Photo: Robert Clark
Despite a record number of homes for sale in 2018, sales throughout New York City have dropped sharply creating the perfect buyer’s market, according to a new report by the listing site StreetEasy.
“More New Yorkers seeking to accommodate a growing family, to relocate, or simply to cash out their investment will inevitably look to sell in 2019, adding to a market that’s already saturated. These sellers will need to take much greater measures to move their homes,” writes Grant Long, StreetEasy senior economist, in the report.
In an effort to attract buyers in 2018, sellers have been willing to cut prices and negotiate to close a sale. The share of listings that had a price cut hit its highest levels since the financial crisis. However, the average amount of those price cuts — on both a percentage and absolute basis — has not changed.
“Instead of coming to grips with the fact that asking prices are too ambitious, most sellers are making small, incremental adjustments to attract buyers. This strategy didn’t work in 2018, and isn’t likely to in 2019,” says Long.
But homebuyers in Queens are likely to face the most challenges — and not because of Amazon’s arrival in the Big Apple.
Over the last year, Queens home prices have risen at a consistently faster pace than in Brooklyn or Manhattan — yet remain relatively affordable. The average listing price in Queens is $657,000, compared to $1.39 million in Manhattan and $950,000 in Brooklyn.
The price growth is more about making up for lost time than Amazon — home price appreciation in Queens has significantly lagged behind growth in Manhattan and Brooklyn since the end of the 2008 financial crisis and is only now starting to catch up.
“The borough’s performance will likely grow with Amazon’s plans to move into Long Island City, but it was likely to continue anyway, given the number of New Yorkers seeking out the relative convenience and affordability of Queens,” says Long.
Yet despite all the controversy, Amazon’s presence will likely not take much of a bite out of the Big Apple’s housing market in 2019. Tech-giants Google and Amazon made massive waves by announcing massive hiring plans in the city, and some real estate professionals salivated at the prospect of a large influx of highly paid professionals — hoping they will push up the cost of housing, much as it did in San Francisco and Seattle.
“While diversifying away from financial services is a welcome move for the New York City economy, it’s unlikely to provide a bailout for those speculating on high-priced luxury condos languishing on the market,” says Long.
Additionally, despite the lauded high salaries, many HQ2 employees still won’t be able to afford the asking price of the city’s many languishing luxury condos sitting on the market.
“The $150,000 average annual salary of a new Amazon HQ2 employee is well above the city median, but still far from sufficient to make a multimillion-dollar condo affordable,” says Long.
Meanwhile, New York City renters should expect to see a very competitive market in 2019.
As interest rates and home prices continue to climb higher, renting will remain more attractive than buying for many New Yorkers. Competition in the city’s most desirable neighborhoods will likely escalate next summer — peak moving season.
The outer-boroughs will also likely be scorched by fierce competition in the rental market next summer.
“Rents in newly chic neighborhoods in outer-boroughs now equal those in many Manhattan neighborhoods,” says Long.