New York, New York, it’s a wonderful town,” were the famous words sung by Frank Sinatra and the all-star cast from On the Town.” But what is it about this fine city that makes its real estate market one of America’s best?
Low Inventory, High Demand
Low inventory and high demand make New York’s real estate market the best. The limited properties of fuel bidding wars for local gems. Consider the borough of Manhattan. A recent report found there were only 4,900 available units during the first quarter of 2014. That’s 17 percent less than Q1 of 2013, and the lowest inventory seen in Manhattan in almost six years.
Despite limited choices, property owners and investors are still keen to secure their own piece of Manhattan. During Q1 of 2014, Manhattan apartments hit a record average price of $1,715,741, 30 percent more than the same time last year. New developments were particularly strong at an average price of $3.29 million, almost 70 percent more than Q1 2013.
Properties Moving Quickly
Buyers know if they don’t act quickly on their dream New York property, it’ll be snatched up from underneath them. In Q4 of 2013, Manhattan apartments were on the market just 95 days, a 46.3 percent decrease from the year before. In Brooklyn, properties were snatched up in about 98 days, nearly 28 less than in late 2012.
However, the real jewels move much more quickly than that. For example, a one-bedroom unit in Long Island was on the market for just 30 minutes this year before an investor offered the full $599,000 asking price without even looking at the property. Buyers know that in New York’s strong real estate market, moving quickly is essential.
Cash is King
More New York buyers are dismissing mortgages and paying for their purchases in cash. A whopping 57 percent of New York property sales go to cash buyers, 14 percent more than the national average. In Brooklyn, the Bronx, and Manhattan, the percentage of cash sales is even higher than the city average.
The higher number of cash sales improves the local real estate market in a number of ways. These sales don’t carry the risk of mortgage-funded sales, where financing could fall through. Without the need to wait for mortgage approvals, New York property cash sales can close in as little as two days, compared to the three to four weeks traditional sales typically take.
Land Prices Soaring
It’s not just established properties that are in demand. The prices of precious vacant land in New York are also soaring and strengthening the city’s real estate market.
We’re seeing it across all the boroughs, from affluent Manhattan to working-class Brooklyn. Last year, Manhattan plots sold for an average of $445 per square foot, up from $366 in 2012. Brooklyn’s prices are more modest, with the average vacant land in this borough costing $177 per square foot last year. However, those prices have almost doubled since 2010. It’s no wonder local churches are selling off parcels of their land worth millions to fund their organizations.
With all thee reasons in mind, there’s no doubt the New York real estate market is booming.