The new year is quickly approaching and this leaves us all wondering as to the current state of the housing market. The question on everyone’s mind is will we see a rebound in the United State’s real estate market in 2013? It is safe to say that most people are tired of hearing the term “recession” but is there really solid signs of an improving economy?
Some economists are predicting a modest growth in the real estate sector for the next year, but everyone believes that New York City is a different kind of animal and typically isn’t affected by what other cities are feeling. Is this fact or fiction?
To get a better understanding of 2013’s housing market, let us take a look at the New York City marketplace:
- Rents are at an all time high, surpassing its pre-recession numbers, with vacancy rates below 1%.
- New Developments have increased in pricing by 17% YOY since 2011.
- In general there is a shortage of new real estate in the marketplace, and we don’t expect to see large numbers of new inventory to hit the market for another 2-3 years, as developers are just starting to get financing again and it takes time to turn around stalled projects and for new projects to break ground.
- Influx of Buyers in the Market:
With this influx of buyers and low inventory of good properties, prices are steadily rising throughout the city. This includes boroughs like Brooklyn which saw an 18% YOY rise in prices, as well as having the highest number of sale transactions for a single new development (The Edge, Williamsburg - which was averaging 30 apartments per month in the winter of 2011.)
- There are a large number of overseas buyers in the market since the U.S. Dollar is weaker. People from China are buying heavily in New York in anticipation that its own domestic market might be at the brink of its own bubble. Also individuals from Australia, Brazil, Canada and Russia are investing heavily in New York as well.
- In many cases it is now cheaper to own than to rent. With high rents and historically low interest rates, many first time buyers have added to the growing number of people looking for a new home.
Although I obviously cannot predict the future, based on what I am seeing in the marketplace I expect that prices will surpass their 2007 levels next summer, and we are around the corner for the next real estate boom in New York City.