Living in Manhattan, I spend about 20% of my salary on rent every year. When I spent five months unemployed, the rent didn’t fall. Pulling together such a large sum every month was a constant scramble of unemployment checks and odd-jobs.
But the tides are changing.
If you live in California, a sand state, or Motor City, then you’ve already seen real estate prices fall as much as 50%. But in some areas — especially greater NYC– real estate has been stickier. According to Tyler Cowen, the median price in Westwood buys you 100 median-priced houses in Detroit. For the NY home owner, that’s been good news. But for us renters it’s been brutal.
According to a number of industry experts, however, many of the more resilient areas are poised for a correction. This is by no means good economic news. But for embroiled job seekers it will take some pressure off of the wallet. Conservative estimates put NYC housing 15% lower in a year. Pessimistic ones ratchet the decline up to 45% over two years.
Anecdotally, it feels like this has already started to take hold. Our landlord lowered our rent 8% without a whole lot of prodding. In the neighborhood, comparable properties are renting for as much as 15% less than we pay already. For high-rise buildings and newly-rentable condos, it’s not uncommon to see the first 1-2 months of rent free with a one year contract.
I’m rooting for the housing market to stabilize. But in the mean time, why not take advantage of falling prices?
