Matrix Blog

Rentals, Investing

Bloomberg View Column: Rent Control’s Winners and Losers

October 21, 2014 | 3:31 pm | BloombergViewlogoGray | Columns |

BVlogo

Read my latest Bloomberg View column Rent Control’s Winners and Losers. Please join the conversation over at Bloomberg View. Here’s an excerpt…

Any renter in New York City has probably has felt the pain of coming up with the monthly payment. There are plenty of reasons for the city’s steep rents…

..So what would happen if rent control and its cousin, rent stabilization, disappeared overnight?

[read more]


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Adding Queens To Our Manhattan/Brooklyn Rental Report

July 14, 2014 | 9:12 am | delogo | Reports |

Rental_0614

We’ve expanded the Elliman rental report to include Queens this month and added additional metrics for Manhattan and Brooklyn.

MANHATTAN
- Prices increased for 4th consecutive month after year end lull.
- Median rent is at highest point in more than 5 years.
- The vacancy rate was lowest June in 5 years.
- Use of concessions continued to fall, now at nominal levels.
- Marketing times and negotiability continued to fall.
- Luxury market outperformed the overall market.

BROOKLYN
[North, Northwest, East Regions]
- Median rental price up year over year for 13 consecutive months.
- Rents hovering near record highs but have remained stable since beginning of year.
- New rentals surged indicating resistance to price increases at time of renewal.
- Nominal use of concessions by landlords.
- Overall market outperformed luxury market, price growth stronger in smaller units.
- Manhattan-Brooklyn rental price gap remained at $500, more than the $210 record low in February but less than half of 2008 level.

QUEENS
[Northwest Region]
- Median rental price year-over-year slipped after 4 consecutive monthly increases.
- Shift in mix to smaller units (60.2% share of 1-bedrooms) pulling down overall prices.
- Nearly half of the rental stock is located in new development buildings.
- Overall market outperformed luxury market, price growth stronger in smaller units.
- Marketing time slipped as listing discount remained nominal.


The Elliman Report [Miller Samuel]
Miller Samuel Aggregate Database [Miller Samuel]
Chart Gallery [Miller Samuel]


May 2014 Report: Manhattan and Brooklyn Rentals Swap Roles

June 12, 2014 | 1:29 pm | delogo | Reports |

Rental_0514 Today Douglas Elliman published the Manhattan/Brooklyn rental report that I author. This monthly report is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994 (20 years!). We discontinued the quarterly rental report series but still present the information in our aggregate database.

MANHATTAN
- Median rental price increased to the highest level in more than 5 years.
- After softening in late 2013 with intensive competition from the sales market, median rental prices have trended higher since the beginning of 2014.
- Although the market share of landlord concessions edged higher over the year ago level last year, they have fallen sharply from 13.1% in January.
- Vacancy rate slipped nominally from same period last year, hovering near multi-year lows.
- New rental activity fell reflecting the increased likelihood that tenants would renew their leases as a result of limited alternatives to increased affordability.

BROOKLYN
[North, Northwest Regions]
- Median rental price increased from the same period last year but has showed some stability since the beginning of the year.
- 2 and 3-bed apartments showed weaker price trends with the addition of new rental housing stock and intense competition from the purchase market.
- There was a sharp drop in new rentals from the same month a year ago as more tenants were resigned to sign their leases at time of renewal.
- Although marketing times expanded slightly, negotiability dropped sharply reflecting the ongoing tight market conditions.

Here’s an excerpt from the report:

MANHATTAN For the third consecutive month, median rental price increased above the prior year level. Median rental price was $3,300, 3.1% above the same period last year and the highest level reached since early 2009. After weakening in the second half of 2013 from intensive competition from the sales market, median rental prices have generally trended higher since the beginning of the year. The remaining rental price indicators were mixed. Average rental price slipped 1.2% to $3,902 and average rental price per square foot increased 7.1% respectively from the same month last year…

BROOKLYN Median rental price increased 8.6% to $2,800 from the same month last year, yet remained essentially unchanged from the prior month. Since the beginning of the year, median rental price has showed some stability on a month-over-month basis…

The Elliman Report: 5-2014 Manhattan/Brooklyn Rentals [Miller Samuel]
The Elliman Report: 5-2014 Manhattan/Brooklyn Rentals [Douglas Elliman]
Miller Samuel Aggregate Database [Miller Samuel]
Chart Gallery (Brooklyn Monthly) [Miller Samuel]
Chart Gallery (Manhattan Monthly) [Miller Samuel]
Chart Gallery (Manhattan Quarterly) [Miller Samuel]

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[Infographic] Manhattan and Brooklyn Rents Continue to Rise

May 17, 2014 | 8:55 pm | delogo | Infographics |

Here’s the latest infographic from Douglas Elliman covering the Manhattan & Brooklyn rental market reports for April 2014.

April2014 Manhattan Brooklyn Rentals


Manhattan/Brooklyn Rents Continue to Rise

May 15, 2014 | 10:24 am | delogo | Reports |

Rental_0414

Douglas Elliman published the Manhattan/Brooklyn rental report that I author today. This monthly report is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994. We discontinued the quarterly rental report series but still present the information in our aggregate database.

MANHATTAN
- Second highest median rental price reached in over 5 years (highest was one month spike to $3,695 in Feb-09).
- Second consecutive month with year-over-year rise in median rent after 6 consecutive monthly declines.
- The vacancy rate was the lowest for an April in 4 years, falling to 1.45% from 1.58% a year ago.
- Market share of landlord concessions was up slightly from last year to 6.8%, but down from recent January peak of 13.1%.
- The number of new rentals slipped 6.2%, as landlords and tenants have remained more in sync for the 3rd consecutive month.

BROOKLYN
[North, Northwest Regions]
- Median rental price up year-over-year for the 11th consecutive monthly increase.
- New rental activity surged 57.1% as tenants pushed back against rising rents at time of renewal.
- Marketing times and negotiability expanded from a year ago, but remained stable over the past 3 months.
- Studios showed the largest rise in median rental price. 1-bedrooms and 2-bedrooms also increased.
- Brooklyn median rent was $442 less than Manhattan median rent, up from $210 record low in February.

Here’s an excerpt from the report:

MANHATTAN Median rental price increased 1.6% to $3,247 from the same period last year to the second highest level in more than 5 years. This was the second consecutive year-over-year monthly increase after 6 consecutive months of decline, largely attributable to a higher than normal sales volume in 2013. The robust sales market provided competition, poaching some rental demand as “fencesitters” concerned about rising mortgage rates opted to purchase. Average rental price rose 5.1% to $4,008, the second time the $4,000 threshold was exceeded in the past 4 years. The overall rise in rental prices was largely seen in the studio and 1-bedroom markets with year-over-year gains of 4.2% and 1.4% respectively…

BROOKLYN The 11th consecutive increase, median rental price increased 3.9% to $2,805 from the same month last year, but fell 3.3% from the prior month record of $2,900. Average rental price followed a similar pattern rising 6.4% to $3,209 over the same period. Despite the rising trend, month over month rental price trends for all indicators have showed relative stability since the beginning of the year…

The Elliman Report: 4-2014 Manhattan/Brooklyn Rentals [Miller Samuel]
The Elliman Report: 4-2014 Manhattan/Brooklyn Rentals [Douglas Elliman]
Miller Samuel Aggregate Database [Miller Samuel]
Chart Gallery (Brooklyn Monthly) [Miller Samuel]
Chart Gallery (Manhattan Monthly) [Miller Samuel]
Chart Gallery (Manhattan Quarterly) [Miller Samuel]

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[Infographic] NYU Furman on Cost of Renting in NYC

April 25, 2014 | 9:28 am | furmancenterlogo |

The NYU Furman Center goes infographic on us with an illustrated story of the falling affordability of NYC rentals – 2/3 of the city is rental.

2014nycrentingNYUFurman

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With Mortgage Lending Historically Tight, Renters Suffer Just As Much

April 15, 2014 | 4:19 pm | nytlogo |

nytrentafford4-14

There was a good article in the New York Times yesterday: In Many Cities, Rent Is Rising Out of Reach of Middle Class

Many have complained about the Federal Government’s (and our society’s) overselling of homeownership over the past decade and how the decline in homeownership will eventually lead to an emphasis on rentals in the US. Of course, like many housing market ideas, good and bad, they tend to be presented in a vacuum, without real context.

I believe much of this discourse is in reaction to tight credit combined with a weak economy rather than some sort of fundamental cultural and economic shift. During the bubble we got the opposite discourse – that there was a fundamental cultural and economic shift towards homeownership.

Currently there is a much smaller subset of Americans that have access to financing. According to the Federal Reserve Senior Loan Officer Survey, lending has actually tightened in 2014 over 2013 (related to QM). Many homeowners are unable to sell because they can no longer buy and many renters no longer qualify for financing so the idea of of homeownership as a goal fades.

Case in point has been the recent public discourse on the issue of home affordability, whether it be sales or rentals. Zillow presented an analysis for the New York Times that illustrates how much rents have risen in the past 13 years (since 2000) in cities across the US.

Here’s the scenario:

The economy is weak – we are seeing tepid growth in employment, stagnant incomes and historically tight residential mortgage lending.

  • Approximately 38% of homeowners can’t buy their next home so they won’t list their home for sale.
  • Buyers without credit issues won’t list their homes until they can find something to buy.
  • The lack of supply presses prices higher because those who have access to credit have little inventory to choose from, driving up prices.
  • Renters looking to buy can’t find a home they want to purchase so they are kept in the rental market.
  • Renters looking to buy don’t qualify for a mortgage so they stay in the rental market.

The organic flow out of the rental market into the sales market is slowed and a log jam is created of too many renters and not enough buyers.

Rising rents against stagnant incomes creates an affordability crisis. The sales and rental markets are connected. They are not mutually exclusive.

Rising rents are a product of tight credit, which is a residual byproduct of the financial crisis. Fix the economy and credit eases, then lending normalizes (no, not circa ’06) and the pressure on rental housing is eased.

ASIDE I’m not entirely confident with the reliability of the historical rental data being presented to the New York Times by Zillow – but I still agree that affordability is being pressured:
- Zillow was launched circa 2006 and rents are not public record so the early data has to be super thin.
- The comparison was made between a first quarter (low) and a third quarter (high) in a highly seasonal market.
- I am not sure if “New York” means Manhattan or New York City. If it is Manhattan, then our median rent figure in 1Q 2000 was $2,600 in nominal terms, and $4,276 in real terms. In nominal (unadjusted for inflation) terms, rents have risen 23.1% through 3Q 2013 while real median rent has fallen 27.3%. The Zillow median rent as share of median income nearly doubled, rising from 23.7% to 39.5%. Either incomes have collapsed in NYC or the 2000 rental figure being punched into their model is flawed, ie way low, no?

Other inights on any of this would be appreciated.

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Brooklyn Rentals: Coolness doesn’t come free

April 11, 2014 | 10:07 am | Public |

4-2014qzmanhattan-brooklyn-rentspread [Source: Quartz]

Rob Ferdman over at Quartz writes a great breakdown of the narrowing rental spread between Manhattan and Brooklyn using the data I crunch for The Elliman Report: Manhattan & Brooklyn Rentals. Here’s my version of the chart.

After I designated last week’s Bloomberg story headline “Brooklyn’s Hipster Economy Challenges Manhattan Supremacy” as my favorite new phrase, specifically:

Brooklyn’s Hipster Economy

Quartz has given me a new favorite phrase (see under original chart):

Coolness doesn’t come free

.

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[Infographic] Looking at the Manhattan and Brooklyn Rental Markets 3-2014

April 10, 2014 | 12:00 pm | delogo | Infographics |

Entering the world of infographics, here are some highlights from our just released Elliman Report: Manhattan & Brooklyn Rentals 3-2014

ManhattanBrooklyn3-14INFOGRAPHIC


New Record of Foreign-owned Assets in the United States

March 27, 2014 | 4:06 pm | wsjlogo |

3-14commerceForeignInvestors

According to the WSJ Real Time Economics Blog there are the record investment gains. This is good news/bad news…and:

has worried some economists, because it makes the U.S. more vulnerable to major shifts in the global economy. But it also could show strengthening confidence in the American economy.

These gains are largely due to the rising US stock prices rather than more investment. However in the housing sector, I do think rising property values are attracting even more new capital for investment – whether for new development or unit purchases. We can see this in markets like New York City and Miami. Foreign investors seem to be chasing safety and a long term equity play.

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