© Daniel Acker/BloombergThe median monthly rent in Manhattan dropped 3 percent from a year earlier to $3,100.
The median monthly rent in Manhattan dropped 3 percent from a year earlier to $3,100, according to a report today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The vacancy rate climbed to 2.8 percent, the highest since the firms began tracking the data in August 2006.
Rents had been climbing for almost two years and approaching the 2006 peak of $3,265 a month before they began to slide in September. Manhattan home purchases jumped to a six-year high in the third quarter as buyers rushed to make deals before rising mortgage rates pushed costs higher, Miller Samuel and Douglas Elliman said. Sales of one-bedroom units reached a 15-year high, suggesting an influx of first-time buyers.
"With the scare about rising mortgage rates, it poached a lot of demand from the rental market," Jonathan Miller, president of New York-based Miller Samuel, said in an interview. "On top of that, what else is poaching demand from the Manhattan rental market is Brooklyn."
© JB Reed/BloombergLuxury condominiums in New York City.
Brooklyn Spread
The median monthly rent in Brooklyn rose for a sixth straight month in November to $2,800, up 3.8 percent from a year earlier. The $300 spread between leasing costs there and in Manhattan was the second lowest in almost six years of record-keeping, a sign that demand may swing back toward Manhattan if Brooklyn rents continue to climb, Miller said.
"There's going to be a point where Brooklyn can't grow in the way that it has," he said. "As they start coming closer together, Manhattan rates are looking like a better deal. We're getting to that point."
Manhattan landlords agreed to offer concessions, such as a month's free rent, on 7.2 percent of all new leases in November, up from 4.2 percent a year earlier.
The number of new agreements dropped 34 percent, the biggest decline since September 2011, suggesting that landlords opted to forgo large rent increases to entice existing tenants to stay put, Miller said.
"I see that as weakness," he said. "More people renewed because the landlords weren't that aggressive."
Strong Demand
Manhattan rents are unlikely to drop precipitously in the coming year as rising employment keeps leasing demand strong and higher borrowing costs deter potential buyers. The average rate for a 30-year fixed mortgage was 4.46 percent last week, the highest since September, according to data from McLean, Virginia-based Freddie Mac.
"I don't think the purchase market is going to see the same heavy volume it saw in 2013 next year," he said.
Among Manhattan neighborhoods, rents on the East Side fell the most last month, dropping 3.4 percent to a median of $2,800, Miller Samuel and Douglas Elliman said. On the West Side, the median fell 2 percent to $3,250. Rents downtown, defined as the area south of 34th Street, held at $3,495.
Leasing costs for luxury apartments, the top 10 percent of the market by price, climbed 1.2 percent to a median of $8,500.
for some people, that is. For speculators primarily, of course, but also for the privileged elite who get caught in high priced real estate that declines sharply in value. We've seen this before in the real estate bubble leading up to the crash in 2008, and the too big to fail banks are driving it again.
The US Fed cannot keep spiking the punch with its 'qualitative easing' free money forever, and when it backs off there will be hell to pay. The entities hurt the worst at first will be banksters and hedge fund sharpies, and we'll be able to cheer as many go bankrupt in the fallout, but without some real reform of the banking system, it's likely that ripple effects will be very bad for everyone.
The fact is that it's impossible to generate economic growth under the fiscal policy bias of 'austerity', no matter how low private central banks set interest rates, as those are zero bound, and they are already there and have been for some time. Without jobs or income for the workers, there's no money to spend and they can't or won't take on more debts.
When there's no money in the real economy, as opposed to the vapor of speculative finance capital chasing ever more risky investments, the system can't produce real economic growth, and it's bound to implode.
The problem is in Wall Street, the City of London, and financial centers in Europe, along with the capitals where politicians have been bought by the banksters. A few asteroids strikes might be very helpful, but it's probably not going to happen, so it might be better to just burn 'em all.
There are more nuanced approaches that might work, of course, but it is more likely that the financial oppression of the banksters will lead to violence, in which case there will be nowhere they will be able to hide, followed by rebuilding. If it all breaks down, that will take a generation, at least, if not two or three. We can only hope that those who survive it will understand what happened, and will be stronger and wiser than us.