New York Apartment Prices
Posted by Wei Min Tan on June 20, 2023
New York property report: Manhattan condo market
Key Point 1: Sales volume down 41 percent
In Q1, 2023, sales volume was down 41 percent compared to Q1, 2022. Since the second half of 2022, sale volume dropped significantly because of increases in mortgage rates. In efforts to combat inflation, the Federal Reserve increased interest rates dramatically, and this increased borrowing costs. Buyers who need a mortgage saw monthly payments increasing and became renters instead.
Currently, the national average 30-year mortgage rate is around 7 percent. For context in early 2022, it was around 4 percent.
Weimin’s article, New York historical condo price trend
Key Point 2: Record high rents
Rental expense is about 30 percent of the inflation index. With inflation that peaked at 9 percent last year, rents commensurately increased. Further, there is added demand from buyers who became renters as a result of high mortgage rates. Back in June 2022, average Manhattan rent hit $5,000 for the first time and that made the news everywhere.
Rents continued increasing and in April 2023, average rent was at $5,270 or 9.3 percent higher than a year ago (table below). Compare this to the 4.9 percent inflation rate in April. The increase in rents far outpaced inflation.
Deal Example: Investor client’s condo at Devonshire House, one of Manhattan’s distinguished prewar condos designed by Emery Roth. Rented out in 2 days after receiving multiple applications. This was our prewar condo investment strategy and it worked out tremendously well.
Key Point 3: Buying for yield
We were in a buyer’s market but since Spring, activity has increased again. Those waiting on the sidelines have come back into the market and the market is now in neutral territory.
All cash buyers still have an advantage. This is because they are not exposed to high mortgage rates and are not competing with buyers needing a mortgage who have since converted to being renters. The market can be summarized as follows:
1) Cash buyers have better negotiating position.
2) Investors can expect increasing rents and hence rental yields.
3) Completed new developments, where risk is lowest, are more negotiable in both price and concessions.
Deal Example: Client purchased this unit at 88 Greenwich Street. 17th floor with double height ceiling and water views. One block from World Trade Center means strong appreciation potential. There are 4 new residential condos coming up in the area, all with much higher prices per square foot. The area is transforming and 88 Greenwich will benefit from it.
Weimin’s article, Investing in a Manhattan penthouse apartment
Deal Example: Client’s new condo in Hudson Square next to the new Google downtown headquarters (the new glass building opposite). We booked at pre-construction, rented out immediately after closing.
Weimin’s article, Buying a vacation home in Manhattan
Article updated June 20, 2023
What We Do
We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale
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