With the seemingly all-consuming election finally over, the real estate industry is turning its attention again to the country’s major markets. The epicenter of the national market is, once again, New York City. The financial debacles of the past economic era have ushered in a new set of problems for investors, and the city’s market resembles the national market, yet with essential factors considerably more poignant.
The positives in the NYC real estate market are much more positive than most of the rest of the country, but the negatives are also more negative. The financial crunch has hit the city like everywhere else but has also threatened the city’s jobs sector, as numerous NYC-based investment firms have either consolidated or folded completely. The long-term demand for apartments, on the other hand, remains high from a historical perspective.
While the gentrification of many neighborhoods will presumably stall over the next several years, there is little to no likelihood that New York City’s situation will return to what it was during the late 1970s. That being said, hipsters that recently bought condos close to Morrisey might be in for a little disappointment about the direction their neighborhood takes over the next several years.
Queens, in particular, seems like its rough patch will only get worse during the coming several quarters.
Apartments on the market have increased dramatically, both regarding year-on-year numbers and in comparison to the previous month. The figures were +33.8% and +14.4%, respectively.
These are especially negative numbers. It is likely the near future will see a significant reduction in the average prices of many neighborhoods, even if the luxury market remains functional and even-keeled.
One sign of relief has been the stalling of the US dollar’s recent rapid climb. If the absolute ceiling to the dollar’s value is somewhere around $1.30 per euro, then the city has little to fear regarding losing the strong stimulus that a weak dollar provides to the real estate market here.
While the worst is yet to come in terms of the macroeconomic data, the downturn of the recent recession in the New York City real estate market is probably more severe than it will be during the rest of the year: Credit markets froze for a considerable length of time, and it was hard for anyone to get reasonable conditions on their mortgage loans, if they even had access to quality credit in the first place.
The sector of the market that is most likely to get walloped are landlords with units that are not an A or A+ in their overall quality. Owners that think they still have a steady hand to play regarding negotiating sales details are in for a very rude awakening. Most buyers are still actively looking, but feel perfectly content to rent for another year.
This being New York City, though, that might be a good thing. It’s about time the buyers had a dominant hand to play.