News

Manhattan Price Deflation: Rental Rates Drop 10%

Almost everyone knows that New York City is an expensive place to live.

However, in the past year, it's become less costly for those who rent.

Here's an excerpt from an August 18 New York Times article:

The number of apartments for rent in New York City has soared to the highest rate in more than a decade, a sign that a notable number of residents have left the city because of the outbreak, at least temporarily, potentially creating a new obstacle to reviving the local economy.

There were more than 67,300 units available in July across the city, according to StreetEasy, the most apartments available in any month since the listing site started tracking rental inventory in 2010.

In June and July combined, more than 120,000 apartments were for lease, a nearly 26 percent increase over the same months in 2019.

The surge in supply has driven down rental costs across the city and forced landlords to offer generous concessions, including up to three months' free rent and paying the expensive fees brokers command.

The spike in available units has been most stark in Manhattan, where office towers are mostly empty, residents with second homes have largely not returned, and many retail stores are closed or have gone out of business.

The median rental price there in July was $3,167, a 10 percent drop from July 2019, though New York still has some of the highest rental rates in the world.

The vacancy rate in Manhattan climbed to 4.3 percent in July, the highest percentage in at least 14 years and surpassing past records set in June and May...

However, even before the coronavirus pandemic became worldwide news, the October 2019 Elliott Wave Financial Forecast warned of a downward slide in key real estate markets, including New York City:

In real estate, the bellwether housing markets of London, San Francisco and New York City continued to decline in August and September. In San Francisco, August figures showed a 0.2% decline in home prices relative to August 2018. London home prices fell 1.7% from September 2018. According to Fox News, NYC prices are in a "Near 'Free Fall.'" In the third quarter, the median sale price for a New York City home declined 17% from the third quarter of 2018. "It's Now a Buyers' Market in Manhattan," says an October 2 headline in The New York Times. Even as New York's quarterly price decline hit double digits, however, construction cranes whirred over all parts of Manhattan. On September 17, the builders of the Central Park Tower celebrated the topping off of the world's tallest residential building. Like the ground-breaking ceremony for the Empire State Building in September 1929, the celebration is a perfect starting point for a new era of over-capacity and deflation.