Dubbed the greatest city in the world, New York City boasts some of the highest real estate prices. Housing prices have increased significantly over the past decade – a testament to the thriving housing market in NYC.
Home prices are nearly triple the national average, with many NYC homes selling for under $1.1 million in September 2023. This makes New York City an attractive destination for long-term real estate investments.
Over the last few years, there has been a shift in the city’s real estate trends. In early 2020, before the pandemic hit, New York real estate trends was a hot buyer’s market. By 2021, it became a seller’s market as several people moved out of the city.
This trend spilled over to 2023. While the demand for housing hasn’t completely dried up, it has dipped. High prices and financial challenges due to high mortgages have deterred homebuyers. Home inventory has also hit a low, prompting bidding wars and escalating prices.
According to the New York State Association of REALTORS (NYSAR), there is likely to be a further rise in property values by at least 4% over the next year. As a result, purchases will continue to slow down.
Some of the most compelling factors that will influence the housing market in NYC this year and in 2024 are:
- Rising interest rates
- Economic conditions
- Outmigration
- New housing projects
New York Real Estate Trends and Market Overview
The New York real estate trends was robust in 2021 and 2022. In 2023, real estate listings and sales are facing a downward trend. Homeowners are holding on to their properties until market conditions change. As a result, home inventory is low.
The outflux of population from the Empire State and the Big Apple isn’t helping. In 2022, over 500,000 residents left the city for greener pastures. New York City saw one of the biggest losses in population since the pandemic began. The exodus, albeit now slow, continued this year.
That said, some NYC boroughs like Manhattan are seeing a rising demand for luxury homes. Manhattan is the crown jewel of the US housing market, attracting affluent investors who want a piece of the real estate pie.
Outside of the city, in upstate New York for example, Rochester and Buffalo are attracting interest. Homebuyers from across the country are keen on investing in vacation homes in these family-friendly areas.
To better understand New York’s housing market trend, let’s look at both city and statewide market trends in 2023.
Housing Market Trends in New York City
- The number of homes sold in New York City in September 2023 fell from the previous year. The city’s housing market saw only 2,258 sales, compared to 3,278 sales in September 2022.
- September 2023 also saw a drop of 4.4% in home prices in New York City. The home median price fell to $765,000.
- Homes stayed on the market for an average of 62 days, up from 54 days the previous year.
Housing Market Trends in Statewide New York
- Compared to NYC, statewide median home sales prices rose by 6.8% in September 2023. The median home price increased to $390,000, a substantial increase from $365,000 in September 2022.
- The inventory of homes in New York continued to decline. It shrunk to 28,943 homes available in September 2023 from 38,082 homes last year. This indicated a 24% year-over-year dip.
- The number of new listings fell from 14,017 to 12,592 units this year, marking a 10.2% year-over-year decline.
- Closing sales were also low this quarter, with only 9,564 units sold compared to 12,335 last year. This represents a whopping 22.5% reduction in closed sales transactions.
- Pending sales followed a similar pattern. They fell by 8.1% as compared to September 2022
Rising interest rates may be to blame for much of this year’s drop in house sales and active listings. According to the Freddie Mac Mortgage Survey, the interest rates in October 2023 are at an all-time high, at 7.63% on a 30-year fixed-rate mortgage. This represents the largest increase since 2000.
Despite its dynamic nature in recent years, the NYC housing market remains at the top compared to other major US cities. According to the New York Post, NYC real estate has a staggering market value of $4.24 trillion. This marks a considerable increase of 4.2% over the previous year.
Los Angeles follows close behind, with a $3.71 trillion home market worth. Other large cities having housing stock values over $1 trillion include San Francisco and Miami. California dominates the market, with New York ranking third in housing market value.
However, NYC’s low home affordability is a source of concern. It prompted a major outmigration in recent years compared to other US cities.
A Note on the NYC Rental Market Forecast 2023
The NYC rental market is showing signs of cooling off after months of record rentals. This may offer some respite to renters, but experts advise against getting their hopes up. In NYC, a rental cooling-off could just mean a slight dip.
The good news for renters is that rent will not rise much in the last two quarters of 2023, owing to an increase in inventory. The following are the rental housing trends in New York City’s five boroughs:
- In September 2023, the median monthly rent in Manhattan was $4,495. This marked a 1% gain over last September, but there was no change from August 2023. This minor year-over-year increase confirms that the NYC rental market is cooling.
- In September 2023, the typical rent in Brooklyn was $3,837 per month. This marked a 4% rise over the previous September. However, there is a 2% dip in rental prices compared to the previous month.
- Queens showed a similar pattern as Brooklyn. The average monthly rent in September 2023 was $2,804.94, signifying a 4% increase over last September. This price shows a slight decrease of 0.23% from the previous month.
NYC Real Estate Market Forecast
A report by Zillow forecasts a 1.7% increase in the value of NYC homes by 2024. This suggests that the housing market in NYC will be promising in the coming year.
Homebuyers, especially first-timers, need to carefully assess their financing strategies if they plan to buy a house. Rising mortgage rates, along with increasing housing prices, will create affordability concerns.
Even so, NYC’s sheer size translates into numerous options for homebuyers. Let’s look at New York Real Estate prices by neighborhood and the best NYC neighborhoods to buy or rent a house:
Queens
StreetEasy’s latest report dubbed Queens as one of the top NYC boroughs to watch in 2023. Its affordability and accessibility to Manhattan make it a top choice for homebuyers and renters. The report highlights four up-and-coming neighborhoods in Queens:
- Woodside
- Sunnyside
- Elmhurst
- Middle Village
The neighborhood of Elmhurst ranked fourth overall in the list. According to the StreetEast survey, Elmhurst showed a 31% year-over-year rise in home searches. Its median asking price was up by 16% to $435,5000. The median rent rose to $2,100, a 17% increase over the previous year.
The neighborhoods of Woodside and Sunnyside offer easy access to Manhattan, as both are located along the same train line.
Another Queens neighborhood to watch out for is Astoria. Brimming with a close-knit community vibe, Astoria offers homebuyers a mix of the old and the new. It also promises a quick and easy commute to Manhattan.
Most importantly, Astoria is hailed as one of NYC’s most affordable neighborhoods, especially for renters. On average, a one-bedroom apartment will cost you $2,723 per month. Studio flats in this area cost roughly $2,300 per month if you want privacy and affordability. If you don’t mind sharing a room, private rooms will cost you $1,150.
Brooklyn
Old favorite Brooklyn is home to inexpensive neighborhoods such as:
- Sunset Park
- East Flatbush
- Bushwick
- East Harlem
- Kips Bay
These neighborhoods are fairly far from Manhattan but score high due to their affordable pricing.
Although more expensive than other Brooklyn neighborhoods, Williamsburg is popular with young homeowners and renters. Its modern vibe and quick commute to Manhattan make it a sought-after spot.
However, if you want to live here, be prepared to pay a higher premium. Private rooms in Williamsburg can cost up to $1,600 per month. Rent for a one-bedroom apartment can average $4,108 per month, while studio apartments cost roughly $3,456 per month.
Manhattan
Turtle Bay is one of New York City’s most desirable areas, with a low crime rate and easy access to Manhattan. The prices, though, are exorbitant, with the median asking price approaching $992,500. Turtle Bay witnessed a 47% increase in home searches this year despite its high pricing.
If you want to be close to Manhattan but not pay top dollar, Harlem and the Bronx are two Upper Manhattan districts to consider. They have easy access to major neighborhoods via public transport.
A one-bedroom apartment or a studio in Harlem costs between $2,600 and $2,900 per month on average. Private rooms cost roughly $1,426 per month.
The Best Properties to Invest In NYC
The housing market of NYC is such that you can expect a substantial return on property investments. The city has a decent annual average property appreciation rate. Home prices will grow in the coming year, making it an excellent time to invest in a NYC property. You can consider investing in one of the following three properties in the city:
- Single-family dwellings
- Residential condominiums (for budgets exceeding $700,000)
- Townhouses
Is it a Good Idea to Invest in Condos in NYC?
Condos became popular in New York City in the 1970s. The city’s condo market has expanded substantially in a five-decade span and is now one of the largest in North America.
Given Manhattan’s sky-rises, you might expect most condos to be found here. However, due to Manhattan’s limited land supply, new developments are surfacing in emerging neighborhoods like Brooklyn, Queens, and the far East and West sides.
Here are some factors to consider if you’re in the market for a condo in NYC:
- Buying a condo in NYC can be expensive, but unlike co-ops, you will enjoy complete ownership of your condo apartment.
- Earlier this year, Manhattan’s median condo sales fell 4.2% from the previous year. This suggests it is a good time to invest in a condo
- Closing costs of a condo are significantly higher than those of a co-op. But you will find some respite in the down payment price, which is typically 10% of the total purchase price
- Condos have a high appreciation rate. In comparison to co-ops, they are easier to refurbish and purchase. It is also easier to finance a condo purchase, thanks to their lenient requirements.
- When purchasing a co-op, financing options are limited and stringent. Condo boards have fewer rules and more streamlined processes, making it easier to sell your unit.
Buying a Home in New York
The competitive housing market in NYC can be intimidating for first-time homebuyers. But median real estate prices in New York are currently declining. This allows homebuyers a chance to secure a piece of the proverbial Big Apple. Here are some steps for navigating the home-buying process:
Set Aside an Amount for Down Payment
Most NYC buildings need a down payment. Depending on the type of home you’re purchasing, you’ll need to put down 10-20% of the total home price as a down payment.
Ensure you save up this hefty sum before commencing your home search. If coming up with this amount is a challenge, see if you qualify for any of the state’s down payment aid programs.
Prepare for Loan Preapproval
Securing your finances before actually buying a home is a crucial step. You can do this by obtaining preapproval from your mortgage lender. Approvals can depend on factors like:
- Credit score – a minimum requirement of 620
- Debt-to-income ratio – less than 50%
Getting pre-approved will help you assess the level of your affordability. It shows sellers you are serious about purchasing a home.
Find a Reliable Agent
Employ an experienced agent to help you navigate the complicated NYC housing market landscape. An agent can help you:
- Estimate purchase costs
- Identify the right neighborhood for your needs
- Negotiate pricing
Choose Your Preferred Neighborhood and House Type
Research the kind of neighborhood you’d like to reside in. You’ll need to compare neighborhood house price costs against your budget. Don’t forget to factor in your commuting needs.
There are four types of homes in NYC:
- Single-family detached homes
- Condos
- Co-ops
- Townhouses
Weigh the pros and cons of each and select the best fit for your needs. Given New York’s housing prices, you should be realistic and flexible about your demands.
Make an Initial Offer
Your initial offer may not be the one you close at. It might undergo negotiations. Work with your agent to arrive at a realistic and comfortable figure. Don’t be afraid to negotiate with the seller within a realistic framework.
Get a Home Assessment Done
A home inspection is a must before closing a deal. A professional inspection can help you determine the home’s market value. It can also unearth potential issues and weak spots, if any. Based on these, you can proceed with further negotiations if necessary.
Closing the Sale
Close the sale after a final property walkthrough with your agent. Note that you might have to pay closing costs. These are typically 3%-6% of the loan amount. You will also require the services of an attorney at the closing.
The state of New York has provisions in place to make home ownership more attainable for its residents. Some of the most popular government programs are:
SONYMA Statewide Assistance
First-time homebuyers in New York can take advantage of the downtown assistance program offered by the State of New York Mortgage Agency (SONYMA).
SONYMA also helps homebuyers obtain affordable mortgage loans. Under SONYMA’s assistance program, you can finance all property types except those made for investments. They include:
- Condos
- Co-ops
- Manufactured homes
- Single-family homes
- Multi-unit homes
Homebuyers can also avail of FHA and VA loans with SONYMA. If you participate in this program, you can apply for a home loan only through SONYMA’s approved money lender list.
SONYMA has the following qualifying criteria to avail of its programs:
- A verifiable credit score and history to ensure timely payments
- Sufficient quantifiable income to cover home ownership costs
- Guarantee that the home in question will be used as a primary residence
- Fixed income going back two years
HomeFirst Down Payment Assistance Program
The HomeFirst Assistance Program is intended to assist first-time homebuyers struggling with finances. It provides qualified candidates up to $100,000 in down payment or closing costs. However, 1% of the total down payment must come from your funds.
This program applies to homebuyers seeking to purchase a single to multi-family home, a cooperative, or a condo. The home has to be a part of one of New York City’s five boroughs.
Applicants must meet eligibility requirements. Technically, a first-time homebuyer refers to anyone who:
- Has never owned a home
- Has never owned a home in the past three years
Candidates also need to complete a homebuyer education program.
Federal Housing Administration Loans (FHA Loans)
People with low credit scores can avail of FHA loans. These are part of an initiative by the U.S. Department of Housing and Urban Development. FHA loans help borrowers with low credit scores by insuring their mortgages.
Borrowers may have to pay a mortgage insurance cost of 1.75% in addition to annual premiums. The FHA loan program provides borrowers with a list of certified money lenders from which to obtain loans at competitive interest rates.
Buying a home in New York also comes with tax implications. Taxes vary from one-time costs to recurring payments, depending on the property you purchase.
One of the taxes associated with home buying is the transfer tax. All property sales in New York State over $5,000 are subject to transfer tax. Specifically, there is a 4% rate or $2 for every $500 of the total transaction value.
The transfer tax is paid at the state level and has no federal ties. If the property is an inheritance, transfer tax does not apply. In a property purchase, the transfer tax is typically the obligation of the seller. If the seller is exempt, the buyer assumes the tax liability.
Selling a Home in New York
Selling your New York property can lead to big profits, but the process can be challenging. Here’s what you need to know about selling a home in New York.
Set the Right Price
Many sellers make the mistake of overpricing their homes, which is counterproductive. Overpriced homes may take longer to sell despite the considerable demand. Instead, it is best to price the property at its fair market value.
Once it attracts buyers, sellers can use their competitive advantage to negotiate a higher price. Sellers should be realistic about setting the home price. This is possible by researching home prices in the area, evaluating market patterns, or speaking with a real estate specialist.
Hire a Professional
Selling a home in New York entails several processes that are complicated for a regular person. To deal with documentary requirements, taxes, closing costs, and other expenses, you must have a strong understanding of real estate math.
A realtor can help you navigate these processes, from pricing your home correctly to closing the deal.
Gather Essential Paperwork
If you’re selling a home in New York, ensure you have these documents:
- Disclosure form/statement about the home’s structural state
- Seller ID
- Recent tax statements
- Bill of sale
- Purchase agreement
- Signed deed
Time It Right
Timing might have an impact on the bids you receive for your house. According to experts, the month of May or summer months are the best times to put your home on the market. Most people, especially those with families, contemplate moving during the spring and summer months to accommodate school schedules.
Plan a Home Appraisal
While the onus of home inspection typically rests with buyers, more sellers are opting for a “full disclosure” these days. A thorough inspection report from the seller’s side can help build trust with the buyer. It can also help you fix/repair serious issues that would otherwise reduce the value of your home.
In any case, New York State law requires sellers to provide a disclosure statement outlining any defects to the buyer before contract signing. Sellers can opt out of the disclosure by crediting the buyer $500 at closing.
Market Your Property
Curb appeal is a crucial factor in selling a home. You want to ensure your home looks appealing to buyers, so stage it well. If you advertise the sale online, take high-resolution pictures of your home in natural light.
Some sellers hire professional photographers to produce attractive pictures of their homes. Once you have the pictures, market your home on popular real estate platforms, including Zillow, Trulia, and Realtor.com. You can also share these updates on social media to attract consumers from your network.
Lastly, coordinate with your agent to schedule viewings for potential buyers.
Review Offers
Seller agents would typically make provisions for forms to be filled out by prospective buyers. Once the offers on your home start pouring in, you’ll need to review each one carefully. Sellers can make a counteroffer, which the buyer can accept or reject. This negotiating process will continue until both parties reach an acceptable price.
When the seller accepts an offer, they must hire a real estate attorney to create a purchase agreement. Once both parties have reviewed and signed this agreement, the offer becomes legally binding.
Closing
Sellers and purchasers must reach an agreement on how to split closing costs. Other costs that sellers must pay upon transaction completion include:
- Agent commission fee, typically 5% of the total sale value
- State transfer tax
- Recording fees
- Attorney fees
- Escrow fees
- Outstanding liens
If both the buyer and seller have agents and attorneys, they can close the deal without either side being present. Once all taxes are paid and documents filed with the county clerk, the house is considered sold.
Investing in New York Real Estate
New York City’s real estate market is a complex landscape. Navigating it requires understanding state regulations, interest rates, market trends, tax implications, and property laws.
But the good thing is that NYC real estate offers diverse investment opportunities, whether you’re a novice investor or a veteran. Here are some ways to invest in the NYC real estate market.
- Real Estate Investment Trust or REIT
Real estate investment trust is the real-estate version of mutual funds. REIT is a good way to pool your capital with other investors and earn passive income from a property. There are ways to earn a return on your investment without the hassle of financing or managing a physical asset.
- Investors receive returns in the form of a dividend income
Investors from around the globe can invest in commercial or retail properties in NYC’s illustrious areas like Union Square. Popular NYC REITs include the following:
- Empire State Realty Trust
- Paramount Group (PGRE)
- Vornado (VNO)
- Simon Property Group
While REITs provide excellent portfolio diversification, investors should note that they are vulnerable to rising mortgage rates.
- Leverage a Property for Rent
Investing in a tangible rental property in NYC can promise big returns as home values continue to rise. NYC has a promising home appreciation rate. It also has a high rental rate, ensuring steady income each month.
Before buying a rental property, ensure the building is in good condition. You should also ensure the neighborhood has a low crime rate. The property should be accessible to downtown and Manhattan areas. If you intend to sell in the future, you may need to pay renovation fees upfront to get a fair resale price.
- Turnkey Property
Turnkey properties allow investors to buy and rent a property remotely without the hassle of property management. It is a great way to earn passive income.
In a turnkey investment, investors quickly remodel and rent out the property. They outsource the management to third parties, who act as caretakers or managers for the property. While paying for this service may reduce profits, investors can still earn good money from such properties.
Remember that turnkey properties require a hefty capital upfront. After purchasing the property, finding a reliable turnkey company or manager can be challenging.
- Invest Online in New York Real Estate
Investing in NYC properties via an online platform is an excellent remote investment option. Many online real estate platforms act as go-betweens for ardent investors and developers.
NYC is consistently producing new developments, so investing in one of these, albeit remotely, can help diversify your portfolio. Investors typically receive monthly or quarterly dividends for investing in these developments. There is some risk involved, so ensure you only invest through legitimate platforms.
You can check an online platform’s track record by speaking with other experienced real estate investors.
New York Housing Market: Comparison of Borough Markets
Here’s a comparison of the latest real estate market trends in NYC’s main boroughs.
- Manhattan Real Estate Market
Manhattan’s real estate prices are among the highest in the NYC housing market, with a median price of $945,000. According to PropertyShark, Manhattan’s September 2023 median sale price fell 11.4% year-on-year.
Its median price per square foot also saw a year-on-year decline of 2.5%. The number of real estate transactions completed this month was 2,521, indicating a 66.1% increase from last September.
- Brooklyn Real Estate Market
The Brooklyn real estate market is turning a corner as the year draws to a close. Real estate prices are stabilizing to pre-COVID times. It is a good time for investors and homebuyers to make a move.
In September 2023, Brooklyn homes sold for 3.36% below the average asking price. The market also had a decent supply of homes, with lower demand than in the past year. This indicates a shift to a buyer’s market. The median sale price of homes in Brooklyn fell to $755,000, marking a 5.4% decrease from 2022.
- Queens Real Estate Market
The Queens real estate market showed a similar trend as Brooklyn in September 2023. Inventory was stable, and competition was low. With homes selling for 2.4% below asking, the last quarter of 2023 might be a buyer’s market for this borough.
Queens’ median listing price remained constant at $585,000, with a flat year-on-year trajectory. The median sale price fell 13.8% year-on-year to $478,000.
A Look Ahead: Navigating the New York Real Estate Trends
The New York City real estate market is known for its tenacity. Despite obstacles such as shifting demand, rising interest rates, and outmigration, it remains an attractive investment destination.
There are opportunities for both homeowners and investors, with some neighborhoods offering both affordability and growth potential. However, buyers and sellers must carefully evaluate timing, mortgage trends, and economic conditions to make informed choices in this volatile market.
