The rental reckoning has begun.

It started more than a year ago.  The rental trucks and moving vans lined up all over the city to bring hundreds of thousands of renters away to parents’ houses, second homes, and far away, with apartment items in storage, sold on Craigslist, or donated.

The news was dire.  Everyone is fleeing New York!  The world is ending!

Of course, not everyone was aware that the vast majority of those leaving were renters, nor did they realize that the tide started shifting about 9-10 months ago.   Those who still ask me, “Aren’t people moving away?  I heard that…” are sorely, sorely mistaken!

Renters started coming back in droves in the Spring, and rents started leaping back to pre-COVID prices.  In fact, now the rents are well above where they were in 2019.  We see nonexistent rental inventory across the city, with a pile-on of rental applications for every good apartment that comes on the market.

But what happens to the people who struck AMAZING deals on their rentals?  Those who got $25,000/month apartments for $15,000/month, like one client of mine?  Or another tenant who gut a $9000/month rent on a unit that is GORGEOUS and should get $14,000/month in a normal market?

What about the Brooklyn tenant who got a $3000/month rent when the prevailing rent today is $4100?

Rents are jumping dangerously!

Even worse, all of the “no fee” situations that were nearly unanimously offered last year?  Those are gone, too!

These tenants are all in for a massive shock when their landlord sends them a renewal notice.  When the landlord can get 25-40% higher rent levels today, what do you think is going to happen?

First, some tenants are going to keel over in apoplexy.  But once they do that, they are going to consider their options.  Most are going to ultimately sit tight, realizing that they can’t do better without spending a ton of money up front.

But many will do the Math

Renters will opt to check out the sales market.  Sales prices have yet to increase from 2019 levels.  While they may start an upward climb in the beginning of 2022, which many expect, the cost of buying versus renting just got a whole lot more interesting.

And these renters-turned-buyers will drive a pickup in the studio and 1-bedroom market in Manhattan and Brooklyn, which has slightly lagged the rest of the 2- and 3+ bedroom markets.

You watch!  The reckoning is here, and it’s going to get worse.  Landlords couldn’t be happier- and renters could find themselves owning apartments that fix their housing costs, at levels far lower than renting.

Did your rent jump 30%  Reach out to chat! -Scott &  The Harris Residential Team.