New York City is the most populous city in the whole of the United States. Located in the southern region of the State of New York, the city is home to over 8.6 million residents. Even so, New York City saw an increase in its population by 5.5% from 2010 to 2018. According to NeighborhoodScout, 77.7% of this population rents rather than owns a home. So buying a rental property in the New York City housing market can make for a great real estate investment as rentals are in high demand.
The economy in New York City is actually the largest regional urban economy in the nation. The city leads the country’s job market in the fields of banking, finance, and communication. New York City is not only known as “The Big Apple”, but it’s actually been nicknamed “The Finance Capital of the World” because located in the city are NASDAQ and the New York Stock Exchange. Other major industries in New York City include international trade, healthcare, media, journalism and publishing, manufacturing, information technology, and real estate.
The New York City housing market (specifically its borough Brooklyn) came in at #2 in the PWC’s Top Markets to Watch in 2019. In the Northeast region of the US, New York City’s boroughs took 3 out of 5 spots for the top markets for overall real estate prospects in the annual report. Not only is the New York City real estate market a top national market, but it’s a popular market for international real estate investment as well. In fact, according to a survey by the Association of Foreign Investors in Real Estate (AFIRE), New York City came in second in the global ranking of major cities for top real estate prospects. So whether you’re a domestic or foreign real estate investor, New York City is one of the best places to invest in real estate.
|Facts and Market Trends in New York|
|Homes For Sale6,936|
|Traditional Vacancy rate5.20%|
|Airbnb Occupancy Rate71.33%|
|Median Rent Price$3,149|
|Median Days on Market138|
|Price to Rent Ratio34.5|
|Average Cap Rate|
|Average Rental Income|
|Median Household Income$50,711|
|RENTAL STRATEGY||STUDIOS||1 ROOM||2 ROOMS||3 ROOMS||4 ROOMS|
New York City is notorious for its high property prices which is why so many residents rent rather than buy. However, if you can afford to invest in New York City real estate, you’ll still enjoy significant property appreciation. In fact, since Q1 of 2000, real estate appreciation of NYC properties has totalled 123% for an annual average growth rate of 4.37%. Zillow forecasts that next year will be no different with an expected appreciation of 3.3%.
The housing inventory is tight as it is in most major US metro areas, and it doesn’t help that land and construction costs are very high. However, local officials are working with the city’s real estate board and construction unions to remedy the issue and increase housing supply. So even though property prices are high, the New York City housing market is actually a buyer’s market right now. This means that there is room to negotiate those home values down. And there are still affordable neighborhoods in New York City where you can find cheaper homes for sale making the city a great place to buy investment property.
Because New York City is a popular domestic and international tourist destination, welcoming over 60 million visitors a year, it’s no surprise that Airbnb growth was massive in the early years of the vacation rental industry, with Airbnb New York City hosts generating millions of dollars in annual revenue. However, as a result of Airbnb’s growth, city officials have cracked down on short-term rentals with strict regulations. When it comes to non-owner occupied properties such as Airbnb investment properties, they are illegal in New York City.
In order to rent out a primary residence on Airbnb legally, the host must be present throughout the guest’s stay. This means you can only rent out a room rather than an entire house in the Airbnb New York City market. Hosts will also be required to obtain a business license and permit as well as pay various taxes such as a hotel occupancy tax.
Besides this, there are also zoning laws that dedicate certain regions in the city where short-term rentals are permitted. If your home is under rent control, you must check with your local rent board to find out if renting out on Airbnb and other vacation rental websites is permitted. Airbnb New York City hosts must also adhere to any HOA restrictions against short-term rental properties.