This page has been updated to reflect the latest trends in the NYC real estate market as well as the statewide market. New York City's housing market is one of the most costly and competitive in the country. It has also been one of the most hit by the COVID-19 pandemic, with the highest job losses among the nation's main metro areas. New York has been recovering from the pandemic's economic effects. Home prices are still low compared to where they were last year, just before the pandemic hit New York City.
Most buyers aren't paying sellers' asking prices. 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-over-month and the rental prices are recovering with the increase in demand. The high buyer demand has also altered the dynamics of the residential sales market, which had been cooling for nearly three years. NYC is still a real estate buyer's market, however, and buyers can get a lot of heavy discounts.
New York Real Estate Market Trends 2021 (Most Recent Data)
In May 2021, the New York real estate market (statewide) continued to surge, with pending sales nearly doubling from a year go, according to the most recent housing report released by the New York State Association of REALTORS®. Closed and pending sales remained strong in April, marking the ninth consecutive month of sales growth in year-over-year comparisons.
Pending and closed sales continue to rise in year-over-year comparisons. In May 2020, when the pandemic was still in its early stages, there were just 8,245 pending sales in New York compared to 15,775 in May 2021 – an increase of 91.3 percent. Closed sales jumped up 43.2 percent in May 2021 to 10,694 units from 7,467 sales last year.
Inventory remains low, with only 40,776 units available in May, compared to 50,038 in May 2020, an 18.5 percent decrease. In year-over-year comparisons, the number of available homes has decreased for the 18th consecutive month. Months supply of inventory dropped 42 percent year-over-year – from 5 months to 2.9 months. The statewide median sales price in the New York real estate market continued to climb – from $276,000 in May 2020 to $357,000 in May 2021 – an increase of 29.3 percent. This marks 12 consecutive months of increasing median sales prices.
The housing affordability index decreased by – 21.7% to 108 as compared to May of last year when it was 138. An index of 120 means the median household income is 120% of what is necessary to qualify for the median-priced home under prevailing interest rates. A higher number means greater affordability.
New 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 time 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 extends the moratorium on covid-related residential and commercial evictions and foreclosure proceedings for those filing a hardship declaration until august 31, 2021. Extending this legislation will help to ensure that vulnerable New Yorkers and business owners who are facing eviction through no fault of their own can keep their homes and businesses 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 June 17 by the New York State Department of Labor, New York State’s seasonally the adjusted unemployment rate decreased from 8.2% in April to 7.8% in May 2021. The number of private sector jobs in New York State increased over the month by 17,500, or 0.2%, to 7,459,100 in May 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).
- New York City’s unemployment rate decreased over the month from 11.4% to 10.9%.
- Outside of New York City, the unemployment rate decreased from 5.7% to 5.5%.
- The number of unemployed New Yorkers decreased over the month by 38,500, from 774,900 in April to 736,400 in May 2021.
NYC Real Estate Market Trends (Describes June 2021)
Now let's discuss the latest trends in the New York City real estate market. NYC has been the epicenter of the pandemic. The fallout from the pandemic has led to people moving to suburbs, bidding up home prices in those places. On the other hand, those sticking around in the city have often been 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.
- Data by Redfin.com shows that homes for sale in New York have a median listing price of $849,000.
- In the past month, 3710 homes have been sold.
- Most homes for sale in New York stay on the market for 85 days.
- The average sale price of a home was $800K last month, up 14.3% since last year.
- The average sale price per square foot in New York is $688, up 25.2% since last year.
- On average, homes sell for about 1.5 percent below their asking price.
- Realtor.com's latest data also shows that NYC is a buyer's real estate market.
- In June 2021, the median list price of homes in New York, NY was $825K, trending down -1.7% year-over-year.
- The median listing price per square foot was $605.
- The median sale price was $780K.
- The sale-to-List Price Ratio was 100% — homes sold for approximately the asking price on average in June 2021.
- Ideally, a buyer would prefer a sale to list price ratio that’s closer to 90% whereas a seller would always prefer scenarios that can yield a ratio of 100% or higher.
- Tribeca has a median listing price of $3.9M, making it the most expensive neighborhood.
- Riverdale is the most affordable neighborhood, with a median listing price of $399,000.
Impact of COVID-19 on The NYC Real Estate Market
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 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.
Even though demand is returning, the reason for these price declines is a large amount of housing supply. With inventory levels as high they are, there’s currently no end in sight when it comes to falling NYC real estate prices. It is time for buyers to take advantage of this housing market that still favors buyers in 2021. If the trend of increased inventory continues throughout 2021, it will become easier for buyers and renters who are hoping to secure a good deal this year.
However, the StreetEasy May 2021 Market Reports show that the NYC real estate recovery has begun. The tide has shifted in both the rental and sales markets. Recent rent reductions, combined with the city's reopening and the vaccine's rollout, have significantly enticed renters to return. NYC rental market has reached a tipping point where rents are starting to rise again.
The City-Wide Trends Show That Real Estate Recovery in New York City is Underway
- The median asking rent in the city has remained unchanged for the past six months at $2,500.
- For the first time since the pandemic, median asking rents in Manhattan, Brooklyn, and Queens increased from the previous month in May.
- The median asking rent in Manhattan increased by $60 to $2,860.
- It was up $49 to $2,449 in Brooklyn.
- In Queens, asking rents increased by $50 to $2,100.
- On the sales front, inventory has begun to normalise after plummeting last summer, followed by a fall spike to record highs.
- In May, there were 21,556 homes for sale on StreetEasy.
- The number of homes under contract remained exceptionally high in the three boroughs, at just over 3,200.
- However, it is beginning to level off in comparison to the massive month-over-month spikes seen since the beginning of 2021.
- Homes on the market in New York City sold faster in May than in any other month this year.
- In May, the average New York City home was on the market for 56 days.
- This is a decrease from 68 days in April and a significant decrease from 116 days in January 2021.
Rents In Manhattan Are The Furthest From Their Pre-pandemic Highs
- Manhattan median asking rents rose $60 between April and May to $2,860.
- But that is still 18% lower than the pre-pandemic high of $3,500 seen in March 2020.
- Rental inventory in Manhattan has continued its downward trajectory, with 25,840 rentals available in May.
- Prior to the pandemic, the record high number of rentals available in Manhattan was 27,288, way back in June 2017.
- In May, the StreetEasy Manhattan Price Index was 8% lower than in May 2019, prior to the pandemic.
- The median asking price for a Manhattan home in May was $1,395,000.
- Manhattan saw 1,672 pending sales — a near-record high beaten only by April 2021.
Brooklyn Is A Hot Real Estate Market In New York
- The real estate market in New York City is rebounding, but Brooklyn is particularly hot.
- For the third month in a row, the borough saw a record number of properties go under contract.
- In May, 1,079 residences in Brooklyn were sold.
- In May, the StreetEasy Brooklyn Price Index was 5.4% lower than in May 2019, prior to the pandemic.
- The median asking price for a Brooklyn home in May was $949,000.
- In May, 22% of rental properties advertised a concession.
- There were 19,118 rentals available in Brooklyn, down 26% from last summer's highs, but still higher than any period before the pandemic.
Since the pandemic, more New Yorkers have been buying in Brooklyn than ever before, leading to an all-time high of pending sales in October 2020. Inventory, however, still sits at record highs, leading prices to fall 5.4% year over year. The economic impact of pandemics makes everything more uncertain. The market outlook appears fairly bright for Brooklyn, uncertain for Queens, and likely weak for Manhattan, which has record levels of inventory and many potential buyers looking elsewhere. People are moving out and buyer interest in suburban neighborhoods and areas with low population density has spiked.
In Queens, Rent Discounts Have Dropped to a Three-Year Low
- In May, the Queens inked 479 contracts.
- That compares to 474 pending sales in May of this year, before the pandemic.
- In May, the StreetEasy Queens Price Index was 1% lower than in May 2019, prior to the pandemic.
- The median asking price for a Queens home in May was $619,000.
- Only 10.6% of Queens rents were lowered by the landlord or agency.
- This is the lowest percentage since July 2018, when 9.1% of rentals were reduced.
- When compared to the other boroughs studied, Queens rental inventory remains high.
- In Queens, there were 7,174 available rentals in May.
- This is the same as it was during the epidemic last summer, and it's still 30% higher than May 2019.
More Insight into NYC Rental Market Trends
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.
The best deals in New York City are in Queens, according to New York-based brokerage Douglas Elliman. The west side is getting the biggest discounts — 20% — compared to only 17% in downtown, 12% on the east side, and only 9% in northern Manhattan.
In the latest Douglas Elliman report, the month of March was uncommonly animated in Manhattan — with the highest number of new leases signed since 2008. 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. March marks the sixth consecutive month where landlords have seen gains in tenants.
Manhattans discounts are attracting tons of renters. For the sixth consecutive month, new lease signings in Manhattan rose to their highest level for the current month since the financial crisis. The dollar amount of rental concessions rose to the third-highest level since 2008.
- Doorman new lease signings continued to rise by about twice the rate of non-doorman lease signings.
- Existing new lease signings increased by more than twice the rate of new development lease signings.
- There were 4986 new leases signed, compared to 2683 a year prior — close to an 89% increase.
- Landlord concessions market share for the luxury market was nearly half that of the non-luxury market.
- Lower price tranches continued to see a larger percentage decline in median rent than higher tranches.
- The average rental price in Manhattan in March 2021 was $4,001, a drop of 6.9% from March 2020 ($4,299).
- The average rental price increased by 5.5% from Feb 2021 ($3,791).
- The median rental price in Manhattan in March 2021 was $3,098, a drop of 13.7% from March 2020 ($3,590).
- The median rental price increased by 3.4% from Feb 2021 ($2,995).
- The current vacancy rate is 11.25%. It is more than five times the year-ago rate (2.13%).
- Listing inventory (19,633) remains nearly four times than year-ago levels (4,258) — An increase of 361.1%.
- The median rental price continued to decline in Downtown (-15%), Eastside (-12.5%), and Westside(-13.3%).
New lease signings in Brooklyn have continued to rise sharply since the fall, up sharply year over year for the seventh consecutive month. The net effective median rent fell year over year for the ninth straight month. Lower price tranches continued to see a larger percentage decline in median rent than higher price tranches.
- There were 1,269 new leases signed, compared to 721 a year prior — close to a 76% increase.
- The average rental price in Brooklyn in March 2021 was $3,168, a drop of 6.1% from Mar 2020 ($3,375).
- The average rental price increased by 1.4% from Feb 2021 ($3,125).
- The median rental price in Brooklyn in March 2021 was $2,696, a drop of 10.1% from Mar 2020 ($3,000).
- The median rental price increased by 2.7% from Feb 2021 ($2,625).
- Listing inventory (17,558) increased by a whopping 1,343.9% from year-ago levels (1,216) but dropped -12.1% from the previous month (19,965).
In Northwest Queens, despite the steady decline in rental price trends bringing greater affordability, new lease signings have not trended higher. Net effective median rent fell year over year for the eleventh straight month. New lease signings fell year over year for the second time in three months. The market share of landlord concessions has fallen by nearly half since peaking in November.
- There were 176 new leases signed, compared to 216 a year prior — a drop of -18.5%.
- The average rental price in Northwest Queens in March 2021 was $2,738, a drop of 11.2% from March 2020 ($3,084).
- The average rental price increased by 1.6% from Feb 2021 ($2,695).
- The median rental price in Northwest Queens in March 2021 was $2,400, a drop of 16.7% from Mar 2020 ($2,881).
- The median rental price dropped by 4.8% from Feb 2021 ($2,522).
- Listing inventory (4022) increased by a whopping 1079.5% from year-ago levels (341) but dropped -16.5% from the previous month (4816).
NYC Real Estate Market Forecast 2021-2022 (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 peak home-buying season.
The New York Real Estate Market Performed As Follows In The First Quarter Of 2021:
- Pending Sales in New York State were up 31.9 percent to 35,855.
- Closed Sales increased 27.5 percent to 32,534. Inventory shrunk 30.1 percent to 36,739 units.
- Prices gazed upward as the Median Sales Price was up 23.1 percent to $357,000.
- Average Sales Price rose by +18.3% to $448,634.
- Days on Market decreased 17.3 percent to 67 days.
- Months Supply of Inventory was down 38.3 percent to 2.9 months.
- Sellers received, on average, 98.8 percent of their original list price at sale, a year-over-year improvement of 2.0 percent.
- Housing Affordability Index dropped by -15.6% to 103.
- A higher number means greater affordability.
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 45.43%, which ranks in the top 30% nationwide. This equates to an annual average real estate appreciation rate of 3.82%. Despite the pandemic drastically affecting the New York real estate market, during the latest twelve months, New York's appreciation rate has been 3.53%, which is lower than appreciation rates in most communities in the US. In the latest quarter, NeighborhoodScout's data show that house appreciation rates in New York were at 0.72%, which equates to an annual appreciation rate of 2.92%.
Let us look at the price trends recorded by Zillow over the past few years. Since 2012, the NYC home values have appreciated by nearly 54% — 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 $662,535. It indicates that 50 percent of all housing stock in the area is worth more than $662,535 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). In July 2020, the typical value of homes in NYC was around $640K. Home values have gone up 3.5% 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 2021. The New York housing market could favor sellers over buyers.
- New York-Newark-Jersey City Metro home values have gone up 12.1% over the past year and the latest forecast is that they will rise 11.0% over the next 12 months.
- New York (statewide) home values have gone up 12.3% over the past year and will continue to shoot up in 2021.
- New York City home values have gone up 3.5% over the past year.
- The future market trend is not available for NYC. However, it is still a buyer's market.
The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until June 2022.
Please note that this is an overall market forecast and cannot be deemed 100% accurate. The ongoing pandemic has dramatically changed the dynamics of New York's real estate market and it can vary from neighborhood to neighborhood. Submarket reports from local brokerages like StreetEasy show that in 2020 New York saw record numbers of vacant apartments hitting the market, leading to the lowest rents in more than a decade. On the other hand, strong buyer demand returned to a sales market that had been cooling for nearly three years.
Rental demand will not return to pre-pandemic levels until jobs return, and recreating more than half a million jobs could take considerably longer than successfully rolling out a vaccine. Until the rate of renters moving back to the city surpasses the rate of inventory coming onto the market, rents will fall as the glut of inventory grows.
New York Metro Real Estate Appreciation Trends
The change in home prices for New York-Jersey City-White Plains, NY-NJ is shown below for the three time periods (data up to 3rd Quarter, 2018). The New York Home Price Index has increased for the last 25 consecutive quarters. The all-time high in the New York Home Price Index was 270.5 in the 3rd Quarter, of 2018. The Home Price Index indicates that the New York Market is up 9% over the last 10 years. Over the last thirty years, it is up 145%.
The highest annual change in the value of houses in the New York Real Estate Market was 28% in the twelve months ended with the 1st Quarter of 1987. The worst annual change in home values in the New York Market was -7% in the twelve months ended with the 1st Quarter of 2010. The historical change in home values has been calculated until the 3rd Quarter of 2018. For the upcoming updates, you can visit LittleBigHomes.com.
|Time Period||New York MSA Real Estate Appreciation|
|Last 5 Years||24%|
|Last 10 Years||9%|
|Last 20 Years||141%|
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? Strong buyer activity has continues in summer. The New York housing market continues to surge, with pending sales, nearly doubling from a year ago in May 2021, according to NYSAR. Pending home sales are strong forward indicators of home sales. 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 2021, which is why the housing forecast for New York is positive for the coming months.
Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment. After the pandemic (hopefully) is over in 2021, the shortage will once again put intense pressure on home prices and apartment rental prices in all four boroughs of New York City. The rent default and eviction trends are negatively affecting the New York rental market. The rent prices are already dropping due to increasing vacancy rates. More information on the latest rental trends is given below.
For sellers in New York, it is a great time to sell. Motivated buyers are looking for houses for sale, and you are not competing with as many property owners. Many sellers have chosen to back out amid this pandemic.
For buyers in New York, the mortgage rates are at their lowest. The rate on a 30-year fixed-rate mortgage is still holding around 3 percent. According to Freddie Mac, the average rate for June 2021 was 2.98% and the average rate for June 2020 was 3.16%.
On average, homes in New York, NY sell after 169 days on the market. The trend for median days on market in New York, NY has gone down since last month, and slightly down since last year. 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.
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 rented for about 3,800 dollars a month. This is why the NYC real estate market is one of the most expensive in the world.
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 in June 2021 across 16 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 $1,885 last month. New York City was the most expensive market with one bedrooms priced at $2,570. Newark rent dropped 5% to $1,320 and ranked as the most affordable.
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 (Y/Y%)
- Hackensack had the fastest growing rent, up 19% since this time last year.
- Long Branch saw rent climb 18%, making it rank as second.
- White Plains was third with rent jumping 8.5%.
The Fastest Growing Cities For Rents (M/M%)
- East Orange had the largest monthly rental growth rate, up 5.2%.
- Jersey City & Hackensack rents both jumped 4.9% last month, making them tied for the second fastest growing.
- Yonkers was third with rent increasing 4.8%.
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 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.
There are 188 neighborhoods in New York (as per Realtor.com). Tribeca has a median listing price of $3.7M, making it the most expensive neighborhood. Riverdale is the most affordable neighborhood, with a median listing price of $375K. Graniteville is another popular neighborhood for homebuyers who can afford to buy a home in the median price range of $427K.
Some of the other popular neighborhoods in NYC are Floral Park, Jamaica, Woodside, Queens Village, Brooklyn, Staten Island, Astoria, Teaneck, Riverdale, Rosedale, Flushing, Bayside, Kew Gardens, Queens, and Maplewood.
There are some buyer-friendly neighborhoods in New York City where buyers have a bit more negotiating power in neighborhoods as compared to sellers. Jackson Heights is one of New York City’s most buyer-friendly neighborhoods at the moment with home prices under $700,000.
Other buyer-friendly markets with a median sales price below $700,000 include Rego Park, where the median sales price in 2019 was $429,999 and the sale-to-list price ratio was 95 percent; Sheepshead Bay ($699,000, 93 percent), East Flatbush ($649,000, 97 percent); and Brighton Beach ($619,500, 94 percent).
Buyers have a bit more negotiating power in neighborhoods where the median home price falls between $700,000 and $1 million. In areas like Midtown East, where the median sales price in 2019 was $899,000, listings typically sold at a 6 percent (or $54,000) discount.
The other neighborhoods best for buyers looking to spend between $700,000 and $1 million are Bayside, where the median sales price in 2019 was $717,000 and the sale-to-list price ratio was 93 percent; Gravesend ($799,000, 93 percent); Flushing ($786,668, 93 percent); and Bay Ridge ($739,000, 94 percent).
As we write this, 7282 single-family homes are currently for sale on Realtor.com within New York residential boundaries, including open house listings. The most expensive single-family homes can be found in the Central Brooklyn neighborhood in the city of Brooklyn, NY where the median price is in the range of $773K. Currently, it is a buyer's market.
The median list price of homes in Central Brooklyn was $772.5K in October 2020, trending down -3.3% year-over-year. Homes in Central Brooklyn sold for 2.12% below the asking price on average in October 2020. They remain on the market for 137 days on average. The median listing price per square foot was $618. The median sale price was $760K.
Another expensive neighborhood is Midtown Manhattan where the median sales price in 2019 was $1.85 million with a sale-to-list ratio of 90 percent. All of this could vary from time to time and can be checked on Realtor.com. 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
- W 58th St / Ave Of The Americas
- W 116th St / Amsterdam Ave
- East Rd / West Rd
- W 57th St / 5th Ave
- Amsterdam Ave / W 166th St
- Broadway / Grand St
- Madison Ave / E 60th St
- Metropolitan College of New York / W Broadway
- Touro College / Broadway
Other 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 studies, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and take the help of a real estate investment counselor.
Market Data, Reports & Forecasts
Softening luxury market
Rules for high rents
High rental rates
Potential for bargains
The Overall Cooling of the Housing Market
Expanding luxury development
https://www.businessinsider.com/nyc-penthouse-expensive-surplus- divided-up-smaller-units-sales 2019-1