Rental Rates Hit a Ceiling, Home Prices Continue to Rise

Manhattan Apartment KitchenIn Manhattan right now, rental prices are at all time highs, and some sources say they have hit a ceiling. Prices to buy are also at all time highs but are expected to continue to climb due to foreign demand. What’s interesting is that the annual price to rent an apartment in Manhattan in some cases equals the landlord’s annual cost just to maintain the taxes and common charges on the apartment. So what’s so great about buying a home in NYC? The benefit to home ownership is clearly financial security. However, if one can attain financial security through other means such as growing one’s business, then that individual might not be so foolish after all for renting, especially if that business rate of growth surpasses the rate of growth in the apartment value. Over the next decade, whereby many expect interest rates to rise and inflation to rise, it’s very possible that the rate of growth in apartment value will not be as a high as the last decade. For the past decade, all that we saw were rates going down, which has lifted asset values. Over the next decade, rising rates will negatively impact asset value annual rate of growth.