The Real Estate: Lane Brown

What If the Rent Surge Is Based on a Lie? Investigating a COVID-era mystery.

- By Lane Brown

For a minute there, things looked grim for New York City landlords. The pandemic caused an exodus of such proportions that owners were forced to cut rents to their lowest levels since the bad old days of 2011. But then a miracle happened. (Or at least one seemed to!) New York's expats didn't just return. They came-in a phrase uttered in eerily identical fashion by the real-estate industry and the credulous reporters who cover it"flooding back."

"What started as a trickle earlier last year has become like a geyser of demand," one broker told CNBC in early 2022. Suddenly, there were lines around the block for open houses and bidding wars over unrenovated walk-ups. The vacancy rate in Manhattan fell below 2 percent, and median rent passed $4,000 for the first time. "I'm not exaggerating when I say that I've never seen the rental market as crazy as it is right now," another broker claimed to Insider in July, right before prices went up again.

What could explain it? Even if all of New York’s deserters had soured on country living—like the publicist profiled by the New York Times who came crying back after beavers flooded his yard in Saugerties—that still wouldn’t account for why there seemed to be fewer apartments available than before they’d left. Experts tried to identify factors that might be aggravating the shortage. Maybe the Fed was discouraging home sales with higher interest rates, so more people were renting. Or the couples that had split up during lockdown were separating and moving into all the one-bedrooms. Or single people had gotten claustrophobic and were spreading out into all the two-bedrooms. Or remote workers from other cities were coming to New York just because they felt like it.