Rents in Manhattan

In one of my recent blogposts I discussed the effect of Wall Street’s troubles on demand of rentals as well as for-sale properties.  Per this Fox News report,  rents for 1- and 2-bedroom apartments have already started dropping in Manhattan, while price of studios went up.  This, I believe, points to lessened demand for larger, more expensive housing units, and an increased demand for smaller, less expensive units.  As I discussed in my previous post, many Wall Streeters and other NYC employees may be opting to reduce their lifestyle in the light of general economic malaise / recession, and very possible layoffs.

So if 1-bedroom units decrease in price, and studios increase in price, they just may become equal in price over time.  At which point, renters will move back into 1-bedroom apartments.  To all my renters, I say, get a short term lease for a 1-bedroom (if, in fact, there are deals out there), and go back out hunting for even better deals in 3-6 months.  If they started to drop, I think they will continue to do so.  And then, once you believe the rental market is at the bottom (largely depending on how this recession scenario plays out), lock yourself into a nice permanent low-priced lease (well, low-priced in Manhattan terms, that is).

To all my landlords, current and aspiring… Rack up on low-priced properties over the next year.  There are a ton of foreclosures. There are also a ton of non-foreclosures that have been on the market for quite some time (I think the average is 11 months nationally and 2 months in Manhattan, but don’t quote me on that).  So if you are buying on the island, I would wait until Manhattaners become more desperate to sell, as they are everywhere else.  Even though rents may be decreasing in Manhattan, they will surely go back up: the cultural, intellectual and financial appeal of the Big Apple is hard to beat).  Nationally, rents are up quite a bit, driven by increased demand (because people still have to live somewhere after they lose their homes, and foreclosures are only going up).  So now being a landlord makes more sense than ever: buy cheap, hold for a while, realize appreciation and rent out for cash in your pocket monthly. Perhaps we will see a similar trend towards smaller and cheaper apartments nationally.  So picking up some of those would be good  now.   But also don’t forget that you are buying for the long term, and rents will keep increasing over the years, while your mortgage will stay the same. Which means…  cash flow!!  A good and diversified assortment of properties will keep you well-covered, should demand swing towards smaller units, back to larger units, and whichever way it chooses to go.

Happy renting and landlording!

Humor and Real Estate: Forget the Bear! Forget the credit crunch. This little girl will devastate the NYC real estate market.

With the loom and gloom of current events about our beloved real estate market and economy at large, we could use some humor. I found this great video while reading real estate blogs, The Real Estate Bloggers post, to be specific. We can always count on Steven Colbert to infuse some humor into the otherwise grim world of real estate of 2008.

Blame the little girl!

(Ooooops, for some reason I can’t get the embedded video to work any longer. In the meantime, while I look into it, please click on this link to watch the video. It’s worth it, I promise!)