New York Real Estate – What Will Affordable Housing look like in Year 2021

As per the Real Estate Board of New York, New York City’s Real Estate industry created almost $32 billion in taxes a year ago, 53 percent of the city’s expense income, and it employed almost 275,000 individuals. Land colors the expectations and plans of innumerable individuals, organizations, and policymakers.
To sort out what may occur in the following year or two, the New York Times met about 50 individuals including former senior city officials, real estate executives, affordable housing advocates, urban planners, and brokers.
Residential real estate sales dropped 40% in July, and 57 percent in August, compared with 2019, as indicated by the New York City Comptroller’s Office. Commercial deals were down 28 and 43 percent in July and August, compared to a year ago.
Yet at the same time, numerous specialists forecasted that New York will eventually bounce back like it did eventual after the Great Recession, 9/11 and the fiscal crisis of the 1970s.
The Department of Housing Preservation and Development, which funds and maintains much of the city’s affordable housing stock, suffered a great loss this summer, when the city decided to decrease its capital funding by 40 percent over two years.
Executive director of the New York Housing Conference, Rachel Fee, predicted 21,000 fewer new and preserved affordable housing units and 34,000 fewer jobs, mostly in construction and related industries. In a reversal, the city said Thursday that it would restore almost half of the funding that had been scheduled to be cut.
The cuts could delay a number of projects. For instance, in Far Rockaway, Queens, an 11-building complex called Edgemere Commons with more than 2,000 units, all of which would be offered below market rate, was scheduled to receive city financing in December, but a backlog of stalled closings this summer means their project will likely be pushed back further.
Daniel Moritz, a principal at Arker Companies, the developer, planned to begin construction this year.
Ron Moelis, a co-founder of L+M Development Partners said that it could cost millions of dollars in predevelopment like architectural plans, legal fees and engineers that can overwhelm developers awaiting funding. His company expected to close city financing in June on the first phase of Bronx Point, a mixed-use project in the South Bronx with 542 below-market-rate units expected to be completed by 2023. Now financing has been pushed back until at least December.
In September, a survey conducted indicated that about 85,000 apartments in New York, nearly 20 percent of tenants paid no rent, according to CHIP, a group that represents 4,000 landlords and managers of primarily rent-stabilized buildings.
Rafael E. Cestero, a former housing commissioner who is now president of the Community Preservation Corporation, a nonprofit housing and finance company mentioned that experimenting with new methods to create or preserve more affordable housing is very important.
The Regional Plan Association estimates that 500,000 new homes, including 100,000 in New York City, can be created at a minimal cost if state and local governments make it easier for basements, garages, and attics to be converted into legal dwellings.
Meanwhile, the New York City Housing Authority, the landlord for one in 15 New Yorkers, is exploring new ways to increase funding. The agency needs $40 billion to fix issues including mold, lead abatement, and deferred maintenance in its 170,000 apartments across 2,252 buildings.

As Buyers Are Hanging Back, Prices of New Home Sale Rises

In the last month Americans paid more for newly build homes as compared to buying an old one. According to the research conducted by Census Bureau, the median price of new homes that sold in September was $326,800, up 4.5 percent from August. The number of new homes sold last month — seasonally adjusted — fell 3.5 percent, to 959,000, from over 1 million in August.
Despite the August drop, the report mentioned that September’s rate of sales for newly built homes went up by 32 percent. While the number of new homes on the market increased. By the end of September, there were 284,000 new homes listed for sale. That’s an increase from 282,000 new homes on the market at the end of August.
The report’s preliminary seasonally adjusted numbers indicated the almost 67 percent of the homes sold last month across the U.S. were either under construction or had not yet begun to be built.
The northeast region of the country faced the biggest drop when it came to sale with only 32,000 new homes sold last month, down by nearly 29 percent from the 45,000 sold in August. Talking about the western region, it was the only region who saw uplift in the number of new homes sold in September, with almost 4 percent increase to 271,000 new homes sold last month, from 261,000 in August.
About 60 percent of the homes listed for sale at the end of September were under construction.
The decline in new home sales in September compared with the volume of existing homes sold. Last month, 6.5 million existing homes sold, a jump of more than 9 percent compared to August’s record-setting sales month.
In spite of the September decline in new home sales, the industry appears to expect strong demand to continue from buyers, in large part due to nation’s low housing supply. This has boosted developers. September housing starts surged to 1.4 million, seasonally adjusted, as homebuilder confidence hit its highest levels in 35 years early this month.

New York City Real Estate in Q3 2020

The Third quarter of New York City’s 2020 Real Estate Market has slowly started to revive. Due to Covid’19 businesses were forced to shut down from mid-March until the last week of June, turning the city’s assets into its drawbacks. Then, owing to the extreme measures taken by the state government to keep people at home and properly masked, the infection rate decreased, leaving the city with a low virus case.
Manhattan ended Third Quarter 2020 on a positive note. Signed contracts were up 167% versus Second Quarter 2020. The third quarter has seen strong activity particularly in the market for properties costing $2 million and under; according to UrbanDigs, this price range has represented over 70% of all deals made since March 23.
The market in Brooklyn, which in relative terms has considerably more inventory priced at $2.5 million and under, has regained more optimism than that in Manhattan. Frequencies of competitive bidding are higher and mid-priced properties are trading more rapidly. The $4 million and up market in Brooklyn represents a considerably smaller slice of the total pie; it mostly encompasses luxury townhouses in Brooklyn Heights and Park Slope. They too move slowly in the current environment.
The rental market was hit much worse than the sale market. Offices all have work-from-home policies until 2021. As result, many tenants didn’t renew leases and moved out of Manhattan temporarily, to save on rent and because much more space is needed when everyone is working/schooling from home. Rental inventory increased 166 percent to 15,025 units and vacancy rate shot up to 5.1 percent.
While both sales volume and sales prices have dropped from pre-pandemic levels, and although sales inventory in Manhattan has soared to over 9000 units, real estate market shows increasing signs of transactional life each week.

How to Get Pre-Approved For A Mortgage To Buy A NYC Real Estate

Buyers tend to have a very short window of time once an offer is accepted. During this time, usually 40 to 50 days, the buyer is responsible to obtain finances and also make sure to get the unit inspected, appraised, and insured. To ensure that you don’t end up failing in obtaining the finance before the closing date, most agents recommend that you get pre-approved for a mortgage before you start bidding.
Pre-Approved:
Pre-approval requires a credit check. If you’ve been pre-approved, the lender is ready to lend you required amount of money for your home purchase. It is not a final loan approval. To be able to finalize your loan you have to put in a bid and have an appraisal carried out on the property you intend to purchase.
The Documentation Required to Get Pre-Approved:
To get pre-approved for a loan, you’ll be needing the following paperwork.
Proof of income: To get a loan, you need a proof that you are employed. If you’re an employee, this would mean that you have to print out W-2 statements for the past two years. Pay stubs for the past twelve months and proof of any additional sources of incomes, including alimony would also be required. If you are a freelancer, lenders might ask for a lot more documentation. Be prepared to bring your 1099s for the past three to five years and bank statements to show how much money you have flowing into your account every month. You will also need to bring tax returns, whether you’re a salaried employee or freelancers.

Employment verification: Lenders may ask for employment verification letter and they can even ask for information regarding your current employer or employers to contact them directly.

Proof of assets: You might even be asked to prove that you have money coming in on a monthly basis. You would have to be completely transparent regarding your assets. Be prepared with your bank statements and investment account statements as an evidence to show you have resources for down payment. If your down payment is a gift from a family member or friend, you may also be asked to provide a letter proving this is the case. Lenders would also want proof that you haven’t taken out a loan that is not yet showing up in your credit history to acquire a down payment. If you don’t have a large down payment on hand and need a bit more help, you may be eligible for a HomeFirst Down Payment Assistance. This program offers loans up to $40,000 to New Yorkers who make 80% or less of the area median income.

Proof of service (for VA loans): Few loans options do not require a high down payment, this includes VA loans for U.S. veterans, service members, and not-remarried spouses. To ensure the VA loan program is not abused, additional paperwork is required. If you want a VA loan and you are no longer active, you will need a copy of your DD214. If you are still active, you will need a statement of service from your commanding officer. Also, a completed request for a Certificate of Eligibility (form 26-1880) from the Department of Veterans Affairs and a completed Certificate of Eligibility is required.

Credit Score: Lower levels of credit are difficult to obtain (nearly impossible to obtain in New York City). In the current market, your credit score should be at least 620, but if you want options, you should at least have a FICO score above 700.

Other documentation: To complete a credit check, your lender would also require a copy of your driver’s license and social security number and may ask for a copy of your passport.

Assembling paperwork might not be an easy job, it is an important step and the sooner you start, the better it is. According to research, buyers who go on the market pre-approved are far less likely see their deals fall through. Once pre-approved, the underwriting process generally only takes one to two weeks and if not it might take over a month for finance to be processed.

Tips You May Use When Investing In New York Real Estate

New York City real estate has exclusive investment opportunities for everyone. It is the most energizing and dynamic city in the world. Be that as it may, investing in resources into this radiant city is never easy. Following are 3 ways that you can use to invest in New York real estate.
Go for a REIT
A real estate investment trust (REIT) generate a steady income stream for investors to benefit from the purchase of New York real estate. Their comparatively low correlation with other assets also makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns. It gives experience to real estate market without the need to be a landlord. A REIT allows investments to be made in residential property on top of mortgage loans which lets investors to increase their access to masses of real estate that trade like a stock. As a real estate investor in New York, it opens to an excess of financing options and delivers dividend income due to the requirement to distribute taxable income annually.
Invest in a real estate management company
There are so many companies that can help you own and manage New York real estate without acting as a REIT. They are experienced hence saves your time and removes the burden of managing different issues that might occur. It will also prevent you from being taken as an advantage from corrupt people that seem to help new investors, but their sole motive is to fleece them.
Investment in a real estate management company can be a good idea if you want to experience an explicit type of New York real estate and if you also have the time to explore the company’s history.
Invest in home construction
The real estate market has grown over the years and, but it is fairly obvious that a lot has not been done regarding the inadequate housing inventory in New York City. Hence, it would not be wrong to say that construction of new residential buildings will continue to grow over the next few years.
Consequently, it is easy to understand that investing in the construction aspect of real estate could be a smart move. Builders would be developing new neighborhoods in New York and regenerating existing localities.
But one might ask why to invest in home construction? Well it gives you an opportunity to be a part of active investment and it could turn out to be more economical than buying already existing properties whose value generally decline over time. You need a return on your investment and investing in home construction ensures just that.
In the end, there are lots of opportunities for investment in New York real estate. It is important to act quickly and have a good financial plan. Quality information regarding real estate helps you save money and invest it in right places. By knowing what New York real estate is selling for, and researching the kind of property you are most concerned with, you will have more of an understanding about what is best for you.

Real Estate in New York City After Labor Day

Within a week after the Labor Day weekend, New York City’s residential real estate saw almost 190 million USD in sales, with condos, co-ops and condops selling at an average price of over 2 million USD. However, this year saw one of the lowest number of signed contracts since 2013, with only 10 luxury contracts signed at a price of 4 million USD or more. Additionally, no co-op contract was signed at 4 million USD or above.

In Manhattan, there was a 38% decrease year over year last month for condo contracts. Simultaneously, listings increased by 30%. In Brooklyn, residential properties that were modestly priced saw a surge in sales, especially condos and co-ops. The Hamptons are usually a hot spot for the summer. This year however, it is expected to be an all-year-round destination as many affluent New Yorkers have decided to remain away from the city and have extended their rental period.

Although New York City has announced that schools will reopen on the 21st of September. The reopening of the school system was expected to bring back New Yorkers to their primary residences.  However, about 40% of parents have decided to continue remote education for their children during the first couple of months of the school year. This is a huge number of people, considering that the New York City school system is one of the largest in the country. The parents who prefer remote education belong to wealthier families. As most of such families already left New York City during the earlier months of the pandemic to live in suburban second homes, the rental market will be majorly affected.

Another factor affecting residential real estate in the city is evictions. The Centers for Disease Control and Prevention (CDC) signed a declaration which stated that evicting tenants will be detrimental to public health control measures and would lead to the spread of COVID-19. Therefore, the CDC issued an order which bans residential evictions until December this year. To be eligible for this, tenants need to prove that they are unable to pay rent.

Landlords can, however, evict tenants on the basis of reasons other than non-payment. Because landlords have not been provided sufficient relief by the government during the pandemic, this order has faced criticism. In the meantime, the city has provided homeowners and landlords with a tax break until October, which includes overdue property taxes, sewer bills, as well as water bills.

The pandemic has caused a major financial blow to New York City’s residents, which has in turn had a domino effect on the residential real estate market. Although things were expected to look up after Labor Day weekend, there are several factors that will impact the future of residential properties in the city. However, the situation is gradually returning to normal, which offers hope that the residential real estate market will soon go back to how it was pre-pandemic.

Increase in Residential Property Sales in New York City

This year, the total number of residential transactions and residential sales volume decreased considerably, by about 50% year over year. This means that the sales volume dropped from 12.8 billion USD to about 6.4 billion USD by June of this year. This has been one of the lowest figures since 2011. Apart from Staten Island, there was a steep decline in total sales across all boroughs in New York City.

Across the city, the number of residential real estate transactions dropped by 43% year over year in all five boroughs. This meant a drop from 11,413 sales to only 6534 sales this year. Moreover, there was a 13% decrease year over year in the average sales price of a residential property in New York City, to about 975,800 USD in the second quarter of this year.

The real estate industry of New York City is one of the main factors contributing to the city’s economy, with 53% of the total annual tax revenue generated from this industry alone. Hence, declining sales and transactions are bound to have an adverse financial impact which the city may not be able to overcome in the foreseeable future, especially amidst the current COVID-19 pandemic.

The housing markets in affluent areas such as Manhattan have been badly affected, with a significant increase in vacancy rates and decline in rents as residents move to second homes in the suburbs. The Upper East Side has been described to be a ghost town during the pandemic, with an increase in rental moving trucks making the situation seem bleaker.

However, many real estate professionals have stated that the real estate market in New York City will soon return to what we know it to be. Although areas such as Manhattan are seeing high vacancies, other regions such as Staten Island, Queens, and Brooklyn have only seen a surge in rental rates. People living in these areas are not likely to move due to lower income, employment, family etc.

One explanation for the grave impact on New York City’s residential real estate market is that while other markets opened much sooner, New York City was slower to reopen. Hence, there was lower sales and transactional activity in comparison to other cities across the United States. People living in Manhattan have also started moving to Brooklyn which has made the housing market there much stronger.

Although wealthier families have moved to areas like the Hamptons, many are just relocating within New York City. Many residents have taken advantage of the drops in sales price and have bought better properties which they plan to sell once the situation returns to normal. Therefore, it can be said that although the market has definitely changed temporarily, it is highly unlikely that this change will become permanent.

 

Post- and Pre-COVID Situation in the NYC Real Estate Market

Before the COVID-19 pandemic struck New York City, the real estate market was considerably different than what it is now. In the United States, the New York City residential real estate market has been one of the hottest for several years, boasting some of the most expensive properties in the world. The market was also booming year-over-year. This is due to the high demand for residential real estate as more and more people wish to live in the city, which favors sellers in the city.

Over the past 5 years, prices of homes in New York City have appreciated by almost 30%, with an appreciation rate of slightly over 1% in the latest quarter. This translates into an appreciation rate of 4.41% per year. The median tipping point in New York is about 5.8 years, while the national tipping point is 2 years. This is because houses in New York City have higher prices, meaning that owners tend to stay in one house for much longer.

Last year, the median sales price increase by 5.7%, the number of pending sales increased by 3%, and there was a 1.1% decrease in closed deals. At the beginning of 2020, the city saw a surge in activity in the housing market, with a significant increase in sales. Experts predicted that this year will be one of the strongest for the residential real estate market.

Although the first quarter of 2020 was profitable for people selling residential properties, the spread of COVID-19 in March slowed down activities. Until the mid of March this year, pricing or transactions were not majorly affected but the end of the month resulted in a decline in home sales and new listings. Inventory was also impacted and saw a 10.4% decrease.

However, regardless of a decline in transactions, prices remained unaffected during the first few months of the pandemic. Positive pricing trends were observed, and the median sales price of houses was also relatively stable in comparison to the rest of the nation. April also saw a 5.48% year-over-year increase in median sales prices, and a 4% increase in median sales price was seen in May in comparison to the same time last year.

In June, one of the strongest trends in sales were observed, with the first week of the month being impressively active in terms of sales. In the second week, however, there was an 11%year-over-year decrease in median sales price, making it lower than the figure seen last year. Nonetheless, June had the highest weekly median sales price this year, which was only 2% lower than it was in 2019. Sales activity continued to thrive in July as well, with over 500 transactions seen for the first time in months.

A month later in August, over 15,000 apartments were vacant in Manhattan alone as more residents left the city amidst the pandemic. This borough saw a vacancy rate of over 5%, which has not been seen in the past 14 years. Brooklyn’s real estate market has been performing better, as people living in Manhattan are looking for houses in Brooklyn.

An Overview of New York City’s Real Estate Market in 2020

The COVID-19 pandemic has had an adverse effect on almost every sector and aspect of society, making 2020 one of the toughest economic years in history. While most industries have experienced a financial blow, the real estate sector has seen fluctuations in trends since the virus outbreak in the country. Recently, New York entered the fourth phase of reopening and a shift was observed.

In June, resale home sales remained low. A month later, these sales increase significantly, and July was marked as one of the strongest sales months since March. Across the four boroughs in New York City, over 2300 real estate deals were closed, which was about a 40% increase since June. However, sales still remained 33% lower than the numbers from July 2019.

Housing prices remained steady throughout the coronavirus pandemic. However, in June, the median sales price reached 718,000 USD which was the highest number seen in the New York City real estate market to date. On the other hand, the median sales price in July decreased by 13% year over year. This price, at 680,000 USD, was also the lowest median sales price since March this year.

Statewide, the median price in New York reached 300,000 USD which was much higher than the price last year. This increase was due to a lack of home listings as people decided not to sell because of uncertainty during the pandemic. The monthly home supply in the state decreased by almost 16% year over year.

While the national value of foreclosures is 1.2 homes per 10,000, data on New York City has revealed that only 0.1 homes are foreclosed per 10,000 homes. The city also sees 1.8% delinquent mortgages, which is a higher number than the national value of 1.1%. In July, the number of homes that were foreclosed was 200% higher than the number in June. However, this value still remained 90% lower than the same time in 2019.

Currently, there are over 700 properties in New York City which are foreclosed. The stage of foreclosure that these properties are in varies from default, action, or bank-owned. The number of homes available for sale in New York are almost 3000, with about 4000 houses recently sold in the city.

Out of all four boroughs, the real estate market in Manhattan was impacted the most as both sales as well as prices of houses were adversely affected. In Queens, the year over year median sales price increased the most while the sales activity in Brooklyn was the lowest. The Bronx also saw an increase in median sales price, with an 8% year over year rise. While sales strengthened across the city as shelter-in-place regulations were eased, they still remain 42% lower than they were in June last year.

Another factor affecting the residential real estate market is the high unemployment rates due to COVID-19. According to data collected by the Bureau of Labor Statistics, the unemployment rate in New York City increased to over 20% in May while the unemployment rate outside of New York City was about 13%. When people do not have jobs, they are unable to pay rent.

Consequently, people cannot afford to live in the city and many New Yorkers have started to move after their leases expire in the summer. As a result, the real estate market has become saturated with vacant rental homes. In July alone, Manhattan saw a 65% increase in rental inventory in comparison to the same time last year. As of July, rental prices in Manhattan have dropped by over 3%, which is one of the largest year over year decrease since the Great Recession.

As the demand for rental houses continues to decrease, it can be expected that rents will also be reduced considerably, making it a buyer’s market. Nonetheless, the rental market in New York City is still strong as the factors that cause high rental rates are still present.

New York City: A Buyer’s Market?

New York City is known to be one of the most expensive housing markets in the entire world. However, the COVID-19 outbreak in the United States has resulted in fluctuations in the residential real estate market in New York City. A significant number of renters in Manhattan and the more affluent areas in Brooklyn have left the city. As a result, the number of vacancies has increased, and rents are continuously decreasing.

However, sale price changes are seeing a more gradual change as owners are unable to break leases the way in which renters are able to. Nonetheless, things have started to return back to normal as lock down and shelter-in-place regulations have been lifted. Showings have been permitted to resume which has caused the supply of homes to rapidly increase, especially in Manhattan. In Brooklyn, there have been signs of a shifting housing market due to falling prices.

The pandemic prevented many buyers and sellers from entering the market and the number of homes for sale decreased considerably all across the United States. Now, many markets have still not seen these numbers return to levels seen prior to the pandemic. In New York City however, the number of homes available for sale in the market have started to return to the levels seen in 2019.

While the number of homes for sale decreased by almost 40% year over year in June, Manhattan saw a 23.1% increase in July. This is evident of the fact that buyers in Manhattan have more power in the market. Although Brooklyn has not yet witnessed a change to this extent, it is clear that it is heading in the same direction. In Brooklyn, the number of homes for sale decreased by 24.3% year over year in June but July saw only an 8% decline. This shows that once this value becomes positive, there will be more supply than demand which will give buyers greater leverage for negotiations in prices.

In August, the number of new house listings in Brooklyn significantly increased year over year. This included properties in all price ranges, which means that buyers looking for all types of homes will have the upper hand while deciding the sales price. Generally, sales prices have fallen slightly and rents in Brooklyn have also decreased.

While the real estate market in Manhattan is already favoring buyers, other boroughs in New York City are expected to follow. If more properties are added to the inventory in the upcoming months, it will be guaranteed that the residential real estate sector in New York City is a buyer’s market.