The 2013 New York housing market (along with the 2014 market) was driven by a significant uptick in the luxury segment. It almost seemed as if homes with lower price tags than $1 million had all but disappeared from the market and that condos especially targeted at billionaires were taking over. In fact, reputed sources such as Bloomberg Business went as far as to wonder aloud whether the NYC market was approaching a luxury bubble in early 2015. Bloomberg showcased the city’s most expensive condo ever, priced at over $150 million, situated on Madison Ave., equipped with eight full bathrooms, and fit for no one short of royal status. They also interviewed the CEO and Vice Chairman of Rudin Management, William Rudin, who stated that in 2014 NYC saw some 40,000 completed transactions of homes, totaling over $37.5 billion in terms of property values. Rudin also provided a glance at a cross section of the average buyer’s profile. According to the portfolio of the real estate company he manages, some 70 per cent of all buyers are native New Yorkers, while foreign investors only account for 10 per cent of the market at the moment.
Rudin also explained that the top challenge of a realtor actively working within these New York housing market predictions for 2015 is to stay competitive and draw buyers from all walks of life, in all income brackets, toward the city. As most experts across the nation, he said that New York real estate agents are concerned with the overall performance of the U.S. economy, since it directly affects the evolution of the state’s market. An asset bubble from the fed is a looming spectrum on the horizon, while the imminent tightening of current lending conditions also weighs heavily on the NYC realtors’ minds – since it stands to further diminish market activity levels.
With the economy and political activity as the main factors that are likely to impinge on the evolution of the New York housing market predictions 2015, it’s also important to look at some of the more specific influencers. The evolution of the market last year taught would-be home owners, realtors, and sellers in the state of New York certain lessons.
Lessons Learned Regarding the 2015 New York Real Estate Market:
Low inventory levels for the more affordable end of the market. Overall, the housing stock in New York increased by 5 per cent in 2014. However, a report issued in October last year, by technology-centric realtors Urban Compass indicates that the number of homes listed for sale in the first three quarters of the previous year, priced below $500,000, dropped by as much as 24 per cent on a year-to-year basis. At the same time, the inventory for homes listed at $500,000 to $1,000,000 also lost 14 per cent.
- A very polarized market. The same report cites a 41 per cent increase in the number of homes available for sale at $10 million and above. The number of homes up on the market, asking for a $5 million to $10 million price, also experienced a 21 per cent boost in the first nine months of 2014. Though both these pricing ranges represent only a small portion of the housing market in New York, they’re still significant enough to make for a very dichotomist market.
- Affordable housing in New York is selling very fast. The Urban Compass report also points out that, in 2014, 60 per cent of all homes in the $500,000 to $1 million range, as well as 60 per cent of one bedroom apartments, spent less than 60 days on the market. At the same time, over 70 per cent of homes more expensive than $10 million and 65 per cent of all homes with four bedrooms spent more than those very 60 days on the market. In simpler terms, the more expensive and ample a residential property, the harder it was to sell it in 2015.
- Overall sales dropped, median prices increased, but expensive properties still sold. In the third quarter of 2015, the total number of sales on a year-to-year basis lost a few significant percentage points. However, the total value of sold condos and co-ops exceeded $6 billion, which brought this segment of the market to the highest peak on record since 2008. Median prices for this category have also gone up by 11 per cent over one year, up to $1.32 million, while co-op prices lost 1 per cent and dropped to $707,000. All in all, the higher end segment of the market is now much more variegated than the lower end, placing this niche under the control of potential buyers and investors.
- The market favors educated buyers. With the more affordable New York real estate housing options lacking and development costs running high, it goes without saying that pricier housing will continue to rule the market in 2015 as well. What this means is that first-time buyers or buyers who are considering a return to ownership, after renting, have to be very well prepared to dive into such a sophisticated market. Not only do they need to have all their financing documents in order and pounce on a property when they are sure they want to buy it – but they also need to have attended enough open houses and done sufficient research as to make sure they are taking the best educated guess.
In terms of predictions for the 2015 New York real estate housing market in general and NYC in particular, realtors and market experts expect some things to change; by and large, though, the differences they predict are not that substantial. For instance, a data scientist from StreetEasy, says Manhattan will continue to experience price increases. However, his forecast is of a 4 per cent boost, which is far less dramatic and more natural than the price boost the borough saw in 2014. At the same time, craigslist real estate in Brooklyn and Queens will probably see prices increase at the same pace they witnessed last year. That’s because native New Yorkers are still interested in purchasing homes in areas such as Long Island City, Bedford-Stuyvesant, and Crown Heights. With ample demand influencing the local markets, it is only natural to expect to see prices grow.
Meanwhile, those very same areas will also likely experience an increase in housing stock and inventories. That’s because the number of building permits for new condo buildings and rental co-ops grew in 2014. At the same time, many apartment owners in Brooklyn and Queens have expressed a need to trade up or down, which means there will be a lot of new homes on the market in 2015. In fact, the year’s first quarter has already confirmed this expectation. This trend is influenced by the consistently good prices that the Queens and Brooklyn housing market have seen for the past several years. There’s a certain amount of pressure at work on them, to get their homes on the market before prices start to drop.
There’s also a fair degree of pressure acting on developers, as the tax break state-funded program for rental developers draws to an end on June 15, 2015. The program, called 421a, might or might not be reprised. Developers are rushing against that expiration date, since accessing major funds would become far more difficult for them, in the absence of that tax break program. Developers that still wish to benefit from it need to file all their documentation and plans by June 15, or risk being left without a major financing source. Since the future iteration of this program remains of yet unclear, plans for new rental developments might take a break until they are clarified.
Shared living spaces are also gaining prominence on the New York City real estate market radar. Developers finally seem to have understood that many young urban professionals will continue to find it difficult to shell out as much as $3,000 for a one-bedroom apartment. Many of them prefer to share a suite with two other tenants, where the kitchen and bathroom are common to all of them and each enjoys the privacy of a bedroom. The focus is on luring this coveted category of renters back to the New York City real estate, by allowing them to live there and pay less than $1,500 per month. A somewhat similar trend is forecast for Manhattan, where closed sales of condos priced at $10 million and above are on a slow decrease. As such, developers are focusing instead on smaller luxury housing units, which they can still put up on the market for $2,500 to $3,000 per square foot, but whose total price is lower.