Both nationally and locally, the rental market has proved to be increasingly robust.
The U.S. vacancy rate keeps falling, and high rents in Manhattan continue to grow.
(Average rent for a studio in a doorman building went up 12.26 percent to $2,529 in the last year, according to the Real Estate Group of New York, and other reports show that the average rent in the first quarter rose 3.9 percent to $3,342 versus a year ago.)
A broker friend of mine, Paul Zweben, reports that he had a swarm of tenant hopefuls for a place that he leased for $108,000 a year within a week of putting it on the market! He makes a point with which it is hard to argue that a tight rental market can mean only a strengthening market for sales.
As everyone knows, consumers tend to calculate finely the marginal benefits of owning and renting.
Sophisticated ones take into account the present value of a deposit on properties they might buy along with all the continuing costs such as mortgage interest and monthly expenses. Also figured into the relative benefits will be how long they can be sure of residing in a city, how well they know the area, how secure they are in their job, the potential value of their other assets and their perspective on future interest rates.
More than anything, prospective renters and buyers factor in their views of the local housing market. Where are prices headed?
Given that rents are rising as the number of vacancies is decreasing, the balance of buying over renting tends to tip.
It may well be that the coming weeks until Memorial Day will see significant vitality in sales provided that the inventory of well-priced and desirable properties grows. (Supply may well sag, however.) Whether that translates into higher prices or a more vigorous market than a year ago, when the federal tax credit boosted sales, is an open question.
I’m beginning to have my doubts just how strong the Manhattan market will be. One thing I know is that open house traffic last weekend appeared slow to me and, from what I am hearing, to others as well.
Is the noticeable change from a week earlier significant? Could it be that consumers have suddenly lost confidence because of uncertainty in Washington — the budgetary wrangling last week and already upon us again — in addition to the imminent deadline for paying their taxes? Have they seen everything that might interest them by now?
If I knew the answers to questions such as these, I’d invite you to visit me at Delphi.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022