We'll be discussing the current state of the NYC real estate market, and also for the state of New York. As New York continues to fight the pandemic, Governor Cuomo has extended the state’s moratorium on COVID-related residential property evictions until January 1, 2021, through Executive Order. Additionally, previous Executive Orders have prohibited charges or fees for late rent payments, and tenants facing financial hardship can still use their security deposit as payment and repay their security deposit over time.
The New York real estate market (statewide) continued to be hot in September 2020 with both sales and prices increasing by double digits as compared to last year. The closed sales in September increased by 12.2% (YTY) while pending sales surged by +49.3%.
However, due to extreme disruptions caused by the pandemic, year-to-date sales (closed) are still behind last year by 11.6%. The statewide median sold price in New York climbed increased by 17.5% (YTY) to $324,900. The average sold price also jumped by double-digits (+ 18.2%) to $432,547. The price growth can be attributed to stronger buyer activity and an insufficient amount of homes available for sale.
On the other hand, the New York City housing prices trends have shifted from their normal course of trending up. After remaining firmly steady throughout the pandemic, July presented a whole new picture. July’s $680,000 median sale price represented a 13% year-over-year drop, according to PropertyShark.com.
This trend followed in August as well. August 2020 was marked by the lowest median sale price of the year and sales dropped 19% below July levels. The prices plunged again, from $680,000 to $665,000, declining 2% as compared to July and 1% as compared to last year. Real estate sales across the four boroughs of NYC were down 45% compared to last year's August, representing the sharpest year-over-year rate of contraction in three months.
Earlier in June, the median sales price in NYC had hit $718,000 for the highest figure year-to-date. June also marked the first noticeable year-over-year price contraction, coming in 2% below June 2019's median of $735,000.
September 2020's market data by Realtor.com shows that NYC is a buyer’s real estate market, which means there are roughly more active homes for sale than there are buyers. The median list price of homes in New York, NY was $830K, flat year-over-year.
The median listing price per square foot was $592. The median sale price was $680K. On average, homes in New York, NY sell after 143 days on the market. The trend for median days on market in New York, NY has gone down since last month, and slightly down since last year. On average, sellers could sell homes for 97.44% of the asking price—2.56% below the asking price on average.
The supply for housing outpaced the demand favoring home buyers who have managed to hold good leverage in price negotiations in the past month. Ideally, a buyer would prefer a sale to list price ratio that’s closer to 90%. A seller would always prefer scenarios that can yield a ratio of 100% or higher.
NYC Real Estate Market Forecast 2021 (Updated)
What are the New York City real estate market predictions for 2021? New York City has a track record of being one of the best long term real estate investments in the U.S. NYC home prices nearly doubled in the 2010s.
According to NeighborhoodScout's data, the cumulative appreciation rate over the ten years has been 47.57%, which ranks in the top 30% nationwide. This equates to an annual average New York house appreciation rate of 3.97%. During the latest twelve months, New York's appreciation rate, at 4.68%, has been at or slightly above the national average. In the latest quarter, New York's appreciation rate has been 0.75%, which annualizes to a rate of 3.02%, which is a positive forecast.
According to Curbed by Miller Samuel/Douglas Elliman, the median home sale price for all of New York City in the first quarter of 2010 was $383,699. Prices started rising in 2013 and by the end of 2018, that number had almost doubled to $658,000. 2018 was the sixth consecutive year of home price gains in New York City. Since last year the NYC home prices have remained flat. The real estate market was already cooling off and the pandemic has further slowed it down after NYC became its epicenter.
Let us look at Zillow's data. Since 2015, the median home price in NYC has appreciated by roughly 28.24%. At the start of 2020, the median home price in NYC was around $624,000. At present, the typical home value of homes in New York City is $632,271. The typical home value of homes in New York state is $346,328. The typical home value of homes in New York-Newark-Jersey City Metro is $497,090. These values are seasonally adjusted and only includes the middle price tier of homes.
Here's Zillow’s housing market forecast for New York, NYC, and New York-Newark-Jersey City Metro. According to their forecast, the supply and demand dynamics will likely push prices north again over the next 12 months. The New York housing market will favors sellers over buyers.
- New York City home values have gone up 0.8% over the past year and the latest forecast is that they will rise 6.0% over the next 12 months.
- New York (statewide) home values have gone up 4.0% over the past year and the latest forecast is that they will rise 6.6% over the next 12 months.
- New York-Newark-Jersey City Metro Metro home values have gone up 3.4% over the past year and the latest forecast is that they will rise 5.6% over the next 12 months.
The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until September 2021.
The latest NYC real estate market forecast is that the home prices will rise by 3.7% – in the next twelve months. It is expected that the supply exceeds demand metrics will continue to favor sellers at least until August 2021.
Here is another short and crisp NYC housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for New York City is 77% and it is predicting a positive trend. LittleBigHomes.com estimates that the probability of rising home prices in NYC is 77% during this period. If this price forecast is correct, the New York-White Plains-Wayne, NY-NJ single family
home prices will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
The change in home prices for New York-Jersey City-White Plains, NY-NJ is shown below for the three-time periods (data up to 3rd Quarter, 2018). The New York Home Price Index has increased for the last 25 consecutive quarters. The all-time high in the New York Home Price Index was 270.5 in the 3rd Quarter, of 2018. The Home Price Index indicates that the New York Market is up 9% over the last 10 years. Over the last thirty years, it is up 145%.
The highest annual change in the value of houses in the New York Real Estate Market was 28% in the twelve months ended with the 1st Quarter of 1987. The worst annual change in home values in the New York Market was -7% in the twelve months ended with the 1st Quarter of 2010. The historical change in home values has been calculated until the 3rd Quarter of 2018. For the upcoming updates, you can visit LittleBigHomes.com.
|Time Period||New York MSA Real Estate Appreciation|
|Last 5 Years||24%|
|Last 10 Years||9%|
|Last 20 Years||141%|
The question now is what happens moving forward. These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? While many have lost jobs, making them ineligible for a home mortgage, some sellers have taken their homes off the market. The increase in the number of new listings in September indicates that sellers are now willing to put their homes on the market.
Across the state, new listings were up + 13.6 percent to 21,062. Pending Sales increased by 49.3 percent (YTY) to 16,813. The YTD pending sales are up by 3% from the previous year. Inventory shrank 21.5 percent to 52,687 units. While buyer activity continues to be robust, seller activity continues to be a bit softer. YTD new listings still lag behind by – 10.9% as compared to 2019.
Strong buyer activity has continued into the fall, which is normally the start of the seasonal slowing of the housing market. According to NYSAR, with stronger buyer activity in the market, this year and the continued constrained supply of homes for sale, speedy sales, and multiple offers are likely to remain a common occurrence.
The pent up demand will keep the housing market hot for the remainder of this year, which is why the housing forecast for New York is positive for the coming months.
Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment. After the pandemic (hopefully) is over in 2021, the shortage will once again put intense pressure on home prices and apartment rental prices in all four boroughs of New York City. The rent default and eviction trends are negatively affecting the New York rental market. The rent prices are already dropping due to increasing vacancy rates. More information on the latest rental trends is given below.
For sellers in New York, it is a great time to sell. Motivated buyers are looking for houses for sale, and you are not competing with as many property owners. Many sellers have chosen to back out amid this pandemic.
For buyers in New York, the inventory is relatively increasing & mortgage rates are at their lowest. New listings increased by 13% y-o-y. The rate on a 30-year fixed-rate mortgage has fallen to below 3 percent, according to Freddie Mac. As we write this, it is holding at 2.88%. The 15-year fixed-rate mortgage is 2.36%. This is the lowest monthly average commitment rate on a 30-year fixed-rate mortgage since Freddie Mac began tracking in 1971.
As listings linger on the market for longer, buyers have a special edge in negotiating sales prices. So they should take advantage of scooping up their favorite deals which otherwise are taken away by seasoned investors in the bidding wars.
Any homeowner looking to cash out and sell off their property should do it in the current phase. However, if you looking to buy a home, you should consider a thing called a tipping point. Nationally, the median tipping point is around two years but in New York, it’s 5.8 years.
The higher a home is priced, the longer you’ll need to stay in it to invest pay off relative to renting. It is smarter to buy a property if you plan to be in an area for seven years or longer. The New York real estate market has been booming year-over-year. With supply and demand continuing to favor sellers, prices continue to rise and temper homebuyer activity
NYC Real Estate Market 2020: Prices & Sales Trends (Summary)
New York is a fairly walkable city in Queens County with a population of approximately 8,174,290 people. NYC has been one of the hottest real estate markets in the nation for many years. Despite the cooling off, New York City regularly ranks among the most expensive real estate markets in the world. However, that’s due to demand that simply hasn’t let up.
The overall median sales price increased by 5.7 percent to $280,000 for the year 2019. Pending sales increased by 3.0 percent and closed sales were down 1.1 percent to end the year. 2020 began with increased sales activity in the New York housing market, with the year expected to be a strong one for the industry.
The first quarter of 2020 started strong but as we moved into March, the spread and impact of COVID-19 became more apparent. Until mid of March 2020, neither pricing nor transactional real estate in New York saw any major threat emanating from the pandemic.
As we moved further into March, the spread and impact of COVID-19 reflected more in the NYC real estate sales, as it started to diminish. New homes for sale in New York decreased 9 percent and pending home sales were down 2.9 percent. Inventory levels decreased by 10.4 percent. Months supply of inventory was down 12.1 percent to 5.1 months.
The median and average real estate pricing figures showed an upward trend. The Median sales price increased 6 percent to $291,532. Following the uncertainty and upheaval of March, April was marked by historical lows in sales activity and the strongest pricing trends of the year. As the health crisis stabilizes in the city and surrounding areas start opening up, the industry is watching with hopes of returning activity and buyer interest in the coming months.
Impact of COVID-19 Pandemic On New York City Housing Market
According to PropertyShark.com's analysis of the impact of COVID-19 on the NYC residential market, despite a downward trend in the transactional activity, prices remain unaffected. The pricing trends were firmly positive throughout the crisis and the median sale price in NYC remained steady above the same period last year. The month of March saw a 5% year-over-year gain in the median sales price in the NYC real estate market.
Pricing continued to strengthen in April as well. The month-end posted a year-over-year increase of 5.48% in the median sale price. At $724,900, the first week of April featured the highest median sale price of 2020 by that point, only to be surpassed by the third week of April with its $750,000 median.
Since pricing trends were firmly positive throughout the crisis, May 2020 kept up with that trend. May 2020 ended with a median sale price of $705,000, marking a 4% gain over May 2019. Additionally, this also made May the second-most expensive month in NYC this year, surpassed only by April’s $712,000 median price.
June’s first half however presents a whole new picture with strengthening sales trends and the first significant year-over-year price drop. 813 deals were registered in the first week of June 2019, making it one of the most active weeks in terms of sales activity in the first half of the year.
By comparison, between June 1 and June 7 of the current year, 409 deals were recorded, representing a 50% year-over-year drop, but also a 48% week-over-week upsurge in sales activity. June kicked off with the strongest pricing trends so far this year, posting a median sale price of $743,000, for the highest figure year-to-date.
That represented a 2% gain over year-ago figures. The second week of June 2020, however, posted a median sale price of $679,000, for an 11% year-over-year drop – this was also only the second time that 2020 weekly pricing figures were lower than their year-ago correspondents.
The third week of June closed with a median sale price of $700,000 for a 3% week-over-week gain. However, while it was one of the highest weekly median sale prices in 2020, it still came in 2% below year-ago levels.
However, June 2020’s median sale price of $717,733 also marked the highest median sale price year-to-date, outpacing April and pushing May to the third spot. Additionally, June’s median pushed the median sale price for NYC in H1 up $5,000 – or 1% – in just one month.
All in all, year-to-date NYC saw a total of 14,216 sales, 41% fewer than in the first half of 2019. Pricing trends, however, remained positive, with the year-to-date median sale price across the four boroughs coming in at $690,000, for a 3% gain over H1 2019. Drilling down to the borough level, significant disparities arise when looking at the first half of 2020.
Sales activity continued to strengthen in NYC, with July 2020 up 40% month-over-month, and down by 33% year-over-year. Weekly sales surpassed 500 transactions for the first time in 15 weeks, monthly sales top 2,000 for the first time in four months. Queens' median sales price marks the first year-over-year decline of 10% in July.
August 2020 was marked by the lowest median sale price of the year at $665,000 and sales dropped 19% below July levels.
NYC Real Estate Market Report (August 2020)
- With 1,893 deals, NYC sales drop 19% M-o-M and 45% Y-o-Y in August
- The city median drops to $665,000 in August, marking the lowest monthly figure YTD
- Manhattan median misses the million-dollar mark for the third time in six months
- At $553,400, Queens records lowest median sale price YTD
- Bronx median continues a downward trend since May peak, stabilizing at $453,000
- Brooklyn median drops below $700,000 for the first time this year
The number of closed sales in Manhattan was down by 46 percent in the third quarter compared to the same period in 2019, according to new sales data. Inventory was up by 27 percent — the highest gain since 2009, according to a new report from the brokerage Douglas Elliman — and demand remains soft. The median sales price for apartments, $1.1 million, was 7 percent higher than at the same time last year. Sales in the suburbs are plateauing, indicating that the outbound migration from the city may be waning.
The StreetEasy Market Reports are a monthly overview of the Manhattan, Brooklyn, and Queens sales and rental markets. Here are some of the key housing statistics for July 2020. A near-record number of Brooklyn homes went into contract in August, even as pending sales in Manhattan and Queens continued to fall amid a market slowdown, according to StreetEasy’s August 2020 Market Reports.
Manhattan prices dropped and so did the number of homes that went into contract.
- The number of homes that went into contract in Manhattan fell by 6%.
- Total inventory in Manhattan rose 24% over last year, with 10,639 homes on the market — the highest number in more than a decade.
- The StreetEasy Manhattan Price Index fell 4.5% to $1,395,000, its lowest level since July 2014.
- Even with prices dropping, the number of homes entering the contract was still down 6.0% from last year.
Pending sales in Brooklyn increased across nearly all five price tiers but Brooklyn Prices Stayed Flat.
- Pending sales in Brooklyn’s lowest tier, where the median price is $253,000, increased by 100% over 2019.
- Pending sales of homes in the second-highest tier, with a median price of $999,614, rose 65% over last year.
- The only tier that did not see much change was the uppermost or luxury tier, with a median of $1,613,856, where pending sales fell 0.7%.
- Sales increased in more affordable neighborhoods like Bay Ridge and Flatbush, as well as in pricier areas like Downtown Brooklyn and Prospect Park.
- The StreetEasy Brooklyn Price Index stayed flat compared to last year at $956,900.
- Prices did drop in North Brooklyn, the borough’s most expensive submarket, by 3.9% to $1,410,000.
- Inventory in the borough was at near-record high levels with 5,830 homes for sale on the market, representing an increase of 6.6% compared to last year.
Home prices in Queens rose in the most expensive areas.
- The number of homes that went into contract fell by 4.3%.
- Prices rose in Northwest and Northeast Queens, the borough’s two most expensive submarkets, by 3.5% and 3.4% respectively.
- However, the StreetEasy Queens Price Index remained flat at $660,000.
- Sales inventory continued to linger in these expensive areas — particularly in Northwest Queens, where inventory was up 24.7% year-over-year, to a record high of 601 available homes.
- The number of homes that entered contract ticked up from the lows seen earlier this spring, but was still down 4.3% compared to last year.
New York Real Estate Market: Statewide Trends in 2020 (Summary)
Now let's take a look at the statewide of the New York real estate market that includes single-family properties, townhomes, and condominiums. Low inventory and increasing buyer activity are keeping the prices stable in the New York housing market. The median sold price remained flat at $270,000 in May as compared to last year.
The month's supply of inventory dropped by 11.5 percent in May, from 6.1 months to 5.4. On the other hand, sellers in New York are still holding back on listing new properties on the market. New listings are still on the decline as compared to last year. According to NYSAR, as COVID-19 restrictions continue to soften, the New York real estate activity is expected to continue to improve in the coming weeks.
Homes are selling below their asking prices as the median price of homes that have been sold out is $432,800. It shows sellers were willing to negotiate on prices as they were finding it more and more difficult to sell homes at asking prices. While the Empire State continued to re-open in June with “New York Forward,” real estate activity slowly began to strengthen, according to the housing report released by the New York State Association of REALTORS®.
While much of the country was working on a phased reopening of the economy in June, real estate activity continued to strengthen as well. Prices moved higher as the Median Sales Price was up 1.7 percent to $300,000. Days on Market increased 17.9 percent to 79 days. Months Supply of Inventory was down 9.5 percent to 5.7 months.
The month's supply of homes for sale fell from 6.3 months supply in June to 5.7 months – a dip of 9.5 percent in year-over-year comparisons. The median sales price inched up 1.7 percent this June to $300,000 compared to $295,000 in June 2019. Pending sales are also 25.1 percent lower (year-to-date) as compared to 2019. Closed sales declined 34 percent to 8,107 sales – down from 12,276 units in June 2019.
In July, the healthy buyer demand and constrained supply continued to be the narrative for the New York State housing market. Positive news for home buyers continued to be mortgage rates. The rate on a 30-year fixed-rate mortgage in July fell to 3.03 percent, according to Freddie Mac. This is the lowest monthly average commitment rate on a 30-year fixed-rate mortgage since Freddie Mac began tracking in 1971.
In August, showings and pending sales remained at strong levels while housing inventory remained limited, continuing the competitive bidding market we have seen in recent months. With the stock indexes at or near record highs as mortgage rates remain near record lows, signs point to a busy fall housing market.
Here are the latest housing statistics for September 2020 released by the New York State Association of REALTORS®.
The housing affordability index has decreased by – 10.6% to 118 as compared to September of last year. An index of 120 means the median household income is 120% of what is necessary to qualify for the median-priced home under prevailing interest rates. A higher number means greater affordability.
New Listings were up 13.6 percent to 21,062. Pending Sales increased 49.3 percent to 16,813. Inventory shrank 21.5 percent to 52,687 units. Prices moved higher as the Median Sales Price was up 17.5 percent to $324,900. Days on Market increased 3.1 percent to 66 days. Months Supply of Inventory was down 22.4 percent to 4.5 months.
|New listings increased by 13.6% percent from a year ago.|
|However, YTD new listings still decreased by 10.9% percent as compared to last year.|
|Pending sales were up by 49.3% in year-over-year comparisons.|
|YTD Pending sales were up by 3.0% as compared to last year.|
|Closed sales took a jump of + 12.2% Y-O-Y but still declined by – 11.6% if we consider YTD numbers.|
|Inventory continues to be a large problem as the number of homes for sale dropped by 21.5% Y-O-Y.|
|The month's supply of homes stands at 4.5 months – a dip of – 22.4% in year-over-year comparisons.|
|The statewide median sales price rose by + 17.5% to $309,175 while avg. price jumped by + 18.2% to $432,547.|
Q3 2020 Report of New York Real Estate Market
Q2 was substantially impacted by COVID-19, which slowed the economy and housing activity along with it for much of the last three months. Recent weeks have seen the economy slowly reopening and buyer activity coming back significantly, with June showing activity as tracked by ShowingTime up substantially from April and May levels and nationally now above June 2019 levels.
New Listings decreased 36.8 percent to 41,762. Pending Sales were down 35.7 percent to 26,597. Inventory levels shrank 19.6 percent to 58,215 units. Prices continued to gain traction. The Median Sales Price decreased by 1.8 percent to $275,000. Days on Market were up 5.4 percent to 78 days. Sellers were encouraged as Months Supply of Inventory was down 9.5 percent to 5.7 months.
According to NYSAR, buyers and sellers came back into the market in Q3 2020, with buyer activity up substantially from a year earlier. While seller activity has improved from last quarter, sellers are not listing enough homes to meet the increased demand seen from buyers. Fast sales, multiple offers, and low inventory are likely to continue into what is normally a slower time of year.
Pending Sales in New York State were up 42.6 percent to 53,262. Closed Sales decreased 8.0 percent to 36,058. Inventory shrunk 21.5 percent to 52,687 units. Prices gazed upward as the Median Sales Price was up 7.9 percent to $307,500. Days on Market increased 12.9 percent to 70 days. Months Supply of Inventory was down 22.4 percent to 4.5 months.
NYC Real Estate Foreclosure Statistics
As per the New York City foreclosure data by Zillow, in New York 0.1 homes are foreclosed (per 10,000). This is lower than the New York-Newark-Jersey City Metro value of 0.9 and also lower than the national value of 1.2. The percent of delinquent mortgages in New York is 1.8%, which is higher than the national value of 1.1%. The percent of New York homeowners underwater on their mortgage is 6.7%, which is lower than New York-Newark-Jersey City Metro at 8.5%.
There are currently 759 properties in New York, NY that are in some stage of foreclosure (default, auction, or bank-owned) while the number of homes listed for sale on RealtyTrac is 3,322. In August, the number of properties that received a foreclosure filing in New York, NY was 100% higher than the previous month and 90% lower than the same time last year.
|Potential Foreclosures in New York||759 (RealtyTrac)|
|Homes for Sale in New York||3322|
|Median List Price||$995,000 (2% rise vs July 2019)|
2019 NYC Annual Foreclosure Report: By PropertyShark.com
- NYC foreclosures dipped 6% year-over-year, while pre-foreclosures slid 7%.
- Overall, NYC had a total of 3,056 first-time foreclosure cases in 2019, compared to 2018’s 3,237.
- It marked the second consecutive year of decreased foreclosure activity in the city.
- Foreclosure activity increased in just one borough, with Manhattan surging 39%.
- The Bronx undergoes the steepest drop in first-time foreclosures – down 21% year-over-year.
- Queens logs most foreclosures with 1,164 unique cases.
- Staten Island foreclosures remain relatively flat, yet still 313% above 2014 levels.
- Brooklyn’s 11236 zip code was 2019’s foreclosure hotspot with 4% of all city-wide cases.
- Similar to the trend of foreclosures, pre-foreclosures in NYC also trended downward in 2019.
- 7% fewer residential lis pendens were filed last year than the year before.
- In particular, Queens recorded the largest year-over-year drop, with 20% fewer pre-foreclosure cases than in 2018.
- Conversely, Staten Island had 4% more lis pendens in 2019 than it did in 2018.
NYC Real Estate Market: Is It A Good Place For Investment?
Is NYC a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in NYC is a good investment? The fact is that New York house prices are not only among the most expensive in New York, but New York real estate also is some of the most expensive in all of the U.S. Since NYC real estate is very expensive for many investors, there are several other areas where you can invest in real estate and we shall be discussing some of them here.
It’s a relatively good time to buy a property in New York as housing inventory is on the rise and competition is less. Currently, the NYC housing market is relatively more friendly to buyers than sellers. With the phased opening of the economy, buyers have been quicker to return to the housing market. It seems they want to cash in on the opportunity to purchase their favorite properties amid historically low-interest rates on a 30-year fixed-rate mortgage.
Keeping aside the short-term impact of the ongoing pandemic, let’s take a look at the number of positive things going on in the NYC real estate market which can help investors who are keen to buy an investment property in this city.
The Impact of International Buyers in New York
Despite all the talk about the one percenter dominating this and that, the truth is that the international elite is bolstering the price of luxury real estate in New York City. They see NYC real estate investment as part of a multi-pronged approach. The property is almost certain to appreciate, so it is an investment. Owning a piece of the NYC housing market gives them a place to stay if they have to flee their home country. The money invested in the NYC housing market is typically not reported to their government, and it is almost guaranteed not to lose value. Ironically, foreign owners like these are much more willing to take a modest loss when they sell when they are no longer interested in the property.
New York City's Expanding Luxury Development
New York’s rent control laws don’t apply to luxury units, and developers have chosen to build these instead of the affordable housing the city needs. However, this development isn’t limited to the densest parts of New York City. For example, Staten Island’s North Shore is seeing new luxury condo construction. Interest in the area is driven by both the improved transit via the new ferry service and luxury buyers seeking relative bargains. This is aside from the oversupply of luxury penthouse units in the NYC housing market.
NYC Rental Market is Strong
The factors that led to the incredibly high rental rates in the NYC real estate market haven’t changed. One is the sheer number of people crammed into such a small space. Another matter to consider is all the zoning regulations that limit housing supply, though New York City has had the sense to give tax breaks for those who turn warehouses and commercial properties into rental units.
This means that non-residential properties can be a viable NYC real estate investment, assuming you can get permission to turn it into lofts, condos, or apartments. Strict eviction laws that make it difficult to remove tenants who are a nuisance, time-consuming to remove if late on rent, and nearly impossible to get rid of it in a rent-controlled unit all force property owners to charge much higher rent in the NYC housing market. It is the classic case of cost-shifting causing others to pay a fortune.
The median rent in New York City now exceeds three thousand dollars a month. One-bedroom apartments and studios rent for roughly three thousand dollars a month, while two-bedroom apartments rented for about 3,800 dollars a month. This is why the NYC real estate market is one of the most expensive in the world.
Rental Trends Due to Economic Affects of the Pandemic:
According to Steeteasy.com, as of July, rents in Manhattan have declined by 3.1%, marking the largest year-over-year drop since the Great Recession, when rents in Manhattan fell nearly 10% over the course of a year. New York City’s unemployment rate reached 20.4% in June 2020, already twice as high as the Great Recession’s peak unemployment rate of 10.4% in December 2009.
High unemployment leads to higher vacancy rates, as the New Yorkers who can no longer afford to live in the city. It also means lower demand for the rental inventory piling onto the market as leases expire throughout the summer. As demand continues to decrease, rent prices are likely to fall more than they did during the Great Recession.
As of September 2020, the average rent for an apartment in New York, NY is $3228 which is a 6.29% decrease from last year when the average rent was $3431, and a 1.39% decrease from last month when the average rent was $3273.
- One-bedroom apartments in New York rent for $2810 a month on average (a 3.02% decrease from last year).
- Two-bedroom apartment rents average $3576 (a 4.19% decrease from last year).
- The average apartment rent over the prior 6 months in New York has decreased by $222 (-6.4%)
- One-bedroom units have decreased by $130 (-4.4%).
- Two-bedroom apartments have decreased by $117 (-3.2%).
The cheapest neighborhoods where rent prices are less than New York's average:
- East Brooklyn, where the average rent goes for $1,252/month.
- High Bridge, where the average rent goes for $1,510/month.
- Parkchester, where renters pay $1,641/mo on average.
- Saint Albans, where renters pay $1,687/mo on average.
- Bedford Park, where the average rent goes for $1,756/month.
- The Rockaways, where the average rent goes for $1,757/month.
- Bensonhurst, where renters pay $1,794/mo on average.
- Tremont, where the average rent goes for $1,800/month.
- University Heights, where renters pay $1,803/mo on average.
- South Bronx, where the average rent goes for $1,845/month.
- Queensboro Hill, where renters pay $1,868/mo on average.
The Known Opportunities for Bargain Hunters
The NYC real estate market may seem dominated by five and ten thousand dollars a month apartments in Tribeca, but there are much cheaper neighborhoods. If you’re considering buying NYC real estate investment properties, start looking in neighborhoods like East Brooklyn, High Bridge, and Saint Albans. The average rent for apartments in Saintalbans is roughly 1200 dollars a month, while rents are less than 1500 a month in High Bridge. Since property values are based on multiples of the rental income, this means that you can snap up a small apartment building in the cheapest NYC real estate market for the cost of one luxury condo.
The Overall Cooling of the NYC Housing Market
The NYC housing market can be described as cool, though some will call it a buyer’s market. Things slowed down significantly in 2016 and 2018 as several groups of international buyers found it harder to buy properties or had less need to do so. On top of this is the trend of properties selling below their asking price unless they’re the cheapest unit in the neighborhood. Sales volume has increased somewhat, but there is a wider selection now than several years ago. More importantly, prices are a tenth to a quarter below their 2015 highs.
This is a good time to buy an NYC real estate investment property because the market will continue to warm up as long as the economy remains stable. NeighborhoodScout's data show that during the latest twelve months, New York's appreciation rate, at 5.25%, has been at or slightly above the national average. In the latest quarter, New York's real estate appreciation rate has been 1.04%, which annualizes to a rate of 4.22%.
The Softening New York Luxury Market
The increasing supply of luxury real estate relative to demand is leading to more being done to sell units at their list price. For example, luxury apartment buildings are offering more and more amenities to justify their high monthly rents. Another sign that the market is softening is the growing time on the market for such properties. A few notable properties have sold only after being subdivided into more “affordable” luxury units.
This means that investors with the money could buy a larger unit as a form of NYC real estate investment, subdivide it, and then sell it for a profit. If you have the cash and can close on the property, you could buy these premium properties for up to half of the listing price, too. The alternative is buying slow-moving one and two-bedroom apartments knowing they’ll eventually be worth more.
We mentioned the softening of the NYC housing market already, especially at the higher end. We brought up the increased amenities being used to fill luxury properties that aren’t being held as an NYC real estate investment. However, many properties may sit on the market for years. This is enabled by a large number of properties not lived in year-round and those who simply don’t want to reduce the price tag of their property to a point lower than what they paid for it. As listings pile up and the ongoing carrying costs like high property taxes rack up, expect to see a wave of sellers who will mark down their New York City real estate to move it because they can’t afford to wait to sell it.
The Legislation on the Table Will Increase NYC Rental Rates
There are around a million rent-stabilized apartments in New York City. There are several bills in the Democrat-controlled state senate and a massive tenant’s rights push that will likely lead to tighter restrictions on landlords. For example, it would be harder to get apartments removed from the rent-stabilization policy and limit the ability of landlords to raise rents after existing tenants move out.
While this hurts landlords who own rent-controlled properties, stricter rent control rules result in a reduction in housing supply and rents going up five percent more than they would have otherwise. Conversely, landlords who don’t want to deal with the hassle anymore may be willing to sell properties at a discount simply to get out from under the oppressive regulations.
New York is dominated by renter-occupied one or two-bedroom apartments. 76.75% of New York's dwellings are rentals. As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom large apartment complexes are the most common housing units in NYC.
Other types of housing that are prevalent in NYC include single-family detached homes, duplexes, rowhouses, and homes converted to apartments. The New York housing market has affordable townhomes. New York's single-family homes account for just 1.15% of the city’s housing units.
During the latest twelve months, the New York real estate did cool off. However, the cumulative appreciation rate over the ten years has been 38.81%, which ranks in the top 30% nationwide. Evaluate the specifics of the NYC housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in NYC.
There are 188 neighborhoods in New York (as per Realtor.com). Tribeca has a median listing price of $3.7M, making it the most expensive neighborhood. Riverdale is the most affordable neighborhood, with a median listing price of $375K. Graniteville is another popular neighborhood for homebuyers who can afford to buy a home in the median price range of $427K.
Some of the other popular neighborhoods in NYC are Floral Park, Jamaica, Woodside, Queens Village, Brooklyn, Staten Island, Astoria, Teaneck, Riverdale, Rosedale, Flushing, Bayside, Kew Gardens, Queens, and Maplewood.
There are some buyer-friendly neighborhoods in New York City where buyers have a bit more negotiating power in neighborhoods as compared to sellers. Jackson Heights is one of New York City’s most buyer-friendly neighborhoods at the moment with home prices under $700,000.
Other buyer-friendly markets with a median sales price below $700,000 include Rego Park, where the median sales price in 2019 was $429,999 and the sale-to-list price ratio was 95 percent; Sheepshead Bay ($699,000, 93 percent), East Flatbush ($649,000, 97 percent); and Brighton Beach ($619,500, 94 percent).
Buyers have a bit more negotiating power in neighborhoods where the median home price falls between $700,000 and $1 million. In areas like Midtown East, where the median sales price in 2019 was $899,000, listings typically sold at a 6 percent (or $54,000) discount.
The other neighborhoods best for buyers looking to spend between $700,000 and $1 million are Bayside, where the median sales price in 2019 was $717,000 and the sale-to-list price ratio was 93 percent; Gravesend ($799,000, 93 percent); Flushing ($786,668, 93 percent); and Bay Ridge ($739,000, 94 percent).
As we write this, there are 7282 single family homes that are currently for sale on Realtor.com within New York residential boundaries, including open house listings. The most expensive single-family home for sale on Realtor.com is located in the Central Brooklyn neighborhood in the city of Brooklyn, NY. The asking price is $104,000,000.
Another expensive neighborhood is Midtown Manhattan where the median sales price in 2019 was $1.85 million with a sale-to-list ratio of 90 percent. All of this could vary from time to time and can be checked on Realtor.com.
If you think of investing in NYC, you have decided on a long-term investment property. Here are the ten neighborhoods in NYC having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Broadway / W 225th St
- W 58th St / Ave Of The Americas
- W 116th St / Amsterdam Ave
- East Rd / West Rd
- W 57th St / 5th Ave
- Amsterdam Ave / W 166th St
- Broadway / Grand St
- Madison Ave / E 60th St
- Metropolitan College of New York / W Broadway
- Touro College / Broadway
Other Real Estate Markets in New York For Investment
Apart from NYC, you can also invest in Buffalo, NY. Ignore the Big Apple and look to the west if you want to buy rental real estate in New York. The Buffalo real estate investment offers a surprisingly good deal with low prices and relatively high rental rates. The Buffalo real estate market is dominated by older homes. A majority of homes in the Buffalo housing market were built before World War 2.
Interestingly, this also means that there are many small apartment buildings designed to serve a population that rented small units close to their jobs. For example, roughly a third of homes are single-family detached homes, while almost half take the form of small apartment buildings. This creates an excellent opportunity for those in the market for Buffalo rental properties. You could buy a small apartment building with multiple tenants for the cost of a single rental property in a more expensive New York real estate market.
Another real estate market in the state of New York is in Syracuse. Syracuse's real estate market offers cheaper property with a higher return on investment and a less hostile legal climate. It is one of the better choices if you want to invest in New York state. Another issue that factors into the equation is the job market. Lots of cities have a great quality of life but almost no one can afford to live there.
The Syracuse housing market ranked 6.3 out of 10 for its job market. That’s better than rural and much of upstate New York. And it is why there is a slow trickle of people moving in to replace those who leave. That’s why the Syracuse real estate market has a net migration of 5 or a stable population. This is in sharp contrast to the depopulation seen in most Rust Belt cities. It also means Syracuse's real estate investment properties will hold their value for the foreseeable future if they don’t appreciate it.
Albany is another real estate market which is good for investment. Albany is a steadily appreciating real estate market. While it isn’t as famous or hot as NYC, it offers an affordable entry point and a massive pool of perpetual renters. Though it may not be somewhere you want to live, many locals are choosing to stay and make their homes here. And that will continue to drive demand for Albany real estate investment properties as long as they are priced right.
You can also consider Rochester. The Rochester real estate market is stable, offering slow appreciation, affordable properties to outsiders, and good returns. It has strong, long-term potential that is only buoyed if NYC collapses. And this is one of the reasons why being everything the Big Apple isn’t is in your favor.
The Rochester real estate market enjoys a healthy population profile. Roughly a quarter of the population consists of children, and many are likely to remain due to the healthy job market. It also means that the Rochester housing market won’t crater if the job market weakens the way San Francisco collapses whenever the tech bubble bursts. Others choose to remain here because of the low cost of living.
Let us know which real estate markets in the United States you consider best for real estate investing!
Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. This article aimed to educate investors who are keen to invest in New York real estate. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and take the help of a real estate investment counselor.
Market Data, Reports & Forecasts
Softening luxury market
Rules for high rents
High rental rates
Potential for bargains
The Overall Cooling of the Housing Market
Expanding luxury development
https://www.businessinsider.com/nyc-penthouse-expensive-surplus- divided-up-smaller-units-sales 2019-1