Real estate market has been booming in New York year-over-year. If you’re keen to invest in the NYC real estate, you’d be knowing that New York City is an expensive real estate market that gives many investors pause. However, there are many things going on in the NYC housing market which show that it’s a relatively good time to be a buyer in New York.
As listings linger on the market, the home prices are on the decline. The current situation is that price cuts exist in large numbers in the NYC real estate market. In most Manhattan neighborhoods, the price cuts were much deeper. The median price reduction in the Financial District was 10.4%, in Upper West Side it was 6.4% and in East Harlem it was 14.8%, according to StreetEasy.
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. Since 2015, the median home price in NYC have appreciated by roughly 28.24%. Is NYC going to be one of the hottest real estate markets for investors in 2020? NYC real estate appreciation rate in the latest quarter was around 0.5%. However, it is quite unclear whether it would remain steady or not. Looking at the positive forecast, the annual appreciation rate is predicted to be between 1.8% to 2%.
You can either choose to invest in your future, or market your home to potential buyers. If you looking to buy a home, you should consider a thing called tipping point. Nationally, the median tipping point is around two years but in New York it’s 5.8 years. The higher a home is priced, the longer you’ll need to stay in it to make the investment pay off relative to renting. It is smarter to buy a property if you plan to be in an area for seven years or longer. Please note that there are many variables that can potentially impact the value of a home in NYC (or any other market) and some of these variables are impossible to predict in advance.
NYC HOUSING MARKET DATA – JANUARY 2020
In the past month, 418 homes have been sold in NYC on Redfin.com, a national real estate brokerage. Additionally, there were also 22484 condos, 1018 townhouses, and 3278 multi-family units for sale in New York last month. The median listing price is around $895,000. According their statistics, the average sale price of a home in New York was $598K last month, down 2.4% since last year. The average sale price per square foot in New York is $366, down 8.8% since last year.
The Comparative NYC Housing Market Trends From Jan 2019 to Jan 2020
- Home sales in January 2020 were down by 13%.
- Median sales price declined by 2%.
- Median days on market went from 82 to 80.
- Mortgage rates dropped by 0.9%.
- New listings decreased by 27%.
- No. of home for sale decreased by 19%.
- No. of homes sold decreased by 12.9%.
NYC Real Estate Market Forecast 2020
What are the NYC real estate market predictions for 2020? Let us look at the price trends recorded by Zillow over the past few years. It has a track record of being one of the best long term real estate investments in the U.S. NYC home prices nearly doubled in the 2010s. 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 around 2013 and by the third quarter of 2019, that number had almost doubled to $675,000. Since 2015, the median home price in NYC have appreciated by roughly 28.24% from $509,000 to $652,728, according to Zillow’s index. In the past year, the NYC real estate market cooled off, prices declined by 0.8%. The latest NYC real estate market forecast is that it will bounce back and home prices will increase by 3% in the next twelve months.
The latest real estate data from Zillow shows that the current median home value in NYC is $652,728. NYC is currently a buyer’s real estate market – which refers to a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiation.
Here is the NYC real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 3% till Jan 2021.
The median list price per square foot in NYC is $660, which is higher than the New York-Newark-Jersey City Metro average of $294. Zillow reports that 10.4% of the listings in NYC had a price cut in Jan 2020, which is a good thing for buyers. The median price of current listings in NYC is $760,000 and the median price of homes that have been sold is $561,200. The median rent price in NYC is $2,900, which is lower than the New York-Newark-Jersey City Metro median of $2,950.
New York City Housing Market Forecast 2020 – 2021
Here is a short and crisp NYC housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for New York City is 77% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in NYC is 77% during this period. If this price forecast is correct, the New York City home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the NYC Housing Market Forecast.
NYC Real Estate Market Trends
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. We shall now discuss some of the most recent housing trends in the NYC area from multiple sources and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region. NYC has been one of the hottest real estate markets in the nation for many years. Currently the NYC housing market is relatively more friendly to buyers than sellers.
As of now, Trulia has 24,622 resale and new homes for sale in New York, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median sale price in New York, NY is $1,350,000. Homes are selling for about $1,419/sqft.
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units. With 2020 being, theoretically, in the middle of a boom, there’s still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.
As per the real estate company called Neigborhoodscout.com, the current median house price in NYC is $1,036,678, which indicates that home prices in NYC are well above the national average for all cities and towns in the United States. One and two bedroom large apartment complexes are the most common housing units in NYC. Other types of housing that are prevalent in NYC include single-family detached homes, duplexes, row houses and homes converted to apartments.
Currently, there are 5435 single family homes for sale in NYC on Zillow. Additionally, there are 1009 single family homes for rent. Under potential listings, there are about 11 Foreclosed and 2293 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
There are currently 29,308 homes for sale in NYC on Realtor.com. The asking price of single family homes can start from $35,000 and can go up to $145M for a luxury property located in North Shore neighborhood in the city of Staten Island, NY. North Shore is a popular neighborhood with the median price of $439,000.
Chelsea has a median listing price of $1.9M, making it the most expensive neighborhood to live in the New York City. Another expensive neighborhood is Midtown, where the median sales price in 2019 was $1.85 million with a sale-to-list ratio of 90 percent. These are expensive but buyer friendly neighborhoods in the New York City. 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 are Rego Park, Sheepshead Bay, East Flatbush and Brighton Beach. Riverdale is the most affordable neighborhood, with a median listing price of $375,000.
According to Realtor.com, 1635 homes were newly listed on the market within the last week. There are just 210 new construction single family homes for sale in NYC within a price range of $35,000 to $12M. You can find relativley affordable new construction homes in n Graniteville neighborhood. Graniteville neighborhood has a median price of $399,000. New York is dominated by renter-occupied housing units. Rentals account for 75% of New York’s housing. There are currently 21,190 rental properties in NYC and their rent prices range from $600 to $2M per month. The median rent price in NYC is $3,400.
According to their data, in January 2020, the NYC housing market was a buyer’s market, which means there were roughly more active homes for sale than there were buyers. Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. Despite NYC being a buyer’s real estate market, the sellers have managed to hold good leverage in these negotiations in the past month. On an average, they could sell homes for 96.81% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
The median list price of homes in New York City, NY was $675K in January 2020, trending down -17.7% year-over-year. The median listing price per square foot was $359. The median sale price was $610,000. On average, homes in New York City, NY sell after 144 days on the market. The trend for median days on market in New York City, NY has gone up since last month, and slightly down since last year.
In a healthy, balanced market, it would take about six months for the supply to dwindle to zero. In terms of months of supply, the NYC market can tip to favor sellers if the supply drops to below six months of inventory. As per Zillow’s forecast, the prices may rise by 3% in the next 12 months. That can happen because when inventory drops, buyers start competing and enter into a bidding wars.
The median list price in New York City is $1,525,000 on Movoto.com. The median list price in New York was less than 1% change from February to March. New York’s home resale inventories is 5,574, which increased 0 percent since February 2020. The median list price per square foot in New York is $780.
As you can see in the graph, the median price per sq ft in NYC rose to its peak value in July 2019, when it was $1435. After that there was a drastic decline in prices and the market cooled off. In February 2020 it was $780. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in March.
New York is a fairly walkable city in Queens County with a population of approximately 8,174,290 people. If you are looking to invest in the NYC real estate, you should that three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your NYC investment real estate and you should be able flip it for a lump sum profit.
The neighborhoods in NYC must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools and shopping malls. Some of the 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.
Here is a snapshot that shows the median home values in the some of the popular neighborhoods of New York City.
New York City Foreclosures And Bank Owned Homes Statistics 2020
As per the New York City foreclosure data by Zillow, in New York 0.1 homes are foreclosed (per 10,000). This is lower than the New York-Newark-Jersey City Metro value of 0.9 and also lower than the national value of 1.2. The percent of delinquent mortgages in New York is 1.8%, which is higher 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 New York homeowners underwater on their mortgage is 6.7%, which is lower than New York-Newark-Jersey City Metro at 8.5%.
|Total No. of Foreclosures in NYC||833 (RealtyTrac)|
|Homes for Sale in NYC||1774|
|Median List Price||$954,500 (5% drop vs Dec 2018)|
There are currently 833 properties in New York, NY that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 1,774. In January 2020, the number of properties that received a foreclosure filing in New York, NY was 62% higher than the previous month and 8% higher than the same time last year.
In NYC, the zip code with the highest foreclosure rate is 10026, where 1 in every 2441 housing units is foreclosed. 10027 zip code has the lowest foreclosure rate, where 1 in every 8766 housing units becomes delinquent.
Is NYC a Good Place For Real Estate Investment?
Now that you know where NYC is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Is NYC a Good Place For Real Estate Investment?Many real estate investors have asked themselves if buying a property in NYC is good investment? You need to drill deeper into local trends if you want to know what the market holds for the real estate investors and buyers in 2020.
If you are looking to make a profit, you don’t want to buy the most expensive property on the NYC 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 NYC 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.
Let’s take a look at the number of positive things going on in the NYC real estate market which can help investors who are keen to buy an investment property in this city.
1. 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 are 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 own 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.
2. The 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.
3. 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 off the listing price, too. The alternative is buying slow moving one and two bedroom apartments knowing they’ll eventually be worth more.
4. The Legislation on the Table Will Increase 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.
5. That the Rules that Drove Up Rents Aren’t Changing
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 it 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.
6. The High Average NYC Rental Rates
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.
7. 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 Saintalbans. 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.
8. 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 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 a NYC real estate investment property, because the market will continue to warm up as long as the economy remains stable.
9. The Tax Laws that Are Triggering Sales
Any property in the NYC real estate market is going to be subject to high property taxes. That’s simply a fact of life for property owners in the NYC housing market. However, a number of tax law changes at the local and national level are hitting a number of property owners hard. The federal tax law change to eliminate the state and local tax deduction means that many property owners can’t write the entirety of their huge NYC property tax bills off their federal taxes.
That will push many snowbirds to sell homes in the NYC housing market, since they can no longer afford the carrying costs. For those who own multi-million dollar properties, the mansion tax that was approved gives them a reason to sell as soon as possible.
10. The Sellers Who Can’t Afford to Wait Any Longer to Sell
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 a NYC real estate investment. However, many properties may sit on the market for years. This is enabled by the 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.
Investing in NYC Real Estate Market: The Conclusion
Maybe you have done a bit of real estate investing in NYC 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. Prices are relative, and prices are relatively low given New York City’s recent market conditions. During the latest twelve months, New York did cool off. However, the cumulative appreciation rate over the ten years has been 38.81%, which ranks in the top 30% nationwide.
A good cash flow from NYC investment properties 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 NYC real estate investment opportunity would be a key to your success. If you invest wisely in the NYC real estate, you could secure your future.
As with any real estate purchase, act wisely. 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. If it is your first time to invest in NYC real estate, then you would have to be aware of common beginner’s mistakes. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. Real estate investing requires research. We recommend doing your own research or hiring a real estate investment specialist for guidance.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. 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.
The aim of this article was to educate investors who are keen to invest in NYC 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 Good Markets To Invest in Real Estate in 2020
Another market that we suggest is the housing market in Buffalo, NY. Ignore the Big Apple and look to 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 there are many small apartment buildings 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 market that we suggest is the housing market in Naples, FL. While the Naples housing market is noteworthy for having the second highest proportion of millionaires in the U.S., you don’t have to have a million dollars to invest in the Naples real estate market. There are a number of opportunities real estate investors can take advantage of in this unique housing market while enjoying all of the benefits of owning Florida real estate.
If you’re going to snap up Naples real estate investment properties, the best ones to buy are low-maintenance beach condominiums. Ironically, these are the properties most readily available in the Naples real estate market. The prices for fee heavy condominiums and luxury condominiums have declined because of the recent influx of inventory. This is a significant improvement over other rental markets where the most abundant properties are bank foreclosures and distressed sellers behind on a mortgage; those properties typically have to be fixed up before they can be rented out.
*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.
Softening luxury market
Rules for high rents
High rental rates
Potential for bargains
The Overall Cooling of the Housing Market
Housing Market Data, Trends and Statistics
Expanding luxury development
https://www.businessinsider.com/nyc-penthouse-expensive-surplus- divided-up-smaller-units-sales 2019-1