Living in the exhilarating city of New York understandably comes with high rents, a factor that doesn’t seem likely to decrease. Recently though, there has been an intriguing shift in rental trends. 2015 marked New York’s priciest year to date; however, the rising rental costs somewhat stagnated in the beginning of 2016. The factors causing this slowdown and its implications are both interesting and unclear.
REWIND TO LAST YEAR:
To comprehend the current ebbs and flows of New York’s real estate sector, it is essential to understand its recent past. Particularly since the 1930s Great Depression, a sharp upward trend in property prices has been observed. This trend continued through the late 2000s’ Great Recession. In the last quarter of 2015, property prices soared to an unprecedented high, documented by the city’s largest and one of the oldest real estate companies, Elliman. The median price of a Manhattan house was a staggering $1.9 million – more than 12% up from 2014, and a stark comparison to the national average of $188,900. The cost of apartments, condos, and co-ops also marked a significant upsurge in 2015. Factors like speedy closures, with properties being on the market for just 82 days on average, further escalating prices. Luxury developments are seemingly the driving force behind the price hike, with demand exceeding the supply.
THE CURRENT STAGNATION:
A ray of sunshine in early 2016 seemed to signify cooling real estate prices. January and February recorded consistent prices rather than unreasonable spikes, indicating a sense of stability in the months ahead. Landlords appear more amenable to negotiations, and a fair amount of deals involved a concession from them, a sea change favoring potential tenants and buyers. The fervor of luxury development that heated the market has started to lessen, and listing periods have seen a notable increase. Prices of new luxury apartments in Manhattan have dropped more than 5% from last year. Despite the seeming improvement, it doesn’t look like the real estate prices or rents will drop any time soon. In fact, Manhattan’s average rent is ominously creeping towards the $4,000 mark, which is stretching affordability for many New Yorkers. Whether the market will maintain its stability or veer into extreme highs or lows is a question of intrigue and uncertainty.
