Modest Drop In Manhattan Rents

Mody Livsky has been looking for an apartment in Manhattan. Like a lot of New Yorkers before him, he's been scouring the island for something clean, convenient and in his price range. Last week he found it: on 33rd Street and Second Avenue.

"You see it's spacious. It is a spacious studio. There's no question about it. I mean it does not feel like a studio. Studios are like you got that thing and you're done. That's what I like about this apartment. You have more closet space over here which is good. I'll give you the good and the bad."

Livsky was a beneficiary of the slight softening in the rental market. Studios like his were going for two thousand dollars or more a few weeks ago. He got it for eighteen fifty and was able to negotiate with the landlord for some improvements like a new stove and cosmetic repairs.

"So let's say the walk through is done. So what we have to do is ask him to put the gas as soon as possible and do the floor and if he doesn't want to do the floor then we will just deduct it from the rent. Right."(fade out and into)"So when Joe showed me that for eighteen fifty I knew I had a bargain on my hands for that week. I mean tomorrow could be something else."

His broker, Joseph Lops of the firm CitiHabitats, said what was a landlord's market has now eased, at least a little. Manhattan rents reportedly have dropped about 10 percent this month and landlords are actually offering incentives to move their units.

"Finally, with the reduction of rents, the renter and you know the new hires and the people moving here are going to gain a little relief."

But Professor Michael Schill at New York University Law School says it's not clear that the decline in rents will last or if it is merely a pause on the way up. Either way, he says, Manhattan prices are inflated...and always will be. But, he adds, it's not the only housing market in the city. It just gets the most attention -- maybe more than it deserves.

"I think we get a skewed vision in Manhattan, maybe both on the upside and the downside. We see rents going up to you know six thousand, seven thousand dollars and we think 'oh my god how can this be happening?' And then we see basically rents either stabilizing or moderately coming down and we think 'oh my god the world has changed over night.' And that's not the case in the rest of the city. "

Of course, what drives the market is basic supply and demand. For the island of Manhattan, that probably means rents will always be high compared to other cities.

In the outer boroughs, there's an ongoing housing dilemma of a different kind. There just aren't enough homes for working and middle class residents, especially in Queens and Brooklyn.Professor Schill argues this is the trend that will have a more dramatic long-term effect on the city economy than any uptick or downturn in Manhattan rentals.

"The people who we need for our economy -- to teach our children, to put out our fires, to man the offices in the city -- those people are going to be price sensitive and those people are going to have to move out of the city. "

He says the lack of affordable housing makes it harder for New York to compete with other cities that can offer both good wages AND nearby housing. So far, though, people are still streaming to New York which, bottom line, means that finding somewhere to live will almost always be a headache, and an expensive one.

From the Marketplace/WNYC businessdesk, I'm Patricia Willens.