New York Real Estate Market Trends & Analysis


The New York real estate market plays host to the most extreme housing indicators in the country. In particular, four consecutive years of rising median sales prices have made affordable homes more difficult to come by. Thanks, largely in part, to a distinct lack of inventory, sellers have been able to increase prices at a faster rate than the national average. As a result, prospective buyers have had to remain on the sidelines. Even the prospect of low interest rates hasn’t been able to convince buyers to take action.

Both pending and closed sales numbers have declined year-over-year in lieu of increasing competition and prices. That said, real estate in New York appears to be turning a corner. Median home values are expected to rise at nearly half the rate of the previous year. The easement shouldn’t be viewed as a troubling sign, but rather as a return to normalcy. After years of exponential price increases, the impending temperance could allow more buyers to partake in the market and stimulate a healthy industry moving forward.

The Top New York Real Estate Markets


While the best real estate market in New York is up for debate, here’s a list of the cities investors may want to pay special considerations to:

New York Real Estate Fees & Regulations

Real Estate

Closing Conducted by: Attorneys
Conveyance: Bargain-and-Sale Deed

Foreclosure Procedure

Primary Foreclosure Method: Judicial
Process Period: 4 - 8 months
Notice of Sale: Court
Redemption Period: None

Taxes

Income Tax: 4.0% - 8.82%
Corporate Tax: 7.10%
Sales Tax: 4.00%
Estate Tax: 3.06% - 16%
Inheritance Tax: No
Median Property Tax: 1.23%
Property Taxes by County: http://www.tax-rates.org/new_york/property-tax#Counties

Average Transactional Costs

Closing Cost: $2,892.00
Transfer Fee: Mortgage tax 1.0%; Mortgage NY City 1% - 1.75%; Realty transfer NY City 1% - 2.625%
Origination Fee: $2,109.00

Overview


  • Median Home Value: $327,569

  • 1-Year Appreciation Rate: +2.5%

  • Median Home Value (1-Year Forecast): +3.7%

  • Median Rent Price: $2,022

  • Price-To-Rent Ratio: 8.5

  • Average Days On Market (Zillow): 132

  • Unemployment Rate: 4.0% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 19,453,561 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $65,323 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 10.50%

  • Foreclosure Rate: 1 in every 2,224 (4.4%)

Median Home Prices In New York


The Great Recession was responsible for tanking median home values on a national level, and New York was certainly no exception. As recently as 2012, in fact, New York’s median home value bottomed out around $253,000. It is worth noting, however, that was the lowest the state average would drop. Nearly halfway through 2012 home prices started to appreciate, and they haven’t looked back since.

Thanks to nationwide improvements in the economy, growing optimism and a lack of available inventory, prices in New York have enjoyed nearly a decade’s worth of growth. As a result, today’s median home value is somewhere in the neighborhood of $327,569, or 29.4% higher than where it was around this time eight years ago.

With an appreciation rate bordering on thirty percent, New York residents have every reason to be optimistic. However, it’s important to look at New York home values within a national context. Despite nearly a decade’s worth of appreciation, in fact, real estate in New York failed to keep pace with national trends. From the halfway point of 2012 (when the state of New York saw its median home value hit rock bottom) to today, the median home value in the United States appreciated 52.2%. That’s not necessarily an indictment on New York, but rather more indicative of how far the national real estate market had to go.

Due largely, in part, to a relatively high median home value, the New York real estate market appreciated at a slower rate than the national average over the last 12 months. Whereas the state of New York increased 2.5% in the last year, the national real estate market was the beneficiary of a 3.8% increase. Moving forward, it appears as if New York home values will be held in check by relatively high prices. Already well above the national average, New York’s median home value doesn’t have much more room for growth. As a result, values should increase, but at a slower pace than the national average—3.7% and 4.1%, respectively.

Median Rent Prices In New York


The amount of money tenants can expect to pay in rent shares a direct correlation with local home values. Consequently, both increases and decreases in rental prices are almost always the result of home value fluctuations. There are, of course, exceptions to the rule, but rental rates typically share the same fate as home values. For better or for worse, home prices will impact the direction rental rates head, and the New York real estate market is no exception.

Thanks largely to the inclusion of New York City, rental rates in New York are considerably higher than national trends. Today, the average renter in the state of New York can expect to spend about $2,022 a month on rent, or approximately $24,264 a year. Of course, today’s rents are the result of years of appreciation in the housing market. No more than eight years ago, rents were as low as $1,653 a month, representing a 22.3% increase since the market initiated its recovery from the Great Recession.

In that time, the median rent in the United States jumped 21.7%, going from $1,309 to today’s $1,594. With that in mind, rent across the state of New York increased at a faster rate than the national average. The increase, however, is slightly skewed, as New York City is largely responsible for the higher average. With some of the highest rental rates in the country, New York City has buoyed the rest of the state.

New York Foreclosure Trends & Statistics


With one out of every 2,224 homes in some state of foreclosure (pre-foreclosure, bank-owned or reserved for auction), New York currently boasts a foreclosure rate of 4.4%. When compared to national trends, it would appear as if New York has an average foreclosure rate. In fact, New York shares the same foreclosure rate as the whole country: 4.4%. Not only that, but recent filing trends appear to follow a similar trajectory, too.

In the last year, foreclosure filings across the United States increased 7.0%. As recently as January, “the number of properties that received a foreclosure filing in NY was 17% higher than the previous month and 7% higher than the same time last year,” according to RealtyTrac.

Statewide increases in foreclosure filings have led to disproportionate pockets of distressed inventory. As a result, select counties have developed a reputation for housing larger distributions of foreclosed properties. In fact, here’s a list of the neighborhoods with the highest distributions of distressed homes in New York:

  • Niagara: (1 in every 374)

  • Montgomery: (1 in every 734)

  • Orange: (1 in every 795)

  • Putnam: (1 in every 857)

  • Suffolk: (1 in every 978)



Tax Lien Investing



  • Tax Lien or Deed: Tax Lien state

  • Interest Rate: 14% in counties that have sales

  • *NYC does not sell TLCs to public
  • Redemption Period: 3 years

Real Estate Investing In New York


The New York real estate market boasts several fundamentals working heavily in favor of investors. Not unlike the majority of the United States, New York real estate investors have enjoyed a lucrative run since the last recession. Real estate investors and homeowners across the country, in fact, have enjoyed several years of seller gains and attractive ROI (return on investment). According to Attom Data Solutions’ most recent Home Sales Report, the average home seller in 2019 “realized a home price gain of $65,500 on the typical sale, up from $58,100 last year and up from $50,027 two years ago.”

The report acknowledges that profits “represented a 34 percent return on investment compared to the original purchase price, up from 31.4 percent last year and up from 27.4 percent in 2017, to the highest average home-seller ROI since 2006.” Simply put, average U.S. home seller profits are higher than they have been in approximately 13 years. Consequently, the New York real estate investing community was not left out of the latest trend.

The median home value in New York is considerably higher than that of its national counterpart. As a result, the New York real estate investing community has seen profit margin potential take a hit. After nearly a decade’s worth of appreciation, far too many homes are simply too expensive to ensure profits on the back end of a deal. It is worth noting, however, that the same price increases that have eaten into potential profit margins have also led to more foreclosures. Therein lies the secret to New York real estate investing: distressed properties may simultaneously award investors with better profit margins and motivated sellers.

Real estate investors in New York looking to capitalize on deals with better profit margins should pay special considerations to the state’s distressed market. In particular, pre-foreclosures make up the majority of New York’s distressed inventory. Constituting 37.6% of all distressed homes in New York, pre-foreclosures are essentially the most abundant source of motivated sellers. Bank-owned homes and those reserved for auction make up the remaining distressed inventory—34.1% and 28.3%, respectively.

Investing in New York has gotten more expensive in recent years, but that doesn’t mean deals can’t still be found. Tapping into the distressed property market is the best way to increase one’s chances of landing a deal with good profit margins, which begs the question: Is now a good time to invest in New York real estate? Better yet, what should investors do with the assets once they are acquired? What exit strategies appear to be working best in the New York real estate market?

To be clear, the New York real estate market is firing on all cylinders at the moment. Nearly every exit strategy is in play, but there’s one that makes more sense than all the others: rental properties. While it’s entirely possible to make profits rehabbing and wholesaling, the higher acquisition costs associated with 2020 have made attractive profit margins harder to come by. Instead, investors should look into building a rental property portfolio. Years of cash flow can very easily offset today’s higher purchase prices.

Let’s say, for example, buyers were to us a 30-year fixed-rate conventional mortgage with a 4.158% interest rate (the average rate for a 30-year fixed-rate loan in New York) to buy a home for $327,569 (the median home value in New York). In the event they are able to put down $65,000 (about 20%), monthly mortgage payments would come out to be somewhere around $1,796. Subsequently, the median rent price in New York is $2,022. While the difference may not seem like much, the best rental markets in New York will look even more favorable to investors. That said, rents have gotten so high in New York that cash flowing properties appear to be the preferred method of investing in The Empire State.

New York Housing Market Predictions


The New York housing market has enjoyed nearly a decade’s worth of good news. For seven consecutive years, real estate in New York has been able to ride the wake of national trends, albeit to a tempered extent. Price increases, confidence in the market and several other indicators are heading in the same direction as the rest of the country, but what does that mean moving forward? What can the New York real estate investing community expect for the foreseeable future?

  • Buffalo should see an influx of buyers: With a median home value of $103,589, the Buffalo real estate market is priced well below the New York average. In fact, real estate in Buffalo is approximately one-third the price of the state average. As a result, it’s reasonable to assume Buffalo will see an influx of buyers in the coming year, most of whom are looking to escape the higher prices associated with New York City and White Plains. Added interest has already helped homes in Buffalo appreciate more than the state average in the last year, and it looks like Buffalo will continue the trend for at least another year. Now may be a better time than ever to consider investing in Buffalo real estate.

  • New York appreciation will trail national trends: The median home value in New York is about $80,000 more than the national average. Consequently, real estate in New York has very little room for further increases. As a result, it’s safe to assume the national real estate market will appreciate at a faster pace over the next 12 months. That’s not to say this is a new trend, but rather that the difference will extend into 2020, and beyond.

  • Demand will remain in the face of appreciation: Despite eight consecutive years of appreciation, New York’s economy has seen to it that demand still persists. Not only that, but optimism in the housing sector is growing. More people are ready and willing to buy today than in years past, which bodes well for the entire housing sector.

New York Real Estate Market Summary


The New York real estate market has enjoyed several years at the forefront of the U.S. housing sector. As one of the largest and most influential markets in the country, New York has helped set the pace for the greater part of the national recovery. In doing so, The Empire State has become a commodity to the national real estate investor industry. Investors from around the globe, in fact, have found New York to be a great place to invest for those who can afford to do so.

Sources:



https://www.zillow.com/ny/home-values/
https://www.zillow.com/home-values/
https://www.realtytrac.com/statsandtrends/ny/
https://www.realtytrac.com/statsandtrends/foreclosuretrends/ny/
https://www.realtytrac.com/statsandtrends/
https://www.realtytrac.com/statsandtrends/foreclosuretrends/
https://www.census.gov/quickfacts/NY
https://www.bls.gov/eag/eag.ny.htm
https://www.nerdwallet.com/mortgages/mortgage-calculator/calculate-mortgage-payment/new-york
https://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-year-end-2019-u-s-home-sales-report/

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either expressed or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.