Finding the perfect apartment or condo in New York City isn’t easy. The real estate market in New York has been on steroids for the last ten years. The average sale price for an apartment or condo in the Big Apple is now more than $2 million. But according to tech industry mogul and real estate investor, Arthur Becker, the average price for a condo will drop a little in 2017.
That prediction may sound nice, but the price of an average condo jumped by 91 percent over the last ten years. And renting an apartment in Manhattan is still a shock to the bank account. Even though some landlords are offering a month’s free rent, the average price for a one-bedroom is more than $3400 a month. Most landlords require an annual income of 40 times the rent, so, it’s safe to say, renting an apartment is out of the question for many young Manhattanites.
Becker and other real estate gurus have other predictions about the real estate market in New York City in 2017. Some of those predictions came true in the first quarter of the year. One of the main Becker predictions was mortgage rates will increase, thanks to interest rate hikes by the Federal Reserve. The Feds put the first 2017 increase in motion in March, and Fed Chairman Janet Yellen promises more hikes are on the way. The increase in the interest rate will narrow the margin between the asking price and the bidding price for condos.
The renter’s market will stay soft until spring, thanks to the new developments that will be available for lease. Inventory will grow, and that means incentives to rent will be offered by landlords. But those incentives will be for the new developments, so the deals will not be widely available.
Arthur Becker recently took possession of three townhouses on Sullivan Street in SoHo. He traded his interest in a condo development project in SoHo, so he could own three, large condos. That move may confirm a migration is going on between Manhattan, Queens, and Brooklyn. The prices for new development projects in Brooklyn and Long Island City are making Manhattan prices look reasonable. That fact is subjective, but if people continue to buy condos in the other boroughs that will impact prices in Manhattan.
More than 9,000 new rental units will be available in Long Island City in the fourth quarter of 2017, and 5,000 new Brooklyn units will hit the market around the same time. The competition will force some developers to change their strategy. Developers may change their small rental projects to condos in those locations.
But the Manhattan rental and buying market is still considered the prime market. The completion of the Second Avenue subway system will give the Upper East Side an injection of buyers and renters when it is completed. The demand for rental units will change overnight on Third Avenue, and there will be a spike in sales activity, according to Becker.
One of the most interesting facts about the New York real estate is the number of foreign buyers in the market. The English are still New York City’s top real estate buyers, thanks to the Brexit vote. But for the first ever, the Russians were right behind the English in real estate purchases in the city. Canadians were third on the list and India was fourth. The amount of Russian investors in New York real estate was a surprise to some people in the industry, but it seems Russia is fixated on the United States in more ways than one.
Real estate development projects in Queens are on the rise. Areas like Flushing, Forest Hills/Rego Park and Astoria are getting modern architecturally driven real estate products. Astoria seems to be the number one choice for people that want to escape the madness of Manhattan and Brooklyn. A new ferry service to Astoria will be ready in spring 2017, and the subway is being renovated in the neighborhood. And there is a $30 million restoration project in the works for Astoria Park.
Wall Street is becoming hipper, and it is just a ferry ride away from Staten Island. Taking the ferry to Staten Island is a good option for young professionals. They rent an apartment there for $1,700 a month. The ferry needs a little work, but Staten Island is one of the bright spots in New York City’s rental industry.
But investors like Arthur Becker are not worried about the inevitable changes in New York City real estate. Becker has more than $500 million invested in various real estate projects in the city through his company Atlantic Investors LLC. The dream to live in New York is a worldwide dream, according to Becker, and the dream never seems to end.