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For a brief moment, New York City was (at least to New Yorkers) affordable.
Strict social distancing protocols and the shift to remote work briefly pushed many New Yorkers to search for a reprieve in the suburbs, with historically-low interest rates giving some a golden opportunity to root themselves in markets where they could get more bang for their buck. Those who stayed behind got an opportunity too — access to diving rent prices and other perks as landlords grappled with high vacancy rates.
However, rents in the city have exploded to historic highs over the past year with the median rent in Manhattan reaching $4,033 in November. Many political and real estate leaders said the boost was a simple result of supply and demand, as New Yorkers returned home.
However, Curbed writer Lane Brown wasn’t buying it.
“The pandemic caused an exodus of such proportions that building owners were forced to cut rents to their lowest levels since the bad old days of 2011,” Brown wrote in his Jan. 27 expose. “But then a miracle happened. (Or at least one seemed to!) Not only did New York’s expats return; they came — in the eerily identical words of the real-estate industry and the credulous reporters who cover it — ‘flooding back.'”
Brown compiled U.S. Postal Service’s database of change-of-address request, Census Bureau, New York City Water Board and other third-party data from rental platforms and real estate related businesses, like moving companies, to get an idea if New York City’s current rental woes were indeed due to a miraculous population boom.
What Brown found was evidence of a steady net loss since 2017, resulting more than 3 million fewer New Yorkers. More than 300,000 of those people (317,107) left between March 2020 and December 2021. Another 97,794 left in 2022 alone, according to the U.S. Postal Data. Although the USPS’s data was “admittedly imperfect,” Brown said U.S. Census Bureau data has showed a steady shrinking of New York City’s population since 2016.
“It agrees directionally with the Census Bureau’s estimates, which show that the city’s population has been shrinking since 2016, and it correlates with other metrics such as declines in public- and private-school enrollments (down 9.5 and 3.6 percent, respectively, since 2019), subway ridership, and restaurant patronage,” the article read.
“If there had been any drastic surge in return traffic to New York in 2021 and 2022 — if all of those real-estate experts were telling the truth — it should’ve registered at least a blip in the USPS stats,” it added.
Brown came to conclude that New York City’s rent rebound was the result of several things:
- Warehousing — a practice where landlords allegedly keep blocks of unrented units off the market to create scarcity and push up prices,
- New York State rent control laws that limit how much a landlord can raise rents on rent-controlled properties. Landlords say these laws prevent them from earning the capital to make renovations and relist their units, and
- Rental management software, namely the currently embroiled RealPage, that allegedly encourages landlords to price gouge renters and artificially boost rent growth.
“Look, it’s possible that my suspicions are baseless and all of these buildings are full. Maybe their tenants really did come flooding back to New York last year,” the article ended. “Maybe some are former couples who broke up during the pandemic and needed twice as many apartments and others are remote workers from Milwaukee or Akron evading city taxes by claiming residency in their old states.”
“Maybe they came without any furniture so they didn’t have to hire movers,” it added. “Maybe they’re homeschooling their kids, taking Ubers instead of the subway, avoiding restaurants, and abstaining from all other activities that would expose them to public data collectors. Weirder things have happened here.”
The reaction to Curbed’s article was split, with some commenters calling it a full-blown conspiracy theory.
“Shame on @Curbed for giving this conspiracy theory pixels,” wrote Jesse Strauss (@Strauss_Law). “Rents are high in #nyc because we’re not building housing, full stop. #yimby.”
Shame on @Curbed for giving this conspiracy theory pixels. Rents are high in #nyc because we’re not building housing, full stop. #yimby https://t.co/xwxyvGkgEA
— Jesse Strauss (@Strauss_Law) January 31, 2023
“Here’s my question Lane Brown: Why write a story like this? What is your objective? Such a painstakingly rigorous pursuit to find something negative to say about positive news,” added reinacarmen 33. “Searching USPS records? Sounds like something Christopher Rufo (creator of CRT panic) would do, in his fanatical push for a fascist dystopia.”
Another Twitter user, real estate agent @LuisSuarezNY responded to Curbed with a link to The Real Deal‘s response piece that attempted to poke holes in Brown’s article by highlighting additional data sets and market factors, such as international move-ins, the impact of college students on demand, several years of once-in-a-lifetime market shifts, and for-sale housing pressure that’s keeping renters put.
TRD also pushed back on Brown’s warehousing theory, saying, “Lane surmised, owners are holding market-rate units off-market to push up prices because their loan agreements often require a minimum rent. Attorneys in the field say those claims hold no water…
“During a period of record-low rents, such as the first year of Covid, the attorney said that it would have made sense to hold units off-market. And many landlords did,” it added. “But in the past year, when rents rose to record levels, holding apartments would be a losing game.”
Was the rush for apartments ginned up by property owners to jack up rents? We looked for the truth. https://t.co/dw15ZM7T3j
— The Real Deal (@trdny) February 8, 2023
However, a greater number of commenters simply took Curbed’s article with a grain of salt, saying although Brown made some missteps with his data analysis, it didn’t totally invalidate his conclusion about the state of New York City’s market.
“While the Curbed article is certainly flawed in several aspects, some factors can no longer be overlooked,” Twitter user @James84Tony wrote. “According to various statistics migration in NYC is still net-negative, and it seems many apartments remain vacant long after the supposed “rebound.”
While the Curbed article is certainly flawed in several aspects, some factors can no longer be overlooked. According to various statistics migration in NYC is still net-negative, and it seems many apartments remain vacant long after the supposed “rebound.”
— Tony James (@James84Tony) February 3, 2023
“This doesn’t totally explain the twisted rental market in NYC, but it’s a start,” added user @interstatial.
Commenters on Curbed wrote mini-essays of their own, pointing out the impact of foreign and institutional investors, sharing their own experiences with greedy landlords, detailing their exodus from New York City, and detailing how New Yorkers aren’t the only ones dealing with the sting of high rent.
“In Atlanta, [Blackstone] bought up several square blocks of relatively affordable homes and then flipped them into high-end rentals,” christianmiller72 wrote. “As a consequence, many buyers were driven out of the market and forced to rent artificially inflated rent prices.”
“Ultimately, this increased demand for the average consumer who couldn’t compete with multi-billion dollar corporate all-cash buyers who were buying well above market rates. This of course was intentionally done by Blackstone,” he added. “What happened in Atlanta is occurring in New York as well as other major cities across the US. There are many factors as to why rent has become (for lack of a better word) inhumane.”
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