I thought it would be beneficial to start this newsletter with an overview of the strong numbers from the NY area in Q3:
- The number of sales increased 30% over the same period in 2012
- Inventory decreased by 21.9%
- Case-Shiller reports NY prices increased 3.3% over the last year
- Absorption rate fell to 3.6 months, reflecting the fastest pace of sales for 13 years
These numbers are a continuation of the positive path of the market over the last year. There are 3 key points behind this:
- Continued high demand for NY property domestically and also from abroad
- The rapid return of consumer confidence in the US as economic growth prospects continue to move in a positive direction
- Continued constrained supply
I believe it is worth looking at where the market is likely to head in the next few years. Construction spending in NY is on track to reach $31.5b in 2013, a 14% increase on last year, and more than the 2007 peak number of $31.1b. It is forecasted to continue to grow, reaching $33.4b in 2014 and $37b in 2015. With the increase in new construction, this will increase the amount of new development real estate being introduced to the market. The trend in NY, though, is for new product to be geared to the higher, luxury end of the market. New projects, such as Baccarat & 56 Leonard St, have all been launched and reported strong sales, with entry level price points all north of $2.5m or $3,000 per sq ft. In fact there were double as many contracts signed in Q2 this year for sales over $5m than a year before.
This is putting pressure on good quality real estate priced between $1m-$2m / under $2,000 per sq ft, which is a more affordable, equally in demand sector of the market. It is this section of the market where many of our international clients have purchased and where many continue to look. I’ll share details a little lower down of two such opportunities.
In terms of the rental market, rents are on average up by 3% on 2012. In Manhattan, Studios average $2,790 per month, 1 bedroom’s $3,994pm and 2 bedroom’s $6,142pm. This is city wide, and there are neighbourhood differences.
In regards to capital appreciation, looking back over the last 4 years until the end of 2012, there is a variance neighbourhood by neighbourhood from 5% to as high as 33%. While Jersey City is not yet back to the price points of 2008, over the last year prices have increased by as much as 7%.
Several clients I have spoken with have asked about pricing and the trends in some of the neighbourhoods just outside of Manhattan. I’ve been researching and looking for a good quality, well located project for some time now. As an aside, it is worth noting that some new developments in Brooklyn now sell for above $1,000 per sq ft. It is fair to say this neighbourhood has seen rapid appreciation over the last 2 to 3 years! Worthy of consideration are some of the stronger neighbourhoods in Queens, that offer the combination of accessibility to Manhattan with sub $1,000 per sq ft price points.
In Q1 next year I anticipate being able to share details on a brand new development located just 4 subway stops from Midtown Manhattan, pricing should start a little over $550k. If you would like priority information, please email Alistair at firstname.lastname@example.org
The NY area market is quite unique when compared to other major global centres, and indeed other markets within the US. It is driven substantially by the domestic market, but has always been a city where international investors have purchased real estate. Aside from NY being a global city, it is seen as a safe place to acquire and hold real estate, as well as over the last few years, as offering value compared to some other markets. Looking at the international aspect, Chinese buyers have purchased $1.7b of real estate so far in 2013, up from $1.1b in 2011 (across the US in total). In NY, it is reported that 70% of the real estate they purchase is in cash.
Will the NY market continue its ascent over time? I feel confident it will for these reasons; domestic demand is strong and growing, in part as confidence and the ability to finance is greater. Rising interest rates will apply necessary pressure in time, and the geography of NY ensures that it is almost impossible to create an over-supply of inventory. As the economic capital of the US, it will always attract many of the brightest and most talented, who generally rent before they buy. This should keep all parts of the market moving in a steady, upward trajectory.
Finally, if you have any buying, selling or management questions or requirements, please feel free to contact us as our company holds brokerage licences in many States. Additionally, we post news updates to our Facebook page, so please feel free to click the ‘follow us’ button at the bottom
- A 57 storey, iconic building, that is home to 223 residences
- Outstanding views of Manhattan, the new World Trade Centre, NY Harbour & Hudson River
- Located within a 2 minute walk of subway, employment shopping and dining
- Multi-Billion dollar investment in new shopping malls, transportation hubs, schooling and commercial space
JMA has an existing track record that can be used to negotiate the best pricing and potential discounts for clients. There are Studios, 1 bed & 2 bed homes available, all with great views. Starting from around $1m.
- A new build, 32 storey building located in Midtown East (305 East 51st St)
- Estimate completion date, early 2015
- Current pricing from $1.565m
- 1 bed to 4 bed homes available
If you would like more information on either project, please don’t hesitate to contact Alistair at email@example.com.
Wishing all our clients a prosperous final quarter to 2013.
JMA Property Services