Residential real estate in New York shows signs of strong recovery
Article: Despite residential property growth, commercial property growth is slow in New York City.
The residential real-estate market in New York City is expected to lag behind the other markets for at least the next couple of years, even as there is a rebound in real estate across the country.
New york real estate market analysis
A recent report suggests that conditions are not favorable for prices to rise in the city, particularly in Brooklyn and Manhattan.
- By contrast, average prices in the US are expected to gain 5% yearly.
- The report also says that housing is overvalued by 4% on the basis of rents and 2% on the basis of income.
Residential real estate in NYC
The residential real-estate sales’ market, for the first quarter of 2013, felt the strength of the recovery in the market.
- Sales of more homes at just over 10,000 were up 11% year on year and 4% over the preceding quarter.
- The average price was USD $805,000, which is also the highest average price since the average price of USD $853,000 achieved in 2008.
- The total price consideration for all sales was USD $8.1 billion, up 23% year on year and up 7.6% over the previous quarter.
- This is also a record post the financial crisis of 2008 when consideration totaled USD $10 billion for the first quarter of that year.
Commercial real estate in NYC
New York is the headquarters for many large companies – the main pillars of the economy are the financial services companies such as insurance and investment banking. The commission real estate market is improving and values are rising a little, though they are well below the 2007 peak.
- The office market in Manhattan has shown positive absorption and the vacancy late has declined to under 13% with the recovery being driven by Midtown.
- Lease rates for prime space are in the region of US $50 per square foot.
- However the downtown market is witnessing growing vacancy, declining rent and negative absorption.
- The asking price for office space was around US $192 per square foot, which is a 7% decline year on year and a small drop from the preceding quarter.
- Retail property, that had touched a high of over US $250 per square foot, is now available at around 15% lower (which is the lowest price in the last 3 years).
The fiscal cliff problems had a negative effect on the tradition of finance, insurance and real estate sectors, which have been the mainstay of the New York City economy. Once these problems are sorted out, there should be a recovery in both the number and value of transactions in 2013.
- Around 20 companies are believed to be looking for more than 100,000 ft.² of office space, each making a total of 2.8 million ft.² in Manhattan.
- Financial services companies are not actually shrinking, but growth in the first quarter will be slow because hiring has not been active.
- The New York office market has always been with nearly 440 million square feet of office space and this will always result in activity because of the expiry of leases.
The bottom line
The residential real-estate market shows a strong growing trend and this may be a good time to consider investment. If your interest is in commercial real-estate investment, you should consider waiting until you can see the trends for 2013.