A $500 drop in rents is drawing people back to Manhattan, according to a new report from Douglas Elliman.
With landlords piling on concessions, new leases surged to the highest October total in 12 years after stalling for the past 14 months.
But with over 16,000 empty apartments in the borough, any return to normal is an uphill climb.
Vacancy has climbed to over six percent compared to two percent at the same time last year. It is now at its highest in 14 years after the coronavirus pandemic drove Manhattanites to more suburban and rural areas.
Nevertheless, appraiser Jonathan Miller, who compiled the Douglas Elliman reports, paints a glass half full picture.
“While the usual records continued – high inventory and landlord concessions – Manhattan saw a sharp uptick in new leases for the first time since the summer of 2019,” said Miller.
“Falling rents are beginning to pull people back into the market resulting in the most October new leases signed since the financial crisis.”
According to the report, studio, one and two-bedroom apartments saw the biggest rent drop ever recorded in the borough.
5,641 new leases were signed in Manhattan in October – a 33.2 percent increase on the same time last year. They were listed at a discount that was more than double that offered in October 2019.
With just over 60 percent of all leases signed with concessions, the result was a drop in net effective media rent to $2,868 compared to $3,409 at this time last year.
The picture was similar in Brooklyn, where new leases surged to the second-highest October total in 12 years, as falling rents again expanded market activity.
But despite a 15 percent drop in year-on-year rents, the Queens rental market remains in a slump, according to the report.
According to Miller, “Northwest Queens is one subway stop away from Midtown – but it’s not seeing the uptick in new leases yet like Manhattan is. The lack of activity shows that pricing likely has to adjust more before more renters are pulled in.”
Low interest rates, negotiability, and high inventory are also giving first time buyers a chance at the Big Apple lifestyle.
Last month, Elliman reported that first-time buyers drove the new development market in Manhattan as discount there rose to. The average $3.6 million asking price for a new Manhattan condo ultimately closed at $2.37 million.
The Canadian Thanksgiving long weekend brought a not-surprising further drop in prices of most benchmark construction framing dimension softwood lumber commodities, as the days got increasingly shorter and the weather turned ever more winter-like. Demand across North America was almost entirely for small fill-in orders, while sawmills were preoccupied with locating shipments long-ago sent to customers but still not arrived, according to Madison’s Lumber Reporter.
The big question on the mind of industry players is, “Where is the price bottom and when will that arrive?” No one yet knows the answer for this, except to say it will be much higher and much later than in usual years. The latest lumber production and sawmill capacity utilization rates data release from the Western Wood Products Association — for July — shows a marked downturn in Canada. In the US, softwood lumber production continued to recover. The all-important wood manufacturing volumes in Canada took a significant tumble downward in July 2020, after recovering nicely in May and June from terrible lows of April. This decrease in lumber available for sale after the supply constraints earlier in the year well explains why prices remained so high even until now.
Prices continued to crash down in the Eastern S-P-F market last week. A large contingent of buyers participated, but the focus was on Less-Than-Truckload orders from the distribution network at wildly varying – but resoundingly lower – numbers. Overall sales volumes were strong but individual orders remained small as customers refused to take long positions in a falling market. Prompt wood became more common with each passing day as sawmills began to run into order files on a number of items, while production of bread and butter items were booked at around two weeks.
For the week ending October 9, 2020 the price of Eastern softwood lumber commodity item Eastern S-P-F KD 2×4 #2&Btr dropped once more, to land at US$920 mfbm, said Madison’s Lumber Reporter. This price is now -$85, or -8%, less than it was one month ago. Compared to one year ago, this price is up a remarkable +$465, or +102%.
Compared to one-year-ago, last week’s Eastern S-P-F KD 2×4 #2&Btr price was +$343, or +59%, higher than the 1-year rolling average price of US$577 mfbm and was up +$416, or +83%, compared to the 2-year rolling average price of US$504 mfbm.
The below table is a comparison of recent highs, in June 2018, and current October 2020 benchmark dimension Softwood Lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of September 2015:
WASHINGTON (AP) — Construction of new U.S. homes surged 22.6% last month as homebuilders bounced back from a lull induced by the coronavirus pandemic.
The Commerce Department reported Tuesday that new homes were started an annual pace of nearly 1.5 million in July, highest since February and well above what economists were expecting. Housing starts have now risen three straight months after plunging in March and April as the virus outbreak paralyzed the American economy. Last month’s pace of construction was 23.4% above July 2019’s.
“U.S. housing starts blew the roof off of expectations in July … …. these are the kind of gains seen after storms/hurricanes,” Jennifer Lee, senior economist at BMO Capital Markets, wrote in a research note. Strong demand and limited supply drove builders to break ground.
The big gains came from the construction of apartments and condominiums, which soared 56.7%. But single-family home construction ticked up, too, by 8.2%.
Construction rose all over — 35.3% in the Northeast, 33.2% in the South, 5.8% in both the Midwest and the West.
Applications for building permits, a good indication of future activity, jumped 18.8% from June to an annual rate of 1.5 million, highest since January and up 9.4% from July 2019.
The National Association of Home Builders reported Monday that builders’ confidence this month matched the record high first reached in December 1998. “Strong demand and a record level of homebuilder confidence will support housing starts in the second half of 2020,” economists Nancy Vanden Houten and Gregory Daco of Oxford Economics wrote.
But they warned that Congress’ failure to approve another rescue package could take a toll on the economy. “The still-widespread coronavirus and an economy struggling to recover without fiscal support may limit the upside” for the housing industry, they wrote.
WHITE PLAINS— The optimism felt by residential real estate practitioners in the first quarter of 2020 when strong sales figures in the lower Hudson Valley region, served by OneKey™ Multiple Listing Service LLC, seemed to be an indication of a robust year ahead for residential real estate sales. This optimism took an abrupt left turn in the second quarter when fears and uncertainty created by COVID -19 took hold, according to the 2020 Second Quarter Residential Real Estate Sales Report Westchester, Putnam, Rockland, Orange, Sullivan Counties, New York released on July 7.
On March 7th, New York State Gov. Andrew Cuomo declared a state of emergency and as of March 20th all non-essential businesses were closed. This closure affected the ability of real estate practitioners to show properties, home inspectors to conduct inspections and attorneys to conduct closings in their offices.
Initially stunned, the creativity and resiliency of agents and brokers along with the enhanced use of technology created a slow but sure path forward. Agents began conducting business online, showing homes virtually. New York State permitted notary services online and attorneys conducted business in parking lots going between cars. Although sales figures still took a significant hit, continuing demand could result in a fairly rapid recovery.
Residential sales figures were down anywhere from a high of 39.8% in Bronx County (hardest hit by COVID-19), which translates to a total of 296 total residential sales compared to 492 sales in the second quarter of 2019 to a low of 6.2% in Putnam County, which translates to 258 sales as compared to 275 sales in Q2-2019.
More reflective of how home sales fared was Westchester County where residential sales were down 27.6% or 1,805 sales as compared to 2,493 sales in the second quarter of 2019; Orange County residential sales were down 27.9% or 742 sales as compared to 1,029 sales in Q2-2019; Rockland County sales were down 24.1% or 482 sales compared to 635 sales in Q2-2019 and Sullivan County sales fell 13.7% or 196 sales compared to 227 sales in Q2-2019.
Percentage declines for single-family residential sales, as compared to Q2-2019, closely mirrored the overall drops with Putnam County down 6.6%; Sullivan County 10.6% lower; Westchester County down 21.3%; Rockland County lower by 22.1% and Orange County sales fell 26.5%.
Single-family residential sales prices did not reflect the turmoil wrought by COVID-19 and were, in fact, up in every county covered by OneKey™ MLS with the exception of Putnam County, which experienced a relatively small decrease of 1.1% in median price. The median price in Putnam was $359,900 as compared to $365,000 one year ago. Sales prices increased 17.7% in Sullivan to $175,000; 6.7% in Rockland to $480,000; 12.5% in Orange to $298,000 and 1.2% in Westchester to $711,000. The median sales price is the midpoint price at which 50% of sales were higher and 50% of sales were lower.
At this juncture it would be difficult, at best, to make any predictions about market conditions going forward. Anecdotally, we know that interest and demand have been high and brokers report that there are multiple offers on properties, many above asking price. It appears that the suburban market, as well as the exurban market, are the beneficiaries of city dwellers who no longer wish to be living in such close proximity to others or who, at least, want a second home to “escape” to. Factually we know that mortgage interest rates are at historic lows, which benefits the market.
Typically, the third quarter registers the highest quarterly sales for the year. It is important to note that those sales are generally a reflection of activity from the prior quarter. That activity, as we know it, simply did not occur and will likely have an impact on third quarter sales. There is, however, a very real demand for housing which, even if not reflected in third quarter sales, may be the catalyst to a full recovery of the market.
OneKey™ MLS is one of the largest Realtor subscriber-based multiple listing service in the country, dedicated to servicing more than 41,000 real estate professionals that serve Manhattan, Westchester, Putnam, Rockland, Orange, Sullivan, Nassau, Suffolk, Queens, Brooklyn, and the Bronx. OneKey™ MLS was formed in 2018, following the merger of the Hudson Gateway Multiple Listing Service and the Multiple Listing Service of Long Island. For more information visit onekeymlsny.com.
NEW CASTLE, NY — After Westchester County officials begged hundreds of New Castle residents exposed to the new coronavirus over Horace Greeley High School’s graduation weekend to self-quarantine and answer contact tracers’ calls, town officials issued a statement — and they didn’t mince words.
“It has come to our attention that despite the continued outreach and education by and from the Town of New Castle, Westchester County and New York State, there are some people who continue to ignore social distancing guidelines and willfully disregard the protocols intended to protect the public health,” they said in a special edition of their e-newsletter.
“Lest it be lost on anyone, your 16-year-old child does not dictate to you that he or she is going to hang out with friends. When your son or daughter is home from college living under your roof, it is your roost to rule. If you just returned from states such as North Carolina, South Carolina, Florida, Arizona or Texas, do not have the arrogance to believe you do not need to self-quarantine for 14 days.”
The outbreak is connected to two local families who returned from trips to Florida bringing the virus. Infected family members attended the ceremony and parties over June 20-21 that drew not only the school’s more than 300 graduates but also family members, other Greeley students and staff, as well as teenagers from nearby communities.
Disregarding pandemic protocols is apparently a pattern in this coronavirus cluster. A photo from the graduation ceremony widely shared on social media shows many students and guests mingling without masks during the ceremony, which was planned as a “drive-in” event at the Chappaqua train station’s south lot.Subscribe
Then during a visit Monday to New Castle, County Executive George Latimer and Health Commissioner Sherlita Amler held a news conference and repeatedly reminded residents that everyone who attended the ceremony or parties must properly quarantine themselves. They also repeatedly implored residents to answer phone calls from contact tracers trying to find and warn everyone who was exposed.
New Castle officials sent out their email later that night.
“We will not tolerate these selfish actions,” they said. “Know that you are potentially and gravely hurting this community and those you presumably love if you do not. Yes, you can have gatherings consistent with the Executive Orders, but whether you are 18 or 81, be neither complicit nor the problem itself. Do not throw parties and forget the social distancing and mask wearing that has kept us safe. Ignorance is not bliss. In fact, getting sick from or passing on COVID-19 is anything but that.
“Show respect to your neighbors, friends, family members and strangers – such as those who were self-quarantined despite adhering to the law and best practices.”
Town officials said the board and Police Department are fully involved in the efforts led by the New York State Department of Health.
“It is our hope that we need not pursue the type of recourse that those who are summoned or charged will undoubtedly regret,” they said. “Whether you are a New Castle resident, a visitor from a neighboring community, or a student in the Chappaqua Central School District, should you flout the very rules that are intended to keep us all safe, the consequences may be quite severe. Know that we have reached out to and spoken with the Governor’s Office and the Westchester County District Attorney’s Office for guidance on how to best enforce social distancing orders whether through civil sanctions and fines or criminal prosecutions.”
With today’s release of the April S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.33% month over month which is cut to 0.16% with inflation adjustment. The nonseasonally adjusted index was up 4.0% year-over-year.
Investing.com had forecast a 0.5% MoM seasonally adjusted increase and 4.0% YoY nonseasonally adjusted for the 20-city series.
Here is the analysis from today’s Standard & Poor’s press release:
“April’s housing price data continue to be remarkably stable,” says Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices. “The National Composite Index rose by 4.7% in April 2020, with comparable growth in the 10- and 20-City Composites (up 3.4% and 4.0%, respectively). In all three cases, April’s year-over-year gains were ahead of March’s, continuing a trend of gently accelerating home prices that began last fall. Results in April continued to be broad-based. Prices rose in each of the 19 cities for which we have reported data, and price increases accelerated in 12 cities.
“As was the case in March, we have data from only 19 cities this month, since transactions records for Wayne County, Michigan (in the Detroit metropolitan area) continue to be unavailable. This is, so far, the only directly visible impact of COVID-19 on the S&P CoreLogic Case-Shiller Indices. The price trend that was in place pre-pandemic seems so far to be undisturbed, at least at the national level. Indeed, prices in 12 of the 20 cities in our survey were at an all-time high in April.
“Among the cities, Phoenix retains the top spot for the 11th consecutive month, with a gain of 8.8% for April. Home prices in Seattle rose by 7.3%, followed by increases in Minneapolis (6.4%) and Cleveland (6.0%). Prices were particularly strong in the West and Southeast, and comparatively weak in the Northeast.” [Read more]
The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We’ve used the seasonally adjusted data for this illustration.
The next chart shows the year-over-year Case-Shiller series, again using the seasonally adjusted data.
Here is the same year-over-year overlay adjusted for inflation with the Consumer Price Index owners’ equivalent rent of residences.
For a long-term perspective on home prices, here is a look at the seasonally and inflation-adjusted Case-Shiller price index from 1953, the first year that monthly data is available. Because the CPI owners’ equivalent rent of residences didn’t start until 1983, we’ve used the broader seasonally adjusted Consumer Price Index.
To get an even better idea of the trend in housing prices over long time periods, we compare the change in the seasonally-adjusted Case-Shiller Home Price Index and the Consumer Price Index since 1953.
For additional perspectives on residential real estate, here is the complete list of our monthly updates:
A revised map of New York State showing the phases each of the 10 regions are currently in. On June 10, Long Island will join the rest of the state when it enters phase two.
WHITE PLAINS—Today is the day real estate brokers and agents have been anxiously waiting for since March 22 when Gov. Andrew Cuomo issued the “New York on Pause” order that virtually shut down the real estate industry and all other “non-essential” businesses in the state.
Gov. Andrew Cuomo announced this morning (June 9) that the Mid-Hudson region, which includes Westchester, Rockland, Orange, Putnam, Dutchess, Sullivan and Ulster counties, entered phase two which lessen restrictions on real estate, offices, essential and phase II in-store retail, vehicle sales, leases, and rentals, retail rental, repair, and cleaning, commercial building management, hair salons and barbershops and now allows outdoor dining at restaurants.
The Mid-Hudson entered phase one of the reopening process on May 26, which loosened restrictions on the construction and manufacturing industries, as well as the wholesale supply chain. In addition, certain retail operations were eligible to be expanded for curbside pickup and drop-off or in-store pickup. The phase one designation also affected the agriculture, forestry and fishing industries, but had no beneficial impact on the real estate industry, with the exception of real estate development construction.
The Mid-Hudson could be eligible for phase three of the four-phased reopening program on Tuesday, June 23, which will lift some restrictions on food service and personal care. The final phase (four) would impact arts/entertainment/recreation and educational sectors.
Gov. Cuomo, who noted that today was day 101 since the first case of COVID-19 was diagnosed in the state, praised the work of government, health and business leaders for helping facilitate the phase two designation. “The numbers are down because you brought the numbers down,” he said. The governor noted that at the peak of COVID-19 back in April, the Mid-Hudson reported 75 deaths in one day. On June 8, there were no COVID-19 related deaths in the entire Hudson Valley region. Westchester County Executive George Latimer, in a later press conference, noted that there was one COVID-19 related death the previous evening in Westchester County.
Latimer chronicled the great progress the county and the Mid-Hudson region has achieved since the peak of the pandemic in April. He noted that two months ago on April 9, there were 44 COVID-related deaths in Westchester County. Since the pandemic began, there have been 1,396 deaths attributed to the coronavirus in Westchester.
He said that with the onset of phase two the county can “return to a reasonable place in our society, hopefully where we are fighting the contagion effectively, but at the same time we are starting to reopen businesses and really get back to something close to normal.”
Since the shutdown of the economy back in March, real estate professionals have tried to offer services and facilitate sale transactions on a virtual basis. The phase two designation lifts restrictions, but does mandate safety protocols, including social distancing. One key change with the phase two designation is that in-person real estate showings are now permissible as long as safety protocols are adhered to.
“The day we’ve all been yearning for is finally here! Many agents are jumping right in, with appointments already scheduled today. I expect that we are going to be as busy as we’ve ever been, with pent up buyer demand, sellers who’ve been waiting until now to put their homes on the market, and a lot more steps to every showing,” said HGAR President Gail Fattizzi.
She added, “As we begin meeting our clients in-person again, we must stay mindful that COVID-19 is still here, and take every precaution. HGAR intends to continue providing CE classes and holding meetings virtually, along with great free programs via Zoom. We should all expect that ‘re-opening’ is going to be a slow, steady process, not an instant change back to normal.”
HGAR Chief Executive Officer Richard Haggerty noted, “For 11 weeks the Realtor community has done our part, first by ‘pausing’ and then by shifting our business to a remote environment, in order to flatten the curve and slow the spread of COVID-19. That goal has been achieved and now it’s time to relaunch real estate, following the ESD guidance and with great concern for safety, and get the state economy relaunched.”
Other county and business leaders hailed the beginning of phase two as a milestone that will hopefully begin to relaunch the regional economy, now that New York City has entered phase one (yesterday).
John Ravitz, executive vice president of the Business Council of Westchester, said that the Westchester economy is still in uncharted waters and praised the business community for its resiliency to date in dealing with the COVID pandemic.
“None of us knew what we were facing when the pandemic hit and so many different businesses in different sectors had to pivot; had to deal with their concerns for their employees, as well as their clients and customers,” Ravitz said. “I think what puts Westchester on the map throughout the country is the ingenuity and the creativity we have seen from our business leaders.”
Government officials talked of the work that has been done and the efforts that will need to be made to get their economies back on track.
“County government is doing everything humanly possible to assist these businesses as they reopen,” said Rockland County Executive Ed Day. “We have been sharing guidance with municipalities, local chambers of commerce and with businesses directly through our Office of Economic Development and Tourism. We have also hosted three business info livestreams to communicate critical information and promote Rockland’s tech sector.”
Day also noted that last week the county’s ROCK GOV – FACE COV program which gave out 25,000 masks to local small businesses and nonprofits which have fewer than 20 employees.
“Bottom line, we are working to ensure that businesses reopen in a way that is responsible and protects the health and safety of both their employees and customers,” he added.
Sullivan County government offices will slowly begin reopening to in-person visits, according to County Manager Josh Potosek. “We are bringing back less than 50% of our employees onsite, and offices will be open to the public by appointment only,” Potosek stated. “This is to ensure that the plan we’ve developed is workable and safe before we bring back more employees and reopen for walk-in customers—likely with the start of phase 3.”
The following is guidance from Empire State Development Corp. on In-Person Showings in Phase Two
Residential In-Person Property Showings and Related Activities
Responsible Parties may conduct in-person property showings while adhering to social distancing and required PPE safety guidelines. The following measures must be followed:
• Showings and open houses will only be allowed in unoccupied (e.g., current owner or lessee is not inside the property) or vacant properties;
• For all showings and open houses, Responsible Parties should limit the number of individuals viewing a property at any one time. If multiple parties (from different households) arrive for a showing at the same time, Responsible Parties should encourage those in line to wait outside until their turn.
• As a best practice, appointments for showings should be scheduled in advance, when possible.
Responsible Parties as well as all individuals (e.g. building inspectors / appraiser or potential buyer/lessee) visiting the property will be required to wear a face covering at all times, and Responsible Parties may choose to require gloves and shoe-covers to be worn;
• Responsible Parties should provide face coverings and gloves to prospective tenants and/or buyers, if necessary;
• Responsible Parties should advise prospective tenants/buyers to only touch essential surfaces (e.g. handrails going up/down stairs if necessary) during their time in the property. Other areas or surfaces such as cabinets, countertops, appliances etc. should not be touched by tenants/buyers.
• Responsible Parties must ensure employees, salespeople, agents and brokers clean and disinfect high-touch surfaces (e.g. handrails, doorknobs etc.) before and after every showing; and
• Responsible Parties must stagger showings in order to avoid the congregation of people outside and inside properties.
• Responsible Parties are encouraged not to show common building amenities in-person (e.g. gym, roof deck, pool).
• If the common areas mentioned above are shown, Responsible Parties must ensure that those areas are frequently cleaned and disinfected and appropriate social distancing of 6 feet is maintained for all parties at all times.
• Responsible Parties should encourage only one party (e.g. building inspector, home appraiser, prospective tenant/buyer, photographer, stager) to be allowed inside the property at a time. If more than one party is inside the property at the same time, 6 feet of distance must be maintained at all times between individuals, and face coverings must be worn.
• Responsible Parties and prospective tenants/buyers are encouraged not to bring young children or extraneous guests to property showings, when possible, or leave attended children outside.
• Responsible Parties should limit salespeople / brokers from driving in the same car with prospective tenants / buyers. If this cannot be avoided, face coverings must be worn by everyone in the vehicle and frequently touched areas of the vehicle should be cleaned and disinfected.
• Open houses must also only allow one party inside the property at a time.
• Responsible Parties are encouraged, but not required, to conduct remote walkthroughs rather than in-person walkthroughs (e.g. recorded/live video), where possible.
For important information, guidance and forms related to the Reopening of Real Estate in NY during Phase 2 go to HGAR.com COVID-19 Resources or click links below:
New York Forward – Reopening Guidelines and Forms
New York State Safety Plan Template—(This template, or another safety plan template, needs to be completed and made available upon an inspection by the Dept. of Health or local safety dept.)
The Covid-19 pandemic is wreaking havoc on the U.S. rental market. Approximately 9 million households have so far failed to pay their May rent, according to industry data. Last month, 1.4 million fewer households paid their rent compared with this time last year.
The country’s 44 million rental households are uniquely vulnerable amid the current public health and economic crises. Renters often lack financial security and legal protections, not to mention bargaining power vis-a-vis their landlords. Worse, many are now being hit by the worst economic downturn since the Great Depression. Low-income renters, especially, work in industries crippled by Covid-related job loss: retail, hospitality and leisure, restaurants, and construction. Data suggests that 16.5 million renter households have already lost income because of the economic shutdown.
Faced with the specter of massive housing loss, policymakers have taken some steps to keep tenants in their homes, not only to help the renters but also as a critical public health measure — after all, it’s hard to comply with a “stay at home” order if you don’t have a home, or to socially distance if you’re forced to move into tight quarters with family or friends. The CARES Act has temporarily protected many renters by providing billions of dollars for emergency housing assistance, significantly expanded unemployment benefits and halted some evictions through July. Dozens of states and cities have also temporarily halted evictions, and cities such as Los Angeles, Chicago and Philadelphia are providing emergency funding for tenants.
It appears these stopgaps are working, at least for now: We have not seen as severe a spike in nonpayment of rent as might otherwise be expected, and early rent payment figures from May look a bit more encouraging than April’s numbers.
But these remedies focus on the short term. Because of the scale of this downturn, many if not most unemployed renters will not have new jobs by the end of July. The federal government needs a long-term plan to prevent millions of unemployed renters from losing their homes when eviction moratoriums and unemployment sweeteners run out.
More shutdowns coming
Indeed, public health experts are predicting that the Covid-19 crisis will last well beyond the summer, and some government officials are bracing for waves of shutdowns that could continue for 12 to 18 months. It’s also likely that the U.S. will get hit with another, perhaps more deadly, wave of the virus next winter. When the economy does reopen, it will be in the throes of a deep recession during which millions of middle-income tenants will likely be unemployed and require housing assistance for the first time. Without smart, proactive policies to help millions of unemployed renters, we will be facing billions of dollars in rental debt, chaos at the eviction courts and overcrowded shelters primed for another outbreak.
Renters were struggling before the Covid-19 outbreak amid a well-documented affordable housing crunch. Nearly 40 percent of renter households are rent-burdened — meaning that they spend more than a third of their salary on rent — and two-thirds of renter households can’t afford an unexpected $400 expense.
On top of that, renters have few of the legal and financial protections offered to homeowners. Many states forbid renters from withholding rent even if their unit is in disrepair, most renters have no right to legal counsel during eviction proceedings, and once eviction judgments are handed down, renters can be evicted in a matter of days. And, partly as a result of the subprime mortgage crisis of 2008, federal housing policy heavily favors homeowners over renters. Congress spends approximately three times as much on mortgage-interest reduction as it spends on rental housing vouchers each year. Whereas mortgage holders are protected by the provisions of the Dodd-Frank Act, notably through creation of the Consumer Financial Protection Bureau, no analogue exists for renters.
For the moment, these renters are being kept afloat through a combination of short-term emergency cash, unemployment benefits and eviction bans. But it won’t last past the summer. On top of the one-time $1,200 stimulus check, the extra $600 per week added to unemployment insurance checks expires in July. Unemployment doesn’t cover everyone, notably our 10 million to 12 million taxpaying undocumented immigrants — many of whom are renters — and those working in the informal economy providing child care, cleaning and other services. Another 8 million to 12 million unemployed Americans haven’t even bothered to apply, due to a well-documented backlog of claims and the difficult application process.
It’s not clear what appetite Congress has for extending the current short-term stimulus measures. Lawmakers might choose to extend the $600 per week unemployment sweetener past July. An extra $2,400 per month is more than enough to cover rent for most Americans, and once unemployment offices dig out from the initial crush of claims, delivering this assistance would be an efficient and direct way to keep more people in their homes. Yet Republicans are concerned that these expanded benefits are discouraging people from returning to work, and any such proposal would have to survive tough negotiations.
Meanwhile, the $300 billion recently provided in the most recent stimulus package to keep small business workers on payroll is likely already gone. Temporary rental assistance remains underfunded by tens of billions of dollars, and need is only growing as layoffs continue.
While landlords should be encouraged to reduce payments or implement repayment plans, canceling rent isn’t a viable option for many of them. The prototypical rental unit might be inside a high-rise apartment building owned by a real estate giant, but in fact the overwhelming majority of rental properties in this country are single-unit homes owned by mom-and-pop landlords. These property owners rely on rent to pay their own mortgages, to finance repairs and upkeep of rental properties, and to pay property taxes.
So, protecting tens of millions of renters in the midst of a deep recession won’t be easy. But Congress needs to recognize the importance of keeping rent checks flowing. Delinquent rents could easily spiral into foreclosed units and a consolidation of rental stock similar to Wall Street buy-ups after the Great Recession. That means an increase in substandard housing, worse property management and more marginalized Americans. What’s more, evictions cost U.S. cities hundreds of million of dollars per year. That money should be helping to prop up a struggling economy instead.
But while difficult, it’s not impossible to prevent a rental-housing crisis. Congress needs to expand direct rental assistance. That means cash for rent, sent either directly to landlords or renters.
The National Low Income Housing Coalition estimates that $100 billion in rental assistance would support 15.5 million low-income households over the next year. The Urban Institute’s estimate is about twice that, and accounts for renters of all incomes. That line item’s a drop in the bucket compared to the total stimulus funding Congress anticipates pushing through this year, and will stabilize millions of Americans’ largest household expenditure.
There are several mechanisms Congress could chose for this. Cash could be directly provided for rent through the Department of Housing and Urban Development’s existing Emergency Solutions Grant network, in which local services providers administer funds to those at risk of homelessness, or through temporary expansion of the department’s Housing Choice Voucher program, through which local housing agencies pay landlords a portion of low-income tenants’ rent. While some housing agencies might face a flurry of new applications, most unemployed American renter households with zero income would easily qualify.
Alternatively, Congress could attempt to funnel money more directly to landlords. The benefit of this approach is that there are fewer landlords than tenants, and they’re easier to track down. The drawback is that this approach would involve creating an entirely new program. If Congress goes this route, it could model a program on the Treasury Department’s Home Affordable Modification Program (HAMP), focused on landlords’ non-owner occupied homes, or expand the Federal Reserve’s Main Street Lending program to allow lending to the rental industry.
The bottom line is that Congress needs to find a way to inject funding into the rental ecosystem — whether through unemployment insurance, rental assistance or direct payment to landlords. Protecting our renters won’t be cheap, and it won’t be easy. But ignoring the coming crisis will cost billions more down the line in the form of rental debt and landlord foreclosures, and could keep millions of Americans from safely sheltering in place. That’s something we truly can’t afford.
Reflecting the growing effects of the COVID-19 pandemic, builder confidence in the market for newly-built single-family homes plunged 42 points in April to 30, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The decline in April was the largest single monthly change in the history of the index and marks the lowest builder confidence reading since June 2012. It is also the first time that builder confidence has been below the key breakeven reading of 50 since June 2014.
The unprecedented drop in builder confidence is due to the coronavirus outbreak across the nation, as unemployment has surged and gaps in the supply chain have hampered construction activities. Builders have also expressed confusion over eligibility for the Paycheck Protection Program, as some builders have successfully submitted loan applications while others have not been able to. NAHB is working with the White House, Treasury and Congress to get the broadest builder participation possible. Home building remains an essential business throughout most of the nation.
Before the pandemic hit, the housing market was showing signs of strength with January and February new home sales at their highest pace since the Great Recession. To show how hard and fast this outbreak has hit the housing sector, a recent poll of NAHB members reveals that 96 percent reported that virus mitigation efforts were hurting buyer traffic. While the virus is severely disrupting residential construction and the overall economy, the need and demand for housing remains acute. As social distancing and other mitigation efforts show signs of easing this health crisis, NAHB expects that housing will play its traditional role of helping to lead the economy out of a recession later in 2020.
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
The HMI index gauging current sales conditions dropped 43 points to 36, the component measuring sales expectations in the next six months fell 39 points to 36 and the gauge charting traffic of prospective buyers also decreased 43 points to 13.
Looking at the monthly averages regional HMI scores, the Northeast fell 45 points in April to 19, the Midwest dropped 42 points to 25, the South fell 42 points to 34 and the West dropped 47 points to 32.
The HMI survey took place between April 1 and April 13.
January home sales spur optimism for 2020 New York State housing market
Albany, NY – Closed sales and pending sales were up in January in year-over-year comparisons, fueling optimism for a robust 2020 housing market, according to the housing market report released today by the New York State Association of REALTORS®.
Closed sales improved 4.1-percent to 9,204 units from 8,842 houses at the start of 2019. Pending sales were also up in year-over-year comparisons, escalating to 8,895 houses – a 5.6-percent increase over January 2019’s total of 8,421 homes.
The median sales price continued to appreciate as the calendar turned to 2020. The statewide median sales price was $300,000 – an increase of 9.1-percent from the January 2019 median of $275,000.
New listings were down to 14,370 homes – a 2.9-percent decrease from 14,806 homes in January of 2019.
The monthly average commitment rate for a 30-year fixed mortgage continues to be affordable, dropping to 3.62-percent in January according to Freddie Mac. Days on the market remained unchanged from January 2019 at 77 days.
Data and analysis compiled for the New York State Association of REALTORS® by Showing Time Inc.