Tips for First-Time NYC Buyers

New York City is one of the greatest cities in the United States. It is also one of the most expensive places to buy an apartment for first-time buyers. It is known that buying into the New York City market is more difficult than buying into most housing markets in North America. There are many obstacles in purchasing a house, such as high closing costs, high co-op and condo fees, and down payments, but a combination of useful tips and strategies can help first-time buyers to buy their first-ever NYC home.

  • Save: To buy a good condo or co-op in NYC, the first step is to save as much money as possible to clear the down-payment. The down-payments requests usually range from 20-30%, so regardless of what type of property you plan to buy, save your money.
  • Don’t forget closing costs: Be prepared for other large and small charges, including the higher-than-average closing costs. These costs can vary from 1-4% of the purchase price, depending on what you want to buy. A smart tip for all first-time buyers; make sure to ask for a rebate, so you don’t leave your money on the table.
  • Start your search: Once you have an idea about your budget, start searching for an apartment and try to keep an open mind. You can research neighborhoods that meet your requirements, save them, and keep checking when there are open houses or price changes.
  • Get preapproved: After selecting your desired property, you should connect with a lender or a mortgage broker to receive an estimate on how much you will likely be able to borrow based on an initial review of your credit and financial information. It helps you to get a clear understanding of how much you want to spend on the apartment. 
  • Gather your team: Look for an agent and a real estate lawyer who have established track records working with buyers in your situation and who will get back to you promptly. You want an agent who can help you come up with a sound offer based on market analysis and who will put together a well-rounded application package on your behalf. 
  • Be prepared for competition: Many people are competing to buy a place in NYC, and the purchasing competition is as competitive as the rental. So, if you see a well-priced condo in your budget, purchase it as soon as possible because it is unlikely that it will stay on the market for a longer time. However, don’t get emotionally attached to a place because it is heartbreaking when you go into a ‘best and final’ and you don’t get it.

New York’s Commercial Real Estate Industry is Plunging

New York’s real estate industry is staggering since the start of COVID-19. The commercial market is the driving engine of the economy, but now the pandemic has created a crisis and threatening the future of business districts. Due to the on-going situation, many businesses have shut down, which has increased the number of vacant office spaces. The emptying of office towers has caused significant damage to the city’s finances.

The real estate industry is very concerned that the shifts in workplace culture caused by the outbreak will become long-lasting that it is promoting a striking proposal: to turn more than one million square feet of Manhattan office space into housing. A recent survey states that almost 14% of office space in midtown Manhattan is empty, the highest rate since 2009. On Madison Avenue in Midtown, one of the most affluent retail stretches in the nation, more than a third of all storefronts are empty, double the rate from five years ago.

The order to construct new buildings has dropped 22% this year to 1,187, the lowest number since 2010. According to the survey conducted by the Partnership for New York City, October’s data shows that only 10% of Manhattan’s one million office workers were reporting to the office. The high-end fashion brands like Michael Kors and Hugo Boss, located at Columbus Circle Mall, are skipping out on more than $7 million in rent and fees. The current circumstances have caused tensions to rise between the landlords and the tenants, as many have sued and shut down their shops, deteriorating the financial state of the city. The industry experts and executives think that the situation might get worse.

The commercial property provides a dominant portion of tax revenues, has plummeted by almost 50% through October. The industry’s nightmare initially started during the nation-wide lockdown, when office workers began to work from home in the spring. It has led to many commuters to office workers permanently work from home.

The landlord group has proposed the idea of converting the empty office spaces into residences. Roughly 140 million of Manhattan’s 400 million square feet of office space is considered to be of average quality or is in older and less luxurious buildings, according to Cushman and Wakefield, a real estate brokerage. It would be beneficial not only for landlords but for retailers as well. However, converting vacant offices to apartments is not be easy, as many landlords would not agree with the proposal.

 

New York’s Deteriorating Real Estate Market Causes it to Lose $1.4 Billion in Tax Revenue

The global COVID-19 pandemic has impacted our society in several ways and caused a crisis of rare magnitude. In the United States, particularly in New York State, real estate continues to show certain robustness. According to the Real Estate Board of New York, year-over-year investment and residential sales volume declined 34%, and tax revenue generated by those sales declined by 57% from October 2019 to October 2020. Tax revenue contributes to NYC’s essential services, such as salaries for first responders, building service workers, MTA employees, the maintenance of public parks, and vital repairs and maintenance of the public transportation system.

The year-to-date investments and residential sales added up to $34.5 billion, representing a 50% decline compared to the same time period in 2019 and leading to a 39% year-to-date decrease in tax revenue. Due to these ongoing declines, New York City and New York State have altogether lost $1.4 billion in tax revenue so far in 2020, because of these huge increases in real estate market activity, according to REBNY’s Monthly Investment and Residential Sales Reports.

“This $1.4 billion in lost tax revenue represents another 1.4 billion reasons why the federal government must deliver a new stimulus package to help address New York’s economic crisis,” said REBNY’s President James Whelan. “As real estate market activity remains at historic lows, the negative impacts are being felt every day by millions of New Yorkers who rely on publicly funded government services that will continue to struggle without necessary tax revenue.”

The real estate industry holds the basic ground of New York’s economy, generating more than half (53%) of the City’s total annual tax revenue in the last fiscal year, which is more than twofold the next closest contributor – personal income tax, which accounts for 21% of the City’s annual tax revenue.

However, even amid significant year-over-year and year-to-date declines, REBNY’s report additionally demonstrated some current upticks in market activity. For the second consecutive month, investment and residential sales volume increased, with sales totaling $4.6 million in October 2020, a 33% rise from September 2020. As a result of this current month-to-month increase in sales activity, tax revenue generated from investment and residential sales increased 51% from September 2020 to October 2020, adding up to $108.

According to last year’s report, real estate taxes produced $31.9 billion for the City’s operating budget, accounting for 53% of NYC’s total tax revenue, more than double the next closest contributor – personal income tax at 21%. The health of the real estate industry is critical to the health of both our City and State.

Rise in New York’s Residential Sales

The number of sales for the New York State housing market has plummeted since the onset of the COVID-19 pandemic. However, since the start of winters, the New York housing market is continuing to heat up. Sales remained at higher than normal levels amid continued low inventory across the Empire State, according to the housing report released by the New York State Association of REALTORS®.

The New York state residential real-estate market roared in October as realtors sold 14,981 previously-owned homes. Closed sales in New York State continued to be robust, jumping 16.6 percent from 12,853 units in October 2019 to 14,981 in October 2020. Pending sales skyrocketed to 16,333 homes – a 38.8 percent increase from the 11,766 total in October of last year. Year-to-date, pending sales are also up 6 percent in 2020, with 126,681 homes compared to 119,462 in 2019. New listings were also on the rise, up 9.7 percent for October – from 16,732 units in 2019 to 18,359 in 2020. Overall, Total residential sales volume declined 14% from October 2019 to October 2020 and increased by 61% from September 2020 to October 2020.

The growing imbalance has prompted bidding wars and caused the median price to move up by 24.5 percent to $340,000. Days on Market decreased 8.8 percent to 62 days, and Months’ Supply of Inventory was down 23.2 percent to 4.3 months. The current jump in housing sales shows that buyer activity has increased. The new data shows that the residential houses market value has risen as the average number of days when the property is listed and when the offer is accepted has decreased.

However, since the number of residential sales has increased, the strong demand has pushed some home prices are making it difficult to save for a down payment, particularly among first-time buyers, who don’t have the luxury of using housing equity from a sale to use as a down payment.

Mortgage rates dropped to new record lows again in October, helping to offset the monthly mortgage payment increases caused by the rise in home prices seen in many segments of the market across the country. While prices often dip a bit in the winter months, continued buyer demand may temper any price retreats this year. Low mortgage rates helped maintain the strong housing market in October. According to Freddie Mac, the monthly average on a 30-year fixed-rate mortgage in October fell to 2.83 percent. This is the eleventh consecutive month the average monthly rate has decreased.

Manhattan Home Sales Improve As Suburban Hot Streak Continues

Manhattan which is considered the problem child of New York’s housing market is said to be soon turning a corner as October’s contracts are gradually nearing last year’s levels as buyers return to borough. It has been noticed that last month the new contracts for residential properties edged closer to the levels seen in 2019 as buyers return to the city and brokers have seen an uptick in interest and activity.

According to a report shared from Douglas Elliman, buyers have purchased 510 co-ops in Manhattan last month, which is just 4 percent below the same period last year. Contracts for single family houses have also actually increased from 9 last year to October 13 this year.  On the other hand, condo deals have lagged, in turn consequently behind last year’s monthly total.

The most popular price range for snapped-up condos has gone into contract last month which is exactly up 53 percent from last year. In addition to this, most were I the $500,000 to $999,000 range. Single-family homes deals in that price bracket have also shot up from 17 of last October to 61 this year in 2020.

Jonathan Miller of Miller Samuel who has prepared the report has shared that Brooklyn has been behaving much like the suburbs and has now benefited from outbound migration from Manhattan area. Another trend that we have been seeing for most of the year in 2020 is that in the suburbs of Long Island and Westchester, that a year ago the deals were well above the levels.

In addition to this, North Fork contract signings have also been seen as significantly higher. While in the Hamptons, contracts for single-family homes more than doubled last year’s numbers, with noticeable spikes in price ranges above $4 million. Miller also shared that “the regional story is that the housing markets across the region, overall, are still faring much better than they were a year ago, but they essentially stabilized — plateaued — since July.”

“Manhattan continues to crawl out of the hole it dug itself in after lock down, but for the most part it still has not achieved parity with the prior year,” he further added to his statement.

Recent Report Suggests New Yorkers Spend 32.5% of Income on Rental Housing Alone

Home ownership is becoming less and less attainable due to rising home prices. But while the cost of home ownership is high, renters often face an even heavier financial burden. A new report has revealed and taken a look at how much income New Yorkers are spending on rent and utilities. Researchers at HireAHelper have used Census data in order to rank various U.S. cities according to the share of income their residents spend on housing. According to their findings, American renters spend a median 31.0% of income on housing, compared to just 16.5% for homeowners.

It was worth noticing that New York City did not make it to the list of top ten large cities with the highest percentage of income spent on rent. In fact, the report found that New York City renters spend about 32.5% of their income on rent and utilities, with the median gross rent in New York equaling $1,483 per month. Moreover, the median gross rent throughout the country is $1,097.

In addition to this, the showed the median monthly household income for renters equaled $4,563 monthly and $54,759 annually, compared to the United States as a whole with $3,540 and $42,479, respectively. While the United States has a minority population of 38.9%, New York City’s minority population was estimated at around 67.9%.

The report notes that the high costs of rent impact low-income renter households more than any other group. Over 75% of households with annual income below $50,000 per year spend 30% or more of their income on rent and utilities, while renter households with an annual income below $20,000, almost 90% spend over 30% of their income on rent.

It should also be brought under notice that the high cost of rent impacts low-income renter households more than any other group. Over 75% of households with annual income below $50,000 per year spend 30% or more of their income on rent and utilities. Among renter households with an annual income below $20,000, almost 90% spend over 30% of their income on rent.

New York Residential Market: Rise in Vacant Properties

The residential market suffered a massive blow due to the outbreak of COVID-19. New York is among the most competitive housing markets in the nation, and has been the epicenter of the pandemic. For this reason, there were very few buyers and sellers as health concerns forced buyers to stay at home. Whereas the others moved to the suburbs, home prices in Long Island continue to climb, while rent prices decline in cities like New York and San Francisco.

The number of vacancies in New York has started to climb as it is slowly becoming a renter’s market. New York City has become a buyer’s market, which means there are roughly more active homes for sale than there are buyers.The supply for housing outpaced the demand favoring home buyers who have managed to hold good leverage in price negotiations in the past month. Recent data shows that the average sale price of a home was $630K last month, up 2.4% since last year.

The average sale price per square foot in New York is $392, up 1.6% since last year. The median listing price of a home has risen to $850k, which led these homes to stay on the market for 135 days and receive three offers. New York City has experienced the highest losses as thousands have left the city from February to July of this year. The demand for residential properties took a dip during peak COVID, but still, the prices remained affected.

According to sources, the Manhattan rental vacancy rate hit an all-time high of 4.3 percent in July. The rent-stabilized apartments in the city are also sitting vacant because landlords don’t have enough money to renovate them. Moreover, due to the changes in the law, landlords can be reimbursed for renovations. Therefore, the current situation has led to an increase in the vacancy rate.

As the sale prices of residential properties in New York City are soaring, the prices in the neighboring boroughs plunged, recording the lowest median sales. At $553,400, Queens recorded the lowest median sale price. Brooklyn’s median dropped below $700,000 for the first time this year. Manhattan managed to follow the other two as its median misses the million-dollar mark for the third time in six months.

However, during the last few months, New York’s appreciation rate has been 0.75%, annualizing to a rate of 3.02%, which is a positive forecast. According to the latest prediction, the supply and demand dynamics will likely push prices again north, and the home values will rise 6.7% over the next few months.

 

The On-going Pandemic and Election Result All Set to Reshape the New York Real Estate in 2021

New York City is among one of the best and expensive real estate markets in the world. The last decade illustrates how history will, in general, recurrent itself in the most unique and liquid luxury housing market.

After the financial crisis of 2008, the prices of the US luxury housing sector plummeted and managed to hit a peak in 2017. Being one of the most competitive markets in the nation, it is also among the most hard-hit by the COVID-19 pandemic.

As the pandemic is spreading like wildfire, the real estate prices are soaring nationally as well. The need for additional workspace at home has created a surging demand nationwide. If we compare 2019’s real estate sales with this year, they have fallen 57% in August, according to the NYC Comptroller.

The residential rents have also dropped down to more than 10% in the past quarter of 2020, and recent projections state that the situation will repeat in the first two quarters of 2021. Many people have moved out of the city and settling in other neighboring towns.

As of March, due to the nationwide lockdown, New York has experienced health and financial issues. This situation has caused an increase in the unemployment rate, pushing the renters and buyers out of the city, forcing the rental rates to drop.

Half of the nation is celebrating the victory of Joe Biden and hence it is guaranteed that the results of the election will affect the real estate industry in taxes and regulation. New York is painted with blue color as a democratic senate has taken control of the office.

The industry’s worst-case scenario was a Democratic conference dominated by New York City members, who tend to favor tenants and enforce the tax on the rich. However, since the election, the market is moving in a positive direction.

The activity has increased in different neighborhoods of New York since they moved things online, and procedures were established for those that wanted to proceed in-person. The introduction of this efficient system has led people to spend and invest in the real estate market again.

2021 is going to be quite challenging from the pricing point of view, and with COVID-19 on the rise, the first few quarters will be difficult. However, a positive change is expected in the mid of 2021, where we will see an upswing, as people will be buying and selling properties. Nonetheless, 2022 might be the year where the real change happens.

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.