The New York City Rental REVOLUTION

The third quarter of 2021 delivered a rental market with revolutionary characteristics that I have never seen in my almost quarter-decade in the New York City real estate markets. Multiple bids, over-bidding, dramatically rising prices at all price-points (even $45,000/month rentals!), desperately crafted letters from tenants drafted to landlords begging for priority, inventory shortages, a daily flood of emails begging for home sellers to consider renting…..all in a city where some of the US's lovely politicians and their deceptive propaganda infrastructure had (very effectively) messaged that EVERYONE WAS FLEEING BIG CITIES, especially New York. They were not only wrong. They were often purposefully lying.?

Yes, many had left the city…..temporarily…..and many were ‘fleeing’ to their second or third homes like they do every weekend when there is no pandemic! So what does this ultra-buoyant rental market have to do with the sales market which is what we mostly cover?

1. Many sellers who had considered renting are now seeing price recovery and are choosing to sell instead of rent.
2. Many buyers who thought renting would be much cheaper, see the cost of renting become more expensive than owning in a low interest rates environment where seller pricing expectations have adjusted.
3. The investor buyer is returning as they see rental returns improve dramatically.
4. It appears the new tax laws will not eliminate the 1031 exchange, further fueling this segment of the buyer pool.
5. Add in Merck's new COVID medication that could prevent hospitalizations and the deadly effects of the virus.
6. All of this messages the resiliency of New York’s real estate markets.
7. Rental Inflation is possibly the best argument for home ownership with a more fixed monthly cost of home.

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