State of the Residential Real Estate Market: New York City
The New York City residential real estate market witnessed many changes in 2018. First and foremost, it transitioned from a seller’s market to one primarily geared toward buyers. What will the rest of 2019 hold? Our experts weigh in below:
The Buyer’s Market
The buyer’s market isn’t going anywhere anytime soon. While more homes were listed for sale on StreetEasy in 2018 than ever before, fewer sales were recorded. The market is saturated, and this trend will continue. Prices are dropping as a result, albeit slowly, and experts don’t expect this to be of much help in boosting sales.
Numerous megaprojects are in the works and will impact the housing market in New York City. Hudson Yards is a good example of the changes that we have seen so far in 2019. Residential tenants are starting to move into their new accommodations, and office tenants are already occupying their space within this project. Essex Crossing also has apartments in its overall plan, and these residences opened to individuals in January 2019.
Queens is an exception when it comes to slow sales. In fact, prices are rising considerably faster in this area than in other parts of the city, yet housing still remains affordable. This is due in part to the fact that houses haven’t appreciated as quickly in Queens and buyers are taking note of this benefit.
Many people choose to rent in New York City to avoid high sales prices and interest rates. This leads to increased competition and individuals find the rents in certain neighborhoods to be similar to those seen in Manhattan. As a result, people may choose to head to the outer boroughs or great spots in New Jersey to obtain a new residence thanks to more space and amenities in these accommodations.
Many neighborhoods in New York City’s most populous borough continue to remain excellent buying opportunities, with a good balance of inventory and purchases. Boerum Hill, Prospect Park, and the developing Waterfront are all seeing an influx of boutique developments being constructed at a time where families, professional couples, and immigrants are looking for just that.
A Changing Skyline
Be prepared for changes to the New York City skyline: 2019 is the year in which the city’s tallest residential building will open. The Central Park Tower reaches 1,550 feet into the sky and will begin leasing in October if things progress as planned. This is not the only skyscraper that will alter the skyline either. Others include Steinway Hall and 111 West 57th Street.
Many millennials are approaching their 30th birthday and will begin buying homes to accommodate their changing lives or upgrading from their current home. It is expected they will account for 45 percent of all new mortgages taken out in 2019. Furthermore, experts predict millennials will buy more homes in 2020 when they actually turn 30. This impacts the housing market in a wide range of ways – but it’s too early to tell if Millennials as a whole are going to be a boon for the New York real estate market.
Back in 2016, when the housing market started softening, developers opted to hold back certain properties. The housing market hasn’t improved significantly, but these developers can no longer hold on to the properties. They must open them up and buyers and renters are the ones who will benefit. In fact, it is estimated the New York City housing market will have 8,000 units for sale by the end of the year and only a quarter of those will actually be sold. This only takes into account new apartments also, not resales.
Another factor that will have a significant impact on the housing market is rising interest rates. The current 30-year fixed mortgage rate is around 3.75%, down from 4.60% at the same time last year. Dips in mortgage rates are temporary, and buyers should act fast while rates are low so that they save on the long-term costs of a new home.
Institutional buyers will compete with individual investors for the best properties. Institutional investors have an advantage in that they have a larger budget to work with. Furthermore, they also benefit from the higher interest rates which make it more difficult for an individual investor to buy and hold rental property. Combine this with a decrease in the inventory and more competition and individual investors will need to choose wisely when making any purchase.
The Role of Technology
Individuals no longer buy and sell property as they did in the past. A person can simply view a property online and determine whether or not they wish to visit it in person, thanks to 360 bird’s-eye views. Furthermore, many properties are now purchased using cryptocurrency, and iBuying has changed the way parties act in a real estate transaction. All will have an impact on the housing market this year.
The Bottom Line
While it is expected the housing market will slow, demand will continue thanks to changing demographics. Overall, prices won’t appreciate as rapidly, allowing incomes to catch up, and the inventory will likely normalize. This should lead to a healthier housing market as a whole.
Diversification is always wise when it comes to one’s investment portfolio. Real estate remains an excellent choice, as most properties increase in value over time. However, investors need to take housing market information into account when determining whether to put their money into property within the city. For those who desire more information, NRIA. Contact the us today to learn about our excellent investment opportunities!