The housing market in New York City is going through turmoil. Planners and developers are still figuring out a forecast of the situation for the next year. No one knows for sure what will happen to New York City real estate next year, but there are some indications of possible outcomes.
Let's learn from past examples
Suppose we look at the recession from 2008 that seriously affected the real estate market in New York City. The unemployment rate went from 4.4% to 10.3% in a matter of months. Consequently, people started leaving rented apartments and moving to the suburbs. Even though rents went down by 10%, the number of vacant apartments continued to grow.
We have a similar situation happening at the moment, with people selling their homes, leaving downtown, and moving to the city's outskirts. Similarly, major companies are looking to downsize or transition to remote work to reduce their expenses, which leaves a lot of offices empty.
On top of that, new developments and expensive condominiums are still waiting for potential buyers. There are over 12,000 units still unsold across the city, out of 20,000 that entered the market in 2018. Furthermore, over 2,000 units still haven't hit the market. The total value of these empty apartments and houses exceeds $33 billion.
How the pandemic affects future housing projects?
Brooklyn's Industry City complex had an expansion in progress, but the entire project came to a stop. It was predicted that this was supposed to bring over 20,000 new job openings.
Another project that was canceled in September was the construction of 15 business-oriented towers in Long Island City.
Large, luxurious, and extravagant commercial and residential complexes are currently not in demand.
Expensive commercial and residential projects came to a stop due to financing issues.
Still, it is essential to underline that the development companies go against this attitude. Even though the pandemic has seriously affected the economy and real estate market, it is crucial not to back down. The business must continue, or it will cease to exist. With that mindset, it is crucial to continue working on new development plans and look for an opportunity to start the projects.
Is affordable housing affected in the same way?
The Department of Housing Preservation and Development, which is in charge of the new projects for affordable housing properties in the city, had a budget cut in the summer of around 40%. The city officials' latest decision is to restore 50% of the budget amount that was cut.
This is good news since it allows for the continuation of Edgemere Commons, an affordable housing project that consists of 11 buildings with 2,000 units.
Another housing project called Bronx Point, which was scheduled for completion due to 2023, is also delayed because of funding issues. The good news is that new financing is expected around December.
With its 542 units, that is 2542 new housing units that are to be sold below the market price once they hit the market. This is good news for anyone looking to buy a new home.
Affordable housing projects that experienced a cut in financing are getting a part of the budget back.
The drop in apartment rental prices and what it means for New York City real estate next year
As mentioned before, many families are choosing to have their transport taken care of by professionals and move from the city to the suburbs, looking for affordable living conditions. With residential relocation being on the rise, a question presents itself; what will landlords do about empty apartments?
Rent prices went down by more than 10%, and they are continuing to drop. Expectations for the New York City real estate next year tell us that property owners will probably seek to sell if they cannot rent. While this is a time when everyone is turning towards the countryside, it is also an opportunity to move to the city. So many empty properties raise the chance of finding a more affordable apartment or house.
What will happen with the suburban properties?
As a result of the pandemic, more and more people are transitioning to remote work. Even in cases where employees are allowed to come back to the office, this mostly happens for younger people. Older employees prefer to stay in the safety of their homes.
With an increased surge of people moving to the suburbs, it is crucial to ask what will happen with suburban properties. Since the demand was high in the past few months, it is only natural for the price to go up.
Even though older people are choosing to move to the suburbs, the younger population of employees still remains in the city.
However, have in mind that this demand will have to slow down at one point. The majority of people moving to the suburbs belong to a specific age group. Since the younger population still stays in the city, both markets remain active.
Is relocation safe at the moment?
With people preferring to stay inside, it is vital to discuss the safety of moving at the moment. Based on the information gathered from divinemoving.com, it is safe to say that all measures of precaution are implemented and applied.
Families can safely organize a move and still be protected from the coronavirus. There is a myriad of online options for various parts of the process, from getting video estimates, speaking with the movers, etc. With this approach, a relocation can be organized in a safe environment.
A few closing words
A few ideas stand out when talking about what will happen to New York City real estate next year. First of all, the rentals rates will continue to drop until they come to a halt that will stabilize for some time. With new affordable housing projects being built, a substantial number of housing units will be sold below the market price. Still, it is crucial to understand how to increase the percentage of closed deals. Even though people choose to use video tours of homes being sold, it is a fact that most of them prefer to see the place in person before the purchase. In order to get the numbers up, a solution to this problem is a necessity. All in all, even though the situation is hard, the battle is still on!
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