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What do you know? Landlords who got burned by deadbeat tenants who screamed that they are entitled to live rent free are reacting per the free market.
That's probably an inaccurate assessment of what happened. What's more likely is that a lot of people fled the city, especially Manhattan during the height of the pandemic and driving up vacancies. As an uncertain market with high vacancy rates at the time, landlords adjusted the rent or gave very strong deals such as eliminating /paying for brokers fees and months added for "free" (though effectively it's just lowered rents per month) in order to fill up those vacancies which otherwise generate no revenue.
Those rental agreements were unlikely to have been long-term ones and more likely to have been one year, or in the case of some of the "free" months, ones slightly adjusted for over a year plus those "free" months. Those rental agreements are now coming to an end and at a time when NYC has seemingly become far less empty than it was before and with a much more competitive market, so landlords are raising rents that are likely significantly higher on a percentage basis than the ones which were signed in the midst of the pandemic. It's unlikely this trend is mostly due to "deadbeat tenants" and squatting overall, because even as the percentage basis of households in arrears on their payments has grown, it's still a fairly small percentage total of the overall rental market. As I recall from a Furman Center report, the dip from 2019 into the pandemic was 98% of total rents across all units were paid versus a dip to 95% of total rents across all units paid. That would seem significant as a more than two-fold increase, but it is overall a small amount.
Walk-in for $2,000. Get carried out on a stretcher for $3,500 a month !
A couple I know made a massive upgrade move a little over a year ago, but they locked in a two year lease with additional "free" months extending out which at the time the landlord was very happy to sign. In retrospect, it appears NYC didn't completely collapse forever and that was a pretty good move.
More than half of all rentals in nyc and the boroughs are stabilized …rents ain’t going anywhere for millions…
The issue will be that there are so many stabilized apartments available that landlords who are uncompetitive will find it hard to rent or it takes so long you lost the difference in rent.
Planted story. They're so obvious if you know how to spot them. Somewhat surprised it's Bloomberg as the NYT is the favorite outlet of the NYC RE industry. The RE industry has been writing pieces for the major media outlets in NYC even before COVID.
Sentiment plays a large role in markets. LLs are keeping inventory off market and planting stories in the press that the market is back to pre COVID levels. While that may be somewhat true for very select areas (mainly where the influx of college students is back) in NYC, most areas aren't anywhere back to pre-Covid levels.
A lot of landlords were offering "free" months as a lure to get people to sign. Let's say a place was going for $3,000 a month on a one year lease. Landlord then offers 3 free months to sweeten it, but the way you're paying the landlord is actually amortizing those 3 "free" months over the course of 15 months, so for 15 months you're paying $2,400 a month.
These were often given on top of already substantial drops in rent prices. Now prices are generally up from their nadir, and so people are talking about large percentage increases. However, one thing to keep in mind is that these percentage increases are large because the *base* was already greatly reduced and you can have large percentage increases and still have it below the 2019 prices. However, someone might see the large percentage increases and scoff that "It's a planted story" because he sees the big numbers, but due to what's essentially illiteracy with numbers, don't understand that these big percentage numbers don't necessarily mean a return to 2019 prices.
Let's take an outrageous example of this. Let's say a place was going for $3,000 a month pre-covid. Let's say things got really bad and the effective price cut of about half (50%). That's now at $1,500. Now let's say after that sweetheart deal is over and you have a bump of 50% up. That sounds really intimidating and similar to the 50% cut we saw earlier, but in reverse. However, a 50% increase on this lowered base brings it up to $2,250 which is still 25% below that $3,000 a month original price.
Last edited by OyCrumbler; 09-16-2021 at 12:41 PM..
Many stabilized buildings like ours which are at market rents were offering a free months rent to attract tenants since lowering rents now have negative ramifications as far as getting those rents back up to what you were allowed
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