For broke millennials, recently forced to move back home, or who've never left their parents' basement, but still have a job, a deal of a lifetime awaits in New York City, with apartment rents crashing to prices not seen since 2013.
A combination of the virus pandemic, remote working, social unrest, and violent crime has caused many New Yorkers to flee Manhattan to suburbs or rural communities, resulting in a tripling of apartment listings to 15,923 in September, up from 5,299 a year earlier, according to data from Douglas Elliman and Miller Samuel. As Bloomberg explains, this is the largest inventory on record, dating back to 2006. The vacancy rate also set a new record for the fifth consecutive month, rising to nearly 6%.
The glut of empty apartments has forced many landlords to offer some of the highest ever incentives while driving down rents to attract new tenants. A couple of top rental operators in Manhattan have started offering "no rent until 2021" promotion to entice new tenants.
Including all the promotions, median rent fell by 11% year over year in September to $3,036 per month. The question now is where the floor is or if prices continue to decline into early 2021 as public health and socio-economic issues are expected to persist.
The most significant decline in rents was for studio apartments, crashing 17% to $2,814 in the month.
Steven James, president and CEO of Douglas Elliman's New York City brokerage said he "doesn't think we're there yet," while referring to when plunging apartment rent prices would find a bottom.
"I think we have a little ways to go. The consumer knows the landlords are on the ropes and they know they've got them," James said.
As for location, Northern Manhattan recorded the biggest rent declines of 9.9% to $2,208. Prices on the West Side slumped 9.6% to $3,300, and Downtown fell 7.8% to $3,595. On the East Side, prices were down 5.3% to $3,079.
Jonathan Miller, president of Miller Samuel, was uncertain about the next six months. He said, "the direction of the rental market is determined by when there is a vaccine."
Manhattan rentals account for about two-thirds of all apartments in the city, which is one largest rental markets in the country. As rents plunge, landlords become pressured and may have trouble servicing their debts. This could trigger a firesale if declines in rent prices were to persist through 2021.
"The chain reaction is going to be difficult, especially for newer landlords that haven't been through something like this before," Miller said.
For the lucky millennials still living at home, and still have a job, now might be the time to take advantage of cheap rents in New York City.