Its time to break out that old lease and start reading the riders, cause it’s warming up quick on Wburg’s already smoldering rental circuit! With sales low this year the market is saturated with renters that qualify for home ownership competing alongside young professionals and students with guarantors. The competition promises to be fierce. Over the last six months we’ve definitely seen a trend on the rental market, of highly qualified seekers with reserves in the bank. Prospective tenants that would have been saving to buy a home, coupled with recent homeowners that just sold their primary residences, are going to be major influences on the rental market in 2008.
More competition by numbers and by qualifications belabors the obvious, but what will happen to rent prices this year as a result of these developments? Will they go up? Go down? Or stay the same? While rents always go up in NYC, with the economic slow down and the real estate bubble burst, the answers may not seem clear for some. There are a number of possibilities. With a nationwide credit crunch approaching, (or already underway,) and the threat of a serious clamp on peoples finances, we have already seen a growing reluctance amongst tenants with expiring leases to move. If this continues we can expect a lower supply of vacancies as tenants renew their leases for another year. With a fresh pool of highly qualified prospective tenants replacing the crowd of renewers this season to make for a relatively unchanged demand, and by contrast, a lower supply of vacancies (new buildings aside), we have a strong feeling watching the market at work here in Linnaeus Group, that rents are gonna shoot up quite a bit more than usual in the beginning of spring and summer. With the coming wave of more responsible, ready money on the market, and current tenants fighting to renew we may see a bottleneck effect in the city this year.
And yet the argument can be made to go both ways because that crowd of tenants that have either been saving to buy a home, or just sold a home can be a frugle crowd. Indeed the majority of the pressure on rents to rise comes from the young fresh-to-New York faces of students and urban professionals with strong guarantors. With the economy on a slow down we may see a reduced number of these out of state newcomers to New York. So these might be balancing factors for 2008.
So far the trends we have been able to observe over the last 6 months can be summarized as follows:
- More responsible money on the rental market.
- Lower turnover reported from landlords and management/Higher rate of renewals.
- Lower influx of Out-of-State professionals.
We’ll be watching closely and updating you here… In the meantime your feedback and observations are much appreciated.
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