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

[click to play]

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

I’ve been warming up with two events this week and in both cases I seemed to be enjoying myself. Thanks to Nancy Strong and Christine Haney for the actions shots!


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

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See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

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