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That is true...but the NYC market is driven by th GLOBAL market, and not just the local market. As someone who has taken economics, you should also be well versed in supply and demand, and therefore should be aware that simply saying prices should be some multiple to be healthy is nonsense. Furthermore, you should also be aware that what may have worked for the past 5,000 years may not work today and may not be applicable at all.
Nobody can forecast whether prices can be sustained or not in the longrun..this is all our best guesses and based on historical data that may/may not represent the future, however what we can say is that prices are still being sustained in NYC, and no crash has happened as of yet. What we can also say is that Global demand has remained quite strong for housing in NYC, which has supported pricing in the city, and increased it in many cases. We can also say that NYC is now growing in population, and demand for housing, especially "affordable" housing, is escalating exponentially, putting further upward pressure on rental prices, and providing some support for home prices as well.
As someone with an economics degree, you should be aware of all these things. Where did you get this degree from? The economic principles are tried and true, but real life takes into account a host of other variables, intangible and tangible, that are not accounted for in these formulas. Oil prices should be at $50 a barrel, the stock market should really be about 8,000 points, gas should be around $1.75 a gallon, a 2bedroom apt in the upper east side should be $1,400, but this is not the way our society functions. There are other factors that affect demand and pricing that is not accounted for in your economics class....and these factors are what are driving and sustaining pricing on a host of commodities..and will continue to do so for the forseeable future.
^^
Time will show you exactly what I am saying. The same thing happened back in the 80/90s run up in prices and a HUGE market correction took place. Those who do not learn from history are doomed to repeat it. That is all i can say about it for now.
PS
Oil prices right now have NOTHING to do with supply and demand. Demand is WAY down. This is because of inflation. I won't go into that though, its off topic. Check the business forum, there is tons of info on why prices are so high for goods/gas etc.
I agree 100% Pete..but unfortunately..these Tenants are like the mob and Unions...it will never happen. It's all about the money for them.
It's all about the money for the landlords too--it is a business. In general everyone wants as much for themselves as they can get. There can be exceptions. I know someone who's landlord never raises the rent. This is a large building in a nice neighborhood and they pay like 850 for a two bedroom, two bathroom apartment. I think the situation can also be different if the tenant and landlord share the same house. Then people are more likely to see each other as human beings and be more understanding about the situation of the other. But in general, the landlord and tenant don't know each other very well, and don't care that much about one another, and each wants the most money possible in their pockets.
Wild: I remember the housing bust in the 90s...but what has occured since that time? Prices have escalated monumentally because the demand has outstripped supply. If you never sold in 1993...you would be sitting on HUGE gains....what's the moral here? Yes they go up and down..but the longterm trend is strong price appreciation that is fundamentally disconnected from the basic economic principles that you have discussed. The city is unique that way...it is not just a local economy..but Global in every sense of the word. A downturn in our economy may coincide with huge growth in South America, Europe, wherever..suporting demand in NYC..but not Kansas City.
Regarding other commodities like food, oil, etc..I agree that right now oil and other commodities have nothing to do with supply and demand...that is exactly my point! You cannot base pricing on simply demand vs supply, as there are other variables that effect pricing...so the models do not apply.
I agree that time will tell..but if you look at the early 90s, you would know that if you bought at that time, when things were bad, or merely did not sell, you would be sitting on huge gains today....due to demand/supply, and a host of other factors that continue to escalate prices well beyond your economic charts.
Pete I totally understand. LLs are about the money too..no doubt..but when things are so skewed one way....you have to wonder how long anyone can afford to maintain/operate these buildings. As I stated..we know what happened in the 70s the last time rent vs costs were so disjointed.....and that unfortanetly may happen again if changes to the rent stabilization laws are not done ASAP.
I understand Guywithacause, especially when my family owns like 200+ properties in Puerto Rico. I really dont think someone should be living in UES or UWS or any Manhattan for 800 dollars. I understand(a little) the rent control in NYC (Non in other places), but that would bring down the value of a building.
Hey Guy, how does the rent stabilization work, does it start when you lease? Or is the appartment for ever would be at the same price?
Don't landlords receive or have received tax abatements if the buidling is rent stabilized? That is a reason why some of them go into the program. I mean you can take the rental extremes in any case but for rent stabilization your apartment does have increases every 1 or 2 years depending on what lease you signed. If the landlord makes capital improvements in the building then that cost is passed onto the tenants. If the landlord has to renovate your particular apartment they can also past those costs on to you. It becomes part of the standard rent and remains their forever, even after the renovation has been paid for. Most rent stabilized apartments I know of go for about the market rent when you originally move in and the way that the market is, a lot of those apartments are becoming deregulated at a brisk clip, especially in Manhattan since the landlord can have the apartment removed from rent stabilization once it is vacated and it rents for over $2000. If the apartment is occupied it has to rent for over $2000 and the household income must exceed $175000.
The only positive that is generated from it, rent wise, is if you stay in the apartment for a long time and even then if the rental market falls you will still be paying the legal mandated rent, even if it is over the market rate.
I cannot answer all the rent stabilization questions...best to google it! Darkman..the increases are paultry..lets be serious. Costs can be passed on....but they are limited in how much they can pass along at any one time..so thats not a great way either ..i.e. the LL renovates your apt for $25,000, and cannot pass along a 500 a month increase in your rent to pay for the costs.
I found that to be one hell of a bad post in fact. So grandma rents and apt for $97 a month...but screw the LL..too bad for him! And her friend has a bargain apt in West illage..AND HE DOES NOT LIVE THERE and illegally rents it out I presume? Another winner! Furthermore, the tenants prefer to leave the apts in the 1955 state because "they don't want to improve the LL's property"...but when rent goes up...all of a sudden it is "my home" and "I have lived here for 40 years how can they do this to me in my home." Meanwhile..they are paying $97 bucks a month..rent goes up 3% (aka 3 bucks)..and they are on the cover of every paper " LL's seek to raise rents on Seniors" and every one casts their stones. In addition, they are ONLY paying $97 bucks, and STILL won't do anything to their apt...you would think with virtually free rent they would at least make the place habitable, upgrades, new appliances...they have been living free after all. But nope...why should they? Screw the LL....right? It's not mine after all right?
first of all lets stop with the $97 bucks because there are not a lot of people in that particular situation, its a rarity to find somebody not in public housing paying these paltry rents unless you can show me some stats. and senior citizens who live in rent stabilized apts are under the SCRIE program, google that. and why would i make improvements on a property thats not mine, so when i eventually move, i have to return it to the original condition?
Quote:
Originally Posted by Guywithacause
Let's face it...whether you want to admit it or not..if YOU were the LL and you have $97 rents in NYC...would you be saying "Oh well, that's just how it goes." Nope...you would realize that it is grossly unfair...you are not looking to get rich..but paying a fair share is..well..FAIR. The reality is that median rents in the city are about $850 bucks..whether you want to agree with that or not, or somehow believe that's not really true or not really accurate is your problem.
let's be honest, can the LL get rich on "what's fair"? cause "what's fair" is not market rate.
Quote:
Originally Posted by Guywithacause
The assault on affordable housing is ludicrous...as people TODAY have a median rent of $860..and in some cases $529 like Spanish harlem. Yes if you want to live in Chelsea...you are gonna pay more..but across the city...housing IS reasonable and downright cheap. Don't think these super cheap apts are available..think again..as the poster said "One granny dies...her kid is getting it." So yet another person/generation will happily rape the LL..and no doubt not put a dime into the apt "cuz it's not his" and when rent goes up another $3 bucks..he will be the first proclaiming "This is my home...this is unfair and the LL is getting rich off of us."
if they have secession rights, then problem's not with them, its with the laws in place.
Quote:
Originally Posted by Guywithacause
Let's be real people...when the shoe is on the other foot..you would be having a different opinion. Rent stabilization was a good thing...but how can you possibly assert that $529 median rents in East Harlem, or $850 median rents in NYC is healthy, normal, good for the city, or for anyone besides those taking advantage of the system?
if rent stabilization is not a good thing, then what is? and if you don't know what should be a good thing, then why attack the issue?
__________________
"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
Unfortunately there must be ALOT of people in that situation..how else do you explain a median rent in NYC of $850 bucks? Spanish Harlem $529?!! Scary..very scary how many people are paying paultry rents that would be considered fair in Appalachia..but NYC? Wow.
Regarding improving your property...when you are paying $300 a month in rent...why would you not improve it..I thought it was YOUR home? After all when, the rent increases 3%...everyone screams bloody murder because "it's their home." If I were a LL I would be less inclined to raise rents at all knowing a tenant takes pride in their space and has spent the time/money to improve it..which adds value to me AND to them..they are the ones living their after all...you live in a better place that you can enjoy for as long as you are there..which is 2, 3 or more generations at this rate. ANd if you think any LL is gonna make you return the premises back to its 1955 condition...you are sorely mistaken.
I believe fairness is market rate..which is how much the market will bear...that is how everything is priced in our society..cost versus benefit. If it is not worth it to people, the price comes down to a new equilibrium, and vice versa...there is no other fair measure. What is happening now with rent stabilization is not fair, but a greatly skewed and abhorrently low rent, so low that median rents in NYC is $850!! Clearly..something is wrong here.
Yes secession rights are part of the laws, and I really have no problem with them at all. The problem I have is a secession right on grandma's $97 rental so that you also pay the same $97. Any reasonable person should have a problem with that. Again...I am being quite reasonable.
As I have stated, any system that has median rents at $529 anywhere in NYC in 2008 is not a good sytem..any reasonable person would not agree. Do we need to do away with rent stabilization. Nope...do we need to fix this broken system...YES....that is fair and reasonable.
Unfortunately there must be ALOT of people in that situation..how else do you explain a median rent in NYC of $850 bucks? Spanish Harlem $529?!! Scary..very scary how many people are paying paultry rents that would be considered fair in Appalachia..but NYC? Wow.
Regarding improving your property...when you are paying $300 a month in rent...why would you not improve it..I thought it was YOUR home? After all when, the rent increases 3%...everyone screams bloody murder because "it's their home." If I were a LL I would be less inclined to raise rents at all knowing a tenant takes pride in their space and has spent the time/money to improve it..which adds value to me AND to them..they are the ones living their after all...you live in a better place that you can enjoy for as long as you are there..which is 2, 3 or more generations at this rate. ANd if you think any LL is gonna make you return the premises back to its 1955 condition...you are sorely mistaken.
I believe fairness is market rate..which is how much the market will bear...that is how everything is priced in our society..cost versus benefit. If it is not worth it to people, the price comes down to a new equilibrium, and vice versa...there is no other fair measure. What is happening now with rent stabilization is not fair, but a greatly skewed and abhorrently low rent, so low that median rents in NYC is $850!! Clearly..something is wrong here.
Yes secession rights are part of the laws, and I really have no problem with them at all. The problem I have is a secession right on grandma's $97 rental so that you also pay the same $97. Any reasonable person should have a problem with that. Again...I am being quite reasonable.
As I have stated, any system that has median rents at $529 anywhere in NYC in 2008 is not a good sytem..any reasonable person would not agree. Do we need to do away with rent stabilization. Nope...do we need to fix this broken system...YES....that is fair and reasonable.
aww come on.....me and you both know why median rent in east harlem is $529 dollars....look at the amount of public housing in that area. the median rent for the entire city would be a much higher number, and that is closer to the reality. what do you think the median rent for mott haven is...see my point?
maybe if i planned to live in the apartment until i dropped dead then yeah i would do things to it. but not if its a temporary situation. there would be no point for me to do that. and even if i did make improvements to my apartment, they would be cosmetic at best, because i really could not do anything else aside from new carpet/tiling/appliances/fixtures. and the LL will still complain about keeping up the exterior of the bulding, how much it cost to heat it, the cost of the washer/dryer electricity if the bldg has a laundry, and blah blah blah. so i really think upgrading the things in my apartment will really not make a big difference to the LL, except that he didnt have to pay for it.
fairness is market rate? the market rate fluctuates so much that you cant even gauge it....but this is what you want to call fair.
if your grandmother was paying $97 dollars a month in rent and legally turned the apartment over to you, would you ask the LL to increase your rent? because i find that hard to believe. i dont think any normal person would.
and back to the $529 rent....thats for east harlem...how many projects does east harlem have? count them. also you have to remember, a lot of new buildings are going as "market-rate" rentals.....so they're not included in the grand scheme of things.....so an old crackhouse gets knocked down and a new condo gets built in its place, or a 3 story building gets 3 stories added on and the whole bldg turns co-op....thats 1 less rent stabilized building off the map. another point is, east harlem is one of the oldest neighborhoods in the city. so you probably even have rent-controlled apts there, which are a rarity. older people with stake in the neighborhood = more chance of them being a rent controlled or rent stabilized tenant for many years.
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"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
Last edited by SeventhFloor; 05-18-2008 at 02:06 PM..
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