New York Rental Vacancies Climbing Faster
Summer rental vacancy rates typically climb, yet in this scorching hot summer of 2020, vacancies in New York City are rising at a rate that is concerning to small and mid-sized landlords.
In New York and Manhattan the rising vacancy rate, rent default rate, and tenant employment situation may be creating a crisis.
The vacancy rate now is highest on record (2.88% according to a RealDeal news report) for the city, as rentals jumped by 85%. Rental vacancies are the highest in 14 years in Manhattan as leasing activity dropped by 62%.
Landlords Starting to Offer Big Concession to Keep or Lease Tenants
New York City landlords are so desperate they’re offering 1, 2 and even 3 months of free rent to capture a renter. Renters in all 5 New York City boroughs have been fleeing the high density neighborhoods hit hard by the Corona Virus. Others are abandoning leases they simply have no funds to pay.
Employed renters definitely have the upper hand in Manhattan and are able to negotiate better lease terms for the first time in at least a decade.
Manhattan has the highest rents in the nation where according to Rentcafe, average rent prices have reached $4208 per month. See the comparison with other major cities.
In Manhattan, renters comprise roughly 57% (or 427, 744 units) of all households. In Battery City Park, the average rent is a whopping $5605 per month. Within NYC, the average rent is $3902.
Given the exodus to the countryside or upstate New York or New England, we might expect severe issues for some of the big property companies in Manhattan going forward. Business trouble will likely cascade down to property management services firms and maintenance service contractors.
New York Wages Lagging for 20 Years
Over the past 20 years, wages of New York City workers have risen very little while rent prices have rocketed higher. Now the work shutdown is making it tougher for renters to pay their rents, encouraging them into the cancel rent movement or leaving the city where possible.
Despite lower occupancy rates, the housing affordability crisis continues. In one case, 5 people living in an apartment, with only one person employed are being sued by the landlord for $20,000 in overdue rent.
Despite rising vacancies in Manhattan, rent prices stayed the same in Manhattan where the median price for an apartment was $3,415 in May, up $2 per month from last May according to RealDeal. And Brooklyn rents in May actually rose 3.3% over a year ago, from $2,829 to 2921 per month.
Landlords are not lowering rent, but instead raising slightly the level of other concessions such as a free month of rent. Some it is believed have offered up to 3 months rent free. If this is true, it reflects a very serious situation for the rental sector in the city.
Renters Squeezed More
It’s estimated that about 700,000 renters have lost income in the past 4 months, and NYC is highly dependent on the taxation of apartment rentals. It’s an explosive situation for landlords who are on the hook for the cost of the Corona Virus pandemic.
While New York and Manhattan are recovering from the Corona Virus pandemic, jobs haven’t returned, as a proportion of Americans resist going back to work.
The threat to NYC and Manhattan landlords is mounting as renters find it difficult to pay their monthly rent.
MHN news reported that “77.4% of renters made their July rent payments, which is down from 80.8% in June.
NMHC President Doug Bibby told Multi-Housing News that while July rent payment numbers look good so far, he is worried that multifamily could suffer dire consequences after the extra $600 in unemployment benefits expires July 31″ — from Multihousingnews.com
Given the work shutdown has lagged on to 4 months, it is astonishing that so many renters were able and willing to pay their rents. That is a feather in the cap of tenant screening services who ensure renters are high quality. Check out
Landlords will be using the top apartment rental listing sites, writing rental vacancy ads and negotiating lease terms with renter prospects more frequently now. Learn more about rental leases and online lease management. Get up to date on landlord and property management skills and technology you’ll need as the rental crisis deepens in many parts of the country.
Long term view of the rental market is still positive.
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