New York was hit pretty hard by the first wave of the coronavirus and is now seeing the second rise in daily cases as of November 2020. The state’s economy and job market have been greatly affected by the pandemic. However, the unemployment rate has been steadily improving. Back in May, it reached 14.5% but the latest data for October shows a drop to 9.6%.
Because New York has been such a hotspot for the virus, eyes have fallen to the New York real estate market. While the US residential real estate market as a whole is one of the few economic sectors that are thriving during the pandemic, this isn’t the case for all local markets. So what is New York’s story? And based on this year’s events, what is the New York real estate market forecast for 2021? Let’s dive into it.
New York Real Estate Market: 2020 Statistics
NY real estate is generally known to be very expensive and the local residential real estate market is quite aggressive. How is the housing market in New York right now? To answer this question, we turn to Mashvisor’s New York housing market data:
- Median Property Price: $697,721
- Price per Square Foot: $307
- Price to Rent Ratio: 26
- Average Days on Market: 120
- Monthly Traditional Rental Income: $2,234
- Traditional Cash on Cash Return: 2.1%
- Airbnb Daily Rate: $217
- Monthly Airbnb Rental Income: $2,758
- Airbnb Cash on Cash Return: 2.0%
- Airbnb Occupancy Rate: 54%
From this data, we can see a few current housing market trends:
- Despite the pandemic, New York house prices are still relatively high.
- Real estate investors who own a traditional rental property are still generating a good rental income and cash on cash return.
- Airbnb investors are still getting bookings and generating a good monthly income from their short-term rental properties.
So even though New York has suffered due to the coronavirus, it seems that the New York real estate market is holding up during these tough times. But what can we expect for 2021?
New York Real Estate Market Forecast 2021
Although New York real estate investors seem to be surviving the pandemic, there are new real estate market trends that have emerged this year that will impact 2021. Based on these, here is the New York real estate market forecast for 2021:
Suburban migration will continue
With many companies allowing their staff to work remotely, New Yorkers are increasingly moving out of the cities to the suburban real estate market. In April, one study revealed that searches for relocating to New York City suburbs increased by about 250% compared to the same period in 2019. Areas that experienced the biggest increase in searches include Port Chester, Long Beach, Syosset, and Scarsdale. In July, reports showed that there was a 44% increase in home sales in suburban counties compared to the previous year. At the same time, home sales in Manhattan City dropped by 56%. With the coronavirus pandemic being far from over and some companies going permanently remote, it is expected that this migration trend will continue in the New York real estate market 2021.
Rental rates may drop in some NY cities
One New York housing market prediction for 2021 is that rent prices may drop in some areas.
For this housing market prediction, we look specifically at a report on New York City, which revealed some interesting trends in rent prices during 2020. It seems that during COVID-19, rent prices actually hit highs in this part of the New York real estate market. The reason for this can be attributed to the fact that tenants signing new leases are those who were obviously able to afford to move – they likely were not part of the population who has been negatively affected financially by COVID-19 and are probably wealthier.
At the same time, the number of tenants signing new leases dropped significantly in areas like Brooklyn, Manhattan, and Queens. It seems that as more and more New Yorkers are suffering from job losses and avoiding touring apartments for rent, lease renewals are actually increasing. And with these lease renewals comes rent reductions and deferred payment plans. And this is where the New York real estate market 2021 prediction for a drop in rental rates comes from. With such a large portion of the population suffering job losses and other streams of income, it’s very likely that landlords will be forced to lower rents in order to attract tenants to New York rental properties in 2021. This may not be a permanent trend for the New York real estate market, but it’s likely to occur in 2021 before the economy fully recovers.
There are new Airbnb regulations to be aware of in one of NY’s hottest Airbnb locations
If you are planning to join the New York real estate market as an Airbnb host, you need to get familiar with Airbnb laws in New York. Keep in mind that it is illegal in some cities to rent out non-owner occupied Airbnbs while other cities allow it.
Though nothing much is expected to change in 2021, there is a new ordinance that requires short-term rental platforms to share information about hosts and listings with the City of New York. From January 3rd, 2021, Airbnb will disclose the following information about the host:
- Name
- Physical address (zip code, street name, unit or apartment number, street number, county or borough)
- Phone number
- Profile ID number
- Details of the account used by hosts to receive payments
You will only be exempted from this Airbnb New York law if you host guests for 30 days or longer.
Related: What Are the Best Places to Buy a Vacation Home in New York State?
New York will be a seller’s market for 2021
Is New York a buyer’s market or a seller’s market? Data from Zillow.com shows that New York real estate prices have increased by 5.1% in the past year and are expected to go up 7.6% in the next 12 months. The New York State Association of Realtors reported that in October, sales were up as inventory was down. As a result, the New York real estate market 2021 is likely to remain a seller’s market.
Related: Will the 2021 US Housing Market Be a Buyer’s Market or a Seller’s Market?
The Best Places to Invest in Real Estate in New York for 2021
Based on the above forecast, it may be a little tricky to navigate the NY market next year. With prices still going up but the possibility of rents dropping, you need to make sure to choose a great location before buying a rental property. Based on Mashvisor analytics, these are some of the best locations for investment in the New York real estate market 2021.
As Airbnb laws vary greatly in the state, we have listed only the best cities for buying a long-term rental property here. You can always visit Mashvisor and use our real estate investment tools to find the best places to buy a vacation rental property in New York.
#1. Syracuse
- Median Property Price: $177,986
- Price per Square Foot: $99
- Price to Rent Ratio: 13
- Traditional Rental Income: $1,184
- Traditional Cash on Cash Return: 3.6%
#2. Buffalo
- Median Property Price: $204,120
- Price per Square Foot: $112
- Price to Rent Ratio: 17
- Traditional Rental Income: $1,015
- Traditional Cash on Cash Return: 3.5%
#3. Islip
- Median Property Price: $543,164
- Price per Square Foot: $303
- Price to Rent Ratio: 16
- Traditional Rental Income: $2,859
- Traditional Cash on Cash Return: 3.0%
#4. Newburgh
- Median Property Price: $398,094
- Price per Square Foot: $189
- Price to Rent Ratio: 17
- Traditional Rental Income: $1,998
- Traditional Cash on Cash Return: 3.0%
#5. Troy
- Median Property Price: $211,023
- Price per Square Foot: $108
- Price to Rent Ratio: 15
- Traditional Rental Income: $1,194
- Traditional Cash on Cash Return: 2.8%
A Few Final Words
Is the New York real estate market a housing bubble that is about to burst? Not any time soon. Once a coronavirus vaccine is found, New York is expected to bounce back into vibrancy. Therefore, if you were planning on buying property in New York, you don’t have to worry about a real estate market crash. Just be sure to use tools like Mashvisor’s real estate heatmap to find the best neighborhoods for buying cash flow properties in the New York real estate market.
To get access to our real estate investment tools, sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.