New York City has a reputation of being one of the best cities for long-term real estate investments in the country. Year after year, the NYC real estate market has been thriving. However, NYC is also known to be an expensive market not every investor can navigate with ease and confidence. If you want to invest NYC real estate and do it before the prices become too high, you might find this article helpful.
Recent Trends In NYC Real Estate
According to Zillow, the median home value in New York is $671,400. Home values have increased 0.1% over the last year. They predict that the prices will decrease -1.0% in 2020. In New York, the median list price per square foot is $668. The median home price of the homes that are listed at the moment in NY is $775,000, while the median rent is $2,900.
Foreign Buyers Have Disappeared
The NYC real estate market continued to stabilize over the summer of 2019. There is bidding for some well-priced and nicely renovated properties. The percentage of foreign sales in the total number of sales is not nearly as high as it used to be. Buyers come far more often from the United States than Asia and Europe. The reason? Russian buyers completely disappeared from the high-end market a long time ago. Buyers from China are reluctant due to a slowing economy in their country and the hostile US government. This doesn’t come as a surprise since political trends have always been among the trends that are changing the real estate industry.
Since the number of active buyers has decreased, developers are in fierce competition to attract them. To deal with this challenge, they offer to include lawyers’ fees, taxes, even decorating, in order to keep the prices higher. The market in which developers plan buildings and the market in which they sell them are usually quite different.
Condominiums Vs Co-ops
At the same time, the gap between co-op and condominium prices is getting bigger and bigger. Co-op Boards are turning down suitable buyers for mysterious reasons. Consequently, the owners are forced to re-market, which means they will probably get a lower price the next time. This phenomenon is reducing the value of co-ops throughout the city, making condos a more desirable option. Another reason a growing number of buyers are finding condominiums more attractive are the strict renovation guidelines.
Manhattan Real Estate Market
For almost four years in a row, real estate prices have been decreasing in Manhattan. It appears that they have reached a state of relative stability, except for the most expensive properties. With the lower prices, the number of sales is stabilizing. Time will tell whether the number of Manhattan buyers taking advantage of that stability increases or not. Combined, second and third quarter closings of the year 2019 exceeded the previous year by 4%. Also, buyers have a wider choice now, as inventory rose for the 16th quarter in a row.
Even though the NYC real estate market is currently very challenging for the agents, the prices seem to be settling at a level anywhere between 10 and 20% below the highs we saw in 2015. Consequently, some NY buyers are taking advantage of the lower asking prices to re-enter the market. We are talking about well-priced properties on the Upper East/West Side, the 6 to 9-room marketplace, and 2,000 to 3,500-square-foot lofts downtown. On the other hand, the market for one-bedroom and smaller two-bedroom apartments is in a state of stagnation. Even the well-priced smaller units have sparked little interest over the past few months.
The third quarter of 2019 saw a drop in closed sales of 4% year-over-year to 3,146 closings. For Manhattan real estate, this is the lowest 3rd quarter since 2009. The fall was caused by a drop in resale condo sales of 13%. When it comes to resale co-op sales, they were steady year-over-year and improved 7% in comparison to the previous quarter. New development sales improved 2% compared to last year.
In the 3rd quarter, median price dropped 8% to $1.010M, a four-year low. The average price dropped 13% to a five-year low of $1.653M. The price per square foot also decreased, although not so drastically.
Thanks to a lower number of sales, active listings rose 3% year-over-year to over 7,400 units, while the average number of days on market grew nearly half-a-month to 112 days. Still, both of these statistics show a drop from the second quarter of 2019.
Brooklyn Real Estate Market
The Brooklyn real estate market was affected by several factors during the third quarter. One of them is the uncertainty after last summer’s state mansion and transfer tax increases. Although new development closings grew 13% annually, resale condo and co-op sales dropped in those markets.
Constrained inventory still hinders sales activity. Over the third quarter, listings at the high end expanded annually at three times the rate compared to listings at the low end. Following the recent construction boom, new development supply grew 2 ½ times faster compared to resale inventory. The third quarter of 2019 had fewer closings than the same period last year (a decrease of 5%). This was the fifth quarter of annual sale declines in a row.
When it comes to the average price, it was the same as last year’s. Median price dropped by 3%. Nevertheless, resale condo prices stayed high. The third quarter saw the second-highest resale condo median price in more than a decade. New development median price dropped to its second-lowest point in three years. Median co-op price reached its ten-year high, which hindered co-op sales by 6% in comparison to 2018.
About the author
Leah Davis is a freelance writer, mostly dealing with real estate, interior design, and moving industry topics. She currently lives with her family in New York City and works for bigapplemoving.com. When she’s not writing or reading about real estate, she likes cycling, singing karaoke, and traveling.