Experts are still trying to figure out how the virus will affect the residential real estate market. StreetEasy conducted a study and looked at the data of the 2008 financial recession. Although the recession will not directly tell us the future, an understanding of the past can help us make predictions and prepare for the uncertain future.
During the recession, rents fell by nearly 10%. The least expensive units fell drastically, by as much as 11% due to the sudden loss of jobs and high vacancy rates. However, when the economy stabilized, the city saw great growth and rental rates surged.
Interestingly, rents fell the most in Manhattan between 2008 and 2009. Brooklyn rents fell by nearly 5%. However, it is the outer-boroughs that are expected to take the biggest hit in 2020.
“During the 2008-09 recession, Manhattan’s finance and insurance sectors saw the biggest increases in unemployment,” reads StreetEasy. “Today, the outer boroughs have the highest concentration of vulnerable industries, such as restaurants, retail, childcare, and personal services.”
StreetEasy noted that New York City changed drastically after the Great Recession. Up until February of 2020. the City experienced the longest and largest job expansion since the end of World War II. With job creation, the rental markets grow.
The hope is that the market returns to its glory, which was seen as recently as February.
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To see the full StreetEasy study, click here: https://streeteasy.com/blog/nyc-rents-during-recession/
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