Does rental market portend strong sales?

(Courtesy The Real Estate Group of New York)

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.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

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Rent declines in 2009 were slow but steady

Manhattan’s rental market opened 2009 with a continuation of the downward trends that began in the fall of 2008, reports the Real Estate Group of New York, which noted that landlords quickly saw that incentives were needed to decrease inventories.

“Manhattan rapidly became a no fee market.”

The chart below (which, I’m sorry to say, is hard to read), summarizes the report: Continue reading

Apartment vacancies rise, rents fall over a year

Asking rents for units in doorman buildings in Manhattan this month are down 5.79% compared with December 2008, according to the Real Estate Group of New York. But rents in non-doorman units are off just 1.74%.

From November to December, rents for doorman units slipped 1.19%, yet non-doorman units rose 0.87%.
Continue reading

Rents down, a “cold winter” is seen for landlords

While many landlords and property owners assumed that the traditional flurry of activity would allow them to unload much of their excess inventory and raise prices, writes the Real Estate Group of New York in its latest monthly report, “this has not been the case.”  The report on August rents continued:

“In fact, we’ve observed that many of the landlords and property managers who were eager to test the market by increasing prices and removing incentives from their units saw quickly that these tactics were premature.”

While activity has increased, the numbers have not shown significant improvement. Rents have stabilized, but at levels nearly 10% back from already depressed 2008 numbers. And although vacancies showed improvement this month, they have yet to establish the trend necessary to absorb the considerable amount of excess inventory that is continuing to depress the market.

The tables below distill the findings, but the tables are hard to read here, I know.  You may want to check them out in a PDF from the source.

These tables from the Real Estate Group of New York tell the whole story.

These tables from the Real Estate Group of New York tell the whole story.

As Manhattan heads towards the traditionally slower winter months, it seems unlikely that the market will rebound in 2009, the report says. It goes on: Continue reading