We've noted it before at the Luxury Rentals Manhattan blog, more than once and in ways both bloggy and worth-a-thousand-words visual. Of course, we have our reasons for this (the name of this blog is Luxury Rentals Manhattan, after all), but the numbers don't lie -- Manhattan rental apartments, now more than ever, are simply a better deal than Manhattan condominiums. While some of this owes to the price of those Manhattan condominiums, the trend away from buying and towards renting has been so dramatic, both in Manhattan real estate and in general, that it bears repeating.
Which is why we keep repeating it, and which is exactly what a recent report from Bloomberg -- the financial news people, not the tiny orange Mayor -- does, in numbers too striking to ignore. Thanks in part to epidemic foreclosures and largely to a national trend towards renting, the U.S. homeownership rate has fallen below the 60 percent mark, making it the lowest recorded homeownership rate. Before this year, the lowest homeownership rate recorded was in 1965 when the rate was 62.9 percent. The highest rate, by contrast, was 69.2 percent in 2004 when George W. Bush promoted an “ownership society” and banks offered two-for-one mortgages during happy hour. Now, just seven years later, the rate is 59.7 percent -- and the erstwhile ownership society, both in Manhattan and elsewhere, is looking disarmingly like a rentership society.
You might wonder why the homeownership rate is falling, and the answers are clear, really. Reasons behind the decline include mortgage-related troubles, foreclosures, and tighter credit for housing loans, according to Bloomberg. While it is often deemed the “American dream” to own a home, it seems that a large portion of Americans are realizing that this dream is unattainable or impractical, at least at this time. Renting is often seen as an easy way to live in a place without making a commitment. Renting doesn’t demand as much money as buying a home, and it allows people an easy escape route in the event that they need to move.
Of course, this, too, is a trend that is very likely to change directions in another seven years. For now, though, these statistics are in favor of the Manhattan luxury rental market. Although the rental market hasn’t outdone its 2009 peak when the median face rent was $3,300, the rental market is still doing rather well -- today’s average face rent is $2,896. With the reinforcement from Bloomberg, landlords should prepare for busy months ahead. But given the local and national trends, chances are they were prepared for that already.
