UPDATED, Dec. 21 at 9:31 a.m.: In 2016, one of the biggest issues facing New York City’s residential market was the weakening demand for ultra-pricey properties. Next year, according to residential listings website StreetEasy, the biggest issue will be how that slowdown will adversely impact the rest of the market.
“There’s a market correction coming in Manhattan,” said StreetEasy economist Krishna Rao. “We’ve seen a lot of softness in the luxury market, and we’re going to see that trickle down.”
Using its market data, StreetEasy is forecasting some of the leading trends that will impact the city’s residential market in 2017.
Resales prices will stay stagnant
The median resale price in Manhattan is forecast to rise just 0.6 percent to $985,585 over the next 12 months, according to StreetEasy. Brooklyn’s median sales price will rise 3 percent to $579,609, while the median sales price in Queens will go up 4.4 percent to $339,717. In the Bronx, the median sales price is forecast to fall by 1.4 percent to $195,095.
“There’s been a lot of supply coming online at high prices. At the same time we’ve seen a weakening of demand,” said Rao. “[These apartments] are lingering on the market and they are just not selling.”
Each week has seen price reductions on the city’s most expensive pads, and there have been a number of high-profile properties sold at losses or well below ask. Earlier this week, an apartment at Extell Development’s One57 sold for $13 million less than its asking price. In October, a Chinese billionaire picked up a pad at the building for $23.5 million, an $8.2 million discount on the $31.7 million the seller paid in 2014.
In November, ADCO Group bought an Upper East Side townhouse from artist Abby Leigh for $20.4 million, almost half the original asking price.
The same month, an Upper East Side townhouse occupied by the Queen Sofia Spanish Institute sold for $23 million less that its original asking price.
Rents will go north, but not by much
Landlords who pegged their hopes on rents rising significantly in 2017 will be disappointed. StreetEasy is projecting that while rents will go up across all boroughs, it will occur at a slow pace.
Manhattan’s median rent will hit $3,310 per month in 2017, a year-over-year increase of 2 percent, according to StreetEasy. Brooklyn’s median rent is set to reach $2,899, an increase of 1 percent from 2016. In Queens, the median rent will be $2,444 next year, a rise of 2.4 percent. The Bronx will see the biggest increase, according to the website. The borough’s median rent is set to hit $1,708, a jump of 3.7 percent.
Landlords in Brooklyn and Manhattan have been dealing with stagnant rents throughout 2016. Brokers say it’s becoming harder to rent out the city’s most expensive pads. A recent report from Douglas Elliman found that just over 25 percent of all Manhattan residential leases signed in November included some form of concession.
With rents remaining at this high level, and Manhattan resales prices slowing down, new buyers may start investing in the city’s residential market.
“For those who plan to live in an apartment for more than a few years, the investment could pay off sooner than it has in the past,” Rao said. Last month, StreetEasy published a study that found there are some parts of the city where, if you live there long enough, it actually makes more sense to buy than rent.
Brooklyn stays “hot” for buyers and renters, while Manhattan cools off
Kingsbridge in the Bronx topped StreetEasy’s annual list of the city’s 10 “hottest neighborhoods,” while places in Brooklyn took six of the spots. The website uses its “hot market index” to create the list, by looking at individual neighborhoods’ annual change in sales price, rent price, population growth and StreetEasy page views per listing.
Kingsbridge — with a forecast median sales price of $447,00 and rent of $1,750 — was No. 1, according the index. Brooklyn’s Fort Greene, where the prediction is for the median sales price to hit $1.4 million and rent to reach $2,850, took out second place. Bath Beach, in the southwest edge of Brooklyn, came in at No. 3. The median sales prices there will hit $984,450 next year, and the rent will be $2,000.
Correction: In an earlier version of this article, the neighborhood of Kingsbridge was misstated.