Living in the bustling city of New York naturally means high rents, which don’t seem to be going down anytime soon. However, there has been an interesting shift in rental trends recently. While 2015 was the most expensive year for New York real estate, the surge in rental costs started to slow down at the beginning of 2016. The reasons behind this slowdown and its effects are quite puzzling.
LOOKING BACK:
To get a better grasp of today’s real estate situation in New York, we need to look at what has happened recently. Since the Great Depression in the 1930s, property prices have been on the rise. This continued through the Great Recession in the late 2000s. By the last quarter of 2015, prices were at an all-time high, as noted by Elliman, one of the city’s major real estate firms. The median price for a Manhattan home reached an astonishing $1.9 million, which was over 12% higher than in 2014 and much higher than the national average of $188,900. The prices of apartments, condos, and co-ops also saw a significant increase in 2015. Quick closures, with properties staying on the market for just 82 days on average, further pushed prices up. Luxury developments, in particular, drove this price hike due to demand outstripping supply.
THE CURRENT SLOWDOWN:
At the start of 2016, there seemed to be a breather in the form of stable real estate prices. January and February showed consistent prices without extreme increases, hinting at a more stable market in the near future. Landlords became more open to negotiations, with many deals including concessions from them, which was a positive shift for renters and buyers. The frenzy of luxury developments that had been heating up the market began to cool off, and the average time properties spent listed increased. Prices for new luxury apartments in Manhattan dropped by over 5% from the previous year. However, despite these positive signs, real estate prices and rents are not expected to decrease significantly. Manhattan’s average rent is nearing $4,000, placing a strain on affordability for many residents. The future of the market remains uncertain, whether it will stay stable or swing to new highs or lows.