The Insider: Sales Spike as NYC is Losing Residents
Posted on June 3, 2022
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New York City loses 300,000 residents while the rental market hits all time highs and the pace of signed contracts has been blistering. What gives?
The City reports NYC lost 300,000 residents between the start of the pandemic and mid 2021, and it looks like we’re still losing residents.
At the same time rental prices are at all time highs for one bedroom and two bedroom apartments:
Source: Zumper
And consider the blue line in the graph below, which shows strong buying demand as the number of contracts signed increases to a blistering pace from mid 2020 to currently.
How can all of these things be happening simultaneously? Here is our analysis.
FIRST:
People are learning to be efficient working from home. They just aren’t doing it with three roommates. In short, since the pandemic started more people are living by themselves, which increases the demand for apartments.
SECOND:
Remote work means that more people are doing remote work from New York City. At first this seems counterintuitive, but people love New York for the culture and the food. So why not do your work from an apartment, have no commute, and still get NYC as your playground? The worst part of NYC living is the commute, not the work. Get rid of the commute and BOOM, lots of people want to live here. Surprise, surprise.
THIRD:
New York City is the only truly blue chip city in the USA for investment purposes. As other asset classes go haywire (crypto of course, but bonds and stocks as well) real estate is looking like a very stable asset class to park money in. It might go up and it might go down, but it isn’t likely to go down 30% in a month, for crying out loud.
Yes, the market may be cooling a bit (we will cover that next week) but for now, even cash isn’t a safe haven with inflation the way it is. So we will continue to advocate for significant percentage of everyone’s assets to be allocated to real estate in the City.
