How do rents and real estate prices evolve? – Councilor Forbes
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New York real estate was on shaky ground last year as it was among the first epicenters in the United States for the Covid-19 pandemic. Stories of New Yorkers fleeing to Manhattan’s suburbs and rapidly closing commercial buildings cast a dark shadow over what was once prime real estate, then losing billions of dollars in revenue.
Many people worried that New York City would not recover. Die-hard New Yorkers like comedian Jerry Seinfeld, however, have not flinched in the face of a global pandemic. In an opinion piece for The New York Times, Seinfeld responded to a writer who claimed the city was “forever dead”, stating that the city “will definitely be back.”
And he was right. Broadway opened this month, having been closed for about 17 months. The relaxed restrictions also ushered in concerts, festivals and indoor events. And the discounted apartment deals that landlords were offering last year to attract tenants to the city, like free rent for a few months, have started to fade.
âThe past few months have been the busiest months I’ve seen in over 20 years,â says Maria Daou, broker at Warburg Realty in Manhattan. âThere is no comparison with last year. It all came to a screeching halt last spring, and everyone deregistered New York. They were wrong. “
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Devastating storm hampers New York recovery
Amid what some have dubbed ‘New York’s hot vax summer,’ Hurricane Ida struck the city dead earlier this month as monumental flooding and historic rainfall caused billions. damage.
People who lived in basement apartments were most vulnerable in Ida, where flooding killed at least 11 people in their homes. Basement apartments, which are located below the level of the sidewalk, are often illegal. Unless upgraded or designed to meet Department of Buildings (DOB) code requirements, basement apartments can be very dangerous as they typically lack adequate ventilation and only have single exit, which can be fatal in an emergency.
âPeople shouldn’t keep anything important in basements, like birth certificates or valuables,â says Aaron Hillel, real estate agent at Hillel Realty Group in Manhattan. âAnd they shouldn’t be sleeping in it. The floods that we saw with Ida were horrible.
As to how this will affect real estate, Hillel says Ida has likely educated management companies and homeowners about the need for flood insurance, even though many damaged homes were not in areas floodplains requiring such coverage. Typically, a standard home or tenant insurance policy will not cover flood damage.
Basement apartments are popular with low-income people as well as those who might not qualify for a formal lifestyle, such as undocumented immigrants or people with bad credit histories. According to Brookings, they’re especially popular in high-cost cities like New York City.
But even after a deadly pandemic and storm, it doesn’t look like rents and real estate prices will get any cheaper in the future.
New York homebuyers will pay more now than in 2020
The New York real estate market has turned around this spring, says Michael J. Franco, New York broker at Compass.
âIf something is priced correctly, it will sell quickly, and sometimes above the list price,â says Franco. “Some (not properly valued) properties are still languishing in the market.”
In the five boroughs, the median selling price of single-family homes and condos was up in June compared to a year ago, according to data from ATTOM Data Solutions.
In New York County, single-family homes saw a 9.9% increase; followed by Richmond County with an 8% increase; and Queens County saw a 5.6% increase. Kings and Bronx counties both saw significantly smaller price increases with increases of 1.4% and 1.3%, respectively.
Median selling price of single-family homes and condos
Rental offers are disappearing as the city opens up
At the height of the pandemic, the rental market faced extreme vacancy rates, leaving landlords with empty apartments as people fled the city and potential transplants stayed away. The owners have tried to woo the tenants with free rent, parking and better amenities. However, most of these benefits are no longer available in the market today.
According to a market report from real estate firm DouglasElliman, new lease signatures jumped 64.3% to 8,201 in August from a year ago. It was the highest number of new lease signings for this month and the fourth highest of any month since 2008, when DouglasElliman started tracking the data. As a result, the vacancy rate is down to 3.23%, from 5.1% in August 2020.
âThe rental market is back,â says Julie Gans, real estate salesperson at Compass Real Estate in New York. âThe rents are definitely increasing and the owners are no longer offering concessions. “
Newly engaged couple Dan Sellers and Mia Pinero left Brooklyn after the Covid hit last year, leaving Pinero out of his Broadway job. The 27-year-old had just made her Broadway debut as Maria in West Side Story, when production closed in March 2020 due to the pandemic.
Sellers, an engineer, was able to work remotely. But for Pinero, the safety net jobs that many people in the entertainment industry often fall for, like catering and babysitting work, are also gone. So the couple decided to sublet the apartment, return home to Wisconsin, and spend time with their family for a few months. Those months turned into a year.
âWe missed New York while we were gone. In a way, we felt like we had abandoned our house, and we even went back and forth to see if it was a good decision, âsays Pinero. âBut in the end, it worked. “
The couple returned in May and found a better apartment across from Prospect Park for what Sellers estimates to be around 20% less than it’s worth, and right before offers like this were taken off the market. .
âWe couldn’t have afforded this before Covid with regular prices. This place has a balcony, a roof and a washer and dryer in the unit, âsays Sellers.
According to data from ApartmentList, the median rent for a one-bedroom apartment in Brooklyn has fallen from $ 1,782 in August 2020 to $ 1,977 in August.
Manhattan rent has jumped just over 14% from last year.
Brooklyn’s vacancy rate has dropped significantly since its pandemic peak to over 9%.
The last exodus has probably already taken place
While the Delta variant has made many consumers suspicious and sparked debate among lawmakers over the vaccine requirement for government officials, it doesn’t create the same instinct for theft among New Yorkers, Gans says.
âIf you haven’t left town in the past 18 months due to the pandemic, closures, school closures, unemployment, or any other reason, you’re probably here for the long haul,â says -she. âMost of the people who wanted to move have already fled the city. “
As more businesses open and workers return to offices and jobs there, more and more people are returning. But those who return think of their living space differently, says Daou.
People “go for bigger apartments, preferably with outdoor space, in case they get stuck at home again,” she says.