May 2009: Surprise! Vacancy rates plummet! Is this a recovery?

One of the biggest factors helping clients to get the best deals in this market has been the increasing vacancy rates. By February 2009, vacancy rates had practically doubled the year before, to just over 2%. While a 2% vacancy rate in any other city is a "severe housing shortage," for New Yorkers, accustom to a very tight housing market, a 2% vacancy rate means relative bargains, with low-end prices down approx. 6% over a year ago, and higher-end properties down much more. Now a 6% drop may not sound like, much, but compared to the typical 5 - 10% increase year-over-year, the difference between a drop versus an increase is much more substantial. In short, New York City has been "On Sale!"

We've been seeing a slow but consistent strengthening in the rental market since February, but with rents beginning to increase, there has been a sudden surge in demand throughout May and June. The May 2009 rental report (below) reveals a dramatic plunge in vacancy rates from 2.28% to 1.72% towards the end of May. Essentially, as bad as the economy may appear to some, people are moving to the city and taking advantage of the lower rents en masse! The very best deals have been snagged in Feburary and March but there still remain some great deals out there. I've had some clients waiting since January for rents to drop further, and they now realize that they've "missed the boat." It's not too late to grab a great deal, however, and of course I still am able to bring my clients to the very best values in the city regardless of market environment. The following rental report can be used as a guideline for recent changes in rents...

http://www.citi-habitats.com/media/pdf/2009-5-mra.pdf