New York City has always been a land of opportunities and a land where people come to make their dreams come true. Because of that, people from all parts of the world and from all walks of life come here to try their luck and either make it or break it. So, as you can guess, the demand fr real estate properties (either for buying or renting) is always in demand here. But, one must wonder – is now a good time to invest in New York City real estate? Thus, today, we will focus on those factors and how they impact the state of the market. With that being said, keep on reading if this is something that may interest you and keep on reading if you plan on investing in New York City real estate in the near future.
The Current State of the Market
Unfortunately, the global pandemic hit New York City hard. Residential real estate market was impacted the most. Ever since the first case of COVID-19, renters started fleeing in groves! Some went to more secluded and affordable neighborhoods to keep themselves safe from the virus while others left the state for good. It just goes without saying that all of this has taken a big toll on NYC’s real estate market. However, that does not necessarily mean that now is a bad time to invest here. The best local real estate agents predict the city’s major comeback once the situation with coronavirus settles and life becomes ‘normal’ again.
Rental Vacancies Are Up!
The vacancy rate has experienced an increase of 0.8% year after year and it is currently at 5.2%. For instance, if we look at the increase at the national level, the vacancy rate is over 6%. It is true that many renter’s plans are currently in flux, but, just as previously mentioned, that will all change once the pandemic is gone.
Yes, the rental vacancies are expected to drop substantially in the near future, but still, real estate investors should prepare themselves to have their ‘investments’ sit vacant for the next upcoming months as well as to have their leases signed at lower price points. This is not a bad thing for tenants. Now they can choose areas that are not that expensive, like Manhattan for example. The median rent price has decreased making it easier for tenants to pay their rent.
New York City, now, is not the place to invest if you are somebody looking to make a quick buck! But, it is a time to invest if you want to be a part of the long game – a game that will make your investment worthy one day.
Housing Supply is Decent
The good news is that if you want to invest in real estate property right here in New York City, you will have plenty of options to choose from. Namely, New York City has approximately five months’ worth of housing inventory available at the moment. That is pretty decent, especially when compared to the national residential market that has around one or two months’ worth of housing inventory. The global pandemic did not affect it at all – to be honest, everything is where it was before the pandemic even started.
Unemployment is High
And now, the worst news. The unemployment rate in New York City has always been around 6%. But, since last December, the unemployment rate has gone up and is now 9.5%. All of that happened because of the pandemic. Many people have lost their jobs and businesses. This, of course, affected the real estate market significantly. It is simple – if people cannot work they cannot afford to live in New York City either.
So, from an investing point of view, investing in the real estate market right now is very risky. Excessive unemployment will create even more vacancies in the upcoming months. But, just as previously mentioned, the pandemic front is bound to improve soon, and when it does jobs will come back and so will the people with the need to rent and buy. After all, it is all about the timing – for instance, if you are interested in Staten Island, you can buy a house there at a relatively cheap price now, and then turn it into a rental after the entire situation goes back to normal. Of course, you just have to be patient and have some money on the side.
Things That Will Always Draw People to New York City
Even though the real estate situation in New York City is not ideal at the moment, be sure that people will always come back to this state and to this city. New York was, is, and will always be a place on everybody’s wish list. People will always want to come here to live, and thus, to buy a home in the city or rent it out. So, if you have some money for investing, be sure that you will not make a mistake if you decide to buy a property here. It may be vacant for a month or two, but tenants will come, there is no doubt about that. This is because New York City has some of those things that will always draw people to it. So let us mention them.
- 5 distinct boroughs – Manhattan (a place where everything happens and where there is an abundance of jobs), Brooklyn (the hippest borough you have ever seen), Queens (diverse and full of history), the Bronx (Manhattan’s cheaper counterpart), and Staten Island (perfect for families and elders who prefer being a part of a close-knit community but still relatively close to all the action).
- plenty of notable neighborhoods – Morningside Heights, Greenwich Village, The Upper East Side, Battery Park City, Dumbo, etc.
- Top-notch schools and universities – Columbia University, New York University, City University of New York, etc.
- Industries that will never ‘die’ – hospitals and healthcare, investment banking and financial services, media and entertainment, technology, tourism, etc.