Falling Prices?

You should not use Miami's rental/purchase price factors in NYC. NYC's rents are skewed higher due to rent regulation. Rent regulation imposes costs and additional risks to investor landlords which require a premium in the rental price. Added to this, the type of rent regulation in NYC discourages investment in the under $2000 per month sector of the market, so there are far fewer properties available than would be the case if rent regulation more evenly balanced consumer protections for tenants and property rights of landlords.

Laws in most other states and cities are not as heavily weighted in favor of tenants as they are in NYC, therefore the risks of being an investor landlord in Miami are much lower, consequently many more investors enter all segments of that rental market. With more property available, vacancies tend to be higher, rents lower, and the quality of housing tends to be higher. Typically in Miami you would get a modern, well kept 1 bedroom apartment with a washer, a dryer and a parking space in the South Beach area for under $1000 a month. Try getting that in an equivalent area of NYC for under $4000. In Miami the landlord will probably give you some kind of sweetener to sign the lease. In NYC you will have to pay a broker 12% - 15% of the annual rent when you sign the lease.

Unfortunately, it's basically the law of supply and demand. Oppressive rent regulations such as we have in NYC severely discourage private investment in regulated properties.

The price of rental apartment that is subject to rent regulation will normally be lower than a the price of a rental apartment not subject to rent regulation. In this case prospectus is looking at an owner occupied apartment. Rent regulation in fact skews all aspects of the real estate market, as does the political attitude. In markets like Miami, Chicago and Dallas/Fort Worth, many condo buildings contain a fairly high proportion of rental apartments, and investors may buy one apartment in a condo building and rent it out. This typically does not occur in NYC because small investors take a look at NYC rent regulation and think "It's less risky to invest elsewhere".

NYC residential buildings tend to be either rental or owner occupied condo/coop. NYC condo and co-op boards are vary wary of encouraging or permitting a significant number of rental units, possibly out of fear that those apartments will become regulated and therefore create a lot of hassles for the board. The same does not occur in other cities and it quite common for a significant portion of a condo building to be occupied by tenants rather than unit owners.

A further twist to the market is the antipathy many NYers display for the development of new high density housing. I have actually seen articles on the web suggesting that the large tracts of derelict warehouses and factories along the East River in Queens be preserved and somehow provided at low cost to manufacturers or artists or whatever, anything but demolished and turned into modern mid-rise housing. In addition, most new high density housing projects have to include a percentage of so called "affordable housing" if they are to get approved. The cost of providing this housing is borne by the buyers of the market rate housing.

There is a whole conglomeration of regulation of rental and owner-occupied regulation that unnecessarily adds to the costs of owning or investing in NYC real estate. Rent regulation is but one part.

I am a great believer in minimizing regulation in this area. There needs to be consumer protections, and building standards, but they should not be oppressive. I believe that he current regulation profits politicians, very large landlords, those old time NYers who have rent stabilized apartments and screws everyone else.

bohuma: Again I agree with you that rent regulation causes rents to be out of whack, and you're probably right about owner-occupier ratios and the distortions of regulation and opposition to mid/high-density development. But you didn't answer my question: if the structure of the market here is out of whack, what do you think fair or equilibrium ratio in is in NYC as opposed to the ca. 15 long-term average for the rest of the country? Two answers if you like, one for regulated renting vs. owning, and one for deregulated renting vs. owning?

on WINS today they said housing prices fell 5% in Brooklyn from last year.

MeredithB wrote: on WINS today they said housing prices fell 5% in Brooklyn from last year.

Yes, according to Brown Harris. Corcoran's out today saying prices _rose_ 5% in the quarter (and +6% on per sq foot basis). Meh. Who to believe? Oh wait, they are both brokers...I'd go with neither.

I own but in today's market I would rather rent.

this may be unrelated but....

i hope NYC turns into the late 70's again and i can get an apartment in the village to myself for $150 a month.

I keep meaning to post this somewhere. but my 1BR is up for rental (if you want to cover my mortgage, whatsit I pay to the co-op board and that pesky HELOC. and let's not forget the slush fund that covers calls to, oh, the plumber.) or for purchase at a nice price. however, mortgages are next to impossible to get. in any case, PM me if you want a cut rate purchase or an under $2k 1BR with *gasp* window seats, A/Cs to measure, new kitchen appliances and a stained glass window! the first and last got me to rent when I originally moved in.

5 dollars now was roughly 1 dollar during the mid 70's.

so if 1beds go down to 500 bucks a month its time to bunker up.

Santa wrote: im not looking to buy and this place isnt in prospect heights but im still curious about why it hasnt rented. Im pretty sure I saw it a few weeks ago for 1650 but now its down to 1500. Its overlooking the park and around 13th street. Pretty insane it hasnt rented.

http://newyork.craigslist.org/brk/fee/950207102.html

I used to date a woman who lived in that apartment in 2000. She was subletting it for 750. Hopefully time will continue to move backwards.

Wow! That is a good deal! It is advertised as a one bedroom but it seems that there's a large living room and there's a center foyer looking area that connects the kitchen and the living room, so maybe it not a real one bedroom?