With New Year’s Day approaching, there is no escaping platitudes about peace and prosperity.
But some fortune may indeed be forthcoming for those renting in 2018, according to market analysts tracking rent rates’ plateau and the rise of rental concessions.
Here is a full rundown of housing market trends to watch next year:
Rents are expected to hold steady, possibly slump
As several new developments open, landlords have had to offer more to lure in tenants, including paying brokers’ fees on their behalf or waiving a month or two of rent.
But many analysts believe the reliance on these rental concessions has reached its peak. Particularly in areas like Long Island City, Williamsburg and Downtown Brooklyn, where the number of apartments has surged, rents may be poised to decrease, according to Grant Long, senior economist at the real estate listing site StreetEasy.
“In many parts of the city rents will fall,” Long said. “There’s a lot of new rental housing, and landlords are having to compete against each other and offer concessions, and inevitably cut the headline rents that they offer to folks. … And after a long period of increases that lasted over seven years, people are largely at the limit of what they’re willing to pay.”
But Jonathan Miller, president of the Miller Samuel appraisal firm, noted most of the new developments skew higher-end, which means the benefits of increased competition are not as likely to trickle down to less expensive units.
“With a growing population and job growth, there’s much more price pressure on the lower half of the market,” Miller said.
L train shutdown could curb rents in Williamsburg
Williamsburg’s rental market took a hit after the MTA announced it would need to shut down L train service between Manhattan and Brooklyn so it can repair a tunnel damaged during superstorm Sandy, according to Constantine Valhouli, co-founder of the real estate analytics company NeighborhoodX.
Valhouli estimated rent rates dropped at least 5 percent over the past year in Williamsburg, while cautioning that rental analyses often struggle to precisely account for negotiations that occur in private.
As the 15-month shutdown approaches, currently slated for April 2019, Valhouli and others expect to see prices fall further.
“We’re going to see a bigger drop than what’s reflected so far,” Valhouli said.
New ferry routes may drive up rent near stops
The city plans to expand its ferry service and add stops on the Lower East Side, the Upper East Side and Soundview, which could buoy nearby rents, according to Long.
StreetEasy found that new ferry service along the East River brought rent rates up 1.5 percent in areas immediately surrounding the docks in Astoria, Greenpoint and near Atlantic Avenue when compared to the broader market. This pattern was not evident in more expensive communities such as Long Island City, Dumbo and Williamsburg, Long said.
But given that the city is preparing to introduce bigger boats and improve service in 2018, Long said the new ferry routes could bring up prices more dramatically in northern Manhattan and Soundview.
“One-and-a-half percent is fairly modest, but we think in the coming year, the extension of ferry service could make rents rise even faster in many of those areas, particularly as the subway continues to struggle with maintenance and delays,” Long said.
Federal tax policies unlikely to be fortuitous for renters
Analysts agree that owners of large rental properties are expected to benefit from the new federal tax policies. But there was less consensus on how much, if any, of the savings would be passed on to tenants.
Long hypothesized that owners whose properties have to vie for tenants may be compelled to pass on any economic perks.
“For many who face the prospect of having a unit vacant for a while before they find someone, they may be more likely to offer a lower rent or willing to accept a lower rent,” Long said.
But Miller disagreed.
“There’s no passing down,” he said. “There’s nothing in there that benefits (tenants), that I can see.”
Residences carve out co-working spaces
As buildings offer amenities like Pilates studios or cooking lessons in a bid to attract residents, Long said he is curious how many landlords will add co-working space, now that the shared office environment model has proven popular.
“Most buildings do have free Wi-Fi in their common spaces and you will find, anecdotally, we hear a lot of people take advantage of that to run their own business or conduct business meetings,” Long said. “We do hear of some buildings starting to formalize that a little more.”