A decade has passed since the financial crisis of 2008 and New York City continues to be a top market for real estate investors. In fact, it ranked in the top 10 markets to watch (only second to Dallas) in the PwC’s Emerging Trends in Real Estate Report. It’s true that the New York City real estate market is a tough one to enter, but this doesn’t change the fact that it still offers good investment opportunities.
Looking to invest in the Big Apple this coming year? Here are our New York City housing market forecast and predictions that property investors can expect to see in 2019.
Note: At the end of this blog post, we list the 5 best neighborhoods in NYC to invest in real estate, so make sure to check that out!
New York City Is Becoming a Buyer’s Market
Numerous reports state that New York City’s pricey housing market is seeing a major shift to a buyer’s market. Warburg Realty’s Q3 2018 Market Report, which surveys real estate conditions around the city, shows data that reflects definitive cooling in NYC. Figures from the report show that the number of homes for sale has risen sharply, yet recorded sales throughout the city actually fell. In other words, while more New Yorkers decided to sell their properties, fewer transactions have taken place than in past years.
Warburg’s report also shows a greater difference between asking prices and selling prices in the New York City real estate market. “Offers 20% and 25% below asking prices began to flow in, a phenomenon last seen in 2009,” said Warburg Realty’s Founder and CEO Frederick W. Peters. Moreover, another indicator that the city has shifted to a buyer’s market is the increase in the number of properties staying on the market for longer.
Related: The 2019 US Housing Market: A Seller’s Market or Buyer’s Market?
Thus, our first New York City housing market prediction for 2019 is: Real estate investors looking to buy an investment property in NYC will have the upper hand. In contrast, sellers can’t expect multiple offers anymore and will need to take much greater measures to sell their houses. So, while NYC remains one of the most expensive housing markets in the country, well-prepared property buyers will have a strong negotiating position as sellers are motivated to meet their terms or cut prices!
To start looking for an investment property for sale in the New York City real estate market, our Property Finder is the ultimate tool for you. Click here to see a complete list of the best NYC investment properties with addresses and a complete investment property analysis!
Inventory Is Up Across NYC Neighborhoods
According to StreetEasy, the New York housing market is going to see an upward spike in inventory. In fact, new development has been pushing inventory gradually since 2013, and one housing market trend you can expect to see in 2019 is that this inventory will continue building up. The PwC’s Emerging Market Report also supports this prediction, stating:
“New York’s soaring land and construction costs inhibit the development pipeline, but the city government, the local real estate board, and the construction trade unions are finally working together to increase new supply.”
This new supply of properties, combined with falling sales and longer days on the market, further proves that New York City is shifting towards a buyer’s market. Real estate investors searching for investment properties to buy in NYC will likely find more options of homes for sale to choose from, no matter what type they’re looking for. Additionally, even though the New York City real estate market is one of the most expensive in the country, this year’s inventory included a significant number of properties at lower, more affordable price points.
Thus, another housing market prediction for 2019 is: More property sellers will have to cut asking prices to increase the demand. For real estate investors, it may be tempting to wait and see if prices further fall later this year. However, we advise you to enjoy this enhanced bargaining position afforded by this year’s inventory. Now more than ever, you have the chance to be picky with the selection of homes for sale and find an investment property that best meets your needs without the fear of missing out!
To start looking for and analyzing the best investment properties in the New York City real estate market, click here.
Rising Interest Rates and Demand for Rentals
As we’ve already established, New York City is one of the country’s most expensive cities. And even though sellers might be willing to cut asking prices, homeownership isn’t an option for many New Yorkers due to high interest rates. The average rate for a 30-year fixed-rate mortgage rose to 4.81% from below 4% at the end of 2017, according to data from Freddie Mac. As a result, homebuyers can’t bid as strongly for properties as they could when interest rates were lower.
Related: US Housing Market Predictions: What’s to Come in 2019
This leads to our next New York City real estate market forecast: Renting will stay a more attractive option than buying for many New Yorkers in 2019. Real estate investors with rental properties can expect an increase in rental rates due to this high demand for rentals. In fact, rents in outer-boroughs’ neighborhoods now equal those in many Manhattan neighborhoods. Moreover, you should be ready for some competition in many of the NYC’s priciest neighborhoods next summer.
Amazon HQ2 Affecting the Housing Market
Just last month, Amazon announced that its new headquarters would be split between Long Island City in Queens and Crystal City in Northern Virginia. Amazon’s arrival in Long Island City may affect the overall New York City real estate market. Of course, this will bring an influx of highly paid professionals to the city which will please real estate professionals. However, according to Grant Long, StreetEasy senior economist, those hoping to sell their luxury condos to Amazon workers will likely be disappointed.
Long wrote, “The $150,000 average annual salary of a new Amazon HQ2 employee is well above the city median, but still far from sufficient to make a multimillion-dollar condo affordable.” He further explained that current Amazon employees may be hesitant considering New York City’s sales prices are a bit above Seattle’s, the firm’s current headquarters.
This leads to our final housing market forecast: Many of Amazon’s future employees in NYC will find renting a more affordable option. In turn, this strong demand will push rents upward, especially in less dense neighborhoods surrounding Long Island City. Thus, Amazon’s arrival will bode well for real estate investors of rental properties in New York City.
Related: The Amazon HQ2 Decision: How It Will Impact US Housing Markets
Best Neighborhoods in the New York City Real Estate Market 2019
If you’re already planning your next rental property purchase in the Big Apple, you’re most likely searching for a good neighborhood. Search no more as we’ve got you covered! Below is a list of the 5 best neighborhoods to consider for buying a rental property according to Mashvisor’s real estate analytics and investment property calculator. (Note: Walk Scores are provided by walkscore.com.)
- Median Property Price: $542,856
- Price Per Sq/Ft: $236
- Rental Income: $4,374
- Price-to-Rent Ratio: 34
- Walk Score: 78
- Cash on Cash Return: 5%
- Median Property Price: $614,667
- Price Per Sq/Ft: $156
- Rental Income: $4,520
- Price-to-Rent Ratio: 33
- Walk Score: 74
- Cash on Cash Return: 4%
- Median Property Price: $607,129
- Price Per Sq/Ft: $405
- Rental Income: $3,941
- Price-to-Rent Ratio:84
- Walk Score: 68
- Cash on Cash Return: 4%
- Median Property Price: $726,723
- Price Per Sq/Ft: $403
- Rental Income: $4,728
- Price-to-Rent Ratio:81
- Walk Score: 88
- Cash on Cash Return: 4%
- Median Property Price: $982,063
- Price Per Sq/Ft: $484
- Rental Income: $6,178
- Price-to-Rent Ratio:25
- Walk Score: 90
- Cash on Cash Return: 4%
Ready to start your search for profitable NYC property? Click here to start your 14-day free trial and subscribe to our services (with a 20% discount after) to find the best properties for sale in any of these neighborhoods along with an investment property analysis.