multi-family volume down >50%

https://www.urbandigs.com/marketwide-charts/monthly-closed-sales/all-manhattan/townhouse/?agentid=58

Doesn't this just result in higher rent for everyone else, eventually? If there isn't a mass exodus due to deteriorating subway lines, higher crime, higher taxes, and overall reduced services. Sometimes I can convince myself the City is on the edge of a downward spiral.

I've looked at the townhouse market over the past five or so years. It's such a mystery. Some of the units seem to comp like a luxury condo, others like multi-family - which many of them have become over the years.

My observation is as follows:
Renovated single family are priced like a condo but un-renovated and configured as multiple apartments (could have rent stabilized tenants) are priced as multi-family but with a premium to large multi-family due to possibility of conversion to single family.

FYI Noah:
Clicking on that link using Chrome on an Android mobile results in pop-up with:
"Access this feature for Free by Connecting with an UrbanDigs Pro Agent below"

Ugh.. ok thanks for letting me know..that should work for public use. Not sure why, seems to work for some but not others. Will report it

https://www.wsj.com/articles/after-new-york-rent-reform-some-landlords-are-falling-behind-11572098400

I wonder whether falling behind is just a strategy as I would think current cash flow have not been impacted yet .

The problem is a lot of loans have been executed as what activists complain of as "Predatory Equity" (i.e. the debt service can't be covered by the current rent roll so they HAVE to get current statutory tenants out by any means necessary). For such properties the new law made those positions untenable. Also, there are currently thousands of units being held vacant in the hopes the law will be overturned. But those units bring in zero income. So if you were operating at even or a small loss, and now you get a couple of units vacant, you're caught in the Catch-22 of not being able to rent them out without getting into a long term below market lease but also not having the former income from those units.
And for owners who bought in at inflated prices in the assumption that they would be able to work buildings, substantially increase the rent roll and then sell at a large mark-up (so it was worth it to carry buildings at an operating loss in the near-term) they are now faced with an immediate devaluation of about 1/3 as well as the inability to substantially increase the RR no matter what they do. So why put any more money out of your own pocket into a property when you are in a hole with little chance of getting out?
I suspect that in some cases they are pocketing the rent and paying none of the bills to not only recoup some of what they have put in, but also as somewhat of a poison pill strategy to bring lenders to the table.
But you also have to take into account the number of recent awards against landlords for rent overcharges as well as new cases in the pipeline, as well as those not even started yet. There's a good chance these guys are aware of overcharges (they know what they have done), see hundreds of thousands of dollars in liabilty, and know that there is no way they can stay afloat when those hit. So even if they are cash flow positive now, not only won't they be post litigation but they will owe a huge settlement so they are being proactive to that situation.

Thanks. So deliberate vacancy, tight cash flows to start which assumed every few months they can get an increase in cash flows via decontrol, and of course owner willing to fund temporary cash flow shortfall in the past. I am guessing if they can get 5-10 percent concession on the loan value, they can have positive equity again assuming 65-70 percent LTV originally.

Where do people see CAP rates for fully rent stabilized multi-family with most rent raising improvements already in place in "still a little iffy" areas of BK where the market will start to trade again? I realize it will take at least 6 more months for the market to start moving again.

I am thinking 6-6.5 cap rate (vs say 4.5 cap rate before the rent law change) based on current NOI as NOI will only decline slowly as the expenses and taxes go up faster than Gross Income.

Also, I am not sure if the fully rent stabilized in better areas should be any higher cap rate. But I know the price premium exists.

Sorry posting to a more appropriate thread.
https://streeteasy.com/talk/discussion/45062-immediate-impact-of-rent-regulation-changes

Do you mean better areas sell at lower cap rate? That has historically been the case. I remember back in the 1990s looking at a setup for ?107 West 11th St? which was at a cap rate of less than zero.