High Market Rates =Trouble for NYC Job Makers
Wether I was living in Manhattan, outer borough or outside the city altogether I always kept track of rentals in the city being I always had family living in Manhattan and other boroughs. I have been back for a decade now and my rent is been as high as 75-80% of income to as a low of 45% (one yr.) of income.
My rental history is typical of most renters wether they live in subsidized apartments or not. On the latest figures from CNNmoney the median rent climbed to $3,380 in May, and the borough’s vacancy rate was 1.65%, according to a report by real estate appraisal firm Miller Samuel for Douglas Elliman Real Estate.
"Another way to think of it is 98.35% of the units in Manhattan are rented at any given time," said Jonathan Miller, president of Miller Samuel.
High costs and low inventory are making it tough to rent across the Big Apple.
Steadily rising rents are creating tension between landlord and tenants. "When new rentals surge, that means a lot of tenants are rejecting offers and looking elsewhere," said Miller.
But affordability can be hard to come by anywhere in New York City. The median rent in Brooklyn was $2,933, while rent in the northwest part of Queens was $2,597.
High churn is creating stress on the market, Miller said. "You have people scrambling, they want to be here in the city. There is job growth, there is a lot going on here. But the jobs that are needed to be filled are by people who can’t afford to pay the rent.” And this is the problem where the productivity and economics of the city get hurt. Imagine having jobs but you can’t get workers to come from another city to work for you because they can’t afford to live here.
Why not get workers already leaving int he city? That is just it, the working pool in the city is employed. Every job description would have its own pool of people that would be willing or are trained to do that job. The jobs that pay the most are having the workers which are part of what we call “gentrification” because they re willing to move anywhere in the city and either pay the asking rent or get help from the government to buy some run down property and make theirs or just have the company help them with the rent, deposit, etc. It’s been done for me so it happens. But those are highest paying jobs for companies that are willing to pay as much as it takes because they are in a business environment in which they can pass on the expenses to their customers.
All other jobs below the 45k a year cannot pass their expenses that easily to their customers and they depend on that working pool which is not well off or able to earn more for what ever reasons. That means that the companies which are the bread and butter for the city because they provide the bulk of the work force providing both stability and a good tax base for the government. Those are the business’ that cannot fill all their open spots and eventually they end up moving away to a place with a stable working force and reasonable taxes and workers that are not going to move away because they can no longer afford to live there. I don’t mean to imply that this high rent period does not affect companies such as Google and other in the high spectrum. They also have jobs un filled and in their case their potential employees have no where to move even paying $3500-$5000 for a one bedroom in Manhattan and the parts of Brooklyn which is not two hours away by train from Manhattan. Imagine all the incentives and tax dollars given to those giants to loose them to NJ or Atlanta, Ga. because their employees could not find rental in this market which is full at 98.35%.
When things go out of whack wether on a factory suddenly inundated with orders that it cannot fill or a city with a repaired reputation in which people believe that the streets are pave of gold all over again. Eventually the factory ends up loosing it’s customers because it can not fill the orders on time and in the city people realize that the streets are full of pot holes and murder, shootings are up even though graffiti is way down.
NYC has it’s up and down and when it’s up it never learn the lessons of the las time it was down so we live in a pendulum in which it has it’s up and downs never staying in one place.
Some people would say that’s good because NYC never stand still. People that say that are people that are never adversely affected by those pendulums’ movements. The fact is the city is not a clock with a pendulum and even though what goes up tends to go down it doesn’t need to crash down and that is usually what happens in NYC. When things change to coming down is not a normal landing but a crash.
Some people watching the trends are already seeing a monkey wrench. The problem is the people that are directly affecting the changes don’t see a problem charging what ever the market will bare.
Even the Saudis and their precious commodity of oil learnt that lesson after the oil embargo of the 70’s. They saw US and all major markets begin to conserve and make changes, They also learn that their unlimited supply of oil was indeed limited and charging what ever the market will bare made no sense. OPEC was born and quotas to control the flow and prices of oil emerged.
As time went on they saw the predictions of the experts come true. If they charged what their customers would pay because their customers had no choice eventually those customers would find alternate means because they had no choice. Now the Saudis rush to build the cities of the future, self sufficient and guess what? Not self sufficient in oil because at the present rate eventually there will be none. They are doing what others are doing of using the sun, the wind and new technology on batteries, etc., to make those new buildings and roads needless of oil by the time there is none.
That is a lesson developers and owners don’t see and they don’t care about seeing it. Plenty is not enough because everybody thinks about the time when we crash, when things go bad. The problem with that is the same as when they announce a powerful hurricane, what do people do? They hoard and empty the shells. A lot of people take more than they will ever use and others don’t get sufficient to last a period of no utilities and flooding.
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Why not get workers already leaving int he city? That is just it, the working pool in the city is employed. Every job description would have its own pool of people that would be willing or are trained to do that job. The jobs that pay the most are having the workers which are part of what we call “gentrification” because they re willing to move anywhere in the city and either pay the asking rent or get help from the government to buy some run down property and make theirs or just have the company help them with the rent, deposit, etc. It’s been done for me so it happens. But those are highest paying jobs for companies that are willing to pay as much as it takes because they are in a business environment in which they can pass on the expenses to their customers.
All other jobs below the 45k a year cannot pass their expenses that easily to their customers and they depend on that working pool which is not well off or able to earn more for what ever reasons. That means that the companies which are the bread and butter for the city because they provide the bulk of the work force providing both stability and a good tax base for the government. Those are the business’ that cannot fill all their open spots and eventually they end up moving away to a place with a stable working force and reasonable taxes and workers that are not going to move away because they can no longer afford to live there. I don’t mean to imply that this high rent period does not affect companies such as Google and other in the high spectrum. They also have jobs un filled and in their case their potential employees have no where to move even paying $3500-$5000 for a one bedroom in Manhattan and the parts of Brooklyn which is not two hours away by train from Manhattan. Imagine all the incentives and tax dollars given to those giants to loose them to NJ or Atlanta, Ga. because their employees could not find rental in this market which is full at 98.35%.
When things go out of whack wether on a factory suddenly inundated with orders that it cannot fill or a city with a repaired reputation in which people believe that the streets are pave of gold all over again. Eventually the factory ends up loosing it’s customers because it can not fill the orders on time and in the city people realize that the streets are full of pot holes and murder, shootings are up even though graffiti is way down.
NYC has it’s up and down and when it’s up it never learn the lessons of the las time it was down so we live in a pendulum in which it has it’s up and downs never staying in one place.
Some people would say that’s good because NYC never stand still. People that say that are people that are never adversely affected by those pendulums’ movements. The fact is the city is not a clock with a pendulum and even though what goes up tends to go down it doesn’t need to crash down and that is usually what happens in NYC. When things change to coming down is not a normal landing but a crash.
Some people watching the trends are already seeing a monkey wrench. The problem is the people that are directly affecting the changes don’t see a problem charging what ever the market will bare.
Even the Saudis and their precious commodity of oil learnt that lesson after the oil embargo of the 70’s. They saw US and all major markets begin to conserve and make changes, They also learn that their unlimited supply of oil was indeed limited and charging what ever the market will bare made no sense. OPEC was born and quotas to control the flow and prices of oil emerged.
As time went on they saw the predictions of the experts come true. If they charged what their customers would pay because their customers had no choice eventually those customers would find alternate means because they had no choice. Now the Saudis rush to build the cities of the future, self sufficient and guess what? Not self sufficient in oil because at the present rate eventually there will be none. They are doing what others are doing of using the sun, the wind and new technology on batteries, etc., to make those new buildings and roads needless of oil by the time there is none.
That is a lesson developers and owners don’t see and they don’t care about seeing it. Plenty is not enough because everybody thinks about the time when we crash, when things go bad. The problem with that is the same as when they announce a powerful hurricane, what do people do? They hoard and empty the shells. A lot of people take more than they will ever use and others don’t get sufficient to last a period of no utilities and flooding.
-*-
Developments in Queens and Brooklyn are becoming condos instead of rental apartments, adding to the inventory shortage. “Land prices have risen so much … the math doesn't work for rental anymore."Money.CNN
Low inventory also means less incentives for renters. "Concessions being offered by landlords, like free rent, have nearly evaporated."
And it doesn't look like price relief is coming anytime soon.
“I don’t see the narrative changing in the foreseeable future,” Miller,CNNMoney said. “It’s a very complex problem; a city can't grow if new entrants to the city can't afford to live there."
Adam Gonzalez
Adam Gonzalez
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