If you wish to invest in the New York City property market in 2020 and beyond, you need to identify the best neighborhoods to put your money. Under ordinary circumstances, to successfully pinpoint those prime areas, you would go for the locations where sales have slipped, or new developments are lingering on the property market. However, now the Covid-19 pandemic and new housing rules are completely reshaping the real estate market and not just in NYC but globally. There are now additional considerations that you need to take into account as a buyer looking for investment locations.
Lenders and developers alike are now more cautious when reviewing projects and holding back a bit on investment amid the market softening being witnessed. The outlook for the sales market in the Bronx is mixed. Real estate experts expect multifamily sales to remain relatively sluggish as the market adjusts to the new reality and learn to cope with challenges presented by the 2019 rent regulations and the COVID-19 environment. Matters become more uncertain in 2020 being an election year.
Bronx residents can, however, expect to see growth in the years ahead. Consider that over the past five years, in the Bronx, the value of properties has increased by 54%, the highest recorded rate in New York City. These are markets are that can potentially benefit both sellers and buyers. They allow first-time homebuyers to acquire a more affordable property compared to neighborhoods in Brooklyn or Manhattan.
An Overview of the NYC and Bronx Housing Market
NYC’s current housing market can be described as cool, although some are calling it a buyer’s market. In 2016 and 2018, things slowed down significantly as international buyers found it harder to acquire properties or showed less inclination to buy. On top of that, was the emerging trend of properties being sold below their asking price, except those located in the cheapest neighborhoods of New York!
Since then, sales volume has somewhat increased, and now there is a wider selection than several years ago. Perhaps more importantly, for the first time, home buyer prices are currently tenth to a quarter less than their 2015 highs. This is why now is a good time to acquire NYC real estate as the market will likely continue to warming up as long as the economic stability holds.
Jessica Swersey of Warburg Realty opines that 2020 can be expected to be similar to 2019 in real estate with perhaps more hesitation to pull the trigger when buying. Oversaturation of unabsorbed inventory coupled with more inventory being released is likely to lead to inventory sitting on the property market. Jessica thinks that things will hold steady, and NYC will remain a buyer’s market.
The 2020 Election Year Effect
The uncertainty surrounding 2020 as an election year also throws some spanners into the works. This is likely to cause many homebuyers to hold back further as they wait to see how things will shape up after November 2020. NYC saw a total of 14,216 sales, which was 41% less than seen during the first half of 2019. However, pricing trends remained positive, with the NYC year-to-date median sale price across the boroughs holding at $690,000, a 3% gain over the first half of 2019.
Breaking it down to the borough level, the market saw significant disparities over the first half of 2020. Throughout H1 2020, the Bronx investment sales market has seen 84 transactions, consisting of 116 properties worth a total gross of $436 million. This represents 42% and 41% drop in sales transaction and building volume, respectively, a 63% decrease in dollar volume compared to 1H2019.
The Covid-19 Impact on Property Prices
Many New York residents are working from home now—and many may not go back to the office even after the Covid-19 Pandemic subsides. Companies now have a better sense of the health benefits of keeping employees apart and the savings in cost. Apartments with a separate room or nook that offers video conferencing privacy or can be used as a home office are in greater demand. And because sellers recognize that, they are making such properties available.
Homebuyers may be more ready to trade off sky-high views for townhouses or lower floors and reduce reliance on apartment elevators. According to Nada Rizk of Brown Harris Stevens, overall, it’s become more desirable to live in less densely populated buildings and neighborhoods such as the Bronx as it limits Covid-19 exposure, at least for the short term.
Why the Bronx is growing in Attraction
As families and individuals are getting priced out of Manhattan, Queens, and Brooklyn, the Bronx is now being seen by many as the go-to place, the last frontier of New York’s “affordable real estates.” The proximity to Manhattan and attractive home prices are seen as the primary drivers of demand for real estate in the Bronx. The proximity of the Bronx to public transportation and major highways, including four new Metro-North stations and the new Soundview Ferry, will make commuting to inner NY easier, spur faster development, and attract new retail outlets. All these are a home owner’s dream.
Easy access to public transportation — Metro-North stations, subways, and buses — is one factor that is making the Bronx a worth home investment. If you are looking to purchase a home in the Bronx, consider what real estate experts call a tipping point. The median tipping point nationally is around two years, but in NYC, it’s 5.8 years.
In the South Bronx, particularly along the Grand Concourse, it’s not rare to see co-ops selling properties at above-asking prices as bidding wars rise over the spacious units on offer in the area.
As many homeowners leave for the suburbs, Bronx offers attractive alternatives and great investment opportunities. Besides having more affordable properties, the borough has seen steady and strong price appreciation recently, giving new homebuyers considerable potential to build equity.
Despite the recent price appreciation, real estate throughout the Bronx is still offering new homebuyers a significant discount. Besides, with historically low-interest rates and comparatively low land prices, there’s still much-untapped value throughout the borough for new buyers.