New rentals plunge 71% in Manhattan

We know there will be short-term affects when it comes to the real estate market and rental market in response to the Coronavirus pandemic. The question is how long that lasts. Will there still be issues 6 months from now? One year from now?

In places like New York City, the effects are significant. New rentals have plunged 71% in Manhattan. That’s a lot to unwind over the next 6 months to a year.

Will there be fewer office jobs in NYC as companies offer more remote work options? Will fewer people want to move to NYC until the virus is completely eradicated or we have a vaccine?

The psychological effects are real, and sometimes it can take years to get back to normal after a recession or event like an earthquake or hurricane. Effects from a pandemic may be even worse.

  

Housing starts surge

There’s a ton of demand out there for apartments as many Americans turn to renting as opposed to buying homes. With this demand, more apartments will be built and that’s having an effect on housing starts.

U.S. housing starts surged to a 1-1/2 year high in November and permits for future construction were the highest since March 2010 as demand for rental apartments rose, offering hope for the weak housing market.

The Commerce Department said on Tuesday housing starts jumped 9.3 percent to a seasonally adjusted annual rate of 685,000 units, the highest since April last year.

October’s starts were revised down to a 627,000-unit pace from a previously reported 628,000 unit rate.
****
Building permits, a gauge of future construction, rose by 5.7 percent. The increase was spurred by more apartment permits.

New homes have an outsize impact on the economy. Each home built creates three jobs for a year and $90,000 in taxes, according to the National Association of Home Builders.

Although the overall housing market remains weak, rising demand for rental apartments is boosting the construction of multifamily homes.

Falling house values and stringent lending practises by banks are pushing Americans away from homeownership.

The rate is still below the rate needed for a healthy economy, but the trend is in the right direction.

It will be interesting to see how this trend plays out, and it offer business opportunities for people who can exploit these trends. The buying vs renting debate on real estate is definitely tilted now towards renting with the tight bank lending practices.

  

Related Posts