Rising Concessions and Transportation Changes Will Drive New Yorkers' Real Estate Decisions in 2018
NEW YORK, Dec. 6, 2017 /PRNewswire/ -- Transportation shakeups will continue to alter the New York City grid in 2018, including the looming closure of the L train and the continued expansion of the East River ferry service. These changes will play an integral role in the moving decisions of buyers and renters, and will noticeably impact real estate prices in surrounding neighborhoods next year, according to StreetEasy's 2018 predictions.
Sales markets in Manhattan and Brooklyn will most acutely experience slower growth, while Queens will see strong demand as first-time buyers flock to the borough's comparably less expensive homes. The slump in the luxury market will continue through 2018, putting increasing pressure on an expanding range of homes at multimillion-dollar price points.
New York City rents will continue to grow at an anemic pace, while landlord concessions become the norm.
StreetEasy's 2018 Predictions
Transportation changes will drive new demand in neighborhoods across the city. Neighborhoods where new transit options are being added -- like those along the expanded East River ferry line -- and neighborhoods where transit is temporarily halting -- like Williamsburg's L train -- will receive a flurry of interest as New Yorkers seek either a more convenient commute or a bargain. These transportation changes have already impacted rents and prices in 2017, but their effects will be even greater in 2018.
Luxury prices will hit new lows, testing the nerves of high-end buyers. As luxury developers continue to build, the swell of supply will far outsize the number of eligible buyers. Luxury buyers with a home budget of $10 million or more will be hesitant to buy in a market with rapidly falling prices. The current luxury housing market slump comes as the stock market is booming. Should the global economy show signs of a slowdown, steep price cuts will follow.
Homes under $1 million will see heightened competition, prompting more buyers to turn to the outer boroughs. The never-ending supply of luxury homes has done nothing to staunch the city's affordability crisis. While the city's economy booms, modestly priced homes will be in high demand. In 2018, homes priced below $1 million will see more competition than ever, and more buyers who previously hadn't considered the outer boroughs will look to these areas to stay within their budget.
Rents will fall and concessions will rise. A pipeline of new buildings will limit increases in rents and give a negotiating edge to prospective tenants. Rents will likely fall to meet market demand, and even then, landlord concessions won't go away. This combination may cause more renters to consider moving, as they notice enticing deals being offered at buildings comparable to where they currently live.
Renters won't be fazed by the quirky amenity craze. Developers and property managers will go to creative new lengths to make their buildings stand out. Cooking classes, wine tastings, and co-working spaces will become the new norm in high-end buildings. However, affordability will continue to win the day in the minds of NYC renters, who will opt for less expensive rent over the building with unique perks.
Statement from Grant Long, StreetEasy Senior Economist:
"With next year's building boom promising to expand luxury market woes at the very top of the market, 2018 will mark slow price growth across multimillion-dollar price points and a landscape in which high-end buyers enjoy the upper hand in negotiations.
"For renters, 2018 is your year. The combination of ever-present landlord concessions and rents growing at a snail's pace will cause the market to sway more heavily in favor of the renter. Even renters happy with their current home should do their research and ask for a deal before renewing their lease — check comparable listings for the pulse of the market in your neighborhood, and don't shy away from asking landlords for a month free or negotiating a lower rent.
The city's reliance on an aging transportation infrastructure will face tough tests in 2018, but buying in a rapidly changing neighborhood along a major commuting corridor will remain one of the best bets in city real estate. Traditionally that has meant the train, but with an expanded fleet of ferries on the East River, we also expect more New Yorkers to take to the water on a daily basis."
View StreetEasy's full 2018 predictions report here: http://streeteasy.com/blog/2018-nyc-housing-predictions
About StreetEasy:
StreetEasy is New York City's leading local real estate marketplace on mobile and the web, providing accurate and comprehensive for-sale and for-rent listings from hundreds of real estate brokerages throughout New York City and the major NYC metropolitan area. StreetEasy adds layers of proprietary data and useful search tools to help home shoppers and real estate professionals navigate the complex real estate markets within the five boroughs of New York City, as well as Northern New Jersey and the Hamptons.
Launched in 2006, StreetEasy is based in the Flatiron neighborhood of Manhattan. StreetEasy is owned and operated by Zillow Group (NASDAQ: Z and ZG).
StreetEasy is a registered trademark of Zillow, Inc.
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SOURCE StreetEasy
