During this past year the rental market in Manhattan has become very tight. Rents are soaring, multiple applications and even bidding wars have been going on. Many buyers gave up on buying and decided to rent instead.
Flash back 3 years ago. Landlords were offering 1 -2 months free rent, paying broker fees anything to rent their units. Ads were not pulling. No one was renting everyone was buying. It was cheaper to buy than to rent.
Rents are now skyrocketing. I have heard of landlords asking 20-25% increases in rent when a lease expires. Landlords used to increase 4-5% a year even in non stabilized units. Is it worth all the expenses involved in moving to another rental apartment? Will there become renter's priced out of the rental market who will now buy instead?
My suggestion to renters who are not ready to buy just yet - but would like to buy - Should be looking to new construction. There is going to be a glut of new condo units. Many of these developers are offering consessions to buyers but still not lowering prices. They need a certain price so they rather wait out the market?
If history repeats itself like it always seems to do some of these condo buildings are going to start renting. They will probably rent them for a few years and then offer the renters an insider price when they decide to sell.
This is exactly what happened in the early 90's. Many of the new condos that were built in the late 80's (the last construction boom) were not even half sold so they rented the unsold units. In 1993 many of these renters were offered insider prices to buy their units at even lower prices than the people who bought in 1988 -1989. I was a buyer in 1989. I bought at the top of the market. There is no guaratee that this will happen again. But I tend to think history does repeat itself.
The fundamentals still support the market in Manhattan. The local economy is still strong. Supply and demand determine price and the direction of the market. We are in a classic over supply situation. Three years of inventory that needs to be absorbed. After inventory adjustment fundamentals will reassert themselves.
We are experiencing a short term glut that equals a long term opportunity. A buyer's market for the next 24 months. The best buying opportunity since 1993.