Sunday, September 2, 2012

Topics: Rent (Again)

Yesterday was the first of the month, and you know what that means - rent is due.  All over Brooklyn you see U-Haul trucks, new leases, fresh paint, moving boxes, sweaty hipsters, old records, and new Ikea furniture.  September is a big month for rent, something we all know is "too damn high", but a reality that's the backbone of many of these multi-family properties.  While people marvel at recent townhouse prices in Crown Heights and Bed-Stuy - 4 of which you'd need to amount to what a single Park Slope townhome converted into condos like 33 St. Marks Avenue sold for - it's worth keeping in perspective what our rents amount to.  Metro New York ran the story a few weeks ago about New York City ranking high in the country for adults moving in with their parents, as if it were some defeat.  In developed nations all over the world, lots of perfectly respectable folks live with their parents essentially until they're married.  So it's kind of a new normal in this country in the first place that we're working backwards from to assume adults living with their parents is something super telling about the elephant in the room...

This girl turned the woe-is-me of moving back in with her parents into balling outta control.  Tons of people work $9/hour jobs at sandwich shops and have dead-end romances to much less fanfare than her - and luckily she's got a nice big home in New Jersey to move back into in the first place.  We're still hesitant to say whether this speaks for 20-something's at large.  Their self-poll of her friends revealed a mere 3 out of 45 friends getting by on no parental support at all.  Nice job, if you can get it.  Her new rent of $500/month seems like a much more sensible figure to us anyways, compared to her previous East Village difficulties at getting by with $1,200/month for her bedroom in a cramped share.  Meanwhile, last month in Chicago, we saw $1,300/month 1BR rentals in a luxury building with a doorman, a gym, and a finished roofdeck with views of the skyline and the lake:

When's the last time you tried getting a 1BR rental in Brooklyn for $1,300/month?  These Chicago apartments would easily command double as much rent in Brooklyn, and it's not like these Chicago tenants are making half the money.  It begs the question whether Emma Koenig is "channeling her anomie" about some universal human condition, or something specific to life in the East Village on a low budget.  The NY Times extrapolates it out wide and goes on to point out some startling figures of rents over time:

Since 1970, income is stagnant while rent is up 75%?  Ouch!  54% of New Yorkers spending over 30% of their income on rent in 2010.  The majority of New Yorkers are indeed renters.  NY Times claims about 75% of folks in Manhattan rent:

And they report this weekend that these guys copped a convertible 1BR as a 2BR share for just over $1,800/BR in Manhattan...

For that same monthly amount, wouldn't you much rather be paying off the mortgage on a nice 2BR in a great neighborhood in Brooklyn?  What these guys are shelling out for rent also amounts to the mortgage on a 4-Family rental income property on a great block in Crown Heights, or an historic 2-Family fixer-upper in Bed-Stuy that could rent for $5,000/month that's still available.  For anyone with the funds to even possibly consider purchasing, the glass is still half-full.

People see some of the foreclosures from the crash that are rolling over in Bed-Stuy these days, and they ask us if we're worried.  Today's prices have surpassed some of the high watermarks from the pre-2008 bubble, so people wonder if there's another bubble going on now.  The key difference between then and now is clear:  people aren't speculating this time around.  The rents to support these new purchase prices have already arrived.  That's in addition to the $1M-$1.5M townhome market being completely gone everywhere else.  You heard it here first, people.  What's happening in Bed-Stuy & Crown Heights now is not a bubble.  You don't need to read the tea leaves to know that; just read the rental listings.

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