From the Federal Reserve Bank of San Francisco:
Real Estate and Construction (National)
With only scattered exceptions, Districts reported slower activity in residential real estate markets. For new and existing homes, available reports indicated that the pace of sales declined and that the inventory of available homes and time on the market rose in most major metropolitan areas nationwide. Slower sales activity has translated into more limited price gains, and residential construction activity has fallen in most Districts as well.
The St. Louis and Dallas Districts were exceptions to the general slowdown in residential market activity. In the St. Louis District, the pace of home sales was largely unchanged or up slightly compared with a year earlier, although residential construction slowed there. Housing markets have remained resilient in the Dallas District, where despite signs of cooling, “home demand remains strong” and residential building activity has been “robust.”
As home demand has slipped more generally, scattered reports indicated a strengthening in demand for rental units. New York reported that the market for apartment rentals has been tightening in Manhattan, and according to Atlanta slower condominium sales in Florida have prompted owners to convert some units to rental property.
Construction and Real Estate (New York)
Further slackening is noted in the region’s housing market since the last report, though Manhattan’s rental market has continued to firm. New Jersey homebuilders report that the inventory of new and existing homes on the market increased further in the second quarter, but a bit less rapidly than in the first. A disproportionate part of the inventory accumulation is at the middle to high end of the market ($500,000 and over). Builders are also seeing that homes they have recently sold to investors looking to “flip” the properties are remaining on the market longer, exerting increased competitive pressure. Builders have recently begun to reduce selling prices on some units.
A major appraisal firm reports that sales of Manhattan co-ops and condos were down more than 10 percent from a year earlier in the second quarter, while prices were up roughly 5 percent. Separately, a major real estate firm notes that sales of Manhattan’s co-ops and condos slowed sharply in June, following fairly brisk business in May, while selling prices continue to run a bit higher than a year ago. Both contacts note that the inventory of unsold apartments has increased sharply and steadily over the past year, driven largely by new development. In contrast, a major Manhattan real estate agency notes further tightening in the rental market in June and early July: the inventory of available units continues to decline, and rents are up across the board, with gains of more than 10 percent in certain neighborhoods.
Office markets across the New York City area were mixed to stronger in the second quarter. Throughout Manhattan and in Fairfield County (Ct.), office availability rates fell to their lowest levels in roughly five years, while asking rents showed sturdy increases of 6 percent or more from a year earlier. However, vacancy rates rose in Long Island and edged up in Westchester and northern and central New Jersey; asking rents in these areas are little changed from a year ago.
Since I am renting, by choice, which the “newbie” home “owners” can’t seem to understand, they will later :) can tell you that the rent I pay is still 1/2 of what it would cost me to buy the house I rent, using a conventional mtg. with 20% down.
Live in a prime NJ town — rent went up $30 last year, or about $4,970 less than what “owning” a house would cost each month.
Even if the rent I pay was equivalent to a mortgage payment I would not buy since I am a former “real” homeowner I am fully aware of the other costs, the market psychology is changing daily, and residential real estate is leaving it’s “fad” status and thus prices will go south.
The Manhattan rental market is firming because people are no longer buying, or are selling their places and not buying another
vacancies in NYC are all historic lows. rents are through the roof (no pun intended). still cheap though compared to buying there.
Although the anecdotal evidence certainly helps, we’ve got the numbers..
NY/NJ June CPI-U
The housing index rose 1.2 percent in June. The June increase
primarily reflected a 0.6-percent rise in shelter costs, as well as a
seasonal increase in electricity charges. Within shelter, owners’
equivalent rent was up 0.9 percent, following gains totaling 4.7 percent between December and May. Residential rents rose 0.5
percent. The fuel and utilities component of housing rose 7.6
percent in June, primarily reflecting a steep 20.9-percent increase for electricity, often up in June with the imposition of seasonal surcharges. Partially offsetting these increases, natural gas charges fell by 3.3 percent, and the household furnishings and operations index declined 0.8 percent.
If you believe the BLS and the CPI-U numbers, “Rent of primary residence” was up 5.4% YOY in June. Now, we need to compare this with inflation of everything else to gauge if rents are moving up higher, lower, or with the headline inflation numbers.. Realizing that we can’t compare this with the CPI directly (since that already includes shelter), we can look at the “less shelter” numbers as a comparison. CPI-U less shelter was up 5.0% over the same time period.
Rents are rising, no doubt about that, but the increases seem inline with inflation.
grim
So if we prject out .6% rise in rents in June then for the year 12*0.6%=7.2% rise?
the anti-New Jersey
http://tinyurl.com/mxohm
Metroplexual said…
Have any people on this blog noticed rents going up?
7/26/2006 02:41:09 PM
In Hoboken, people have reported up to 10% increases in rent in situations where rent control is exempt, and nothing is tying the hands of the landlord.
Anonymous said…
Since I am renting, by choice, which the “newbie” home “owners” can’t seem to understand, they will later :) can tell you that the rent I pay is still 1/2 of what it would cost me to buy the house I rent, using a conventional mtg. with 20% down.
I feel the same. Former “real homeowner”. It makes no sense buying this bubble. The houses that we are looking at are asking 500k. If we put down 200k with a 15 year fixed mortgage, (that’s right a 15 year fixed not a 40 year), it would cost us approx $3,500 per mo., mtg, tax, ins….not to mention maintenance!!!!!!! Well, we rent a beautiful apt for $1,500, saving $2,000 a month. Instead of owning an asset that will go down 30-40%, the 200k is earning 5.5% a year. The total difference between what we are saving monthly plus interest gained is to the tune of 35K per year!!!!!!!! Now some realtor will tell me that I am missing out on the tax deduction!!!!!!! See you in 2008-2009!!!!! We’ll be bidding 325-350k for the same 500k asking price.
Rents in Brooklyn are running up at least 10 percent this year in prime neighborhoods. It’s a sharp jump after several years of stagnant rents.
I agree it’s still cheaper than buying. And I agree it doesn’t make sense to buy yet. But that doesn’t make it easy for middle class families to come up with the $3200 for a two bedroom apartment in a decent school district.
If you live in New Jersey, and you remain in your rental, a 10% rent increase is excesive. In this case, you go month to month, pay the old rate, then contest the new increase. Your landlord will want to negotiate, or go to court. THe courts are likely to work with you and the landlord to come up with a “reasonable” increase.
Now, if you are moving into a new rental—then you are screwed.
“But that doesn’t make it easy for middle class families to come up with the $3200 for a two bedroom apartment in a decent school district.”
Am I missing something? Who would pay $3,200 to live in Brooklyn?
There are about 1,000 nicer places to live for far less money.
Another measure of rental price increases on new rentals:
Between April and July, median rental listing prices on NJMLS in Bergen County increased from $1700 to $2000 p/month or about 18%, while inventory increased from 1,062 units to 1,220. I believe some of the listing price increase and inventory is due to some sellers trying to get high rents to cover high costs, after failing to sell.
JAY
Rents in Brooklyn are running up at least 10 percent this year in prime neighborhoods. It’s a sharp jump after several years of stagnant rents.
Even in Bed Stuy, East NY, and Bushwick a one bedroom apartment is at least $1,500 a month.
The only places where you can find a one bedroom for ‘near’ $1,000 a month in Brooklyn is Canarsie, Flatlands, or Brownsville.
Every other neighborhood is yuppie or hipster central (including Bushwick) where you need to be able to spend over $2,000 for anything larger than a tiny studio
{{Am I missing something? Who would pay $3,200 to live in Brooklyn?
There are about 1,000 nicer places to live for far less money.}}}
For a two bedroom you would have to move to PA to find anything for much less than $3,200 a month.
And don’t forget that in this market, landlords want 3-6 months rent upfront and you need to pay a brokers fee of 15% of annual rent.
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I will take all these posts at face value, although it strains credulity.
Anyway, real estate is not at a point of long-term equilibrium. Obviously we are experiencing a short-term spike in affordability that will be addressed either by pricing [purchase and rental] or else incomes. If you are in trouble, then you were likely living beyond your means anyway, and tough noogies.
I will say that clearly the apparel markets has been bearish for quite some time. I have recently been able to find some jeans at Bergdorf-Goodman, normally priced at $700+ for only $506. I know that some of you consider me a peasant, but I do consider my frugal qualities quite an important characteristic.
After selling in 2004, I rent one-half of a two-family house. My lease was just renewed, and the rent went up $25, less than 2 percent. Heat and hot water are included in the rent. Hard to imagine that rents can climb much, with all the empty condos out there.
I used to buy my jeans at Gap for $10 marked down from $50. Now I buy at Express for Men at $20 when marked down from $70….. a huge 100% increase in my yearly budget.
Guess if I am lucky to be a trust fund kid on my next life, I can get $300 jeans.
Anon 9:53..what the f are you smokin? Pa for less than $3200 a month?
In PA…1,200 to 1,400 SF beautiful townhomes in great school districts are $1,200 a month. If you have no kids, you can get one in a less-than-perfect school system for $1050 including utilities, 5 miles from the NY train. You are a complete imbecile. Stop spouting nonsense and read the online rentals.
Sorry to be so blunt, but clearing bullsh*t requires a shovel.
Pat