In 2011, New York City saw a dramatic surge in the prices of apartment rentals. Forecasts show that this year will be no different. For the most part, New York City has been sheltered from the harsh economic forces that have plagued the rest of the country. The summer of 2012 will show an increase in the cost of condominiums in both Manhattan and parts of Brooklyn. There are several factors specific to New York City that contribute to this rise, namely:
- A large majority of the distressed properties that were dominating the market in 2008/2009 are now sold.
- Due to the difficulties in obtaining financing and the red tape put in place, gaining approval for new building projects is proving to be more of a challenge than ever, therefore you will see a decrease in new developments for the next five to ten years.
- In general there is a lack of good properties on the market. Apartments that were previously listed at discounted prices are no longer available.
- Due to the weakening of the U.S. Dollar, the once unattainable "Trophy New York City Property" is now relatively inexpensive for foreign buyers.
- The large increase in rental prices has made buying a home a much more affordable option.
- With interest rates at an all-time low for the next few years, borrowing money has never been easier.
- Q4 2011 saw a large growth in the retail sector, which had a huge boost in consumer confidence, thus fueling a growth in the stock market.
I have noticed that since 2008 there has been an upward trend in condominium prices. Today, the average listed condominium in Manhattan is $1209 per square foot whereas pre-recession, the average price per square foot was floating at $1000. Last summer saw a noticeable turnover in the sale of condominiums. For example, in 2008 when sales at 303 East 33rd Street opened, the market was all but dormant. Fast-forward to the Fall of 2011 and all but one penthouse in the Luxury building has been sold. Likewise, sources at the Edge in Williamsburg have revealed that they are considering raising prices and will only be accepting offers at full or above asking price. Seeing as they are over 90% sold and are currently selling an average of 30 apartments per month, they can easily afford to do so.
Whenever I am touring open houses with clients, I can almost always expect a line of people waiting to get in, and this includes properties that were in my opinion, less desirable. There is currently an abundance of buyers, and properties are selling out at above asking price. Recently, I listed a studio apartment without posting pictures or floor plans... 24 hours later I had an offer to buy, and to pay the full amount in cash. Deals like this have been virtually unheard of since the early 2000's.
During the spring and summer of this year, the New York market will have a flood of potential new buyers who, facing expired leases, must consider either renewing their lease at a dramatically higher rate or becoming home owners. "Deals" don't exist as they used to, and the ones that do are few and far between. My advice to you is, don't wait to long! By waiting, you can expect to once again pay pre-2007 prices. If you are serious about buying a home, it would be in your best interest to start looking now. It takes 2-3 months to consider, prospect and close on your perfect home. Stay ahead of the rat race and do not miss your chance to invest in one of the most lucrative cities in the world.
Written by Mukul Lalchandani, The Modern Agent
Edited by Bianca Da Costa