Catch A Falling Rental Market
I’ll explore the NYC rental market this week – actually I needed a way to insert this short video into this week’s Housing Note. I got five hours of sleep last night so I needed some levity.
The May 2017 Elliman Report Was Published
Douglas Elliman  just published my research on the New York City market, namely the Manhattan, Brooklyn and northwest Queens rental market . This is part of an expanding series of Elliman reports  I’ve been authoring since 1994. The rental market accounts for two thirds of the total housing stock although about 75% of the rental market has statutory tenancy. The rental report itself covers new leases, not renewals. The latter is the secret sauce of the rental market, held very closely to the landlord’s vest. In most cases, new leases represent about one third of rental activity and since that information is not recorded in public record, we are collecting a modest portion, but a representative sample across the market, rather than simply the results of Douglas Elliman’s business.
When this was published, I was thinking that there was no way that my rental market research could compete with the Comey Hearing in the U.S. Senate. But hey, the coverage of our market report was the 7th most read story on the Bloomberg terminals world wide.
And speaking of Bloomberg, here is a chart on the rise in new leases – both from consumers pushing back and rental price increases at renewal and more new development product entering the market.
Here are the matrix tables for each of the 3 markets:
And some extracurricular charting:
One more thing on high end rental market skew…
In the month of May, we tracked 88 new leases signed that were at or above $15,000 per month. That was a 95.6% surge over the prior May. Not only was there a surge, but the median rent for those units jumped 8.4% to $19,750. With the introduction of larger, high end apartments into the mix, they do have some impact on aggregate price trends even when looking at median sales price. That’s because there were 47% more sales at or above $10,000 per month. These transactions also skewed larger apartment price metrics such as 2-bedroom and 3-bedroom units when on a unit for unit basis, those markets continue to weaken. Newer higher quality units are continuing to obfuscate the rental market in general.
Ok, one more thing on rentals, really…
With the heavy use of concessions, landlords are in danger of attracking too many renters that can only afford the rent if they are provided with concessions. If for some reason the rental market rebounds and the landlords stop offering concessions, many existing renters will not be able to renew. Curbed has a great piece called: What happens to New York apartment-seekers when perks like free rent dry up? 
Jobs and Homeownership
The U.S. economy is showing mixed signals  these days (remember that the economy is NOT the stock market) with a recent lacklust jobs report a the beginning of the end of a long run of tourism growth . Mortgage rates, which reflect future risk, are at their lowest level this year. Oh, and old-timey jobs  are hot.
Apparently it is homeownership  month. In this note to the NYT editor , and I would suggest a more important discussion over debating the mortgage interest rate discussion, is the mobility of our work force. With the decline in manufacturing, many workers are noit able to where the new jobs are.
It looks like salad days for engineers.
99% Invisible Podcast: Squatters of the Lower East Side
When my wife and I moved to Manhattan in 1985 from the midwest, it was a little dicey. The “broken windows” theory had not been set into practice and our relatives were concerned about our saftey. One of the more worrisome neighborhoods to perform appraisals was the Lower East Side of Manhattan. I remember walking to an inspection on Avenue B, passing a school bus on blocks having been engulfed by flames a while ago, “gangs of anarchists” walking directly up to patrons of local restaurants asking for a bite of their sandwiches, rubble strewn vacant lots, noticing the door of a condo conversion with the freshly painted monniker “die yuppie scum.” There were quite a few tenaments that were occupied by squatters. Thirty years of gentrification later, you’d hardly recognize it.
Here’s a great story on what happened: Squatters of the Lower East Side 
The Global Glut of Super Luxury
The FT takes a great broadsweeping of the aftermath of the global super luxury development boom .
Here’s a good overview:
The luxury construction frenzy has produced too many buildings, and political factors have turned against the sector. China has attempted to clamp down on money flowing out of the country, while low oil prices and sanctions have curbed sales to Russian buyers. Cities around the world are imposing new taxes on overseas property buyers, and there is increased scrutiny of money laundering through high-end property. The mayors of London and New York have pointed to gleaming residential towers as symbols of inequality amid chronic shortages of affordable housing.
Upcoming Speaking Events
June 13, 2017 – Real Estate Board of New York: Residential Brokerage Division Owners and Managers Breakfast: “New York, New York On The Global Stage.” Tickets for Owners / Principals of Residential Brokerage Firms and Residential Branch Managers are available for purchase on rebny.com.
Sorry, but I am taking a little breather this week – no, not because I got home at 3 am last night – but because there are things that are slowly developing that I don’t want to write about prematurely even though I am dying too. There are a number of legal and policy matters coming to a head these days after years of self-dealing by certain entities that benefitted from taking advantage of or simply beating down front line appraisers. It has been painful to watch and experience but I am glad we are seeing things on the verge of coming to the surface. More on this in the future.
Ok, I’ve got to come clean. I am cutting this short because I was out until 3 am last night despite being under the weather. In the meantime, check out the Appraiserville links below, especially over at Appraisers Blogs.
A Brilliant Idea
If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes . And be sure to share with a friend or colleague if you enjoy them. They’ll sharpen your knife, you’ll discover a creative way to paint the town with sex  and I’ll cut a piece of fermented curd .
See you next week.
Jonathan Miller, CRP, CRE
Miller Samuel Inc. 
Real Estate Appraisers & Consultants
Reads, Listens and Visuals I Enjoyed
- Paulson, Blackstone Said to Back Plan to Free Fannie-Freddie [Bloomberg] 
- Candy sells London site as high-end property sales stall [FT] 
- Sales of New Homes in Hong Kong Reach 21-Year High [Mansion Global] 
- What No One Ever Tells You About Tiny Homes [NY Times] 
- Why Old-Timey Jobs Are Hot Again [WSJ] 
- Divorce Is Pushing Hong Kong’s House Prices Even Higher [Bloomberg] 
- Pop Up Goes the Retail Scene as Store Vacancies Rise [NY Times] 
- One 57 becomes home to Billionaire’s Row’s first foreclosure [Curbed NY] 
- Opinion | The Homeowner Trap [NY Times] 
- Celebrating Homeownership [Freddie Mac] 
- Art Dealer’s Fifth Avenue Co-op Sells for $55 Million [NY Times] 
- Trump Palace might be the next NYC building to lose the president’s name [Curbed NY] 
- Donald Trump’s childhood home has become an “unkempt” mess, neighbors say [LLNYC] 
- Fed’s Kashkari is wrong about the housing bubble [Marketwatch] 
- Podcast: Squatters of the Lower East Side [99% Invisible] 
- Not Coming to America [WSJ] 
- Best College Degrees for Homeownership [NY Times] 
My New Content, Research and Mentions
- The gilded glut: falling demand hits luxury property market [FT] 
- Even in the busy summer season, if you’re renting right now, be sure to negotiate [Brick Underground] 
- ‘Today’ Show’s Matt Lauer Cuts The Price Of His Hamptons Estate [Forbes] 
- “Quirk” in luxury rental activity skews median prices in May [The Real Deal NY] 
- Surge in Manhattan new construction leases drove prices up in May: Elliman [BuzzBuzzHome] 
- Super-Luxury Rentals See Major Uptick in Activity in Manhattan [Mansion Global] 
- Manhattan Renters Seeking Deals Send Leasing to a Record for May [Bloomberg] 
- Manhattan’s median rental price swells with influx of $15,000-plus pads [Curbed NY] 
- Manhattan Apartment Rents Rise in May [WSJ] 
- What happens to NYC apartment-seekers when perks like free rent dry up? [Curbed NY] 
- In The Hamptons This Summer, Celebrity Real Estate Is A Tough Sale [Forbes] 
- By George, he’s got it! [The Real Deal NY] 
Appraisal Related Reads
- Inside Mortgage Finance Publications – Banking Regulators Suggest Temporary Practice Permits to Alleviate Sluggish Appraisal Process [Inside Mortgage Finance] 
- 5 Steps to start an appraisal blog [Birmingham Appraisal Blog] 
- Bad real estate advice & blue bathrooms [Sacramento Appraisal Blog] 
- Appraisers, Dentists, and Antritrust Law [Working RE] 
- Sorry, appraisers, you’re wrong – there is a shortage [HousingWire] 
- CoreLogic to Acquire Mercury Network [Businesswire] 
- Residential Appraiser Ignored & Neglected by the Appraisal Institute [Appraisersblogs] 
- Paying Too Much For Appraisals? [Appraisers Blogs] 
- Louisiana Appraisal Board: Anti-Competitive? [Working RE] 
Extra Curricular Reads
- When Monty Python Took American Television to Court [Mentalfloss] 
- War Photographer Robert Capa and his Coverage of D-day [Vanity Fair] 
- Before Silicon Valley, New Jersey Reigned As Nation’s Center Of Innovation [NPR] 
- VIDEO: What If We Could Use Neural Technology To Block People In Real Life [Digg] 
- Roasteries and refineries: The history of sugar and coffee in NYC [6sqft] 
- Unsealed 75 years after the Battle of Midway: New details of an alarming WWII press leak [Washington Post] 
- two°C – New-York City [VIMEO] 
- The brutal war and sweet patriotism that led to National Doughnut Day [Washington Post]