his page has been updated to reflect the latest trends in the NYC real estate market as well as the statewide market. New York’s thriving real estate market showed no signs of slowing in the last quarter of 2021. The dwindling housing supply and rising demand have resulted in a steady flow of transactions throughout the summer months. It has also been one of the hardest hit by the COVID-19 pandemic, with the highest job losses among the country’s major metropolitan areas. New York has been recovering from the economic effects of the pandemic.
Home prices remain low in comparison to where they were just before the pandemic hit New York City last year. Buyers can still get a good deal now that prices have risen to mid-2019 levels. Although rents of apartments have been falling in New York City due to high vacancies we can a significant slow down in those trends. New lease contracts are increasing month after month, and rental prices are recovering as demand rises. The strong buyer demand has also changed the dynamics of the residential sales market, which had been cooling for nearly three years.
NYC is now seeing rising demand and attractive pricing as people want to go back there. According to the latest statistics obtained by Douglas Elliman, as price trends continued to increase approaching pre-COVID levels, there was a surge in new lease activity in Manhattan in September 2021. For the eleventh consecutive month, the number of new lease signings increased year over year, but at a slower pace. Net effective median rent increased year over year but fell short of the level recorded in the same period last year.
Eastside was the only region of the four main regions not to see an annual rise in the median rent. The increase in new lease signings in Brooklyn was the highest for September since 2008. Queens’ real estate is experiencing a boom. The most expensive sector of its rental market has essentially returned to pre-pandemic levels, outperforming every other borough in reclaiming prior heights.
Renters seeking an alternative to the usually more expensive Brooklyn and Manhattan are flocking to Queens, boosting demand. Rents in the market’s medium and most inexpensive segments are also increasing. In September, new lease signings in Northwest Queens more than doubled but fell short of setting a record for the first time in six months. For two of the last three months, net effective median rent increased month over month.
New York Real Estate Market Trends (Statewide Statistics – November)
Data by NYSAR. The forecast is an estimate from other sources. While it is deemed reliable, it is not guaranteed.
As the holidays approach, pending sales increased in November (+11.6%), while sales prices in New York state have increased for 19 consecutive months, according to the New York State Association of REALTORS® housing report. Last month, the median sales price increased to $370,000. This is an increase of 12.1% over the median price of $330,000 in November 2020.
Closed sales decreased to 12,614 last month, down 8.3 percent from 13,758 in November 2020. Closed sales are still up 21.1 percent year to date. New listings fell 7.7 percent in November 2021, from 12,798 units in November 2018 to just 11,811 units in November 2021. The inventory of available homes decreased to just 36,822 units.
This represents a decrease of 26.9 percent in comparison to the 50,355 homes on the market in November 2020. Inventory months supply fell to 2.8 months in November 2021, down 34.9 percent from 4.3 months in November 2020. A balanced market is considered to have a supply of six to six and a half months.
The housing affordability index decreased by – 6.4% to 131 as compared to November of last year when it was 140. 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.
Source: NYSAR.com
The New York resale housing market (statewide data) continued to expand at a breakneck pace in Q3 2021, with record-high sales prices, low inventory, multiple offers, and strong buyer demand the norm this summer, according to NYSAR data.
Pending Sales in New York State were down 11.6 percent to 44,082.
Closed Sales increased 15.5 percent to 42,668.
Inventory shrunk 21.9 percent to 42,849 units.
Prices gazed upward as the Median Sales Price was up 26.2 percent to $385,000.
Days on Market decreased 33.3 percent to 46 days.
Months Supply of Inventory was down 34.7 percent to 3.2 months.
Housing Affordability Index dropped by 15.4% to 126.
A higher number means greater affordability.
Sellers received, on average, 102 percent of their original list price at sale, a year-over-year improvement of 3.1 percent.
New York’s Recovery From The Pandemic
On December 28, 2020, Governor Cuomo signed the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (the “Act”). The Act seeks to provide additional relief to residential tenants and property owners impacted by the COVID-19 pandemic and extend the periods of the stays granted pursuant to Executive Order 202.66 through May 1, 2021. The Act provides that any eviction proceeding pending on December 28, 2020, or commenced within thirty days thereof, will be stayed for at least sixty days.
As New York continues to fight the pandemic, on May 4, 2021, Governor Andrew M. Cuomo signed an extension of the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 and the COVID-19 Emergency Protect Our Small Businesses Act. It extended the moratorium on covid-related residential and commercial evictions and foreclosure proceedings for those filing a hardship declaration until August 31, 2021.
In one of her first acts as Governor of New York, newly appointed Governor Kathy Hochul called for a “Special” legislative session on September 1, 2021, to extend the moratorium on foreclosure and eviction actions provided in the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (S.9114/A.11181) (the “Eviction and Foreclosure Prevention Act”) until January 15, 2022.
Extending this legislation will help to safeguard vulnerable homeowners facing foreclosure until January 15, 2022, “provided the owner or mortgagor… owns ten or fewer housing units, directly or indirectly.” Any foreclosure action will be delayed until January 15, 2022, if the homeowner submits a hardship statement (as New York continues on the road to recovery).
The full recovery of the NYC real estate market and the economy as a whole depends on the potential future shutdowns in NYC, as well as the speed and efficiency of vaccine distribution which can help the businesses to reopen with full capacity. According to preliminary figures released on December 16, 2021, by the New York State Department of Labor, New York State’s seasonally adjusted unemployment rate decreased from 6.9% to 6.6% in November 2021.
New York State’s private-sector jobs (not seasonally adjusted) increased over the month by 24,200, or 0.3%, to 7,614,800 in November 2021. By comparison, the number of private-sector jobs in the U.S. increased by 0.2% in November 2021 (based on a payroll survey of 18,000 New York businesses conducted by the U.S. Department of Labor’s Bureau of Labor Statistics).
NYS Nonfarm Job Growth Exceeded the Nation in November. On a net basis, the total number of nonfarm jobs in the state increased by 23,600 over the month, while private-sector jobs rose by 24,200, in November 2021. At the same time, the total number of nonfarm jobs in the nation increased by 210,000, while private-sector jobs increased by 235,000.
New York City’s unemployment rate decreased over the month from 9.4% to 9.0%.
Outside of New York City, the unemployment rate decreased from 5.0% to 4.8%.
The number of unemployed New Yorkers decreased over the month by 24,700, 639,000 in October to 614,300 in November 2021.
Source: New York State Department of Labor
New York City’s Real Estate Market Overview (Latest Resale Trends)
Let us now look at the most recent trends in the New York City real estate market. The pandemic has hit New York City hard. As a result of the pandemic’s aftermath, people have moved to the suburbs, driving up home prices in those areas. Those who stay in the city, on the other hand, are often able to find a better home for less. The NYC real estate market is currently a buyer’s market which means there are roughly more active homes for sale than there are buyers. The supply for housing is outpacing the demand favoring home buyers who are managing to hold good leverage in price negotiations.
Overseas buyers accounted for 15 percent of all New York sales in 2020, according to Miller Samuel, indicating a surprising degree of resilience despite travel bans being in place for most of the year. Numbers are likely to increase as travel restrictions ease in 2021 although they are unlikely to reach the high of 30 percent witnessed in 2014.
Data by Redfin shows that the average sale price of a home in New York was $785K last month, up 10.6% since last year.
The average sale price per square foot in New York is $596, up 20.1% since last year.
Homes for sale in New York have a median listing price of $850,000.
Some of these homes are Hot Homes, meaning they’re likely to sell quickly.
In the past month, 3329 homes have been sold in New York.
In addition to houses in New York, there were also 16,450 condos, 730 townhouses, and 3655 multi-family units for sale in New York last month.
Most homes for sale in New York stay on the market for 99 days.
On average, homes sell for about 1.7 percent below their asking price.
The average sale price of a home in Manhattan was $1.18M last month, up 8.8% since last year.
The average sale price per square foot in Manhattan is $1.31K, up 4.8% since last year.
Realtor.com’s latest data also shows that NYC is a buyer’s real estate market.
In November 2021, the median list price of homes in New York, NY was $840,000, trending down 2.9% year-over-year.
The median listing price per square foot was $865.
The median sale price was $778,500.
The sale-to-List Price Ratio was 100% — homes sold for approximately the asking price on average.
A buyer would prefer a sale to list price ratio closer to 90%, whereas a seller would always prefer scenarios that yield a ratio of 100% or higher.
Homes in NYC sell after 152 days on the market on average.
The median days on market in New York City have increased somewhat over the past month and increased slightly over the last year.
Tribeca is the most expensive neighborhood, with a median listing price of $4.5M.
Riverdale has a median listing price of $365,000, making it the least expensive neighborhood in New York.
An Overview of NYC Rental Market
In the latest Douglas Elliman report, the high leasing volume continued to push prices up in September 2021. The increasing new lease contracts in New York City are helping to slow annual rental price declines. The rental prices are nearing their pre-pandemic level.
Manhattan’s discounts are attracting tons of renters. The surge of new lease signings in Manhattan slowed as landlord discounts dwindled. Net effective median rent increased year-on-year but fell short of 2019. For the 12th month in a row, new lease signings increased year over year, but at a slower pace. This is the lowest rate in nearly four years for new leases with landlord concessions.
Doorman median rent has risen considerably recently, whereas non-doorman median rent has fallen. While existing median rent stayed steady, new development median rent increased. New leases over $10,000 per month saw their highest market share ever. Luxury listing inventory fell by half in the year to its lowest level since 2015.
There were 5241 new leases signed, compared to 5018 a year prior — close to a 4.4% increase.
The average rental price in Manhattan in September 2021 was $4,322, an increase of 8.3% from September 2020 ($3990).
The average rental price increased by 5.6% from August 2021 ($4094).
The median rental price in Manhattan in September 2021 was $3325, an increase of 2.3% from September 2020 ($3,250).
The median rental price increased by 2.2% from August 2021 ($3,255).
The current vacancy rate is 2.34%. A year ago it was 5.75%.
Listing inventory (6761) is down by 57.5% from year-ago levels (15,923).
The median rental price increased in Downtown (9.2%), Northern Manhattan (1.9%), and Westside (5.2%).
The median rental price decreased in Eastside (-2.6%).
New lease signings in Brooklyn have continued to rise sharply. The increase in new lease signings year over year in Brooklyn was the highest for September since 2008. For two of the last three months, net effective median rent increased month over month. The market share of new lease signings for studios and one-bedroom apartments increased year over year, owing to the available discounts.
There were 1,485 new leases signed, compared to 1421 a year prior — close to a 4.5% increase.
The average rental price in Brooklyn in September 2021 was $3,215, a drop of 5.8% from September 2020 ($3,218).
The average rental price decreased by 0.1% from August 2021 ($3,218).
The median rental price in Brooklyn in September 2021 was $2,850, a drop of 3.4% from September 2020 ($2949).
The median rental price increased by 1.8% from August 2021 ($2,800).
Listing inventory (3371) decreased by 20.4% from year-ago levels (4235) and 39.9% from the previous month (5608).
In Northwest Queens, the year-over-year increase in new lease signings more than doubled but fell short of setting a record for the first time in six months. The number of new leases more than doubled year over year and rose by a third from the same period two years ago. For two of the last three months, net effective median rent increased month over month. With smaller flats, landlord concessions retained a greater market share.
There were 384 new leases signed, compared to 179 a year prior — a rise of 114.5%.
The average rental price in Northwest Queens in September 2021 was $2940, a rise of 1.7% from September 2020 ($2,890).
The average rental price decreased by 0.7% from August 2021 ($2,960).
The median rental price in Northwest Queens in September 2021 was $2,746, a rise of 3% from September 2020 ($2,667).
The median rental price rose by 1.9% from August 2021 ($2,696).
Listing inventory (797) increased by 29.8% from year-ago levels (614) but dropped -21.1% from the previous month (1010).
Impact of COVID-19 on The NYC Real Estate Market (Describes New York City)
Migration Trends: People are leaving big, densely populated areas like New York City and spreading out to suburbs or smaller communities with lower infection rates and/or to save money. Over the past several months, there’s been an influx of renters in the Hamptons coming from New York City. Hampton is roughly 100 miles from New York City and Brooklyn — the top two cities that experienced the highest amount of net losses.
New York City experienced the highest losses — more than 110,000 residents left the city from February to July of last year. That’s 487% growth (or nearly five times) when compared with the number of outgoing movers that left Manhattan in 2019. Brooklyn ranked sixth last year, but numbers quadrupled in 2020, pushing it to second place. What could be causing the large migrations during the key months of the pandemic? Let’s discuss some more interesting trends.
The StreetEasy Market Reports are a monthly overview of the Manhattan, Brooklyn, and Queens sales and rental markets. 2020 sales market was extremely sluggish. NYC was a buyer’s real estate market as the supply of homes continued to outpace the demand. The number of homes that went into contract throughout the year in Manhattan, Brooklyn, and Queens was just 10,751 — about half of the 21,410 sold in 2019.
After years of supply exceeding demand for Manhattan’s most expensive houses, the sales market is shifting. According to StreetEasy August 2021 Market Report, the luxury tier, as these high-priced houses are generally referred to, is currently driving the recovery of NYC property values. The number of contracts signed for homes across all price tiers has cooled off from the record highs we saw this spring.
The number of contracts made for houses across all price ranges has slowed from spring highs. But it doesn’t imply the market is slowing. In reality, the enormous Manhattan luxury real estate inventory is gradually decreasing. Manhattan has the fewest houses for sale since June 2020, and the median asking price increased for the second month in a row.
The median asking price in Manhattan hit $1,425,000 in August — the highest since June 2020. Prices in the luxury tier grew 2% year-over-year. That’s the biggest year-over-year increase since March 2016. Current prices are still lower than levels seen at the very beginning of the pandemic (March 2020), when the median asking price was $1,550,000. Rents are rising fastest in the luxury tier, or the top 20%, of the market. Prices in buildings with high-end facilities (such as a doorman, gym, or pool) are increasing faster than those without.
Tenant rents increased by 6% between March and August 2021, as the rental market recovered from COVID-related slowdowns. Rents in non-amenity buildings increased 4%. Manhattan luxury real estate sales were robust in August. The month saw 309 luxury contracts signed in Manhattan, the most out of any price tier in the borough. In August, Manhattan’s median asking rent increased to $3,100. This is the sixth straight month of rent increases. However, pre-pandemic rentals were $3,500.
In August, the median asking price in Brooklyn remained constant from July 2021. The median asking price in August was $949,000. The median asking rent in Brooklyn increased to $2,650, almost surpassing pre-pandemic levels. This was the borough’s fourth straight month of rent hikes. Inventory levels continued to decline.
From July to August, the median asking price in Queens remained consistent at $599,999 across all price categories. The median asking price in August was $649,000. On the rental side, Queens asking rates increased to $2,250 in August, edging closer to the pre-pandemic peak of $2,395. Queens’ rental inventory is declining, although at a slower pace than in Manhattan and Brooklyn.
New York City’s rental market has been significantly more impacted by the economic effects of COVID-19 than its housing market. Rents have been consistently declining since late March in New York City. But things are showing a sign of hope. The rental market is booming in NYC, with dirt-cheap prices attracting masses of new leases in Manhattan, Brooklyn, and Queens. You can get the best deals in New York City in Northwest Queens, where the rental inventory is rising as compared to last year.
NYC Real Estate Market Forecast 2022 (Latest Predictions)
Many industry experts have been predicting a strong property appreciation in New York in 2021. 2021 is going to be a great one for property owners as the state still faces a long recovery ahead. With the relaxation of COVID-19 policies, different economic sectors have opened up in different ways and at varying paces. According to existing trends, the New York housing market will be extremely active throughout the peak home-buying season.
What are the New York City real estate market predictions for 2021 & 2022? New York City has a track record of being one of the best long-term real estate investments in the U.S. The New York real estate market has been booming year over year. NYC home prices nearly doubled in the 2010s. With supply and demand continuing to favor sellers, prices continue to rise year over year.
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.
According to NeighborhoodScout’s data, the cumulative appreciation rate over the ten years has been 59.02%, which ranks in the top 30% nationwide. This equates to an annual average real estate appreciation rate of 4.75%. Despite the pandemic drastically affecting the New York real estate market, during the latest twelve months, New York’s appreciation rate has been 8.97%. In the latest quarter, NeighborhoodScout’s data show that house appreciation rates in New York were at 3.18%, which equates to an annual appreciation rate of 13.33%.
Let us look at the price trends recorded by Zillow over the past few years. Since Jan 2012, the NYC home values have appreciated by nearly 58.6% — Zillow Home Value Index. ZHVI is not the median price of homes that are sold in a month within a geographic region. It is calculated by taking all estimated home values for a given region and month (Also called Zestimates), taking a median of those values, applying some adjustments to account for seasonality or errors in individual home estimates. It, therefore, represents the whole housing stock and not just the homes that list or sell in a given month.
By this calculation, the current typical home value of homes in NYC is $736,240. It indicates that 50 percent of all housing stock in the area is worth more than $736,240 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). In Nov 2020, the typical value of homes in NYC was around $696,000. NYC home values have gone up 5.7% over the last twelve months.
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. Mortgage rates remaining low, pent-up demand, and good discounts will keep the demand high in 2022. The New York housing market could favor sellers over buyers.
New York-Newark-Jersey City Metro home values have gone up 13.2% (current = $571,556) over the past year and the latest forecast is that they will rise 10.0% over the next 12 months.
Home values in New York (statewide) have risen 14.1 percent (current = $372,566) in the last year and will continue to rise in 2021.
Over the last year, home values in New York City have increased by 5.7 percent.
The latest market forecast is not available for NYC.
However, it would probably remain a buyer’s market in 2022.
The chart below, created by Zillow, shows the growth of median home values since 2012 and their forecast until Nov 2022.
Source: Zillow.com
Please keep in mind that this is a broad market forecast and cannot be guaranteed to be 100 percent accurate. The ongoing pandemic has dramatically altered the dynamics of New York’s real estate market, which can vary by neighborhood. According to submarket reports from various local brokerages, New York saw a record number of vacant apartments hit the market, resulting in the lowest rents in more than a decade. Strong buyer demand, on the other hand, has returned to a sales market that had been cooling for nearly three years.
Rental demand will not return to pre-pandemic levels until jobs fully recover, and re-creating more than 500,000 jobs could take much longer than successfully implementing a vaccine. Rents will fall as the glut of inventory grows until the rate of renters returning to the city exceeds the rate of inventory entering the market. Strong buyer activity continues in the third quarter of 2021.
After escalating for 13 straight months, closed sales in New York have receded in back-to-back months. Sales fell 8.3 percent from 13,758 homes this time last year to just 12,614 sales in November 2021. However, pending sales climbed 11.6 percent from 11,462 units this time last year to 12,614 homes in November 2021. A home sale is listed as pending when a contract has been signed, but the transaction for the home has not yet been closed or finalized.
The pent-up demand fueled by low mortgage rates will keep the housing market hot in 2022, which is why the housing forecast for New York state 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 2022, 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.
For buyers in New York, the mortgage rates are at their lowest. Mortgage interest rates fell to their lowest rate since February. According to Freddie Mac, the monthly average on a 30-year fixed-rate mortgage remained at 3.07 percent in November – the second time above three percent since April. Homes in New York, NY sell after 152 days on the market on average. The median days on market in New York, NY have increased since last month, and have increased slightly since last year. 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.
New York Real Estate Market Report For 2020
Let’s take a look at the statewide data of the New York real estate market and the impact of the Covid-19 pandemic. The statewide market data includes single-family properties, townhomes, and condominiums. In May 2020, low inventory and increasing buyer activity kept 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.
Q2 2020 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.
According to NYSAR, buyers and sellers came back into the market in Q3 2020. 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.
NYSAR’s Q4 2020 report showed that the rebound in New York housing activity seen in the third quarter continued, with buyer activity remaining high while seller activity remains too little to bring supply into balance with demand in most market segments. Closed Sales increased 25.7 percent to 44,351. Inventory shrunk 22.6 percent to 40,836 units. Median Sales Price was up 22.3 percent to $340,000.
2020 Annual Report of New York Real Estate Market
According to NYSAR’s annual report, in 2020, New York (statewide) was a seller’s market for most housing segments as inventories remained at record lows. Declining inventories create an upward pull on home prices. As result, the overall median sales price increased 11.6 percent to $310,000 for the previous year. Seller activity continued to lag buyer demand, which had strengthened the ongoing seller’s market for most housing segments as inventories remain at record lows.
Here’s the 2020 annual report showing key housing indicators for the New York Housing Market.
Pending sales increased 8.5 percent, finishing 2020 at 148,280.
Closed sales were down 0.9 percent to end the year at 129,661.
Comparing 2020 to the prior year, the number of homes available for sale was lower by 22.6 percent.
There were 40,836 active listings at the end of 2020. New listings decreased by 7.2 percent to finish the year at 192,084.
Sellers received, on average, 98.4 percent of their original list price at sale, a year-over-year improvement of 1.1 percent.
The overall median sales price increased 11.6 percent to $310,000 for the year.
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.
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.
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 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 them 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 rent for about 3,800 dollars a month. This is why the NYC real estate market is one of the most expensive in the world.
Current Rental Trends Due to Economic Affects of the Pandemic:
The pandemic reversed a decade of unrestrained rent growth in New York. High unemployment leads to higher vacancy rates, as the New Yorkers could no longer afford to live in the city. It also led to lower demand for the rental inventory piling onto the market as leases expired throughout the summer.
Due to the exodus of Manhattan renters to Brooklyn and the suburbs, there has been a rise in vacancies and falling rents. As demand continues to decrease, rent prices are likely to fall more than they did during the Great Recession. On the other hand, soaring vacancies and rental discounts have attracted a range of renters to neighborhoods that previously would have been unaffordable.
The first signs the city is making a comeback have appeared, with Manhattan and Brooklyn lease signings seeing the highest surge in the past 13 years. The current rental trends (as shown above) that new leases are increasing but since many of the rental market metrics remain very weak, further price declines would likely occur in the coming months.
The Zumper New York City Metro Area Report analyzed active listings last month across 14 metro cities to show the most and least expensive cities and cities with the fastest-growing rents. The New York one-bedroom median rent was $2,030 last month. New York City was the most expensive market with one-bedrooms priced at $3,180 while Bridgeport was the most affordable city with rent at $1,240.
Here are the places where it makes sense to invest in rental properties in the New York City Metro Area. These are the places where the demand for rentals is growing strong in 2021.
The Fastest Growing Cities For Rents in New York City Metro Area (Y/Y%)
New York City had the fastest-growing rent, up 24.7% since this time last year.
Hoboken saw rent climb 18.7%, making it rank as the second.
White Plains was third with rent jumping 14.9%.
The Fastest Growing Cities For Rents in New York City Metro Area (M/M%)
Jersey City & Hoboken had the largest monthly rental growth rates, both up 4.8%.
Newark rent grew 3.2% last month, making it the second-fastest-growing.
New York City was third with rent increasing 2.6%.
Source: Zumper
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.
Disclaimer: Covid-19 may have impacted the NYC real estate market in a way that is not 100% accurately reflected here. When referencing the data published on this page for investment-related decisions, please keep in mind that the data provided here is not solely responsible for depicting the market’s current reality.
New York Real Estate Investment: Where to Invest?
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 housing types 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.
New York City’s housing market is one of the most costly and competitive in the country. There are 237 neighborhoods in New York (as per Realtor.com). Tribeca has a median listing price of $4.5M, making it the most expensive neighborhood. Riverdale is the most affordable neighborhood, with a median listing price of $365K. Here are some of New York’s most popular neighborhoods, along with their median listing prices, as reported by Realtor.com.
NYC Neighborhoods
Median Listing Price
$/SqFt
Upper East Side
$1.5M
$1.4K
Upper West Side
$1.4M
$1.6K
Riverdale
$365K
$352
Midtown East
$995K
$1.3K
Chelsea
$2M
$1.9K
Great Kills
$619.5K
$415
Harlem
$805K
$1K
Sheepshead Bay
$489K
$500
Flushing
$590K
$633
Tribeca
$4.5M
$2K
Park Slope
$1.5M
$1.3K
Eltingville
$629.9K
$387
West Village
$1.8M
$2.3K
New Springville
$498.9K
$394
Flatbush
$635K
$745
Bedford-Stuyvesant
$998.5K
$849
Bayside
$749K
$607
Bay Ridge
$497.5K
$530
Williamsburg
$1.3M
$1.3K
Westerleigh
$650K
$426
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 Oct 2021 was $389K, trending down -8.9% year-over-year. The sale-to-list price ratio was 100 percent.
The median list price of homes in Sheepshead Bay was $499K in Oct 2021, trending down -5% year-over-year. The sale-to-list price ratio was 97.72 percent. The median list price of homes in East Flatbush was $650K, trending up 8.9% year-over-year. The sale-to-list price ratio was 100 percent. The median list price of homes in Brighton Beach was $569K, trending up 16.4% year-over-year. The sale-to-list price ratio was 97.03 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 is $872,500. Homes in Midtown East sold for approximately the asking price on average in Oct 2021. The other neighborhoods best for buyers looking to spend between $700,000 and $1 million are Bayside, where the median sales price in Oct 2021 was $720,000 and the sale-to-list price ratio was 99.37 percent; Gravesend ($684,500, 96.98 percent); Flushing ($838,000, 96.38 percent); and Bay Ridge ($499,000, 98.14 percent).
All of this could vary from time to time and can be checked on Realtor.com. Check out some of the best neighborhoods for investing in New York for the long term→ These neighborhoods have been selected from all the five boroughs.
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
Amsterdam Ave / W 166th St
East Rd / West Rd
W 116th St / Amsterdam Ave
W 57th St / 5th Ave
W 58th St / Ave Of The Americas
W 30th St / 9th Ave
Barclay St / Church St
Broadway / Grand St
Madison Ave / E 60th St
Other Markets For Investing In New York Real Estate
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 many small apartment buildings are 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 that 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 crash 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, 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 study, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and taking the help of a real estate investment counselor.
References
Market Data, Reports & Forecasts
https://www.redfin.com/blog/data-center
https://www.zillow.com/new-york-ny/home-values
https://www.realtor.com/realestateandhomes-search/New-York_NY/overview
https://streeteasy.com/blog/nyc-housing-market-data/
https://www.redfin.com/city/30749/NY/New-York/housing-market
https://www.elliman.com/corporate-resources/market-reports
https://www.propertyshark.com/Real-Estate-Reports/nyc-real-estate-covid19/
Foreclosures
https://www.realtytrac.com/statsandtrends/ny/new-york-county/new-york
https://www.propertyshark.com/Real-Estate-Reports/NYC-Foreclosure-Report
International buyers
https://ny.curbed.com/2019/2/18/18229286/luxury-nyc-condos-real-estate-report
Why American buyers are replacing foreigners in the luxury market
Softening luxury market
https://www.businessinsider.com/new-york-city-luxury-real-estate-not-selling-penthouse-gimmicks-2019-2
Legislation
https://www.brickunderground.com/blog/2015/01/rent_stabilization_misconceptions
https://www.gsb.stanford.edu/faculty-research/working-papers/effects-rent-control-expansion-tenants-landlords-inequality-evidence
https://www.politico.com/states/new-york/newsletters/politico-new-york-real-estate/2019/04/09/mci-loophole-in-rent-regs-212895
Rules for high rents
https://ny.curbed.com/2019/5/14/18617990/new-york-rent-control-tenants-rights-landlords
https://www.forbes.com/sites/jeffreydorfman/2016/06/16/rent-control-treats-the-symptom-not-the-cause-of-rising-housing-costs
https://www.forbes.com/sites/scott-beyer/2015/04/24/how-ironic-americas-rent-controlled-cities-are-its-least-affordable/#7b7e3e048c62
High rental rates
https://www.trulia.com/research/rent-control-sf-nyc
https://www.rentjungle.com/average-rent-in-new-york-rent-trends
Potential for bargains
https://www.rentjungle.com/average-rent-in-new-york-rent-trends
The Overall Cooling of the Housing Market
https://www.forbes.com/sites/fredpeters/2019/03/12/the-real-estate-market-recovery-and-retreat-in-new-york-city/#3ee366d3100f
Tax law
https://www.cnbc.com/2019/04/01/manhattan-real-estate-sales-fall-for-sixth-straight-quarter.html
Expanding luxury development
https://www.businessinsider.com/nyc-penthouse-expensive-surplus- divided-up-smaller-units-sales 2019-1
https://object.cato.org/sites/cato.org/files/serials/files/regulation/2018/12/regulation-v41n4-2.pdf
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