Today's NYC Housing Market: Great News For Luxury Buyers, Not For Everyone Else

The city that never sleeps is going to be the city that most people cannot afford to live in, according to new data on New York City’s residential real estate market.

What Happened: According to a Bloomberg report citing statistics from the real estate brokerage Corcoran, the Big Apple is in line to get 33,000 new apartments over the next three years. But Corcoran President and CEO Pamela Liebman ruefully observed, “It’s 2,000 fewer units annually than the historical average. It’s definitely a mixed bag.”

The new construction is skewed toward the city’s wealthier residents, with the for-sale apartments being marketed as luxury housing. The majority of the new housing, approximately 70%, will be rentals — and not affordably priced ones, either.

“The next batch of construction is not necessarily going to help the market to the degree people would like,” Liebman added.

“It could be a rough ride for a lot of consumers who are trying to get in and find more ordinary priced inventory. I think we can say that this will continue to put more pressure on the rental market, which will push rents up even higher.”

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Why It Happened: Liebman noted the city’s housing market is being impacted by increasing construction costs that have been exacerbated by supply chain disruption and labor shortages, as well as a decreasing number of multifamily properties that opted to convert from rental housing to condominiums.

The latter problem was compounded by a 2019 change in local law that required 51% of a building’s tenants to agree on a conversion, a higher barrier than the 15% required before the law went into effect.

Liebman expected the annual average of units introduced in rental conversions to be cut in half, noting that the conversions were “where you were usually able to pick up a lot of lower-priced inventory. Now it’s just too hard.”

Still she remained optimistic, stating, “Hopefully, in the next cycle there will somehow be some relief, and we’ll be able to see developers build more affordable housing. We don’t want New York City to be a city that’s just so wildly expensive that you chase people out.”

Photo: Jo Wiggijo/Pixabay.