NYC Apartment Vacancy Hits 50-Year Low at 1.4%
The latest data from the triennial New York City Housing and Vacancy Survey paints a concerning picture.
NYC's Rental Housing Crunch Hits 50-Year Low
New York City's rental market is under immense pressure, with the lowest vacancy rates in over five decades.
Survey says: New York City is witnessing an extraordinary decline in available rental properties, with the vacancy rate dropping to a mere 1.4%. This figure represents the lowest vacancy rate since 1968 and is significantly below the 5% to 8% range that characterizes a healthy housing market.
Falling short: The latest data from the triennial New York City Housing and Vacancy Survey paints a concerning picture. Despite adding 60,000 homes to the housing stock, the city's population growth outpaced this expansion, increasing 275,000 households. Consequently, only 33,000 rental units were available across New York City.
The struggle is real: The housing shortage is particularly severe for lower-income residents: Vacancies for apartments under $1,100 are below 0.4%, and barely 1% for those up to $1,649. High-rent units' availability has also plummeted. Over 86% of households earning under $25K spend more than half their income on rent, highlighting the acute affordability crisis.
➥ THE TAKEAWAY
The clock is ticking: With the housing crisis at a critical point, there are calls for immediate policy action. Housing advocates like Rachel Fee are urging the creation of incentives to stimulate housing production. The focus is on measures like the 421-a tax abatement, which Governor Kathy Hochul is looking to reintroduce in the upcoming legislative session to alleviate the housing shortage.
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Soho House Considers Going Private Amid Short Seller Turmoil
Soho House (SHCO), the elite members club, is under scrutiny as GlassHouse Research draws parallels between its trajectory and the infamous WeWork saga.
What happened: SHCO, the parent company of high-end hotels and exclusive clubs like Soho House, the Ned, and Scorpios Beach Club, has seen a significant decrease in its market value. The release of GlassHouse's short report, which cast doubt on Soho House's financial stability and set a striking $0 price target, led to its stock nosediving by 30% at its worst during the day, eventually closing down 19% at $5. This marked the steepest drop in the stock's history.
Dire prediction: GlassHouse analysts, who disclosed holding short positions in Soho House, expressed concerns over similarities between Soho House's trajectory and WeWork's infamous struggles. They cited growing debt and profitability issues as red flags for the London-based company's future.
A bumpy road for investors: Since its July 2021 IPO at $14, Soho House's shares have consistently underperformed, trading over 60% below the initial offering price. Despite this, the stock experienced a notable rebound from a December 2022 low, gaining over 90%, and analysts remain predominantly positive, with an average price target suggesting a significant upside.
➥ THE TAKEAWAY
Why it matters: GlassHouse, known for its forensic accounting, has scrutinized Soho House for around six months. Their report chastised the company for its expansion into less affluent cities, a history of unprofitability, and what they describe as questionable accounting tactics. In response, Soho House rejected the report and announced a $50M share buyback program on Friday.
Barry Sternlicht warns of a $1.2 trillion loss in office real estate, with small banks possibly facing major impacts. New York Community Bancorp has already cut dividends due to potential loan issues. Further, property values may drop by 10% more, says Green Street. This scenario challenges landlords and banks, as slower Federal Reserve rate cuts could increase risks for smaller banks deeply involved in commercial real estate. Six charts illustrate the evolving situation.
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