First it was Australia (closest to China), then Miami, then London, and now New York appears to have been hit by the sudden withdrawal of a bid-at-any-price, stash-my-cash, launder-my-money foreign flood of money to buy real estate. Manhattan apartment vacancies reached their highest level in more than nine years, according top broker Miller-Samuel, a sign that the post-recession run-up in rents may begin to cool. "We're reaching the point where things can't go up as much," Miller said in an interview. "The economics don't make much sense anymore." Did they ever?
Just a month ago, we remarked, with the luxury bubbles in Australia and London popped and soon to be in tatters, we sit back and wait to see how long before it crosses the Atlantic, and such real abominations of the second housing bubble as Million Dollar Listing, can finally meet the fate of Wall Street Warriors.
And now we know, as Bloomberg reports,
The vacancy rate in November was 2.87 percent, up from 2.31 percent a year earlier and the highest since August 2006, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Landlords eager to fill empty units lured tenants with the most concessions since 2011.
The rise in vacancies suggests tenants are reaching the upper limits of what they’re able to pay after more than four years of almost continuous rent growth, according to Jonathan Miller, president of Miller Samuel. In November, the median monthly apartment rent climbed 3.9 percent from a year earlier to $3,361. Leasing costs have jumped more than 18 percent since the end of the recession in June 2009.
“We’re reaching the point where things can’t go up as much,” Miller said in an interview. “The economics don’t make much sense anymore.”
“The conditions that are driving rents higher haven’t changed,” Miller said. “What’s changed is the acceptance of it, the affordability of it.”
The luxury-apartment market, the top 10 percent of all rentals by price, was the only category with a decline in prices. The median rent in November fell 1.4 percent to $8,537.
“Complaining about high rents in Manhattan is nothing new, but now it’s becoming more visceral to tenants,” said Miller, who’s been tracking the apartment market since 1991.
“We’re hitting the point where affordability is really becoming a much bigger issue than it has been in the past.”
So what market's property bubble explodes next?
benchmark U.K. government bonds.