Ulster County Real Estate 2012 Update - Record High NYC Rents Driving Hudson Valley Relocation?
by Dylan Taft
on Friday, May 4th, 2012 at 12:21pm.
There is a strong connection between Ulster County NY real estate and the housing market down in New York City. A large (and growing) number of buyers looking for homes for sale in Ulster County are New Yorkers. As noted recently in the New York Times, rents in Manhattan have reached an all time high, leaving many New Yorkers to wonder if now is the time to leave the city for good. Living in Ulster County, you can have the best of both worlds; that is, if you're qualified. Though it remains one of the best times in recent memory to buy real estate, it is also one of the toughest times to secure a mortgage. So people may want to get out of that lease, but just can't get a loan to buy their own place. With less people able to buy, can the rent just keep going up and up and up? Taft Street Realty takes a look at this bizarre phenomenon.
How Did This Happen? - Record High Rents Throughout NYC and Outer Boroughs, Hard Times or Not
In March of 2012 the average rent in Manhattan was a whopping $3,418 per month! This surpassed an all time high reached in 2007, prior to the market crash when real estate was booming. Even though now the economy is much worse, rents are skyrocketing. Why? If anything, the poor economy may be contributing to high rents as more folks are renting vs. buying, and new construction (even in NYC) has stalled. The trend of 2 and 3 year leases has also caught on, causing a lower vacancy rate as tenants stay put. Lower vacancy rates equal lower inventory for an already high demand. This is part of the reason why rents are so high. But Manhattan has always been expensive right? These days, even the outer NYC boroughs are more expensive (with some of those neighborhoods reporting record rents as well) as people leave Manhattan seeking cheaper rents.
Wouldn't Higher Rents Make More People Buy? Tougher Lending Standards Still a Nationwide Trend
Even though rents are rising in many areas across the country, home prices in general are still declining. This combo of very high rents and very low home prices is something of an anomaly, as one usually follows the other. Record low interest rates and affordable homes create an ideal market for buyers, but securing a mortgage has gotten much more difficult, with personal credit playing a huge role in getting qualified. The result is a pickup in demand for housing, but with less borrowing power, more people are stuck renting. With tenants having no alternative to renting, and lower vacancy rates causing a decline in rental inventory, landlords are free to raise rents as they please, which is exactly what's happening in NYC. Hopefully lending restrictions will ease so more folks can buy a home if they want to. Until then, those seeking the dream of ownership may be stuck paying the rent; no matter how high it gets.
May We Suggest Ulster County NY?
Which brings us full circle to the local connection. Will higher rents in the city drive people north to buy in places like New Paltz or Woodstock? Homes for sale in New Paltz are very appealing for NYC folk who commute and Woodstock NY weekend homes are not too far away either. New Paltz is considered more of a full-time alternative to the city; ideal for those who commute. The NYS Thruway is right there for drivers, and those that commute by bus have a Trailways station right on Main Street that runs regularly to NYC. There is also a Metro North station nearby, making New Paltz a commuting hub. A little further north, Woodstock NY has more of that Weekender vibe. Attractive due to the vibrant arts and culture, Woodstock is a tiny but bustling little town surrounded by pristine natural beauty.
Or will tougher lending and longer leases equal people staying put despite low home prices and the desire to move? To us, that doesn't sound good for anyone but the landlords. What do you think will happen?