5 ms·

> If salaries drop then rent drops. I don't see this being a bad thing. Maybe I'm being irrational, but I suspect that the drops won't be proportional and the

> If salaries drop then rent drops. I don't see this being a bad thing. Maybe I'm being irrational, but I suspect that the drops won't be proportional and the housing isse in SF will just get worse.

cmurf 11y ago
Probably not, because people don't ask. In 2008 when I was living in NYC, I asked and received 10-15% year over year decreases in rent (3 years). Long time NYers thought I was crazy to even ask. Incredulous I got it. And this was in Manhattan, doorman building, a few blocks from Lehman Bros. So yeah ask. And be prepared to move. If you aren't prepared to move, you're not ready to save.
- gech 11y ago
  Just that simple folks.
- pm90 11y ago
  Just curious, what do you mean, be prepared to move? Did you tell the landlord, "I will move if you don't give me a 10% decrease in rent"? I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. It also depends on the kind of property taxes prevalent in the states. e.g. in California, property taxes are set at the time of purchase, while in Texas they are reassessed every year. So, my landlord (in Texas) basically increases the rent to cover for the increase in property taxes.
  - klean92 11y ago
    2008 is the keyword here. Lehman B going bankrupt. Fear.
  - ethagnawl 11y ago
    > I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. I was able to do the same thing when re-signing the lease for my NYC (East Village) apartment in June 2009. My roommates and I drafted a letter requesting a 10% reduction, citing decreased rents 1) in the neighborhood and 2) in the rest of the city - specifically in the financial district where "luxury" buildings were giving away multiple months of free rent as a signing bonus - and the management company accepted it without a word.
  - brianwawok 11y ago
    Yes exactly. Its not a negotiation if you wont walk. Car dealer won't change price? Walk and buy a different car. If you are too in love to walk you already lost the negotiation.
  - rtpg 11y ago
    I think that that threat is more dependent on how fast they can fill the apartments. If the apartment ends up on the market for 2 months... well 10% decrease is the better option isn't it?
  - potatolicious 11y ago
    Tenant protection laws in NYC are very tenant-friendly, to a degree where someone who is sufficiently motivated and knows the system can effectively live in an apartment rent-free for up to a year at a time, if not longer. Landlords are scared to death of deadbeat tenants like this, it costs a lot of legal fees to get rid of them, and they're freeloading while you're walking through the necessary legal processes. Every time the apartment goes onto the market they're rolling the dice again - so the value of an existing pleasant tenant is substantial vs. the risk of a tenant of unknown quality. Which isn't to say you can just get your rent slashed whenever you want, but it's part of the negotiation, and coupled with a recession it can be a powerful argument.
    - cplease 11y ago
      I'm a landlord in New York and I've been a tenant in NYC and this just isn't true. Vast majority of rentals in NYC if you asked the super for a discount in rent you'd be requested not to let the door hit your ass on the way out.
      - cylinder 11y ago
        Depends if you are talking about private small landlords or corporate institutional (ie, Related). The former has totally different motivations and needs. I haven't received rent reductions but I have fought off rent increases in strong markets.
      - morenoh149 11y ago
        only works if prices are plateauing or dropping in your market
  - cmurf 11y ago
    I didn't literally say I will move. I was more coy and diplomatic about it. I just said the market is different, rents are coming down in the neighborhood, it's a great location and apartment and I'd really like to stay here but economic good sense tells me it's reasonable to request lower rent right now, and I think $x is reasonable.
leroy_masochist 11y ago
We moved into a new apartment in NYC in the summer of 2009. The previous tenant had a two-year lease at $4500 (struck in July '07). Our rent was $2800. In the rental market a big driver of the landlord decision cycle is needing, at a minimum, to have a reputable tenant and to cover the cost of carry of the asset (mortgage, etc). In many cases if their cost of carry is met (and that's often a low bar....many landlords in both NYC and SF own their apartments outright, or are paying tiny monthlies on a refinanced mortgage that was originated in the 90's), then the priority is getting a reputable tenant who won't destroy the place or create drama. If the above paragraph is confusing, basically what I am trying to say is that a landlord often prefers, for example, $3000/month from a tenant who they think is 98% likely to be an "easy tenant" to $3500/month from one who they think is 80% likely to be the same. In other words, there's a market premium on reliable tenants, especially in places like SF that have aggressive tenant-protection laws which make landlords even more antsy. As layoffs start happening (as they did in the nine months before we signed our lease back in '09) landlords of reliably-paying, drama-free tenants start getting antsy about keeping their current tenant or finding a suitable replacement. As such, what drives prices in markets like NY/SF isn't just supply-demand equilibrium; there's also a significant behavioral economics angle aspect to it as well, as landlords are willing to pay a premium for peace of mind. Therefore, I would expect a significant drop in SF rents if layoffs start coming.
- brianmcconnell 11y ago
  This times 100. A bad tenant can cost you tens of thousands of dollars, not to mention peace of mind. I once had one who lied about owning my property to have a 60 year old tree cut down. It was a nightmare (it turned out he had sued his previous landlord in a bogus sexual harrassment and basically extorted a hundred grand from an elderly woman). I would much rather have someone who pays less, but is financially and mentally stable. So yeah, rents will drop pretty fast once the market softens. SF in particular is a unique market because you have one population that is hell bent on staying here, and another that is primarily here for work opportunities. The latter population will clear out pretty quick once the work starts to dry up.
  - 11y ago

> If salaries drop then rent drops. I don't see this being a bad thing. Maybe I'm being irrational, but I suspect that the drops won't be proportional and the housing isse in SF will just get worse.

cmurf 11y ago

Probably not, because people don't ask. In 2008 when I was living in NYC, I asked and received 10-15% year over year decreases in rent (3 years). Long time NYers thought I was crazy to even ask. Incredulous I got it. And this was in Manhattan, doorman building, a few blocks from Lehman Bros. So yeah ask. And be prepared to move. If you aren't prepared to move, you're not ready to save.

gech 11y ago
Just that simple folks.
pm90 11y ago
Just curious, what do you mean, be prepared to move? Did you tell the landlord, "I will move if you don't give me a 10% decrease in rent"? I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. It also depends on the kind of property taxes prevalent in the states. e.g. in California, property taxes are set at the time of purchase, while in Texas they are reassessed every year. So, my landlord (in Texas) basically increases the rent to cover for the increase in property taxes.
- klean92 11y ago
  2008 is the keyword here. Lehman B going bankrupt. Fear.
- ethagnawl 11y ago
  > I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. I was able to do the same thing when re-signing the lease for my NYC (East Village) apartment in June 2009. My roommates and I drafted a letter requesting a 10% reduction, citing decreased rents 1) in the neighborhood and 2) in the rest of the city - specifically in the financial district where "luxury" buildings were giving away multiple months of free rent as a signing bonus - and the management company accepted it without a word.
- brianwawok 11y ago
  Yes exactly. Its not a negotiation if you wont walk. Car dealer won't change price? Walk and buy a different car. If you are too in love to walk you already lost the negotiation.
- rtpg 11y ago
  I think that that threat is more dependent on how fast they can fill the apartments. If the apartment ends up on the market for 2 months... well 10% decrease is the better option isn't it?
- potatolicious 11y ago
  Tenant protection laws in NYC are very tenant-friendly, to a degree where someone who is sufficiently motivated and knows the system can effectively live in an apartment rent-free for up to a year at a time, if not longer. Landlords are scared to death of deadbeat tenants like this, it costs a lot of legal fees to get rid of them, and they're freeloading while you're walking through the necessary legal processes. Every time the apartment goes onto the market they're rolling the dice again - so the value of an existing pleasant tenant is substantial vs. the risk of a tenant of unknown quality. Which isn't to say you can just get your rent slashed whenever you want, but it's part of the negotiation, and coupled with a recession it can be a powerful argument.
  - cplease 11y ago
    I'm a landlord in New York and I've been a tenant in NYC and this just isn't true. Vast majority of rentals in NYC if you asked the super for a discount in rent you'd be requested not to let the door hit your ass on the way out.
    - cylinder 11y ago
      Depends if you are talking about private small landlords or corporate institutional (ie, Related). The former has totally different motivations and needs. I haven't received rent reductions but I have fought off rent increases in strong markets.
    - morenoh149 11y ago
      only works if prices are plateauing or dropping in your market
- cmurf 11y ago
  I didn't literally say I will move. I was more coy and diplomatic about it. I just said the market is different, rents are coming down in the neighborhood, it's a great location and apartment and I'd really like to stay here but economic good sense tells me it's reasonable to request lower rent right now, and I think $x is reasonable.

leroy_masochist 11y ago

We moved into a new apartment in NYC in the summer of 2009. The previous tenant had a two-year lease at $4500 (struck in July '07). Our rent was $2800. In the rental market a big driver of the landlord decision cycle is needing, at a minimum, to have a reputable tenant and to cover the cost of carry of the asset (mortgage, etc). In many cases if their cost of carry is met (and that's often a low bar....many landlords in both NYC and SF own their apartments outright, or are paying tiny monthlies on a refinanced mortgage that was originated in the 90's), then the priority is getting a reputable tenant who won't destroy the place or create drama. If the above paragraph is confusing, basically what I am trying to say is that a landlord often prefers, for example, $3000/month from a tenant who they think is 98% likely to be an "easy tenant" to $3500/month from one who they think is 80% likely to be the same. In other words, there's a market premium on reliable tenants, especially in places like SF that have aggressive tenant-protection laws which make landlords even more antsy. As layoffs start happening (as they did in the nine months before we signed our lease back in '09) landlords of reliably-paying, drama-free tenants start getting antsy about keeping their current tenant or finding a suitable replacement. As such, what drives prices in markets like NY/SF isn't just supply-demand equilibrium; there's also a significant behavioral economics angle aspect to it as well, as landlords are willing to pay a premium for peace of mind. Therefore, I would expect a significant drop in SF rents if layoffs start coming.

brianmcconnell 11y ago
This times 100. A bad tenant can cost you tens of thousands of dollars, not to mention peace of mind. I once had one who lied about owning my property to have a 60 year old tree cut down. It was a nightmare (it turned out he had sued his previous landlord in a bogus sexual harrassment and basically extorted a hundred grand from an elderly woman). I would much rather have someone who pays less, but is financially and mentally stable. So yeah, rents will drop pretty fast once the market softens. SF in particular is a unique market because you have one population that is hell bent on staying here, and another that is primarily here for work opportunities. The latter population will clear out pretty quick once the work starts to dry up.
- 11y ago