Tenants are feeling resentful; already staggering from a year or more of rent increases.  Many feel trapped, because it is too costly to move or stay.  This could cause renters to shift their focus from renting to buying, but that may not be an option for some due to lack of down payment or credit issues.

According to Jonathan J Miller, president of the appraisal firm Miller Samuel, “When you see rents rising, it is usually reflective of a strong economy, but that is not the case now”.  Prices are being driven up by a tight credit market that forces people to stay in the rental market and limits new construction.

Some renters will opt pay more for less – a smaller apartment for less or the same rent they’re paying now.  Even so, moving expenses, broker fees and deposits can take even that option off the table.  Others are making the decision to share, even putting up temporary walls where allowed and sacrificing a living room.

Even the outer boroughs like Queens and Brooklyn are seeing spikes in the rental prices. 

Rental averages are up in every category, with one-bedrooms rising the most, by 6.5 percent over the past year, to $2,747, according to the Citi Habitats report. Studios rose 3.6 percent, to $1,953; two-bedrooms climbed by 6.1 percent, to $3,865; and three-bedrooms rose 4 percent, to $5,107.

There are some exclusions to the average rental price.  Since the majority of New York’s rental apartments in Manhattan are rent-regulated in some fashion, they are not included in the average.  Also, smaller landlords that do not use brokers   would not be included.  Renters could find that smaller landlords are more willing to negotiate because they would rather keep a happy tenant with a good payment track record, than to have a vacancy for an extended period of time.

There seem to be few options for renters until developers start to bring more new units to the market, or until another market crash to contain the out of control rents: 

• Stay put and try to negotiate or suck it up
• Get a roommate or two
• Move to another rental, neighborhood or town
• Buy

Based on New York Times article.

“Landlord concessions continue to be the exception, as rental demand and prices press higher”

• Median net effective rent was $3,064 for the first quarter, 9.1% higher than $2,808 in the prior year quarter.
• Rental price per square foot increased to $52.57, reaching its highest level since the third quarter of 2008, just as the credit crunch began.
• The listing discount, the spread between the original list price and rent, compressed in the first quarter to 2.2% from 2.7% in the prior year quarter. This was consistent with the 14.3% increase in new rental activity over the same period.
• Use of landlord concessions fell to 11.1% within all new rentals from 36.8% over the same period last year.
• New rentals of studios increased 16.1%, 1-bedrooms increased 13.5%, 2-bedrooms increased 14.5% and 3-bedrooms increased 20.7%. The 4-bedroom rental market decreased 21.5% over the same period.

The answer could be a temporary wall to carve out the extra space. But it needs to be done properly and meet certain safety standards. And you may need permission from building management or the Board.

Room Dividers NY,  1Wall 2 Rooms, and  All Week Walls   are a few of the many companies the city install pressurized walls. These so–called pressurized walls are made using only a tension system can accommodate most any size or shape of room, without leaving behind screws or adhesive residue when they are removed, but look and feel like ‘real’ walls. They can be attractive and functional, offering the privacy or separation needed for an office, TV room or extra bedroom. You may even be able to mount your flat-panel TV to one.  When the wall is no longer needed, it can be removed.

New York City is aggressively enforcing a long-standing but largely ignored code requiring approval from the Department of Buildings for permanent walls. According to the City Building Department, those wishing to divide a space need to rely on bookshelves or partial walls that don’t reach the ceiling. Temporary walls must not block exit routes or interfere with ventilation or sprinkler systems, as well as meet minimum room size requirements.

This new enforcement stems from a fatal fire in 2005 in the Bronx and subsequent criminal prosecution of the landlords and two tenants on manslaughter charges. According to the city, the illegal partitions put up by the tenants had disoriented the firefighters and lead to their deaths.

Safety is of paramount importance. Egress routes, maximum travel distances as called out by the building code as well as sprinkler coverage, smoke and carbon monoxide detectors should be considered before attempting to place a temporary wall.

Inspired by New York Times Article by Marc Santora.

“Tight mortgage credit conditions continued to drive rental prices and activity higher.”

• The median net effective rent (face rent less landlord concessions) jumped 9.5% from $2,950 to $3,121 in the same period last year. The year-over-year-gains were consistent across all rental price indicators.
• The 2-bedroom and 3-bedroom markets outpaced their smaller counterparts,increasing 14% and 18.1% respectively over the same period.
• New rental activity (excluding lease renewals) was up 10% from 7,217 to 7,942 in the same quarter last year.
• About 7.4% of new leases had some form of landlord concession compared to the 40.5% in the prior year quarter. For those leases with concessions, the average amount was the equivalent of 1.2 months of free rent.
• Days on market—the number of days from original list date to lease signing—was at its second fastest pace of 37 days in 15 years, which is when we began tracking this metric.

“East End market conditions reflected increased activity, especially in the luxury market as listing inventory slipped”

• There were 538 sales in the third quarter, 14.7% above 469 sales total in the same period last year, but 13.1% below the prior quarter total of 619 sales.
• Median sales price was $700,000 in the third quarter, 12% higher than $625,000 in the prior year quarter. In the third quarter, 67.1% of all sales fell below the million dollar threshold consistent with the 65.9%, five-year average.
• There were 2,238 listings at the end of the third quarter, 1.5% less than the 2,271 listings in the same period last year.
• Although price indicators and sales activity increased from the same period last year, the listing discount measuring the negotiability between buyer and seller edged higher to 11.3% from 10% in the same period last year.
• Days on market, the number of days from the last price change to contract date, increased 6 days to 170 days from 164 days in the prior year quarter.

• Median rent with concessions (net effective monthly median rent), increased 4.9% to $2,970 from $2,831 in the prior year quarter.
• The number of listings on the market slipped 1.9% to 4,605 in the third quarter from 4,693 in the prior year quarter. Number of new rentals declined 6.9% to 7.998 from 8,593 over the same period last year, as more tenants likely opted for renewals.
• Approximately 8.6% of new leases had some form of landlord concession, compared to 45% in the prior year quarter.
• Of the leases with concessions, the average amount was the equivalent of 1.2 months.
• Days on market—the number of days from original list date to lease signing—was 58 days, nearly 3 weeks slower than the 38 day average of the prior year quarter.
• The absorption rate for new rentals was 1.7 months, essentially unchanged from 1.6 month in the prior year quarter but down sharply from 7.7 months in the same period two years ago.

It was passed by Congress in 2010 with the intent of generating an estimated $210 billion to help fund President Barack Obama’s health care and Medicare overhaul plans.

It’s complicated and difficult to predict how it will affect every buyer or seller.  The National Association of Realtors ® developed a brochure with examples and different scenarios

• ·         Effective January 1, 2013, the 3.8% tax will affect some but not all income from interest, dividends, rents and capital gains.
• ·         Only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI
• ·         Applies to the Lesser of Investment income amount in excess of the AGI amount over $200,000 or 250,000

 Read more about it here.

• There was an 11% decline in the number of rental listings available, as new rental activity expanded 51.5% from the second quarter last year to the same period this year.
• A nominal 3.4% of new rental transactions received landlord concessions, averaging an equivalent of 1.2 months of free rent, compared to 60% of new rentals receiving an equivalent of 2 months free in the same period last year.
• Tenants paid a median net rental price of $2,888 per month this quarter, as compared to $2,700 in the same quarter last year, also marking a 2.8% increase from $2,808 last quarter.
• The average number of days from original list date to lease signing, or days on market,was 33 days, nearly 3 weeks faster than the 53 day average in this quarter last year.

• In the first quarter of 2011, 36.8% of rental transactions had a landlord concession.
• The average concession when provided was one full month of free rent.
• The median rental price of a Manhattan property, after considering concessions,
  if any, was $2,808, 7.4% higher than $2,616 in the prior year quarter.
• There were 25.6% fewer new rental listings available in the first quarter, falling to
  3,874 from 5,204 in the same period last year. The amount of new rental inventory
  was essentially unchanged from the prior quarter.
• Days on market—the number of days from original list date to lease signing—was
  40 days, less than half the 86 day average of the prior year quarter.