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New York City was hit hard by the pandemic when it landed in March. Now, four months later, the city is just starting to emerge from its Coronavirus cocoon.
The pandemic has had a dramatic effect on the New York City rental market, which unsurprisingly, is the most expensive city to live in New York state. Yet rents are now declining, not as fast as some tenants wish they would, but steadily.
According to Zumper.com, a New York City one-bedroom will cost $2,890 in June 2020, which is down -2% month-over-month, and down -1.7% year-over-year. A two-bedroom apartment is $3,210 in New York City, and that is down -0.3% month-over-month and down -5% year-over-year.
When COVID-19 began in March and April, New York City braced for massive impact. There were job losses, the social and economic shutdown, and every resident who could leave did – in droves. It resulted in vacancies climbing to record heights in the city. Vacancies hit 3.67%, which is more than double the 2019 amount and the highest vacancy rate in fourteen years, according to real estate firm Douglas Elliman.
The vacancy rate increase has meant that property owners must get creative with incentives to entice tenants to stay or move to their properties. Offering one-or two-months free rent is not unheard of; however, many property owners are still hoping to get a rent increase from their existing tenants. This is causing tenants to review their options and see if there are better, cheaper, rental units available that provide similar incentives.
One thing to keep in mind, the virus closed New York City for much of April, May, and June. Rental units were not able to be toured until June 22nd, so lease sign-ups have been at a record low. Once data comes in for July and August, we’ll have a greater understanding of how the rental market is bouncing back now that the state is in Stage 2, or even Stage 3, of reopening.
In the next few months, several potential issues will determine whether we continue to see a decline in rental rates. The first and most concerning one is whether we see a second wave of the virus. If so, vacancy rates will continue to rise as renters abandon their apartments and people move from the city. We’ll also soon learn the fate of the fall college year. Will students be returning to the city for classes or, will they be held exclusively online? If courses are online, then the thousands of rental units traditionally filled by students will be vacant for another eight to twelve months.
Much depends on how the city and state respond to evolving pandemic and whether they flatten the curve. The economy needs to recover, and if it does, rental rates will do what they have always done in New York City - go up. In the meantime, it’s anyone’s guess, but two things are for sure. If you are looking for an apartment in New York City you now have choice and incentives to lease.