Bloomberg, February 4, 2024, Why NYC Apartment Buildings Are On Sale Now For 50% Off
For landlords the playbook had long been simple and lucrative. Buy run-down buildings that are, in New York lingo, rent-stabilized. Fix them up. Pass along the expense to tenants by raising rents, which was allowed under the regulations. Cash out. Repeat. Once rents approached $2,800 a month, owners could charge what the market would bear, and the apartments became a potential gold mine. “You just had to be patient,” Peterson says.
Last year, New York buildings with at least one rent-stabilized apartment sold on average for $203,000 a unit, down 34% since 2019, according to Maverick Real Estate Partners, a New York investment manager. By contrast, the price of nonregulated apartments rose 23%. The value of rent-stabilized units declined by as much as $75 billion, Maverick found. In December the Federal Deposit Insurance Corp. unloaded $15 billion in loans backed primarily by New York rent-stabilized apartments—at a 40% discount. Last week, amid concern over real estate exposure, shares of New York Community Bancorp Inc.—which holds about $37 billion in apartment loans, half backed by rent-regulated units—dropped 38% in a single day. “A lot of owners I’m speaking with want to walk away from buildings,” says Lazer Sternhell, chief executive officer of Cignature Realty Associates Inc. in the city.
