2.25.2007

More (depressing news) about the real estate situation in Manhattan

I take that back. This is only depressing if you're a renter. If you're a real estate developer, building owner, The Man, etc., this is terrific news!

The depressing news isn't news so much as corroboration for (of?) what I already knew. It comes in the form of an article from today's (Sunday's) Real Estate section of the New York Times, called "When Renters Reach the Breaking Point." it says, among other things, that people are either buying places or leaving Manhattan because the rent has become untenable. What I found most interesting/horrifying was the following:
In the last year, rents for market-rate apartments in Manhattan have jumped as much as 20 percent, or nearly three times the standard 5 to 7 percent increases seen each year in the last 15 years, said Fritz Frigan, the director of sales and leasing for Halstead Property. "Rents heated up so much that people said, ‘At this level, we’re better off buying," Mr. Frigan said.
Why are rents going up so rapidly? The article explains how low-rate mortgages drove a lot of people to buy condos in the city or houses outside it, and how a lot of rental apartments converted to condos to meet that demand. Now that that's no longer the case:
Then, by early 2006, New Yorkers who were scared about buying in an uncertain market flooded back into the rental market and found that there were fewer units to choose from. So by last May, the vacancy rate in Manhattan had shrunk to a record low of 0.43 percent. The vacancy rate was even lower in some neighborhoods, like Murray Hill and the West Village, and people were offering to pay more than the asking rents or to put down a year’s rent upfront.
I still don't know what my rent is going to be next year (have several months left on this lease), but this makes it seem unlikely that they won't try to raise it by at least 10%. In this rental market, a 10% raise would probably seem quite reasonable, but I already feel like I'm overpaying for what I'm getting, so it looks like it's time to move.

Another somewhat horrifying aspect of the article was the tale it told of a 37-year old woman who has been living in a rent-stabilized 150 square foot (if you count the sleeping loft she built) studio on the Upper West Side for the past nine years. Nine years, people! 150 square feet! And she's paid up to $1000/month for the space! A bargain! (Read those last two words with the proper amount of sarcasm.) 150 square feet is hardly enough room to turn around in, if it's measured counting the bathroom and sleeping loft.
For nine years, Candice Spielman, a 37-year old freelance television producer, lived in a rent-stabilized apartment on the Upper West Side that measured about 150 square feet if you count the sleeping loft she had built over her refrigerator and desk.

As she stretched her arms across a five-foot-wide section of the living space, she spoke about how she learned to tolerate the rattling in the walls when her neighbors watched television and how she saved room by keeping most of her belongings at her mother and stepfather’s house in New Jersey....

Sitting in her old place, Ms. Spielman described how she managed all those years. “You can never fully relax because you can’t sit down on a couch,” she said. “You’re always sitting in a straight chair.”

When she tried to rent something larger, she found most studio apartments with a similar amount of space cost more than $2,000 a month.

Luckily, the story has a happy ending. Because she's been saving her money on rent and investing wisely for all of these years, she managed to save $100,000, which was enough for a down-payment "on a $510,000 apartment, a 470-square-foot studio in the Cocoa Exchange building downtown." She "expects to pay about $2,500 a month for the mortgage and common charge." Reading that part was a good reminder about how I should really be saving more money, even though I couldn't live in a 150 square foot studio to do so. (For one thing, living in a 150 square foot studio would make having Shabbat meals with actual guests impossible. For another, I own too many books and don't have family in New Jersey to serve as free storage.)

In response to EAR's comment about organizing a tenants' group, we did sort of attempt to do that in my building, but it's hard. About half of the tenants are rent stabilized and have separate concerns from the market rate tenants. Since our tenants' meeting, many tenants have left because they couldn't afford the higher rents, and since nobody particularly likes the management and the apartments themselves are sort of falling apart (each one in its own special way, but still), there's little incentive to stay and fight the rent increase. It's not like the market rate tenants feel like they currently have a bargain. It's also not clear what leverage tenants would use to fight the rent increase.

I'm also not sure what legislative/community-wide action is workable. It's not like anyone is going to expand rent control or rent stabilizing laws right now. The Ariel buildings going up certainly helped gentrify Broadway a little further North than it was previously gentrified, but more condos don't directly raise the rent, and I'm not sure on what basis one could/should prevent developers from putting up more housing in Manhattan, on land that is already zoned for mixed commercial/residential, and assuming they aren't taking down historic buildings. I mean, it seems pretty clear, with a 0.43% vacancy rate, that more housing of all kinds is needed in Manhattan.

I think that the answer, at least for me, is going to be, as Avi suggested, to move into a doorman-less walk-up in a slightly less-gentrified area. (Really, all I want the doorman for is to let Shabbat guests in, but people find ways to make that work.) It might also be time to leave the Upper West Side vicinity or Manhattan altogether. Hell, maybe even New York.

Finally, about EAR's comment regarding increased graffiti on the subway and what that might say about the changing neighborhood: that's due to new graffiti technology, not more graffiti happening. When it was just spray paint, they washed it off the cars every night. Now, the graffiti "artists" are using hydrofluoric acid (a.k.a. "etching acid"), which can't be washed off. According to the NYTimes article linked to above (and here), all subway cars produced since 2000 have Mylar-coated windows that are resistant to etching acid, so you'll only see it on the older cars. I guess the fact that the graffiti can't be removed easily encourages more of it, though, so maybe it's now "more graffiti" in addition to "new graffiti technology" issue. In any case, it's not directly connected to changes in any particular neighborhood. I still see people cleaning regular spray paint graffiti off of things in Central Park all the time.

And with that, I'll wish you all a good night/morning. If you're in New York or environs, enjoy the snow!

4 comments:

David said...

I'm sorry that this is being forced on you, but if you ever decide to leave NYC, there's a nice community about 224 miles away in a Southwesterly direction which would love to have you...

Half Sigma said...

"Because she's been saving her money on rent and investing wisely for all of these years, she managed to save $100,000"

There's been a discussion about this over at my blog.

We concluded that she's probably making less than $50K/year in salary, so there's no way she can afford that $2,500 without her parents helping to pay the mortgage loan payments. And the article implies that most of the $100,000 came from her grandparents. It's easy to save $100,000 if your grandparents just give it to you.

ALG said...

Thanks, half sigma! It makes me feel better that you and your readers concluded that she couldn't have saved $100,000 in ten years on her own, because at my current salary and rent I'll never be able to save that much either. (I'm happily working in the non-profit educational world--no complaints there, but I can tell you that I'm not raking in end-of-year bonuses like my more moneyed aquaintances.) I will also probably never be able to afford $2500/month mortgage payments, and even if I could, I certainly wouldn't spend them on a studio apartment in Manhattan. Sheer madness!

I wasn't overly impressed with the snarky attitude some commenters took to her personal life your website, though. She is "fair game" because she agreed to be interviewed, and it could have been worse, but it all got a little bit too personal for my taste.

And I still don't know how she lived in 150 square feet for nine years and didn't completely lose it.

Half Sigma said...

The speculation about her career is necessary to really understand the article.

Did she wisely save her money, or did her parents finally take pity on her and decide to help her out?

Of course, when she was interviewed, she probably wasn't considering that people would be talking about her at blogs. And she will probably read this stuff if she Googles herself.