With New York City rents now at their lowest in nearly a decade, apartment deals are so attractive that even rent-stabilized tenants can’t help but give up their “cheap” rent-controlled buildings and move to better apartments that were once out of their reach.
Rents in New York City have been declining since the Communist virus (COVID-19) pandemic. According to the first quarter market report from StreetEasy, a New York real estate rental network, rents in New York City are in free fall and are now at their lowest level in a decade.
In Manhattan, for example, the median rent fell to $2,700 per month, the cheapest housing price in the neighborhood since it began business in 2010. By comparison, in the first quarter of 2020 and on the eve of the outbreak, average rent asking prices rose by more than $700 at the time to $3,417 per month.
In Brooklyn, median rents fell 10 percent year-over-year to $2,390, the lowest level since 2011. Prices in Queens fell to $1,999, the first time they have fallen below $2,000 in eight years. Rents in the borough fell 10.5 percent year-over-year. StreetEasy excludes the Bronx and Staten Island from these reports.
Stable Rentals Also Vacant
Patch’s website reports on the case of a tech worker named Ian Tice who originally lived in a rent-regulated one-bedroom on Manhattan’s Lower East Side and moved from the small, run-down apartment in February to a new place in the East Village that comes with more modern appliances and a new bathroom, as well as outdoor space with a built-in washer and dryer, but costs $200 more per month in rent. 200 per month.
It’s obviously not a worthless change, but it’s in the price range of the old apartment,” he told Patch. I think this is the last chance to get a really good deal.”
Tice’s case is not an isolated one. At an April 7 online forum at the New York City Real Estate Expo, O’Toole, president of Eileen O’Toole’s law office, said that according to their survey last December, operating income for landlords of stabilized rentals was down about 22 percent to about $3.5 billion. But rent arrears were only $1.1 billion, and $2.4 billion in uncollected rent was due to “vacancies,” so the biggest problem was vacant stabilized housing.
Previously, experts have always compared New York City’s “rent-controlled buildings” to a “gold mine. Once a tenant signs a contract with a landlord, the tenant’s interests are protected by law, which ensures that low-income people can continue to live in New York City, where every inch of land is gold.
Therefore, rent-controlled buildings are usually very stable, only the landlord “forced to evict”, the tenant does not move out of the news, few tenants will actively give up such a cheap house; tenants not only do not move, but also let the family members to get the right to inherit the rent stabilized apartment. Therefore, it is indeed a rare phenomenon that a large number of “rent stabilized apartments are left vacant”.
Landlord vacancies remain high
It is unknown how long the “last chance” for New York City tenants will last. According to statistics released by real estate services firm UrbanDigs on April 23, more than 50 percent of Manhattan’s rental apartments are intentionally vacant. The real estate community refers to such vacant apartments as “warehousing,” and UrbanDigs reports that landlords are currently “warehousing” more than three times the number of apartments in Manhattan than they were “warehousing” before the outbreak. UrbanDigs reports that landlords are currently “warehousing” more than three times as many apartments in Manhattan as they did before the outbreak.
The “Small Landlords of New York” organization has reported since May of last year that increased rental delinquencies have led some landlords to plan to vacate their vacant rental units to prevent further losses. 56% of landlords plan to remove their vacant units from the rental market. By February of this year, one year after the outbreak, landlords in both Brooklyn and Queens preferred to vacate their units because they were “scared” of rent arrears.
“The phenomenon of vacant rental units shows that landlords have no confidence in their tenants to fulfill their leases under the epidemic, and no confidence in the future; and the efforts or results of landlords to collect rent are not helping to improve their confidence, and the planned vacancy rate among their members remains high.
Rents are falling and some landlords are starting to give in
But with a large number of middle class and wealthy people fleeing New York in the wake of the epidemic, there are plenty of rental apartments throughout New York City and it is only a matter of time before rents fall. However, the sharpest rent declines are usually in the higher-income areas that have lost the most population.
According to data from StreetEasy, a New York real estate rental network, the median rent in midtown Manhattan fell the most, to $2,895. That’s a 14.8 percent decline compared to the same period last year. It was followed by the Upper East Side, which fell 13.9 percent year-over-year to $2,400.
In prime North Brooklyn, home to trendy Williamsburg and Greenpoint, tenants can find one-bedroom apartments for a median price of $2,500, the lowest price in the area in more than a decade. In northwest Queens, rents in the borough’s most expensive submarkets (including Long Island City, Astoria and Sunnyside) fell 9 percent year-over-year to a median of $1,800.
Some landlords are starting to make concessions, such as Manhattan landlords offering a month’s free rent or waiving parking fees to lure renters back, or waiving some rent arrears to retain existing tenants.
“Small Landlords New York recently reported that the percentage of landlords offering up to 25% rent arrears concessions to eligible tenants over the past six months was roughly the same from 67% in February to 68% in March. Although the intentional vacancy rate dropped to 44 percent, March was the second month in a row that more landlords were not offering rent than were offering rent. Ho explained that the previous “planned vacancy rate” was only a verbal declaration by landlords, but now it is being put into action, and there are indeed vacancies that are not for rent.
Housing market can’t rebound without housing courts
So, will New York City rents continue to fall? StreetEasy, the real estate rental network, shows that the number of rental units on the market is one of the key factors driving the drop in rents and the surge in offers. In the first quarter, rental inventory (rental inventory) in Manhattan and Brooklyn was more than twice as high as in the first quarter of 2020. Inventory in Queens increased by 97 percent.
Before the epidemic, the start of spring and fall school in New York City was part of the peak rental season, and home prices would rise until the start of the school year, but now the international students boosting rental demand are stuck at home, online study is becoming the norm, and the most mobile segment of the real estate market, young renters, are finding that with telecommuting, they live There are fewer reasons to live in New York City, and the rental market has changed.
When will the New York rental market rebound? For the housing market to recover, Hodel says, first the housing courts need to reopen, otherwise “who will sign a long-term lease?”
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