Letter From Our Chief Operating Officer On behalf of The Real Estate Group, I am pleased to present the October 2008 edition of our Manhattan Rental Market Report, the only research on the city%u2019s rental rates published on a monthly basis. As we are entering into the historically sluggish fourth quarter, we normally expect to see a seasonal slowdown. In step with these trends, rents are down... [more]
Letter From Our Chief Operating Officer
On behalf of The Real Estate Group, I am pleased to present the October 2008 edition of our Manhattan Rental Market Report, the only research on the city%u2019s rental rates published on a monthly basis.
As we are entering into the historically sluggish fourth quarter, we normally expect to see a seasonal slowdown. In step with these trends, rents are down across the board this month and inventories, which had previously been in a two%u2013month decline, are back up sharply.
Moreover, in year%u2013over%u2013year analysis, rents are down in all rental categories by as much as 7.23% in doorman studios, with the exception of doorman two%u2013bedrooms. To us, this seems to be a clear indicator of downward forces beyond simple seasonality trends.
While we noted last month that it appeared that landlords were making progress to lower vacancies by lowering rents and offering concessions, this effort does not seem to be enough to right a market that is being heavily influenced by economic factors, above all being unemployment.
Consequently, incentives, which had previously been used strategically to lure renters, have now become the norm and have become even more aggressive. Rentals that had previously been offering to pay brokerage commissions or a free month%u2019s rent in many instances are offering both, and we expect these concessions to become even more creative as we move deeper into the winter.
Looking ahead, it appears that the rental market will have a variety of forces to contend with, which could make the fourth quarter a difficult time as renters and landlords fumble for balance.
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As we've discussed previously, it's hard to get a clear view of the rental market because the statistics reflect asking rents, and incentives are reported ancedotally - if at all. It's notable that TREG has turned guardedly bearish, since they continued to grasp at bullish straws until quite recently.
The situation seems to be especially tough for unit owners who are trying to ride out the storm by finding a rental tenant. My favorite example in our neighborhood dropped from $10K to $5500 before getting anyone to bite:
http://www.streeteasy.com/nyc/rental/377863-condo-110-west-86th-street-upper-west-side-new-york ...and whatever deal they made must have fallen through, because the BHS site shows the listing as active again, still at $5500. It's even Clayman's featured listing.
it looks like the rents are dropping much more dramatically than prices as per West 81st post
Of course I dont monitor that market so I dont know how general these examples are.
The sale prices so far seem to be stagnant compared to these impressive drops. Either these are then an impressive leading indicator -- hope hope -- looking for nice 3br 2ba in UWS for $950k at this rate......or rents are ridiculously decoupled from sales as speculators sit on the apartments and take the bite on the lower rent
somehow I don't think that too many of them will do that for too long, and I don't think the market will improve dramatically, except perhaps for a post election bounce (could go either way)
How does rent control work?
If the market rents fall through the floor, the rent control people oblige in the same direction? Likely has never happened since the great depression
since we just went through Great Euphoria over the last decade or so, even a modestly working economy should feel like the great depression to those who enjoyed it
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Response by West81st
over 17 years ago
Posts: 5564
Member since: Jan 2008
joedavis: Increases in regulated rents (mostly stabilized; rent control is dying) are mostly dictated by landlords' operating expenses, not market rents. That's why regulated rents have lagged so far behind/below the market, sparking a lot of irrational anger at regulated tenants. Over the next year or two, the gap is likely to narrow significantly.
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Response by newbuyer99
over 17 years ago
Posts: 1231
Member since: Jul 2008
West81st - the condo conversion looks pretty nice, and $4900 sounds about right. The $7800 asking price was a total joke, as, of course, is the $1.8MM someone paid for it. Listed at 1300 SF, which sounds very, very ambitious. I would guess 1000, maybe 1100 at the absolute most. That psf value doesn't sound so good...
On a more serious note, any idea where I'd find these desperate owners? Would love to rent from one of them for a good price, preferably without going through a broker...
"forces beyond simple seasonality trends" .... i'll say!
As we've discussed previously, it's hard to get a clear view of the rental market because the statistics reflect asking rents, and incentives are reported ancedotally - if at all. It's notable that TREG has turned guardedly bearish, since they continued to grasp at bullish straws until quite recently.
The situation seems to be especially tough for unit owners who are trying to ride out the storm by finding a rental tenant. My favorite example in our neighborhood dropped from $10K to $5500 before getting anyone to bite:
http://www.streeteasy.com/nyc/rental/377863-condo-110-west-86th-street-upper-west-side-new-york
...and whatever deal they made must have fallen through, because the BHS site shows the listing as active again, still at $5500. It's even Clayman's featured listing.
Elsewhere in the 'hood, here's a condo conversion that cost the owners about $1.8MM. Corcoran had it for rent at $7800... $6995... $6250...
http://www.streeteasy.com/nyc/rental/358869-condo-219-west-81st-street-upper-west-side-new-york
No takers there. Now it's with Citi Habitats at $4900:
http://www.streeteasy.com/nyc/rental/422408-upper-west-side-upper-west-side-new-york
it looks like the rents are dropping much more dramatically than prices as per West 81st post
Of course I dont monitor that market so I dont know how general these examples are.
The sale prices so far seem to be stagnant compared to these impressive drops. Either these are then an impressive leading indicator -- hope hope -- looking for nice 3br 2ba in UWS for $950k at this rate......or rents are ridiculously decoupled from sales as speculators sit on the apartments and take the bite on the lower rent
somehow I don't think that too many of them will do that for too long, and I don't think the market will improve dramatically, except perhaps for a post election bounce (could go either way)
How does rent control work?
If the market rents fall through the floor, the rent control people oblige in the same direction? Likely has never happened since the great depression
since we just went through Great Euphoria over the last decade or so, even a modestly working economy should feel like the great depression to those who enjoyed it
joedavis: Increases in regulated rents (mostly stabilized; rent control is dying) are mostly dictated by landlords' operating expenses, not market rents. That's why regulated rents have lagged so far behind/below the market, sparking a lot of irrational anger at regulated tenants. Over the next year or two, the gap is likely to narrow significantly.
West81st - the condo conversion looks pretty nice, and $4900 sounds about right. The $7800 asking price was a total joke, as, of course, is the $1.8MM someone paid for it. Listed at 1300 SF, which sounds very, very ambitious. I would guess 1000, maybe 1100 at the absolute most. That psf value doesn't sound so good...
On a more serious note, any idea where I'd find these desperate owners? Would love to rent from one of them for a good price, preferably without going through a broker...