NYC Rental Market: Supply Decreasing, Rents Likely to Increase

New York Squared previously reported that the rental market will continue to rise in 2012 due to a lower supply of apartments available on the market.  Much of this economic phenomenom was attributed to the tightening of construction finance.  It turns out NY2 was right.  The Elliman Report shows that inventory fell 24.3 percent from last year, to its lowest in seven and a half years.  There are three reasons that this report provides for this decline:  (1) new developments are scarce; (2) sellers are taking a “wait and see” approach until certain economic issues are resolved, e.g., fiscal cliff, Bush tax cuts, Europe, quantitative easing, etc.; and (3) many properties have low or negative equity that sellers are unable to sell.

It remains to be seen whether the real estate market in New York will continue to hurt potential tenants and sellers.