Expect battles over real estate taxes, an influx of younger renters and bulk buyers

Housing markets in other parts of the country have been seeing record high prices and an increase in demand in 2020 — but not so in New York City, where the residential market has taken a beating from the pandemic.

Rents are in freefall and the vacancy rate hit an all-time high of 5 percent. The sales market came to a near standstill in the spring, and seven months later, contract activity is just starting to approach pre-pandemic levels.

But with Covid-19 vaccines being distributed around the country and the Federal Reserve’s commitment to keep interest rates low until 2023, there may be a light at the end of the tunnel.

But while occupancy may enjoy a V-shaped recovery, many landlords aren’t expecting their rental income to return to pre-pandemic levels for years.

Robert Morgenstern, managing principal of multifamily investment and operating firm Morgenstern Capital, said rents across his portfolio of largely market-rate units have dropped 8 percent to 12 percent, depending on the unit size and neighborhood.

“It’s about a 10 percent drop in rent, which if you think rents grow at 3 to 4 percent, you’re talking to three to four years of rent decline,” he said. “That’s a lot. And the concessions are higher. … It’s a tough moment.”

But Morgenstern noted that lower rents for a number of years will create opportunities for people who had been priced out of the city.

“I think the city is going to get younger,” he said.

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