New York real estate market has seen significant development for several recent years and the first half of 2019 has made it possible to determine the long-term trends that impact NY housing currently and will continue doing that at the beginning of 2020. Let’s look at 5 trends that will impact the real estate market of New York and people’s investing possibilities.
Affordable real estate is almost absent
It goes without saying that house prices have always been a driving force in the real estate market and the affordable estate is purchased more frequently than the luxury one. New York City housing market can be hardly called affordable but it is still competitive if to compare it with million-dollar homes sold in San Francisco, for example. There are several viewpoints on the median home cost in NYC and the difference is really great. According to Bestplaces.net, the median home price is estimated at about $680,000, but Mashvisor’s calculator offers a sum of over $1.1 million. Naturally, no matter what number you will take as the basic one, it is still twice or even thrice higher than the national one, so only a few people can afford a home in NYC.
Moreover, the number of affordable housing in NY dropped by 1% in 2019 and housing prices have grown by 7% since the beginning of the year. It resulted in the situation that sales have dropped by 2.5% too.
It is not a secret that about one-third of all apartments in large cities are rented and New York is not an exception. Since the cost of the property is high here, rental rates are also biting asking about $5,000 for a 2-bedroom apartment. Of course, there is some difference in rent cost depending on the neighborhood, but still, it is a profitable solution to invest in NY real estate since you can easily earn about $2,800 being a landlord of a studio or small 1-bedroom apartment.
Increase in value over time
The term when a property increases its value over a certain period of time is known as appreciation. If we consider appreciation in NY, its real estate is worth investments since its value has grown by 30% for the previous 10 years. For the recent year, its appreciation value has been 4.61% in comparison with the national appreciation value of only 2.83%. Consequently, there is nothing surprising that New York remains in the top 20 cities for profitable real estate investments.
New York has been considered to be a city where the number of property sellers outnumbers buyers greatly. But the tendency of the previous year had ruined this viewpoint since the number of people who decided to buy property in New York has increased greatly. One of the reasons for that is a drop in sales that led to decreases in home prices. These discounts have reached 10-15% and attracted a bigger number of buyers for making their purchases.
High demand for rentals
A high cost of housing in New York encourages many people to rent property instead of buying it. According to the experts, when a price-to-rent ratio is over 21, it is reasonable to rent housing rather than buy it. When it comes to NY, this ratio is 33 in this city, so many people look for rented property. As a result, ⅔ of the population living in NY rent property and this tendency will continue to preserve. Moreover, high demand for rentals will make prices grow, so we can expect an increase in rental cost in 2020 too.
As you can see, New York’s real estate trends shape the future of the market and we can expect not only an increase in sales and cost of a housing but also a high demand for rentals and more profitable investment.