Report of Rent Decline ‘Not Cause for Concern,' Analysts Say

Real Estate

By GRACE RAUH, Staff Reporter of the Sun
August 22, 2007

A report that shows rents in the city are on the decline is not necessarily a sign that the real estate market is in trouble, analysts say. Rents are down in nearly every neighborhood across the city after peaking earlier this summer, with prices retreating for all classes of apartments except studios in buildings with doormen and two bedrooms in non-doorman buildings, according to a report by a Manhattan residential real estate brokerage, the Real Estate Group. Since July, rents for one-bedroom apartments in buildings with doormen dropped by $250 in the East Village and by $450 for two-bedroom apartments in buildings with doormen in SoHo, the report said.

"This is not a cause for concern," the chief operating officer of the Real Estate Group, Daniel Baum, said. It is more a sign of "property owners becoming a bit more rational about what the market will bear for their properties," he said. Mr. Baum said the rental market has been "overheated" and that the drop in rents is a sign that potential tenants are simply unable to pay the prices being offered.

The chief operating officer of the residential real estate firm Citi Habitats, Gary Malin, disputed the rival brokerage's report, saying his company has found no decline in the rental market, except for a slight dip in the average rents of one-bedroom apartments between June and July.

"We had a banner July and our numbers are on pace to beat July right now," Mr. Malin said. "We haven't seen any slowdown in the rental market whatsoever."

Foreclosures in the city are on the rise, mirroring a national trend, according to data from California-based RealtyTrac Inc., which found that foreclosures in the city jumped to 2,561 from 1,648 from July 2006 to July 2007, an increase of about 55%. Foreclosures across the country rose by 93% during that same period.

"I think you'd be naïve to think that New York is immune from the credit crunch going on right now," the president of a New York real estate appraisal firm, Jonathan Miller of Miller Samuel, said. "I don't see it as a doom and gloom situation, but I am concerned."