How Will Impending Congestion Pricing Impact NYC Home Prices And Rents?

Living in New York City is about to become even more costly with the implementation of congestion pricing on June 30, 2024.

The city will impose a $15 daily fee on vehicles entering Manhattan south of 60th Street to alleviate traffic congestion. Tolls will be collected via E-ZPass or billed directly to drivers through the mail.

Real estate agents warn that the policy could harm the Big Apple's housing market. However, supporters argue it will remove 100,000 cars, reduce emissions, and improve air quality and the overall quality of life for residents and workers.

The policy could significantly impact home prices. People who don't own cars may be drawn to an area with less traffic, noise, and pollution, potentially driving up prices for buyers and renters. The median rent for a one-bedroom apartment in Manhattan is $4,600 per month.

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"For people who own cars, living in a congestion zone may not be attractive because of the higher costs of vehicle ownership," Realtor.com economist Hannah Jones said.

"If the congestion charge improves the quality of life in the congestion zone, prices could climb," Jones said. "However, if the increased expense associated with driving reduces demand, prices could soften. The outcome will depend on whether the congestion charge actually reduces congestion or simply increases the cost of living without improving the area's quality of life."

New York real estate agents have mixed views on how congestion pricing could impact the market.

Glenn Barnett, a broker with Nest Seekers, called it ‘an unnecessary tax that's going to hurt the struggling middle class,' while Jenny Lenz, managing director of Manhattan-based Dolly Lenz Real Estate, said making it more expensive to live in an area will curb demand.

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"Savvy buyers and renters will consider this — even if the charges are nominal — when choosing where to reside," Lenz told Realtor.com.

But Doug Bendt, a real estate agent with Berkshire Hathaway, noted that the area below 60th Street is more commercial compared with other parts of the city. He believes congestion pricing will have a bigger impact on businesses than home prices.

Still, he said congestion pricing could raise prices for homes near subways and lower prices in areas where people tend to use cars to commute to the city.

"When you kind of look at the city, the [subway] lines are pretty dense in Manhattan, but once they cross into Brooklyn or Queens, they're kind of far apart," Bendt said. "So those are the neighborhoods where the people are going to feel the most impact."

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