Manhattan and New York City are synonymous for all intents and purposes. More than 1.6 million people live in Manhattan. In this article, our focus will be on the Manhattan real estate market trends in 2022. Manhattan is the most densely populated part of New York City’s five Burroughs, and it is the heart of the city. 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.
Manhattan Real Estate Market 2022 Trends
Data by Redfin shows that the median sales price of homes (all types) in Manhattan was $1,200,000, flat since last year. The median sale prices of a single-family home and a condo/co-op in Manhattan are $7,500,000 and $1,186,500, respectively. Manhattan area townhouses have a median sale price of $8,500,000, making them more expensive than single-family homes.
- On average, homes in Manhattan sell after 92 days on the market compared to 139 days last year.
- There were 1,133 homes sold in May this year, up from 1,152 last year.
- The median days on the market are 92, down 47% from last year.
- The median sales price of homes in Manhattan was $1,200,000 last month, flat since last year.
- Homes for sale in Manhattan have a median listing price of $1.5M.
Upper West Side Housing Market
In May 2022, Upper West Side home prices were up 9.9% compared to last year, selling for a median price of $1.3M. On average, homes in Upper West Side sell after 89 days on the market compared to 134 days last year. There were 556 homes sold in May this year, down from 576 last year.
Upper East Side Housing Market
In May 2022, Upper East Side home prices were up 12.7% compared to last year, selling for a median price of $1.3M. On average, homes in Upper East Side sell after 95 days on the market compared to 135 days last year. There were 654 homes sold in May this year, down from 680 last year.
Manhattan Housing Sales Q2-2022
According to Douglas Elliman, the median sales price in Manhattan hit an all-time high, while the average sales price reached its third-highest level. The amount of second-quarter sales reached its greatest level since 2007. The market share of cash buyers increased to the third-highest level seen, a return from the low recorded five quarters ago.
The median sales price of co-ops reached an all-time high, marking the sixth consecutive year-over-year increase. The median sales price of condominiums also reached an all-time high, marking the third consecutive year-over-year increase. Condominium listing inventory saw its greatest first-to-second-quarter increase in at least eight years.
Indicators of the overall price trend for luxury goods continued to grow annually. The number of new development sales has more than doubled compared to the same period last year, while the number of new development listings has risen rapidly for the third consecutive quarter. The pricing trends in Manhattan continued to increase from the preceding year and pre-pandemic levels. The median sales price increased by 10.6 percent yearly to a record $1,250,000, surpassing the previous record established during the same time frame three years prior.
Although the current “Elliman Report: June 2022 New Signed Contracts” indicates a decline in newly signed contracts over the preceding several months due to rising mortgage rates, concluded sales increased by 12.2 percent to 3,834. This indicates that the current quarter is the peak season for closed sales. Nonetheless, the second quarter was the highest in fifteen years and the fourth-highest in history.
Listing inventory increased by 1.1 percent year-over-year to 7,968 but increased by 15.4 percent from the previous quarter, the largest Condo significant growth from the first to the second quarter in eighteen years. Listing inventory was 21.7% higher than the 6,546 second-quarter average of the past decade, consistent with the slowing pace of the past several quarters.
The months of supply, the number of months to sell all listing inventory at the current sales rate, was 6.2 months, 10.1% faster than the prior-year quarter but was the third straight quarter- over-quarter easing of the market pace. The market share of bidding wars fell from the prior quarter’s four-year high of 9.3% to 8.5%, with the average amount of premium paid falling to 4% from 5.3% over the same period.
After plunging to a record low of 39.3 percent in the first quarter of 2021, the market share of cash purchases increased to 52.6%, the third-highest on record and significantly above the average market share of 48.4% over the previous eight years. The increase was driven by higher-priced product sales. Ninety-nine point six percent of sales in excess of $5,000,000 were conducted using cash.
Manhattan Rental Market Trends
In the latest Douglas Elliman report, the price trend indicators in Manhattan rose to record levels. The median rent in Manhattan reached the $4,000 threshold for the first time as lease signings continue to rise. New leases expanded year over year for the third straight month while the vacancy rate remained under two percent for the sixth consecutive month. Doorman's net effective median rent reached a new high for the fifth consecutive month. Luxury price trend indicators all rose to the second-highest on record while their share of one-year leases rose to a new high, exceeding half of all new leases.
- There were 4,934 new leases signed, compared to 9,491 a year prior — close to a 48% decrease.
- The average rental price in Manhattan in May 2022 was $4,975, an increase of 22% from May 2021 ($4,078).
- The average rental price increased by 3.2% from April 2022 ($4,822).
- The median rental price in Manhattan in May 2022 was $4000, an increase of 25.2% from May 2021 ($3195).
- The median rental price increased by 1.9% from April 2022 ($3925).
- The current vacancy rate is 1.77%. A year ago it was 7.59%.
- Listing inventory (5776) is down by 69.6% from year-ago levels (19,025).
- The median rental price increased in Downtown (+28.6%), Northern Manhattan (+11.1%), and Westside (+31.3%).
- The median rental price decreased in Eastside (+27.1%).
Manhattan Real Estate Investment Overview
We have already discussed the Manhattan housing market trends. Purchasing an investment property in Manhattan real estate is a little different from shopping for your car or primary residence. Manhattan has been included among the cities for real estate investment over the past few years. While you still want to get the most for your money, if you are looking to make a profit, you don’t want to buy the most expensive property on the Manhattan real estate market and expect to make a good profit on rents.
Perhaps you are looking for a slightly different hold-over, an investment property in Manhattan that you might move into or sell at retirement in the future! Either way, knowing your profit potential and purpose is the first thing to consider. Some of the best neighborhoods in Manhattan are Upper East Side, Upper West Side, Midtown East, Woodside, Brooklyn, Astoria, SoHo, Harlem, Elmhurst, Tribeca, Williamsburg, Maspeth, The Heights, Queens, Long Island City, Greenpoint, and Sunnyside.
Upper West Side offers 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. Further away from the city center you'll find charming Manhattan neighborhoods like Hamilton Heights and Washington Heights. 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. 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.
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.
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.
The Diverse Manhattan Housing Market
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.
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 a rent bunk of residential communities popping up, often just down the street from the rent 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.
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 vacancies. 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.
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 have 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.
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 faster than the rate of inflation.
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's 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.
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 the 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.
Conclusion
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. Therefore, finding a good Manhattan real estate investment opportunity would be a key to your success. 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 areas, 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.
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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.
References
- https://www.zillow.com/Manhattan-ny/home-values
- https://www.elliman.com/corporate-resources/market-reports
- https://www.elliman.com/corporate-resources/research-reports
- https://www.redfin.com/city/35948/NY/Manhattan/housing-market
- https://www.realtor.com/realestateandhomes-search/Manhattan_NY/overview
- https://www.streetadvisor.com/search/neighborhoods-in-manhattan-new-york-city-new-york
- https://www.cubesmart.com/blog/city-guides/nyc/5-of-the-best-neighborhoods-to-live-in-manhattan
- 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
