The luxury condo market in New York City turned soft as warm butter last year, thanks to a glut of gleaming new towers and a scarcity of interested buyers. Then came the coronavirus pandemic, which doused an already-weak sales market. And now comes a new trend that developers and brokers hope will turn things around: allowing renters to put their monthly payments toward the purchase of condo apartments.
There are currently at least five rent-to-own programs at buildings in the city, with more likely on the way, Brick Underground reports. Rent-to-own apartments can be found at 100 Barclay St., One Manhattan Square (the tower next to the Manhattan Bridge), 196 Orchard St., 298 East Second St., and 21-30 44th Dr. in Long Island City, Queens, which The New York Times highlighted in a recent article about developers’ strategies in response to the coronavirus pandemic. Rent to own, the article says, “is a tactic more commonly seen during the last recession.”
For renters who can afford it, it’s a way to test drive a place and make the overall commitment to buy less daunting. It also may be a fit for renters who want to buy but need time to shore up their credit, or are concerned about job stability in this economy – and want the option to walk away if necessary.
When the city shut down in March, in-person apartment showings were banned, and the impact on real-estate sales was immediate and brutal. Sales, already soft, plunged 58% in the second quarter of this year, according to the Elliman Report. One-on-one showings are now allowed under the current reopening phase.
The massive 815-unit One Manhattan Square started its rent-to-own program last fall, long before the pandemic hit. Christina Medina, director of sales at the tower, says there has been a high number of renters opting into the program, and she expects to convert a number of renters to buyers.
“Every conversation I have with renters right now inevitably swings towards the prospect of buying,” says Molly Franklin, an agent at Corcoran. “The option of rent-to-own definitely appeals to buyers who have great income but not much saved yet, or my clients that are expecting family money to come their way in the next year or two. People who are buying today clearly are passionate about the city, and I think enabling home ownership on a broader and more accessible level can retain the talent we will need to rebuild post-pandemic.”
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