COVID brought many unexpected challenges to all aspects of our lives, and it has had a profound effect on NYC and the real estate market. With 2021 under way everyone is still navigating new territory, but we at Sovereign Associates have your back. Today, we’re exploring trusted real estate website Brick Underground’s 2021 forecast for NYC’s real estate market.

What to expect if you’re a renter

If you rent, or plan to rent an apartment in NYC in the new year, you should know that renters hold the cards, at least for now. That means you have an opportunity to move into a larger apartment or a building with amenities or a more desirable neighborhood—or all three. Plenty of renters have been using the pandemic as a now-or-never moment to find a place where they don’t have to compromise on their apartment wish list. That’s because in the second half of 2020, there was a record number of empty apartments and NYC landlords have been forced to compete for tenants by lowering rents and offering concessions like free months and paying the broker fee. But please keep in mind this is likely a temporary situation: rents could and will likely go up when the city’s fortunes recover.

There’s still a record number of empty apartments available in Manhattan and Brooklyn, meaning there’s a good chance if you’re apartment hunting, you will still be able to get a concession in the coming months. So, it’s a good idea to brush up on how concessions work: If you sign a one-year lease with concessions, when you renew the lease 12 months later, any free months go away, and the rent you pay switches from the net effective to the gross. On top of that, rent increases are based on the higher, gross rent. If you are in a rent-stabilized apartment, you have more protections; market-rate tenants don’t have the same rights.)

The good news is you may still have some leverage even 12 months from now and be able to negotiate a deal with your landlord because even with the recent uptick in leasing activity, landlords will still have to contend with lots of empty apartments in the market for many months to come. One reason for this is that the real number of vacant apartments is likely more than what consumers see as available. Landlords are known to hold back a portion of their rentals from the market, a so-called “shadow inventory”. Current estimates suggest that one in five Manhattan apartments are sitting empty.

For renters who’ve seen their income reduced because of the pandemic, a more pressing issue was the end of the eviction ban. However, the New York Legislature convened a last-minute session right before the new year to pass the most robust anti-eviction bill in the U.S., which Governor Andrew Cuomo signed into law immediately. Landlords are now barred from evicting most tenants for at least another 60 days in most cases. The law also protects some small landlords from foreclosure. According to the New York Times, previously filed eviction cases are on hold for at least 60 days, and landlords cannot begin new eviction proceedings until at least May 1st. One key piece of legislation to watch is the Emergency Housing Stability and Displacement Prevention Act, which prevents eviction and foreclosure filings throughout the pandemic and for a year afterward.

More protections for renters

The state legislature is expected to continue to fight for renter protections through the Fair Housing laws that could increase penalties for discrimination; and possibly by revisiting the Good Cause eviction bill, which would give eviction protections to all tenants. One other issue that will be keenly anticipated by renters and brokers alike is a resolution from the court on who pays the broker fee when the landlord hires the broker. The practice in New York City has been for a renter to pay the landlord’s broker’s fee, ranging from one month's rent to 15 percent of the annual rent. Lawmakers tried to shift the responsibility for this cost back to the landlord in the Housing Stability and Tenant Protection Act passed in 2019. The new broker fee rule (which did not apply to fees for brokers hired by renters) was challenged in court, and hearings to provide a ruling were postponed during the pandemic. And during the pandemic, many landlords have been covering the fee as a concession, a practice expected to end when the rental market swings back to favor landlords. A final clarification on the fee from the court could be a major boon to renters.

For more information and the full article (including forecasts for buyers and sellers), please follow this link: https://www.brickunderground.com/rent/what-renters-buyers-sellers-condo-co-op-need-to-know-real-estate-market-forecast-expectations-nyc-2021

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