Rental Mayhem for Real Estate Halloween
The winds blow through social distancing streets. Trees represent filed patrons waiting to enter the world. Apartments echo an empty presence.
Up and down the streets of Manhattan birds chip. It’s a beautiful fall day. Despite the cool temperature and wonderful ambiance no people stand on their porches. Apartment listings tripled from last year.
A lone smoker looks down the street. Despite rays of sunshine there is a dark presence setting in.
She knows something.
What does she know?
Her hair resembles a burning match…but it’s a match that looks like it’s about to go out.
The real estate market through her MLS portal pulses an ominous glow. She scratches her head. She’s trying to decipher a puzzle with no solution.
Her market has the highest figure of vacancies in recent history. She is running out of ways to make money in Manhattan, Brooklyn and Queens. She continues to mark down her listings. Week after week she inches it closer to a record setting loss.
She cannot seem to draw a mouse to her cheese.
No matter what price drops she does it doesn’t bring renters to apply.
“I am listing for less than $3,000 in 2020. No one will put in an application. What the fuck.”
She pulls out a cigarette. Her rage could light it up. Instead she pulls out a lighter.
She sucks the cigarette until the ember lights up.
The drag on her cigarette draws solutions of poison. Bars and restaurants operate at limited capacity, theaters and museums remain closed. Everyone she knows is still working from home. Downtown is the place to watch corona executions now. No one frolics about times square to have a good time.
Last week she thought about relocating to other cities. But then she found out it was the same. Boston, Seattle, San Francisco and other major cities are where high income rents are plummeting.
At the beginning of the pandemic she knew the market would soften. After all it is a pandemic. She’s a professional. It’s no surprise market cycles happen…but after 8 months?
Never in a million years would she think cities on both coasts would maintain double-digit dips in their rental rates for the entire 2020.
Her fire red hair waives in the cool breeze of Manhattan. She is looking for an ember of hope. She needs something to keep her warm in this environment. She types away on her lap top. Then she looks at a new research from Apartment List, a national platform for apartment listings.
“Let’s see…overall, average rents in 30 central cities dropped more than 5%. Okay…Lemme see here…average rents in the suburbs of those cities inched up half a percentage point?”
She sits down on her porch. Puts the cigarette down and picks up her latte. The swirls in the cup give the same disorder her mind is going through. There is no form of sense.
“So in some cities, rents are going up?”
She takes a sip of coffee.
She clicks through the report.
She scans the highlights.
She writes a few strokes on her new surface pro. The screen resembles a note paper. She throws down the stylus.
It seems growth is concentrating in smaller cities. How? She ponders. There also appears to be something going on in suburban areas within the 30 metros. According to her Apartment List research, suburban rents are outpacing city rents in 27 out of 30 major metros.
“I need to fact check this. Let me make sure this isn’t some rogue people leading me on.”
She pulls up another screen on her surface pro.
“Where does Apartment List draw its research from?”
She keeps going through the screens and clicking on hyperlinks. She stops and circles the screen with the stylus.
“Oh. That’s credible.”
Apparently Apartment List draws on data collected by the Census Bureau as well as internal data from apartment listings.
“That’s a good way to confirm a market trend.”
It’s less a mass urban exodus. It appears to be a redistribution of people. These people normally flow into these places for jobs and amenities. These days not so much.
“Let me see what this report says.”
Her red hair appears to ignite with interest.
In Charlotte, average city rents dropped between January and September (-2%) but rents in the suburbs increased (5%). In Dallas the trend is similar. The rents are down 2% in the city, up 2% in the suburbs.
The biggest gap to sear a gash in the wound of today’s bleeding artery of rentals was found in Seattle. Suburban rents increased barely past 1% but urban rents decreased by -7%. San Jose, near Silicon Valley, posted a massive decline in suburban rents. San Jose took a -11% plummet with a nose dive of city rents at -6%.
Explosive growths before the pandemic seem to add fuel to a rebound in some areas.
“What’s this? This doesn’t make any sense.”
Our fire beholden realtor types on. She opens a screen.
Her face turns aghast.
“Well doesn’t this defy expectations?”
Las Vegas registered increases in both urban and suburban rents. The increase came despite Nevada’s nearly 13% unemployment rate.
“How in the world can a place second only to Hawaii in unemployment be posting gains??? There’s a market looking to have a bubble.”
Our realtor’s fire begins to turn into an ember. Her latte cools off from the nonsense of Las Vegas.
“What cities have suffered the worst decline?”
A fire of interest begins to burn a bit brighter.
“The deepest rent declines are…Boston (-8%), New York (-13%) and above all San Francisco (-18%). Whoa, suburban rents took a tumble.”
The fire seems to blur from red to maroon. The latte looks like a confused milk drink. The cigarette ember just falls off.
What a bust.
Housing shortages are so severe the suburbs function like outlying neighborhoods. Without summer influxes from recent graduates, a lot of metros are registering record-breaking vacancies.
“Looks like the New York area vacancies could rise as high as 6%. If this holds right it’s going to be a 40% increase in vacant units.”
Our fire head’s fire starts to smolder.
She lives here.
“At the height of the Great Recession, vacancies reached about 3.6%. This difference is literally hundreds of thousands of units. What am I going to do to rent a unit?”
She knows. She needs to unload her investment properties now and stack a bunch of cash.
To your Knowledge Success!
About Christopher: Christopher Knight Lopez is a Professional Entrepreneur. Christopher has opened over 7 businesses in his 14-year career. Christopher’s purpose is to take advantage of various market-driven opportunities. Christopher is a certified Master Project Manager (MPM), Master Financial Planner (MFP) and Accredited Financial Analyst (AFA). Christopher previously held his Series 65 securities license examination. Christopher also has his General Lines — Life, Accident, Health & HMO. Christopher has managed a combined 286mm USD in reported Assets Under Management & Assets Under Advisement. Christopher has work experience in 29 countries, raised over 50mm USD for various businesses, and grossed over 8.0mm in his personal career. Christopher worked in the highly technical industries of: biotechnology, finance, securities, manufacturing, real estate, and residential mortgages. Christopher is a United States Air Force Veteran. Christopher has a passion for family, competitive sports, fishing, martial arts and advocacy for entrepreneurs. Christopher provides self-help classes for up-and-coming entrepreneurs. Christopher’s passion to mentor comes from belief that entrepreneurs need guidance. The world is full of conflicting information about entrepreneur identity. See more at www.christopherklopez.com.
Disclaimer: This information is not meant to be a form of investment advice or financial advice. Do not apply this situation to your own personal circumstance. Various risks include: business risk, investment risk, political risk, and other risks. This information is for informational and educational purposes only. Please do not reach out to the author for any investment strategies or philosophies. Please consult your own financial advisor or legal advisor for your own circumstance. Not a recommendation or endorsement of any kind.