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Is Manhattan The Best Market For Real Estate Investment?

If you’re keen to invest in the Manhattan real estate market in 2020, you must peruse till the end. Manhattan and New York City are synonymous for all intents and purposes. More than 1.6 million people live in Manhattan. It is the most densely populated part of New York City’s five Burroughs, and it is the heart of the city.

Manhattan Real Estate Market

Original Photo via Pixabay

New York City itself is home to more than eight million people. Manhattan has long been one of the hottest property markets in the world, and this is partially due to Manhattan’s insane real estate prices. Is Manhattan still one of the hottest real estate markets for investors? Let’s take a deep look at the latest Manhattan housing market trends to come to a conclusion.

Investment Properties For Sale

Manhattan Real Estate Market Forecast 2020

The real estate data from Zillow shows that the median home value in Manhattan is $1,201,000. Manhattan home values have declined -7.9% over the past year and their Manhattan real estate market prediction is that the prices will fall -4.8% within the next year. The median list price per square foot in Manhattan is $1,393, which is higher than the New York average of $683.

The median price of homes currently listed in Manhattan is $1,495,000 while the median price of homes that sold is $1,001,600. The median rent price in Manhattan is $3,455, which is higher than the New York median of $2,845.

Here is the Manhattan, NY real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of -4.8% till July 2020.

Manhattan Real Estate Market Forecast

Graph Credits: Zillow.com

Manhattan Real Estate Market Trends

Let us find out how is the Manhattan real estate market doing in 2019. According to Trulia, Manhattan real estate market trends indicate an increase of $27,500 (2%) in median home sales over the past year. The average price per square foot for this same period fell to $1,430, down from $1,477.

In the second quarter of 2019 the Manhattan real estate sales volume rose 13%, according to a report from Douglas Elliman and Miller Samuel. Manhattan homes are currently left on the market for an average of four months. The median sales price for an apartment in Manhattan hit a record of $1.2 million while the average sales price remained flat at $2.1 million.

According to a report from CNBC.com, it seemed like a turnaround for Manhattan real estate, which had seen six straight quarters of declines. But the real estate experts say the real reason for the spike in Manhattan real estate sales was the new mansion tax law. The New York City’s new mansion tax was kicked in on July 1, 2019 .

Many rich buyers raced to close deals in the second quarter to avoid the tax, which adds between 0.25% and 4% in taxes to sales of $2 million or more. It is believed that implementation of the new new mansion tax shifted sales into the second quarter, which in turn, would likely pull the sales down from the third quarter onward.

Manhattan real estate data by Redfin.com shows that the average sale price of a home in Manhattan was $845,000 last month, down 37.4% since last year. The average sale price per square foot in Manhattan is $1.21K, down 12.7% since last year.

There are 5,715 homes for sale in Manhattan, NY ranging from $5K to $77.7M on Realtor.com. 397 of which were newly listed within the last week. Additionally, there are 14,530 Manhattan rentals for sale, with a range of $950 to $500,000 per month. As per Realtor.com, in July 2019, the Manhattan housing market was a buyer’s market, which means there were roughly more active homes for sale than there were buyers.

Manhattan Housing Market Trends

Sale-to-List Price Ratio: 96.7% | Realtor.com

The median list price of homes in Manhattan, NY was $1.4M in July 2019, trending down -7% year-over-year. The median listing price per square foot was $1.5K. The median sale price was $1.6M. On average, homes in Manhattan, NY sell after 163 days on the market. The trend for median days on market in Manhattan, NY has gone down since last month, and slightly up since last year.

Manhattan Real Estate Market Trends

Graph Credits: Realtor.com

As per the Manhattan foreclosure data by Zillow, the percent of delinquent mortgages in Manhattan is 0.4%, which is lower than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Manhattan homeowners underwater on their mortgage is 9.7%, which is higher than New York at 6.7%.

Best Neighborhoods in Manhattan to Invest in Real Estate

There are 194 elementary schools, 136 middle schools, 153 high schools and 208 private & charter schools. There are 33 neighborhoods in Manhattan. Some of the best neighborhoods in Manhattan, New York are Upper East Side, Upper West Side and Midtown East.

Upper West Side offer an abundance of public green space. It is home to Lincoln Center, which hosts performing-arts institutions like the Metropolitan Opera and New York City Ballet. If you are looking for cheap apartments in Upper West Side, expect to pay upwards of $1,850 for a studio apartment. A one-bedroom apartment can cost you anything from $2,100 to $6,000 per month.

Tribeca has a median listing price of $3.7M, making it the most expensive neighborhood. According to Realtor.com, Washington Heights is the most affordable neighborhood in Manhattan, with a median listing price of $550K.

Further away from the city center you’ll find charming Manhattan neighborhoods like Hamilton Heights and Washington Heights where you can find three-bedroom listings with median prices of $3,002/month and $2,842/month, respectively.

Notable listings include a three-bedroom/three-bathroom rental at 684 Riverside Drive for $3,995/month and also a three-bedroom/one-bathroom rental at 620 West 182nd Street for $2,350/month. the cheapest Manhattan neighborhood has an average rent of $1,600.

Gramercy Park is one of the most beautiful areas of Manhattan. It is located in a quiet corner and attracts fewer tourists than the nearby East Village and Soho. Monthly rents range from $2800+ for studios, to $3800+ for one-bedrooms, and $6,500+ for two-bedrooms.

Battery Park is a favorite choice among families and it always ranks among the safest neighborhoods in New York City. With the newly designed Hub with 11 subway lines, transportation is very convenient from here. Monthly rents start from $3,000 for a one-bedroom apartment in Battery Park City.

Lenox Hill is a posh neighborhood on the Upper east Side. It runs from about 60th Street up to 77th Street and Fifth Avenue to Lexington Avenue. It forms the lower section of the Upper East Side, closest to Midtown. Some of the most expensive real estate in Manhattan is located in this neighborhood. The one thing about Lenox Hill that it is famous for is the hospital. Lenox Hospital is one of the best in NYC. Lenox Hill Hospital just joined forces with North Shore-LIJ Health System, which now provides a much larger hospital in NYC.

Should You Invest In Manhattan Rental Real Estate?

Is it worth buying an apartment in Manhattan, NY in 2019? Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying a rental property in Manhattan is good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead.

We have already discussed the Manhattan housing market 2019 forecast for answers on why to put resources into this market. Although, this article alone is not a comprehensive source to make a final investment decision for Manhattan but we have collected ten evidence based positive things for those who are keen to invest in the Manhattan rentals in 2019.

Investing in Manhattan rentals will fetch you good returns in the long term as the home prices in Manhattan have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Manhattan real estate market which can help investors who are keen to buy an investment property in this city.

1. Manhattan’s Size

The Manhattan real estate market shouldn’t be a top spot for investment because it is so expensive or famous. Its biggest draw is the sheer size of the Manhattan housing market.

You can own a variety of condos, apartment buildings and single family homes in your Manhattan real estate investment portfolio scattered across a wide area and still be part of the same housing market. You only have to know one set of housing regulations affecting tenant screenings and evictions.

2. The Diverse Manhattan Housing Market

Demographic diversity is not relevant to this discussion. The sheer variety of Manhattan real estate investment properties is. The incredibly expensive Manhattan real estate market has resulted in novel, high density projects that offer very high rates of return.

For example, the rent a desk concept behind WeWork has led to rent a bunk residential communities popping up, often just down the street from the rent a desk places. You could invest in these startups or renovate commercial space to create these high density living arrangements.

New York City has also revised its rules to allow for much smaller single resident occupancy apartments. Just make sure you get the necessary permits before subdividing an existing unit, because fines can be steep.

3. The Cooling Luxury Market

The Manhattan real estate market is unusual in the sheer number of luxury apartments and homes. This real estate niche has seen a boom in recent years, because these units are exempt from rent control rules and can be sold for much more than a half dozen conventional condos.

The luxury Manhattan housing market has cooled lately. If you want to invest in these properties, whether to rent out on a short term basis or to up and coming Wall Street brokers, this is the best time to buy.

4. The Low Turnover

There are a variety of rules that lead to tenants staying once they find a decent place in the Manhattan housing market. We periodically hear the stories of someone who moved into an apartment, got rent control, and stayed for sixty years.

In the right circumstances, this is a boon for a Manhattan real estate investment property owner. You don’t have to worry about vacancy. Then there’s no need to advertise the property or worry about the rules regarding such advertisements.

A good tenant will pay the rent month after month. It is guaranteed cash flow, and it is profitable as long as you can keep property maintenance costs and taxes below that level.

5. The Growing Selection

Property prices are starting to drop across Manhattan. Inventory is growing, since there are people trying to sell and relatively few buyers.

After all, median rent is around 80 percent of the median income, so there are not many who can buy the brownstone or condo they live in. This gives those searching for Manhattan real estate investment properties a wide range of options.

6. The Long Term Real Estate Forecast

New York City has long been the biggest city in the United States in almost every way. It has the largest school district in the country. It has also garnered attention for having the most people moving out in record numbers.

We have to keep this in perspective, since thousands moving out every week from NYC has far less of an impact than if it were a small metro area like San Antonio.

In the short term, this creates a buying opportunity in the Manhattan real estate market. After all, prices are down.  The Manhattan housing market, though, remains one of the most expensive in the world.

The local leadership driving away jobs and attacking schools is contributing to this. Fortunately, it means Manhattan real estate investment properties will rebound as soon as there is a change in leadership.

7. The Manhattan Rental Returns

The Manhattan real estate market is famous for an average one bedroom apartment surpassing 3000 dollars a month in rent. However, you don’t have to have millions of dollars of cash on hand to consider Manhattan real estate investment.

There are cheaper properties in the boroughs, and they’ll command 1500 dollars a month in rent for a one bedroom and much more for a two bedroom or three bedroom apartment. And rents in the Manhattan housing market are going up at faster than the rate of inflation.

8. The Higher Quality of Life in New York City

People may come to New York City to try to make it big on Broadway, broadcasting or publishing. However, they only stay if it is worth their while, whether they work on Wall Street or earn a living some other way.

Poor quality of life will drive people away, whether or not they have children but especially after they have children. And it is quality of life that makes the Manhattan real estate market a better play than San Francisco.

New York City has a homeless problem, but it doesn’t have poop so bad they have an app for that or needles littering the place. That will keep New York City housing market demand strong for the long-term. Stronger public transit and the number of activities available at any given time make the city more attractive to Millennials, too.

The demographic churn you see in the NYC area is young adults moving to Manhattan for work, moving to the boroughs to afford a house or larger apartment when they have children, then moving again when they are childless middle aged adults. However, most are not fleeing the metro area after leaving the tech sector as is being seen in San Francisco.

9. Real Estate Market Stability

One point in favor of the Manhattan real estate market over rival San Francisco is its stability. There are many who complain that Silicon Valley tech companies are driving up rents with 100K starting salaries for engineers.

San Francisco housing prices crashed after the tech bubble burst in the early 2000s. The tech bubble could pop again if Washington starts regulating them or the nexus of activity simply moves because tech developers are moving places they can afford to own a home.

The Manhattan housing market, in contrast, is incredibly stable. There have been insane peaks and valleys in the luxury end of the market along with the financial bubble, but luxury condos remain worth millions of dollars. And the middle class Manhattan real estate market was mostly unaffected.

10. The Relative Deal on Property Taxes

New York has one of the heaviest overall tax burdens in the United States. However, that burden varies based on the type of income you receive and property you own. For example, co-ops are not faced with comparable property tax bills to apartment buildings.

Buy a building and renovate it to create affordable, high density housing, and you’ll be eligible for significant property tax breaks.

At the other end of the market, the luxury condo buildings going in result in relatively low tax bills for the owners on the basis of the property’s selling price, though this could still yield a tax bill far higher than what the average person could pay.

Recent changes to the property tax laws that are increasing the property tax bill most will face are contributing to the flood of multi-million dollar mansions and apartment buildings by those who don’t want to pay the bill.

Manhattan Real Estate Investment

Maybe you have done a bit of real estate investing in Manhattan but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. A good cash flow means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt.

Therefore, finding a good Manhattan real estate investment opportunity would be a key to your success. in If you invest wisely in Manhattan real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.

The less expensive the Manhattan investment property is, the lower your ongoing expenses will be. Roughly a $150,000 property is what some experts recommend starting with. However, it is not easy to get that kind of a deal in Manhattan as it is among the most expensive real estate markets in the U.S.

Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing.

If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Manhattan, NY. Manhattan offers incredibly dense housing, incentives for more of the same, and a large, loyal renting population. If you can afford to invest here, it can be worth the effort.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process.

They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.

NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.

Manhattan Real Estate Investment

The aim of this article was to educate investors who are keen to invest in Manhattan real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.

Other Best Places To Invest in Real Estate in 2020

The other best place to invest in real estate is Santa Barbara, CA. The Santa Barbara area is a textbook case of limited supply and high demand driving up the cost of renting and owning in the area. Residents enjoy a higher quality of life, while property owners face lower taxes and less regulation.

That makes the Santa Barbara real estate market one of the best choices for those considering investing in a California coastal community. If you are a real estate investor, Santa Barbara has a track record of being one of the best long term real estate investments in the country.

More than half of all residents in the Santa Barbara housing market rent. This is often the result of economics. The average wage is 50K, while the average home hovers around half a million dollars.

Demand for rentals is so high that young professionals are leaving for cheaper markets, mostly inland. Others double up or live with parents because they want to remain in the area.

Another sizzling market to choose for investment is Midland, Texas. Midland, Texas is in the middle of a sustained boom, though it retains its small town charm.

However, that’s leading to double digit increases in rent and property values at all price levels that won’t be stopping any time soon. This makes Midland real estate a great opportunity for investors.

Also, the value of a Midland TX real estate investment property is certain to remain stable for one reason – demographic momentum. The average age of Midland residents is 32, eight years younger than the national average.

Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you may fill up the form given here. 

One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.


*Remember, caveat emptor still applies when buying a property anywhere. 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.

References:

Long term forecast
https://patch.com/new-york/new-york-city/people-are-fleeing-nyc-hordes-census-figures-show
https://nypost.com/2019/01/19/why-more-people-are-leaving-new-york-than-any-other-state

Diverse housing market
https://www.businessinsider.com/wework-welive-wall-street-co-living-photos-tour
https://www.businessinsider.com/americas-first-shopping-mall-is-now-micro-apartments-2016-10
https://www.businessinsider.com/photos-nyc-micro-apartments-2018-10
https://www.insider.com/nyc-landlord-fined-for-splitting-condo-into-9-illegal-microunits-2019-8

Low turnover
https://www.citylab.com/perspective/2018/12/affordable-housing-rent-regulation-turnover/578227

Size
https://markets.businessinsider.com/news/stocks/new-york-city-housing-market-rent-facts-2019-6-1028269134

Profitability
https://markets.businessinsider.com/news/stocks/new-york-city-housing-market-rent-facts-2019-6-1028269134#even-the-cheapest-manhattan-neighborhood-has-an-average-rent-of-more-than-1-6005
https://ny.curbed.com/2019/6/3/18650949/nyc-rent-prices-zumper-report

Quality of life
https://www.nytimes.com/2018/10/08/us/san-francisco-dirtiest-street-london-breed.html
https://www.businessinsider.com/why-nyc-is-better-than-san-francisco-and-silicon-valley-2016-7

Growing selection
https://markets.businessinsider.com/news/stocks/new-york-city-housing-market-rent-facts-2019-6-1028269134#the-percentage-of-homes-for-sale-is-up-11-7-8

Stability
https://www.vox.com/2019/3/19/18256378/tech-worker-afford-buy-homes-san-francisco-facebook-google-uber-lyft-housing-crisis-programmers
https://finance.yahoo.com/news/10-cities-danger-tech-bubble-100200878.html

Cooling luxury market
https://finance.yahoo.com/news/housing-market-in-nyc-slows-amidst-luxury-development-040100720.html https://therealdeal.com/2019/07/08/summer-slowdown-manhattans-luxury-market-dipped-last-week

Property taxes
https://www.gothamgazette.com/state/8712-an-old-unfair-system-new-york-city-s-property-tax-conundrum-part-i
https://www.citylab.com/equity/2015/05/why-billionaires-dont-pay-property-taxes-in-new-york/389886
https://www.wsj.com/articles/new-more-broad-based-real-estate-tax-hits-developers-11554303511

Housing Market Data, Trends & Statistics
https://www.zillow.com/Manhattan-ny/home-values
https://www.redfin.com/city/35948/NY/Manhattan/housing-market
https://www.realtor.com/realestateandhomes-search/Manhattan_NY/overview

Best Neighborhoods in Manhattan                                                                        https://www.cubesmart.com/blog/city-guides/nyc/5-of-the-best-neighborhoods-to-live-in-manhattan https://www.streetadvisor.com/search/neighborhoods-in-manhattan-new-york-city-new-york


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