US Property Crisis Ahead? Rents Plunge Nearly 25%



ORIGINAL POST
Posted by Ed 6 mths ago
I’m in Awe of How Fast Rents Plunge in San Francisco, New York, Boston, Los Angeles, Other Expensive Cities. Rents Decline Even in Houston & Dallas. National Average Turns Negative
 

There was even a story on NPR: People from big, densely populated, expensive cities showing up in small towns in beautiful rural areas for a few weeks to get away and then getting stuck, now that they can work remotely, and buying homes and sending their kids to local schools.

These are just stories, and there are now millions of them. But it’s showing up in asking rents in those big expensive markets, where vacancies are rising and landlords have to compete with each other to fill their units, and tenants are moving within the city in order to get a nicer place for less money – the free upgrade they’ve been waiting for, after years of costly downgrades.
 

And I’m in awe of how fast rents are dropping. San Francisco has been the big shocker for months, but now it’s other cities too. And they’ve dragged the national average rent growth into the negative year-over-year.

 
 
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COMMENTS
Ed 6 mths ago

We have extensively followed the collapse in rental prices since the beginning of the pandemic (for examples, look here and here and here).

 
In addition to prices collapsing, some tenants affected by the lockdowns have simply decided they no longer want to pay rent and are stiffing their landlords with little consequences.
 

There's not doubt that many renters - including many businesses - don't have the means they once did to pay their rents.

And though we knew the fall in prices was likely to get worse before it got better, the Wall Street Journal is taking it one step further and now asking the question of whether or not the rental price plunge could actually set off the next housing crisis.

 

Another question also remains: how bad will the eviction scene be when the protections against eviction put into place by federal and local government expire? It is estimated that such moratoriums may wear off by January 2021, or even sooner.

At that point, renters will need to pay up for the months they've missed.
 
 
 

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Ed 5 mths ago
https://imgs.6sqft.com/wp-content/uploads/2016/11/16115934/8-Spruce-Street.jpg 
Vacancy Rate at Iconic Manhattan Tower with 899 Apartments Hits 26%: This Shows How Fast & Massive the Exodus Has Been
 

This is now happening in apartment towers in big densely populated cities around the US: Suddenly mind-boggling vacancy rates as a large number of tenants have left in recent months. And this is happening even at the best of them. And holders of the commercial mortgage-backed securities (CMBS) are waking up.

The iconic “New York by Gehry” 76-story tower on 8 Spruce Street in the Financial District of Manhattan, designed by architect Frank Gehry and built in 2011, with 899 apartments, plus an elementary school for 600 kids occupying the first five floors, had an occupancy rate of 98% in 2019.

By September 2020, the occupancy rate had plunged to 74% – roughly 234 units of the 899 units were vacant!
 

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Ed 5 mths ago
San Francisco in Stunning Downwards Spiral
 
The median asking rent for one-bedroom apartments in San Francisco fell by another 3.6% in November from October, to $2,700, bringing the plunge since April to $800 or 23%, according to data from Zumper’s Rent Report. From the peak in June 2019, one-bedroom asking rents have now plunged by 27%, or by $1,020 per month:
 
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New York City Rents Plunge
 
In New York City, the median asking rent for 1-BR apartments dropped 3.1% in November from October, to $2,470, and by 16.8% year-over-year, according to Zumper data. Since July 2019, 1-BR rents have dropped by 19%:
 
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Ed 5 mths ago
San Francisco Rents Plunge 35% As Exodus Continues

The median rent for a studio apartment in San Francisco plunged 35% in November from a year earlier, to $2,100, while costs for one-bedrooms slumped 27% to $2,716, according to Bloomberg, citing a new report from Realtor.com.

 

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