How to Use the Renter’s Market to Your Advantage
The New York Times: There’s nothing like being stuck inside for months on end to make you notice your home’s shortcomings, and stew about how much you’re paying for each and every one of them. Especially in places like New York and San Francisco — where rents reached record highs in 2019 — it’s now hard to justify top-dollar leases when you could be doing your job (and overseeing your kids’ remote schooling) anywhere. This, no doubt, explains the boom in suburban home sales since the pandemic began, and the corresponding exodus from expensive cities.
You might expect that this Covid-sparked urban flight would also drive down rents, and in some cases you’d be right. But that also depends on where you’re looking, explained Cheryl Young, an economist at Zillow, an online real-estate marketplace. “Rents have cooled significantly, but national average prices are still growing compared to last year,” she said, noting that as of August, national rent growth was 0.7 percent, compared with 3.5 percent in 2019. “So it’s slowing, but it’s only negative in places that typically have large rental populations, like New York, the Bay Area, Boston and Washington, D.C.”
So, how should renters seize this moment? “If you’re looking to get a deal, my biggest advice is to learn your market,” said Eric Brown, an agent for Compass, another digital real-estate platform. “Is it an area where landlords are facing a lot of vacancies, or are homes getting snapped up within a few days?” Once you have an idea of demand, he explained, you’ll be in a stronger position to negotiate effectively. Here’s how to get the best rate whether you’re looking to move, renew your lease or wrangle new terms on an existing one.
Scout rent prices on real estate websites.
This is the easiest part: Go online and compare listings in your current neighborhood or the one where you’re hoping to live. Streeteasy offers great data on New York City; Compass, Zillow, Redfin and local brokerage websites will work better for other areas.
“It’s helpful to know what the neighborhood’s median rent is for the size of apartment that you’re looking for, and what percentage it has changed in the previous few months or year,” said Nancy Wu, an economist who analyzes housing data at StreetEasy. “It gives you a broad sense of how the community is doing, and what you’ll be able to ask for.”
While you’re at it, look at how long homes have been sitting empty. If many of them have gone unrented for weeks or months, then you’re in luck. “When tons of buildings have apartments available, then it’s a pretty safe bet that landlords are desperate for tenants and willing to negotiate,” Mr. Brown said.
And get specific. Some areas, like ones that normally have a dense student population, have been hit harder by the pandemic than others, Ms. Young noted. “Those rents will continue to be down for months, because it’s not like college students are going to come back midsemester,” she explained.
Do some digging.
If you want to renegotiate your lease or get a bargain on a new one, some old-fashioned detective work can take you the extra mile. “Looking up at the windows at night can give you a decent idea of how empty a building is based on how many lights are on,” said Elizabeth Donoghue, a tenants’ rights lawyer in Manhattan. “Keep your ear to the ground. You might hear people say, ‘Oh, that person on the third floor moved out, and 4B is leaving too.'”
Ms. Donoghue also recommended asking (tactfully) other people in the building whether they’ve renegotiated recently, or if they know of someone who has. “If another tenant managed to get $200 off, it won’t be posted online anywhere — you’ll only find out through word of mouth,” she said.
If you’re in the middle of a lease, your landlord might not be willing to budge. Either way, it’s always worth checking your apartment’s rent history. “The records might show that your apartment has been illegally deregulated, or that you’ve been overcharged,” Ms. Donoghue said. “It helped one of my recent clients discover that his landlord owed him $9,000 .”
In New York City, you can request rent records from the Division of Housing and Community Renewal. Other cities have different laws, but familiarizing yourself with your rights as a tenant will always work in your favor.
Go for big buildings over small ones.
Certain types of buildings are more likely to be discounted than others. “Most of the people who have left New York City this year tend to be younger renters — more transient people in their early 20s and 30s who have older family members they can go live with, or jobs where they can work remotely,” Mr. Brown said. “These people are more likely to live in big, no-fee rental buildings that are owned by commercial landlords, and those buildings haven’t been doing well since the pandemic hit.”
These buildings are also less desirable from an infection standpoint, Ms. Wu added. “We’re not seeing as much demand for large luxury rentals where you’re sharing elevators with 500 neighbors, and where part of your rent includes amenities like a pool and a gym that’s been closed,” she said. But if you’re looking for a deal, this is where you might find it.
The same goes for smaller apartments; if you’ve been looking to ditch your roommates, now is the time to pounce on a studio or a modest one- or two-bedroom. “Apartments with lower square footage have seen significantly more vacancy in New York City and many urban areas today, because the people who live in them tend to be more mobile,” Mr. Brown said. “We haven’t seen as much turnover in apartments with three or four bedrooms, where you have families of four or five with schools and multiple jobs to anchor them.”
As for single-family homes? Good luck. “Most of the deals we’re seeing are for multifamily housing,” Ms. Young said. “If you’re trying to rent a single-family home, that’s a much tighter market, which makes sense given that many people are working from home with kids who are doing remote school, and they need more space.”
Think about what the landlord is looking for.
Most large commercial landlords just want someone to pay rent in full, on time. But some mom-and-pop landlords are willing to negotiate if they like you and think you’ll be a reliable tenant. The key is to get personal.
“My advice is to come in with a package that shows who you are,” Mr. Brown said. “Have your financials ready, and a reference from your prior landlord, but also add a bio about yourself and your family,. You want to make that deeper connection.” It’s also worth making a phone call to ask if the landlord has preferences on move-in dates and ideal lease length. If you demonstrate eagerness to work with his or her needs, it could buy you more wiggle room on rent price.
Even if your landlord is a large company, you still want to be polite. “If you call up and threaten, the landlord’s immediate reaction will be to threaten back, and that’s a lose-lose situation,” Mr. Brown said.
Be prepared to settle for concessions.
“Landlords would almost always rather give you a few months free than reduce your actual rent,” Ms. Donoghue said. Offering concessions — like a rent-free period — allows landlords to keep their so-called “face rent” high and stable, which affects what they can charge in the future as well as how much their property is worth if they refinance it.
The good news is that many landlords are handing out concessions like candy these days. “In July, 30.4 percent of all rental listings had concessions, which is huge,” Ms. Young said. “In Washington, D.C., it was 57.5 percent of listings.” And 90 percent of the concessions she has seen have involved free rent. “So you may not see rent go down, but you will be able to get a few months off.”
The bad news is that if you’re hoping to stay in an apartment for longer than two years, a few months free won’t save you tons of money in the long term. “If you’re planning to be there for four or five years, you’re better off asking for a lower rent,” Mr. Brown said. “I recommend trying to split the difference. You could say; ‘I understand that you don’t want to lower my rent to the number I’ve asked for. Why don’t we lower it a little bit and do one month free?'”
If your landlord isn’t budging on any discounts or concessions, consider asking for other breaks. “Now is the time to ask for new appliances, or upgrades in the bathroom,” Ms. Wu said. “Anything to make your home more comfortable is fair game, since you’re probably spending a lot more time in it right now.”
The coronavirus isn’t going away anytime soon, and many markets suffering from the economic fallout will take a long time to recover — and may get worse before they do.
“There’s twice the number of rentals on the market in Manhattan this September compared to last year,” Ms. Wu said. “We’re not going to see that number of people moving back to New York all at once. If anything, more leases are expiring every month, more units are coming onto the market, and we’ll have an excess of inventory well into next year.”
While you’re waiting, Ms. Young recommended going month-to-month on your current lease, if you can. “That will allow you more time to look for something specific,” she said. Then you can pounce when the price is right.
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