Manhattan is the center of United States culture, art and business, and its reputation drives its rental and real estate markets. One of the most expensive property ever sold in Manhattan went for $88 million in June of 2012, and the city continues to set records for property values, rental rates and other important investment indicators.
The population of New York City has been increasing by about 70,000 persons per year over the last several years and will likely continue to increase over the next decade. Many investors have championed New York's relatively safe, tangible and lucrative real estate market. Manhattan is an especially attractive market thanks to its historical real estate resiliency and its dependable economic and cultural growth.
After sales activity peaked at 13,430 in 2007, the number of sales fell 44.7% to 7,430 over the next two years. The end of the 6-year housing boom was signified by the collapse of Lehman Brothers in the fall of 2008 and the onset of the global credit crunch. During the housing market crash of 2008, New York real estate prices showed extraordinary resiliency. While New York properties depreciated by about 4.8 percent in 2008, the state fared better than the United States as a whole, where average property prices fell by 6.28 percent according to the House Price Index (HPI).
Despite the lack of access to credit, sales, activity quickly rebounded exceeding the 10,000 sales threshold in 2010. New York's housing market bounced back, posting a 0.18 percent appreciation in 2010 while the United States housing market as a whole fell by 1.55 percent. Much of this appreciation was due to sales activity in New York City and in New York County (Manhattan) in particular
Although U.S. home sale prices decreased slightly in 2011, homes in Manhattan and in other upscale NYC neighborhoods appreciated slightly over the same period. Sales volumes in Manhattan are up more than 3 percent year-over-year when comparing August 2011-2013. In that time frame, Manhattan real estate sales prices rose by about 3 percent. Condominium prices rose by about 10 percent to an average of $1.9 million, among the highest in the United States.
The Manhattan real estate market is set to hit new highs in 2014, according to a new report: the average sale price for condos and co-ops will hit $1.8 million this year, outstripping the previous record of $1.6 million set in 2008. Last year, the average sale price was $1.5 million, the New York Times reported.
Sales volume for all residential sales in Manhattan is expected to hit $22 billion. That’s up slightly from $21 billion in 2013. The number of units sold will be down from last year, however, dropping from 13,900 in 2013 to 12,600 in 2014.
About 700 luxury apartments priced at or above $7,000 per square foot are expected to hit the market in the next five years. The number of sales at new development properties priced at $10 million and up rose 39 percent last year. Meanwhile, prices continued to climb: The average price for apartments in new developments in Manhattan was $3.8 million, up 3 percent, while the average price per square foot rose 2 percent to $2,314.
Rental properties in the city of New York are historically a strong investment. For investors, rising rental prices indicates strong demand and the viability of rental property ownership, especially for those who intend to sell properties at some point.
Vacancy rates for Manhattan rental properties are almost unbelievably low and have historically stayed around 2-3 percent. According to a 2011 New York City Housing and Vacancy sample survey, Manhattan had a 2.8 percent vacancy rate, the lowest of all five boroughs except for Brooklyn. As a whole, New York City boasted a low 3.12 percent vacancy rate.
With these high rental rates, it's no surprise that rental averages in Manhattan are among the highest in the world. The average renter in Manhattan pays $3418 per month according to an April 2012 report in the New York Times. This surpasses the previous record for rental averages in New York City, which was set in 2007 before the housing market crash.
High average incomes. Income figures have an obvious correlation with the ability to sell property in a major city. The Bureau of Labor Statistics (BLS) reports that Manhattan's average weekly wages were $2,634 in the first quarter of 2011. Wages in the borough grew by more than 9 percent during this period, exceeding the national average over the same period.
A varied, international business climate. New York City was named the most attractive city for business in 2009 by the Global Power City Index, ranking it ahead of other major cities including Tokyo and London. The powerful, growing economy of New York City is varied enough to provide real estate markets with some protection from recession, particularly in Manhattan and other neighborhoods with relatively high property costs.
Strong culture and superior public transportation. These factors directly influence visitors' decisions to move to a major city. New York City has the largest subway system in the world, over 13,000 taxis and some of the world's largest international airports. Its art scene, numerous museums and other world-famous cultural attractions bring over 52 million visitors to the city annually.
An efficient judicial and tax system. These factors also are on the top of the list when an investor is called to decide where to invest in order to assess all possible risks. The possibility to rely on a legal system that can effectively protect the investor’s rights, and an almost unchangeable, simple tax system that allows to efficiently plan the tax cost of the investment, are essential factors in making NY the top choice as the place to invest.
Properties in New York City are extremely valuable, and most analysts believe that properties in many neighborhoods will hold their value. This certainly holds true in Manhattan. From July of 2011 to July of 2012, real estate inventory in the borough fell by almost 18 percent.
However, buyers need to consider taxes, property types, locations and other features when purchasing properties as investments in New York City. With the rising cost of real estate, an appropriate level of research and expert advice from experienced property professionals are absolutely essential when trying to maximize property value.
You should always work with a qualified exclusive buyer's agent in order to make knowledgeable decisions about New York real estate investments.
Contact Philip Mark™ for more information or to discuss you investment goals.
