New York City Rents Crash Again In February Under Weight Of "So Much Inventory"

Tyler Durden's picture

After years of gouging the precious, Ivy League snowflakes that flood Manhattan every summer with nothing but their $10 million inheritance checks, a dream and the Faconnable shirts on their back, New York City landlords, courtesy of the flood of new apartment supply coming online, are being forced to offer record-high rent concessions to attract tenants.

Per the latest February 2017 rental report from Douglas Elliman, the number of new leases signed on Manhattan apartments crashed 27.9% YoY as listing inventory surged 11.7% and median rental prices dropped 1.7%.  Meanwhile, even a massive increase in the share of apartments carrying rent concessions, which averaged 1.2 months of free rent, wasn't enough to spark demand.

NYC Rent

 

As Bloomberg notes, even the once defensive studio segment, which caters to all those people who will happily live in a shoe box just to have a Manhattan zip code, is showing signs of weakness.

“There’s so much inventory, and that influx is hitting across all price points, even the studios,” Hal Gavzie, executive director of leasing for Douglas Elliman, said in an interview. “There were a lot of studios that hit the market and have been sitting there. They had to reduce prices.”

 

Until now, studios -- smaller, cheaper and in demand among young job-seekers in Manhattan -- had better withstood the pressures from the wave of apartment construction that’s kept a lid on prices across the market. Now, even those units are getting reductions as landlords fret about rising vacancies and renters at all price levels sense they have the leverage to demand a better deal.

 

“In the months of January and February, we had customers requesting three to four months free, which is pretty unheard of,” said Melinda Sicari, a broker with Douglas Elliman.

NYC Rents

 

Meanwhile, East Side and West Side prices were hit the hardest as Manhattan's hipsters continue to abandon SoHo for the cheaper "Uptown" (a.k.a. "Harlem") market.

NYC Rent

 

But this is surely just another weather-related catastrophe...we're certain March will be much better.

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CheapBastard's picture

Good.

 

RE needs a serious correction. And like a really good BM, it feels so good when it finanlly happens.

Ghost of PartysOver's picture

Carnac the Magnificent is sensing a Goal Seeking Seasonal Adjustment in the upcoming econ reports to prevent deflation or stagflation.

Belrev's picture

Must be all those Clinton Campaign staffers pulling their bids for RE after failed campaign

https://www.youtube.com/watch?v=CLNFzj36T-c

froze25's picture

NYC is a PITA, why anyone would choose to live there is beyond me.

Pairadimes's picture

The insanity of the central bank reflation experiment of the 21st Century is producing absurd results on a now daily basis. One of these is the creation of volatility cycles that never used to exist in commodities and real estate. Excess cash is sloshing around markets all over the world, chasing value and destroying it in the process.

These volatility cycles are only getting worse, and are decimating what is left of the middle class. Ordinary people simply do not have the cash reserves to take this kind of volatility in stride. It has also destroyed the predictability of markets that function on fundamentals, and turned everything into a daytrading and CB front-running game.

To say it will end poorly is to make a colossal understatement.

Logan 5's picture

The RENT IS TOO DAMN HIGH (oh wait)

 

https://www.youtube.com/watch?v=79KzZ0YqLvo

 

Go ahead & elect Cankles as your mayor & see where that takes you.

NidStyles's picture

No one wants to live in a Jewish Ghetto, that's why people leave New Jersey too. Everywhere these people go they created Jew ghettos.

assistedliving's picture

frozen pita, where do u live and I might tell ya

PTR's picture

I would tend to think the people that move INTO NYC are in the Upper Economic classes and can similarly afford to move OUT of NYC.  Most everyone else is probably born and raised there, of which many can't even afford the costs to LEAVE.

 

F**k central banks.

jus_lite_reading's picture

Why? Because work pays well. That's why. My wife loves Manhattan. For me, it's meh. Other than work there's no reason.

Raffie's picture

I got a many relatives in NJ just outside of NYC.

Sent them the link that soon they might be able to afford to live in NYC.

venturen's picture

haha....who is going to buy their NJ dump? 

Buck Johnson's picture

I agree, even in Indiana house prices are too high including rents.  I truly think that the big reason they are inflating the economy is to make sure that we don't have asset deflation pure and simple.

 

Antifaschistische's picture

Houston inventory is skyrocketing pricing seems to stalling on existing apartments...I don't know how the bottom keeps from falling out.  The next 6 months will be very revealing here with the completion of many large $3000 per/month+ units drop onto the market.

Jäger's picture

What industry are people in to afford $3K/ mo apartments?

ParkAveFlasher's picture

Within the city limits you likely have two incomes in a single household.  Most young singles have roommates.

 

NidStyles's picture

I live in a major city, there is simply no way anyone is paying 3K a month on rent. You can buy a rather nice house here for that much and live on the outskirts in the mountains, and still have money left over. 3K a month is a hefty chunk of change for the average person.

PTR's picture

Who said they can actually afford them?

 

How do you think "the rent is too damn high" got started?

natashav's picture

Having lived in NYC for 8 years, I can tell you a lot of money gets thrown around that city.

There's serious billionaires, millionaires who many of the 3k a month people work for...

I never paid rent. My investor took care of it.

LyLo's picture

It's already falling out here.  A few months ago, figure minimum $1k for rent.  Anywhere, even the nasty ghetto apartments with sheets for blinds.  I'm now seeing houses being rented for $700-$800, as of two weeks ago. 

My father-in-law might actually be able to have his own place again someday, instead of living in a basement.  (He's a maintenance supervisor and makes so little that without all sorts of handouts he can't afford to live alone, but he's got this annoying thing called self respect see... Of course, it helps that no one pays people real money around here, so everyone qualifies for HUD which all apartments legally have to take now.  Makes rent pretty cheap when someone else pays it.  Also why utilities are through the roof: they're wrapped up in the rent, so none of the damn apartment dwellers complain because the government covers that bill too.  NG from Duke keeps going up as the market price keeps going down, and no one but me minds, apparently!  Sorry--my rant on the issue, as a homeowner that actually has to cover their own expenditures.)

swamp's picture

You had the fed funded Katrina population move there en masse

affirmed_78's picture

Yeah there's a lot of stuff going up in Hou.  I was paying over $1600 myself for a  1-bed, but was getting tired of seeing basically half my income go to rent and utilities.  Now I downgraded to a 2-bedroom for $1400 with the lady friend.  So far so good.

Dead Indiana Sky's picture

It depends where in our fair state you are, I guess.  I can tell you that most renters I know pay $300-$400 more than my mortgage.

Houses Depreciate's picture

Do you live on the moon? 

Rental rates are half the cost of buying..... and rental rates are falling faster than housing prices now.

NidStyles's picture

Where are they half the cost? Right now buying in my city (PHX area) is cheaper than renting, but that is changing as rents finally collapse here. They were still at pre-2008 levels up until about 5 months ago.

Houses Depreciate's picture

Anywhere in the US and have been for years.

mainstream media is useless's picture

perhaps, if you are comparing renting a 1 BR apt vs buying a 3 BR house

napples's picture

Carefree renter here. Jesus rents are ludicrous here, right? It's a bitch to commute to work in the city from up here(I don't have to, luckily), but my house rent is ~= to a roach home in Sunnyslope. Go fucking figure.

Saucy-Jack's picture

Buying is cheaper until the market collapses and you are way upside down and tied to a mortgage you can't get rid of.

Houses Depreciate's picture

Which simply collapses housing demand.

junction's picture

People pay those rents because they have well paying in Manhattan.  Maybe those jobs are not dwindling.

Houses Depreciate's picture

LOL..... What's the median now..... $42k/yr?

svs9000's picture

By end of the year we will be in full blown, epic recession mode. 

Bill of Rights's picture

Second only to California as a shithole capital of the world...

BorisTheBlade's picture

I could imagine worse places, bullshit in place of shithole and it sounds about right, because price-to-quality or price-to-rent PE aka yields are overinflated. Can't wait when it settles to long-term averages or severely overshoots them, like yields north of 10%.

IridiumRebel's picture

Is it now sub-3k for a Bronx dump shotgun shit house where you dodge bullets leaving the train from your 2 hour "commute" smelling bum urine?

No thx

CPL's picture

The three unmaintained nuclear plants up river has been leaking poison into NYC for a while. 

My guess is the rents are going to around 0 eventually when you can walk without seeing a single person.  Won't be able to give away a cardboard box in that city in a couple of years.  Sprinkle in AH9N7, it'll be a ghost town soon enough for the new tenants from some shit hole in the middle east that will get dumped in there.  That's if the people they ship don't die from the lab engineered bird flu over the next three years.

Out of all the things never predicted in any of the main stream religious crap, is the fact you'd all kill yourselves off to the last child.  This is for the best long term btw and was the decision made.  You can thank the jews for all of it incidentally.  You can thank them for the sixth great extinction of all the bipeds on earth.  All of them die and don't come back if wondering.  AH9N7 continues to get more and more lethal every month and it's already able to jump five speices, not just chickens anymore.  It's built to kill everything that flies, swims, crawls, walks or slithers.

Protip:  When constructing a virus in a lab to sell a vaccine or building nuclear plants, next time might want to build an off switch.  But no one bothered to think about that.

IridiumRebel's picture

Wonderful!
Glad I moved three years ago. I await Capt.Tripps in Ohio.

CPL's picture

From H1N1 to AH9N7 in ten short years with no breaks and it's been four years since tamiflu got it's version update.  Remember, the fastest way to take away everyone's power is to kill all the slaves.

TwelveOhOne's picture

Seems the book "Lab 257" needs an update.

Hyjinx's picture

How much bullshit do you sell on a daily basis?

CPL's picture

Nothing.  Not a penny.  Currently about to be homeless, 6k in debt, unpaid and unemployed busy shitting in the punch bowl. Might as well, got nothing better to do.  The title of Lugus or the Red Hand and Long Spear doesn't get paid for the privilege of getting treated like garbage while handing it back to all the people that keep dumping it on the door step.  It appears my job at this moment is watch them all die and manage my resources even if the resources provided are all worthless white collars.  They'll learn to work dirt if they want to eat soon when this gets really bad.

If wondering.  The protip in this situation is don't be important and don't be in charge when it shits the bed.  After it's all done, drop the torc in someone else's lap and carry on with other things.  And there is no god.

Dr. Engali's picture

Trump should build a yuge tower taller than any other building right in the heart of the city. That would be funny.

ParkAveFlasher's picture

I like the monolith he built overshadowing the UN. 

NugginFuts's picture

only if it's in the shape of either A) a giant penis or B) an extended middle finger. You know, for the kids!

CheapBastard's picture

Ivanka's perfume is still a Best Seller on Amazon:

https://www.amazon.com/Ivanka-Trump-Women-Parfum-Spray/dp/B00CJI9250/ref...

 

Boy, I bet she smells beautiful.