When will NYC rents hit rock bottom?
A lot of people have been saying that people are still continuing to not renew leases. People have mentioned that the effects of COVID had yet to really hit in terms of people not being able to pay rent until the end of this year. Also with many companies saying you wont be able to come back until 2021, will rents bottom around Dec-Jan or will it be early 2021. Also how long will it take for rents to rebound to pre-covid. Will rents still be pretty low come this time next year?
edit: am looking to get a lease. not in RE
It's not going to drop the way you think.
I think there are factors here beyond just supply and demand.
Major landlords CANNOT lower their rents beyond a certain point for a few reasons: if it's a new development, (I may be mistaken here given I'm not in RE) but I believe the loan covenants generally specify a certain amount of rental revenue, and lowered rents may risk violating the covenants. Furthermore, legally, they fear a cap on rent hikes and are NOT lowering their list prices because they need to be on record due to the latest state housing laws.
What you get is a whole bunch of "free months" and net effective rent being listed. Meaning your rent could skyrocket once you resign in a year.
My strategy, which just got me into a VERY nice apt that I offered hundreds under list for, was to look for singly-owned condos/co-ops or brownstones. Small landlords generally just need to pay the mortgage, and aren't worried about IRR or covenants like developers, and aren't hamstrung by on-high to hold rents like the listing agents at places like Archstone.
As a gainfully employed person looking for a rental, you are a unicorn (they can't evict and are worried about people defaulting on rent), and many people are more than willing to make a deal.