“The supply of available rental units continues to accumulate,” UrbanDigs said in its report, which looked at all five New York City boroughs, “hinting that renters will have the upper hand in negotiability when the market finally reopens.”
Larger and more expensive apartments are getting hit the hardest. New leases for three-bedroom apartments in Manhattan dropped 71% in May. The average rental price for the top 10% of rentals fell by 20%.
To people who talk about infinite appreciation... especially in NYC, SF, Miami etc. nothing lasts forever. There will be a move away from these clustered city centers with expensive housing to suburban areas with work from home available.
Detroit coming to NYC, and elsewhere.
I don't know why this is a surprise. The government banned the showing of places, so inventory accumulated. Landlords held places off the market thanks to the insane anti-eviction laws that were put in place. People who thought about moving stayed put due to COVID and the inability of screen new places. Lots of people who would have normally signed a lease held off due to their job situation. Besides, a landlord isn't going to rent to you if you just lost your job. Give it six months and it will be back to normal.
This is a temporary slowdown for a market such as NYC. Manhattan has access all around it from millions of commuters daily, people don’t just live in the city to work there they live there because it’s one of the greatest cities in the world. As people panic and move out for a couple of months maybe year, other people will see an opportunity to get NYC housing at a more affordable price and your typical supply and demand cycle will continue. Detroit market crashed because of a city that was solely tied to the auto industry, and has since bounced back with other business seeking opportunity there. NYC which is the epicenter of the world will and should continue to prosper. Might be a great time to buy. Just my opinion tho.
A market that was under complete lockdown didn't have new leases sign!?!? SHOCKING NEWS!
I wish that was the case so I can jump on opportunities, it is not!!!
Maybe for expensive rentals but sales prices haven’t fallen significantly at least not yet..
Thanks for sharing the article. I’m guessing it is temporary, as people will always want to live in NYC. Also, this speaks to rental/leasing income, not appreciation. I’d expect home values to continue their upward climb, even if there is a temporary slow down due to covid-19
Yes and no. We are seeing a ton of activity here in Marin County primarily from younger couples fleeing SF apartments for a spot of grass. Being cooped up in a 650 square foot apartment with two kids through the Covid 19 lockdown was apparently enough to make at least some millenials reconsider the value of suburban living. I suspect you will some similar activity in Manhattan.
How does anyone know this is temporary? You now have talk of defunding the police, not only in NYC but in other cities as well. Why would anyone want to live in an environment where there is no law and order? Maybe some people think it is great to sleep with a gun under your pillow but that does not sound like my idea of peaceful living.
Another variable in the equation is the Work From Home trends. During the COVID lockdown many people worked from home and enjoyed it. That trend is not going away. Those WFH discovered that they did not have adequate work space, so as Darius pointed out, people are choosing to move to the suburbs for larger space at the same or lower cost. Commute cost and time is no longer a consideration for them.
The irony in all there posts predicting doom & gloom for SF and NYC is they come from people who don’t live there or invest there but are excited when there is less pleasant news about these cities.
Um . . . we do own a condo in SF that we rent out as well as properties in Marin, where we live full-time. It's just across the bridge from the city. No one is gloating; just reporting what we are seeing here.
On the flip side, I have lived in Marin my whole life. Was planning to move into SF soon, and although Covid has paused my plans, they will resume later this year. There will always be an ebb and flow from urban to suburban and vice versa.
Originally posted by @Nicholas Mann :
Manhattan has access all around it from millions of commuters daily, people don’t just live in the city to work there they live there because it’s one of the greatest cities in the world.
If you repeat a lie enough, people will eventually begin to believe it is true.
@John Collins a lot of wall st companies are itching to get employees back in the office. They may decrease their footprint but the impact will not be material. People want to live there and once the virus is behind us, possible middle of next year, things will go back to normal. Will there be a hiccup? Yes but it is temporary.
@Dennis Cosgrave this is a bit flawed because I can tell you when I was doing urban living I thought it'd be nice to have a suburban house with a big yard etc. And while that is nice to have the amount of work that goes into maintenance, whether you pay or do it yourself, is very time consuming. If you're working in NYC you don't have enough time to have a commute and take care of all things related to your house. Yes people will move for now but then they'll either come back or start complaining to their friends that it is a lot of work and the commute sucks. The only way your logic works if if companies exit out of their leases and leave altogether which is unlikely.
We just don't have the data yet to know what the impact of all this will be. NYC has been losing residents even before the lockdowns due to the cost of living. Despite that the local economy is very strong and it's hard to see the real estate market declining as much as the overall country. But anything is possible. I've been thinking about leaving the city for the first time since I came here 10 years ago. But it will be very easy for my landlord to replace me and I don't think enough people/businesses will leave to harm the overall economy.
As others have mentioned, I think this is also temporary and due to what we have faced in the past few months. Thanks for sharing.
Truth - it's early, we don't know what is going to happen yet...nor do the world's top research firms specializing in demographic analysis.
@John Collins IMO if there will be a long term decline in any real estate in NYC it will be commercial and not residential. Google and many other big players in the NYC market have already said they will be cutting back on office space and keep employees working from home. That being said I think that NYC and the surrounding areas will remain one of the strongest major markets in the world.
@Bjorn Ahlblad Not a chance. We have more job and industrial diversity in one NYC Borough then all of Detroit.
@Paul DeSilva I agree with this. Many tech companies are going to optional WFH forever. People will begin to move away from cities and companies will see that the amount of people going to the office will reduce. Companies will then reduce their footprint in NYC or SF. I’ve heard rumblings Twitter is already looking to sublet some of their office space in NYC.
I am in Sf Bay Area. No significant impact on rental price here.
Did not see any vacant house or apartments.
Transaction volume is reduced, due to shutdown. But that has nothing to do with valuation or vacancy.
Appreciation wise, Investing in SF Area is going to make you 10 times richer than investing in Midwest or southern states. Real investors stick here and invest.
I moved to SF Area about 17 years ago, and will never move away. Comparing to the other places that I lived before, Ohio, Philadelphia, New Jersey, Boston, SF is way better in terms of weather, food, culture, and job market diversity. Particularly, this place is great for RE investment.
I believe further appreciation in SF Bay Area market in the next year time frame, due to the money printing from our fed.
More companies Will start up here in Bay Area, and some will become the next Google or whatever.
The real appreciation driver is the innovative spirit of the diverse population, including high percentage of new immigrants here. Trust me, in the next decade, the property value of SF Bay Area will double again. SF is a unique place in the world, where venture capital and Talented people meet.
In the city that I live, more than 40% holds graduate degrees. A high percentage are doctoral degrees.
That is the appreciation driver.
We're making the best out of the situation by renting our home which is 60 miles outside of NYC. People are renting out their homes to Manhattanites for $2,000/night, crazy cash. When we rented our place out the biggest complaint from renters was we only rented it out for 3 weeks and most families wanted the lease for the entire summer.
This is helping us to build funds in case renters in our apt buildings stop paying rent.
@David Song I would agree that some Midwest markets won't make you money but there are "real" investors that invest in Midwest markets. I'd also like to see your numbers on the 10x return in the Bay area, if you can prove that reasoning, I will sell all my properties in Columbus and invest in your market, otherwise, I'm quite happy with positive cash flow and appreciation Columbus and other Midwest markets have offered.
Once there is a vaccine (fingers crossed), I know I'll be running back to the city. WFH sucks (especially if you have young kids)! I'd imagine it also sucks for new college grads who want to socialize and have fun in the office! This whole thing really makes me appreciate city life more (pre-covid)! I can't wait to go out and have fun again! To travel again! To feel the energy of the city! It was good while it lasted...I had a great life!