Walker Whiteside

I mainly do rentals in my area, but a quick look at my deal flow has revealed a question that I would like to get feedback on from other members. I

In a normal year I would do a few "private owner" rentals a year. These are owner occupied/primary residence cooperative units that would normally never come up for rent. The normal disposition of these units would be to sell to another owner occupant. Historically they would only come up for rent due to unexpected events that would be resolved within a year or two as that is the limit that most buildings allow on renting a unit. Some buildings have never allowed sublets, but are now doing special arrangements for 1-2 years due to overwhelming demand from the shareholders

Most buildings in the area limit owners to no more than 2 years of renting before they are asked to move back in or sell. Anyone familiar with coop buildings will understand this.

As of the end of the third quarter I have had a 35% increase in the number of these special rentals. As soon as I realized this I began to look at the possible effect of these not coming to the sale market. The inventory of for sale units in my area had risen in Q1 but fallen 7% by the end of Q3. I can’t help but think that this is only due to owners giving up on selling or not even bothering to list for sale and just renting to “ride out the market”. That phrase is used by all of these owners. But if everyone is ‘riding out the market’ that means that they all have to ride back into the market at the same time.

I was curious if any other members are seeing similar trends as this just seems to me to be delaying the inevitable. Even if the market seems to be improving in a year, all of these owners are going to pile back in the market at the same time which will depress the prices anyways.

Let me know your thoughts!

Never before in my time in Riverdale as a rental agent have the amount of choices and prices been so favorable for the would-be renter.

A huge convergence of events has made this possible.

1. obviously the economy has many people on the fence about making a move or upgrading to a larger apt. This has kept the rents a little bit lower overall as most landlords raise the rent less on continuing tenants then they do on a new tenant. So without those larger bumps in rent pushing all rents higher, they are staying the same and dropping as well

2. the influx of new hires at manhattan financial firms did not happen this fall. Normally I would have 15-20 first year employees at the services firms. They would generally make 45-55k a year which rules out Manhattan for them. So they find Riverdale with the large apartments and rents that make sense with their beginning salaries. This did not happen so those units are still vacant which is discounting the overall rents.

3. Manhattan college opened up 2 new dormitory buildings on campus this fall. This completely emptied out 3 large groups of townhouses that had been leased by the college. The built in clients for these units are now on campus so they are all vacant. This drops rents as well since they are bulk vacancies.

Normally just having one of these events happen in the neighborhood would put pressure on rents, but having all 3 is the perfect storm for any new renters.

Prices have dropped and more and more owners are covering the fees as well so take advantage now while everything is in your favor

I can get you info on all of these apts and help you view the whole rental buffett that is going on in Riverdale

For the benefit of the new renter coming to Riverdale, I will keep updating this list so you know what is available to rent in New Construction.

Keep in mind that these will be some of the more expensive rentals, but they offer something that did not exist it Riverdale until just the last 2 years or so. New construction apts generally have high end finishes and appliances, laundry in the unit itself, and some kind of workout facility.

The list is short now, but it will grow as developers take a hard look at the numbers and need to cover their debt service.

Cambridge Mews--

This one is renting their 3 bedroom units right now. The deal is not too bad at 2800 per unit.

Latitude Riverdale--

This one is official but no units have been released. They will begin renting their studio units once they are finished. These should be available before the end of the year. The rent rate is 2100 per unit. That is very high for the area, but they are unique to this development so there will be takers eventually.

I will continually update this list to keep new comers informed. As always you can email me for more information and to get a showing as well.

Riverdale came late to the out of control run up of this decade. We really did not start drinking the cool-ade until around 2003. Now in 2008 we have finally begun to feel the hangover. Oddly the area held up well until the summer of 2007. From there the downward march began. This is not to say that we are falling off a cliff, but the price adjustments are happening as they rightly should be.

Sale prices have been adjusted about 10% on average and since September of this year, rentals have quickly followed suit. If you are a prospective renter than this is your early Christmas present. It has been about 4 years or so since this many owners have offered to pay the brokerage fees, making their apartments NO FEE.

This is a great boon for renters as the selection is high and a very strong applicant actually has a little bit of bargaining power with the rents.

Even with this drop in sale prices and rents, the Riverdale area will drop a little more. I did a historical norm worksheet and will post the numbers in my next item. Based on those numbers the market will drop about another 8% to be back in line with historical norms for the neighborhood.

Whether or not the norms ever return or if the neighborhood has made a permanent cost shift will remain to be seen.

Also look for my continuing updates on which new condo buildings are switching to rentals from sales. This has many ramifications for Riverdale so keep an eye out for it