What Bear Stearns Means for New York Renters
The New York City rental apartment market is tied closely to the local economy, more so than the sales market. That market might see foreigners buying a lot of condos even as Americans lose their jobs. But the rental market--it tends to rise and to fall with the city's economy. Generally, job losses and uncertainty in New York translates into more vacancies and lower rents.
So the news that JPMorgan Chase and the Federal Reserve are acquiring Bear Stearns, the world's fifth-largest investment bank and one of New York's most prominent employers, could ultimately be good news for the city's renters. Grimly and pragmatically speaking, any layoffs could reduce the number of people who need to be in the city by thousands. That could free up apartments; and that greater vacancy could drive landlords to drop rents.
But not the "could" factor: The rental market, especially in Manhattan, has been remarkably bouyant as of late. Rents have ascended to records in many neighborhoods and the vacancy rate citywide rests somewhere below 5 percent (and below 3 percent in Manhattan).
Still, the landlord logic remains: less qualified renters means fewer leases means incentives, including lower rents.
We're probably still months away from such a reality (the Bear Stearns deal isn't expected to close until June and may yet fall through); but it's a glimmer of possibility that renters, weighted now for years under ever-burgeoning rents, would welcome.
hopefully lower rent really is an outcome of this. I don't have money to even pay a brokers fee. Anyone else who needs to go no fee rentals, check out www.urbansherpany.com
I hope rents in Manhattan go up. Its good for the economy and for the needy landlords.
Unfortunately, rents will only come down slightly. The main problem is that apartments for sale will slump in price as Bear people may sell in order to maintain a fair semblance of their previous lifestyle. In addition, the 14,000- employees will not at the present time be buying apartments or bidding due to an uncertain career outlook. Also, keep in mind a large portion of their wealth, with the exception of their Condos, apartments and houses, was in their company stock which is now, basically a tiny piece of JPM, pending shareholder approval. I think the ownership market will finally decrease as not only NYC slows but Europe and the other economies slow. I would not expect the "Foreign" money to keep buying forever.
I'm all for a depression if it will allow me to move into the upper west side.
It's time our ridiculous real estate market be taken down a peg or two (or three or four.)
Isn't the term needy landlord in relatity an oxymoron?
Only Hillary tricksters would want a DEPRESSION under ANY circumstances -- or seek to thrive in a toxic petrie dish of discord, games and dysfunction back in our White House. Turn the page!
Lehman laying off 5%. Citi laying off 20%. Bear will lose 75%. Ok, now name all the other Wall Street banks and brokerages. Add up their employees. Subtract at least 10%. Tens upon tens of thousands of high paying jobs disappearing.
Rents and prices are going to plummet. For all those who say "Manhattan is different" talk to people from SoCal, Miami, and Vegas who all said the same thing. Foreigners are not going to rent. Foreigners have stopped buying for a few reasons: prices are too high and dropping; the dollar keeps going down. If you are rich German who bought a $2 million condo in NY two years ago, you paid pretty much $2 million Euros for it. Now that place is worth at best $1.25 million Euros. In six months it will be worth maybe $800k Euros. Foreigners make speak funny, but they understand economics.
Any of you real estate perma-bulls lived in Manhattan in 1987 or 1991? No? then shut up and go home.
This is awesome. Finally we will bring down this idiotic real estate market. Who are we fooling when a broker can ask $900,000 for 500 square feet in a shabby building just because it's on Manhattan???
People who ask that much for their property are insane. The people who PAY that much are certifiably stupid.
Remember: An asset is only worth what someone is willing to pay for it.
Suckers.
Jsfox you are so right! I always felt that the prices would have to drop if only these trust fund kids and IBankers would stop shelling out the ludicrous amount of $$ for rent that's become all too common in NY (esp. BK and Manhattan).
But in the end when rich people start losing their jobs it has to have a ripple effect right down to their drivers, dog walkers, nannies and the list goes on and on and on...aren't we all just generally screwed in the end by a govt. who consciously ignores a glaringly obvious recession around the bend?
So, you have to be a Hilary fan to want lower rents????
(Red and yellow, black and white, lower rents are precious in our sight)
Good riddance to investment banker scum. So these are the people ruining NY. Still, not everyone paying skyrocketing rent is a sucker -- some are forced to hold a position, like garment district businesses that have been there 40 yrs, and whatever music venues haven't been shuttered to make way for another ATM.
As for this idiot:
>I hope rents in Manhattan go up. Its good for the economy and for the needy landlords.
I heard a girl say this (effectively) at a party a few yrs ago, and am very cross with myself for not smacking her right across the mouth.
Where else in the world does "good for the economy" actually mean "screwing most of the people"?
Little-known fact: a lot of properties were already sitting empty all over the city, because the owners--who could be making something off them--refused to lease for what they THOUGHT they SHOULD be getting.
Actually, the sales market has slowed slightly as a result of job losses or fear of. So there are actually MORE people looking to rent than ever. I'm getting crazy calls already in March for summer rentals this season. You will not see rents go down. They will remain as high and could even jump 10% or more on deregulated apartments. Advice: find yourself a good broker who is experienced, knows the inventory and knows how to negotiate.