zerohedge.com / by Tyler Durden / Apr 14, 2017 4:10 PM
Softening apartment rents, particularly in the massively over-priced, millennial safe-spaces of New York City and San Francisco, have been a frequent topic of conversation for us over the past several quarters…here are just a couple of recent examples:
- NYC Real Estate Bubble Bursts As Apartment Sales Crash 20%
- New York Real Estate Prices Plunge In 4Q As Listing Days and Discounts Soar
- San Fran Home Sales Crash To Lowest Level Since 2008 As Pricing Reset Gets Underway
- “It’s About Time For Recession” Property Manager Warns As Rents Drop “For First Time In Career”
Now, a new report from Goldman’s Credit Strategy Team, led by Marty Young, helps to highlight some of the key data points that suggest that sinking rent will likely not be just an ephemeral problem.
To start, an just like almost any bubble, sinking rents are the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders. Per the chart below, multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.
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