As the new year comes in, real estate experts, analysts, and developers are making their predictions on what the coming year might bring. Last year saw record-setting prices for the residential market but also a softening of the luxury market and an increasing number of rental concessions. Whatever else the new year brings the new tax overhaul is sure to be at the center of it with the full implications of it still hotly debated.
Read on to see what the market forecast is for 2018.
The tax plan will have an unpredictable effect
The GOP tax bill will have a far-reaching impact, the full impact of which won’t become apparent until late in 2018. The legislation will have wildly different effects depending on whether you own or are buying a home, whether the home is worth more or less than $750,000, whether you’re paying with a mortgage or all cash and much more.
Buyers may take advantage of an increase in inventory and cooling of prices, but the worst-case scenario is that the market stagnates as everyone holds off to see how to new tax laws play out. Expect a volatile season for the first quarter.
Rents will fall, and concessions will Rise
After a seven-year surge, rental prices appeared to peak in 2017. To entice new tenants, landlords are getting more creative with concessions. While the city’s economy will limit how low asking rents will fall, new buildings are expected to hold down any increases in rent. New developments will cost a bit more, but bit by bit rental prices are falling.
Even with a fall in prices, concessions, such as getting a month or two free, are unlikely to go away. Those looking for an apartment in 2018 should be asking landlords for what concessions they can offer. If you don’t ask then the answer is always no. The increase in concessions could also mean more New Yorker’s moving location in the year.
There will be heightened competition for homes under $1 million
Despite all the construction plans for the year, affordable housing will remain an upward battle for most New Yorkers. Studios and one-bedroom condos are expected to be in high demand as more millennials enter the market, and new high-paying jobs could mean workers with more cash to potentially outbid existing New York residents.
While a lot of attention has been focused on Amazons search for a second home, firms like Spotify and Netflix are opening new offices in Manhattan with Amazon and Google also set to extend their footprints. This will mean stiff competition for affordable housing, those who wait for a significant downturn before buying may regret waiting.
Changes in transportation will affect demand
With the L-train scheduled for a shutdown in 2019, sales are expected to fall in the affected areas, especially Brooklyn, as buyers search for homes with a more comfortable commute. Anyone signing a 12-month lease after May will need a commuting plan that doesn’t depend on the Canarsie Tunnel to 14th Street.
On the other hand, the NYC ferry service is set to expand further in 2018, extending its reach up Manhattan’s eastern shore and into the Bronx. Both changes will affect demand in sales and development opportunities, confident in some areas and negative in others.