and here to discuss is erin Sykes, chief economist
and real estate advisor for nest seekers International, thanks
so much for joining us on this story. And
first question here, why is rent so expensive in
the city right now? And why does it matter
right now? So the vacancy rates in the city
are at all time lows, that just means that
there's little supply and a lot of demand and this
is caused by a multitude of things, Covid being
one of them, but also the now return to
office all hitting at the exact same time and people
that just want to be part of that new york
infrastructure um after we were told two years ago that
new york was dead and was never coming back and
obviously that is completely incorrect and and it's a city
that continues to rebound and always really grow after any
traumatic situation that it goes through. So new york
is here to say that demand is here to stay
, but really what we have to determine is how
to work in the city when not paying that$5000
a month rent, because it's absolutely ludicrous to think
that a starting salary in Manhattan can support that type
of rent. So I think people really need to
take a step back say, do I need to
live in Soho or Tribeca or can I commute from
Edgewater and and how can I become my own landlord
? You really have to get into the ownership mindset
and so you're not price taking for these incredibly high
rents, especially in this inflationary environment for americans right
now and I'm wondering, do you anticipate that this
trend continues on that upward cycle or is there a
point when we begin to see it flatten? Also
worth noting for anyone who has ever looked for real
estate in new york city, summer is always the
peak time with the highest rent. So um what
are you anticipating here? So I don't see rent
coming down anytime soon because we are in this high
inflationary environment, you know, if you look back
at what we went through with Covid and the amount
of money and$13 trillion COVID relief and quantitative easing
and infrastructure bills. So we have a lot of
dollars on the table and people have been spending that
primarily on goods and as your last guest mentioned,
the demand for those goods and and for retail in
general is still really strong. However, I think
that there is just such a lag here and people
are finally catching on and you'll see that through increased
credit card bills and we have seen increased savings,
but now that is really falling by the wayside.
And we're becoming an incredibly long perseverance uh inflationary environment
. And and that's why we were talking, you
know a year ago, two years ago about becoming
your own landlord and how buying real estate is really
the best inflation hedge out there because even if it's
not your forever home, you are building equity and
you are able to weather these storms. So I
think that it's super important for people to really get
in that mindset of being an owner and that's the
only way that you're really going to to cut down
on these incredibly high rents is when you can basically
say no to the landlord and um often we don't
see this pullback in consumer spending and also rental housing
market spending until we're officially in a very evident recession
. Um it's my perspective that we are already in
recession, it just hasn't hit Main Street yet.
So I encourage you to really, you know,
behave accordingly and take your power back from the landlords
. Yeah, Aaron, I think that's a really
worthy solution, but not one that's necessarily feasible for
all americans during this time because as you mentioned,
demand is surging, so whether you're looking to rent
or you're even looking to buy because of that surging
demand, even if you have the money to do
so it's a competitive market. What solutions are you
providing for people who inquire and want advice right now
? So right now an average 30 year fixed rate
mortgage is 5.5%. That's still very good. And
I think the thing is people got so used to
having two and three and 4% loans that suddenly 5.5%
seems traumatic, but in the grand scheme it's a
great rate and we likely won't see that rate because
of this perpetual inflation for years, if not decades
. So take the opportunity to get pre approved look
outside, you know, your small window, particularly
when we're talking about Manhattan, it's very difficult to
buy in Manhattan, but if you're willing to commute
30 45 minutes, maybe an hour, you can
at least get in on a property where you build
that equity so that eventually as as you're able to
command a higher wage, you can then purchase closer
and closer. But it's just, it's really important
that you're not adjust, you know, throwing money
away on these extraordinary rents because it's short sighted.
Yeah. And um, I really appreciate this information
. Lots of good tips here for investors and just
americans looking to figure out this rent situation. That's
erin Sykes, chief economist and Real estate advisor for
nest seekers International.