The Age of the Apartment
By Colin Ryan
In the title of his most recent article for The New York Observer, William Alden suggests that “we officially live in the age of the condo.” By this, he means that condominiums are accounting for more and more real estate sales in New York City, outpacing sales of the previously dominant ownership format, the co-op.
Alden cites several possible reasons for the increase in condo sales, and chief among them is the relative ease of buying a condo compared to a co-op. After all, a co-op is essentially a corporation: instead of buying a small piece of real estate, you essentially buy into the legal entity that owns a large piece of real estate. Entry into a co-op is also often contingent on interviews and other red tape. There are other reasons, too: Condo’s require a smaller down payment; they’re often larger than co-op units; and they’re more expensive, which means they’re more desirable for developers.
What Alden neglects to mention is how this trend will affect the rental market in New York City, and it is my belief that rentals will increase along with the condo’s sales market share. Traditionally, due to complicated rent control laws, the rental market has not been quite as attractive in New York as in other cities. (Not to mention, rental markets in general receive little in the way of media attention, due to the perception that they’re unchanging and not very lucrative. Here at Placester, we see things differently–but that’s for another post.) Still, the increase in the construction of apartment-style living spaces, combined with an already large inventory of unsold condos in NYC, will convince the more impatient real estate investors to switch their “FOR SALE” signs out in favor of rentals.
Finally, we have to think about how the changes in the way we communicate are affecting how we live, where we live, and for how long–and here I refer not only to New York, but to all urban markets. Because we’re more and more connected with distant people and places, and because we’re waiting longer to form the kinds of attachments that convince us to stay put (e.g. marriage, kids), young Americans are more willing than ever to bounce around a bit in pursuit of the right job or experience–say, a year in Austin or Portland after college, then two in San Francisco, then three in New York before settling down in New Jersey, Connecticut, or Massachusetts. This means finding a living arrangement that is relatively affordable and based on somewhat short-term commitments. And because rentals will become more common, people will come to expect a level of quality in an apartment for rent that approaches the quality of a condo. So while condominiums are having their day in the sun, I say: don’t forget about apartments.
[EDIT: A recent article by Phyllis Ferman of the New York Daily News offers some challenges to the above analysis, including steep rents and the disappearance of several perks common during the housing downturn. Nevertheless, considering lifestyle changes, it’s my sense that landlords and property owners in NYC will find it difficult to ignore the demand for rentals.]
(image via eszter on flickr)
Published on July 2, 2010