New York is, by and large, a city of renters, with more than two-thirds of its residents choosing to rent their homes rather than buy. (If you count yourself among this often transient class, find all the advice you need on renting this way.)
Why do so many people rent? The barriers to entry for homebuying in New York City are, for many people, impossibly high: Home prices have doubled since 2010, with the median price of a Manhattan apartment pushing the $1 million mark; for the city as a whole, the median is close to $700,000. The median income, meanwhile, hovers around $60,000, and if you don’t already have enough cash saved up for a down payment, you might be out of luck.
Still, there are some people for whom buying isn’t a pipe dream—and if you’re one of them, you might be wondering if 2020 is the year to upgrade your abode or, for first-time buyers, take the plunge and become a New York City homeowner. It’s a deeply personal choice, and one that’s dependent on many factors: your personal finances, future plans, the state of the market (currently friendly to buyers), what’s happening in the political realm (not so friendly for buyers, apparently), and more.
There are other factors to consider as well. If you’re looking in a neighborhood that’s more affordable—that is, far away from Manhattan’s core—you might also be worried about contributing to the displacement of entrenched communities, whose residents may not be able to keep pace with the ever-rising cost of living in New York City. (To wit: Prices in Brooklyn’s Bedford-Stuyvesant, a historically black neighborhood, rose by more than 150 percent between 2010 and 2019, fueled by waves of gentrification and investors snapping up and renovating the area’s historic housing stock.)
But if you’re still thinking about ponying up for your own piece of New York City, the good news is that it’s a very buyer-friendly market right now. We surveyed real estate experts to find out whether 2020 is a good year to buy a home in the five boroughs—and as always when it comes to New York real estate, the answer is complicated.
We collected the responses below before the outbreak of novel coronavirus in the U.S. How might its spread impact the housing market this year? Read this.
Real estate agent, Compass
Just like on Wall Street, nobody can perfectly time the market. Twenty-twenty is an election year, which typically comes with some hesitation from buyers, but this year may be different. There is an unusual convergence of factors: Interest rates remain historically low, sellers are becoming more realistic with pricing, and inventory is still relatively healthy even with the surplus in new development product. Tax changes on a local and national level have actually pushed prices downward to compensate, beckoning more buyers to the market. Those wanting to purchase a home have more options right now than in many years prior, so they can afford to take their time and seek out something special. Under these very unusual circumstances, 2020 is a great time to buy a home in NYC. Properties that are priced right are still moving, and savvy buyers will continue to find opportunities.
Real estate agent, Warburg Realty
There hasn’t been a better time to be a homebuyer in NYC in over a decade than in 2020. Why? The perfect storm of excess inventory in the new development market, low mortgage rates, and an impending election favors a sure-footed, educated buyer. It simply comes down to “supply and demand”—there is an excess supply and a diminished demand. Compound this dynamic with the impending election in the second half of the year, and the savvy buyer could find the deal of a lifetime.
“New York City has over 578 miles of shoreline, with lots of residential real estate—nearly 1 in 8 units under construction, or in the planning phase—being built in the city’s most dangerous flood zones.”
Urban planner, Localize.city
Market conditions have rarely been better. We have record-low interest rates, all-time stock market highs, and the lowest unemployment in a generation coupled with a lot of idle inventory and price decreases across the board. It’s a buyer’s market. While there are many risks to buying a home, one that’s often overlooked is the long term costs of buying near the shore. New York City has over 578 miles of shoreline, with lots of residential real estate—nearly 1 in 8 units under construction, or in the planning phase—being built in the city’s most dangerous flood zones. Living in a flood zone can be more costly over time.
Director of communications, Center for NYC Neighborhoods
Now could be the right time to purchase a home in New York City—if you are ready to compete with the cash buyers who have been responsible for 40 percent of home purchases in the last decade. These purchasers often outcompete the average buyer planning to rely on a mortgage for an affordable home, including co-ops and condos. Because of the challenges of buying in the city, we advise anyone seeking a home to first talk to a pre-purchase counselor who can help examine your finances, educate you on the risks associated with climate change, and steer you toward safe and equitable lending products. Finally, it’s important that you get to know the community that you are moving into to ensure that you are not contributing to displacement and gentrification.
Michael J. Franco
Real estate agent, Compass
It is an excellent time to purchase a property in New York City. The market has been softening for several years now and inventory has grown. There are opportunities out there that may not exist in the near future. Interest rates are still low, and the New York market has historically always rebounded. Sellers have also become much more realistic about values and are oftentimes negotiating (even if their listing is well-priced). There are very few bidding wars occurring right now, which gives buyers an opportunity to take their time and find the right home.
“Look for apartments that have been on the market for 180+ days, find homes that are in need of renovation, and focus on estate sales.”
Real estate agent, Corcoran
The most popular question I receive about real estate these days is whether to buy now or wait. Here are my top reasons you should consider buying in 2020: Sellers are negotiating—I’ve seen owners of resale units discount as much as 18 percent off the asking price. Don’t be afraid to submit offers substantially below the asking price or be afraid to price into your offer the amount you think the market will decrease in the next year or two. Two of my clients recently made offers this way. In one case, on a downtown apartment, we were able to negotiate $180,000 off the asking price, and in another instance we were able to negotiate $500,000 off the asking price on an Upper East Side co-op. And even though we all know interest rates are low, it’s worth mentioning that I have had two clients secure loans at exceptionally low rates; 2.85 percent on a 30-year fixed and another secured at 10/1 ARM at 2.65 percent. With money this affordable, it makes sense to explore what you can purchase.
Look for apartments that have been on the market for 180-plus days, find homes that are in need of renovation, and focus on estate sales. These three groups tend to have the most motivation when it comes to negotiating, which means you’ll likely get a better deal!
President and CEO, Miller Samuel
My default response is: “It depends.” Every individual has different needs, time frames, goals, and finances; yet an answer means everyone is looking at the same property. But I get the curiosity.
First of all, the optics of this market are through a $100 million new condo, and that specific 0.1 percent of the market is deeply challenged, but nearly all of us aren’t in that market. So instead, here are some basic topics to consider when doing your own Manhattan analysis today.
Inventory: new development supply is high, especially at the top. Resale inventory is above average and rising but not close to a record.
Sales: The above $5 million strata is 4 percent of the market, and those sales are down 38 percent year over year. In the remaining 96 percent of the market, sales are actually up 1.6 percent as more sellers have been getting realistic.
Price trends: In aggregate, prices are still drifting lower but I think the bulk of the decline has already occurred in most market segments.
Taxes/Policy: Lots of new federal and state real estate related tax policy changes were added over the past two years, such as SALT, the Mansion tax, higher transfer taxes, and the new rent law. Sellers have been going through the agony of repricing for a while now, and the recent uptick in sales is evidence of that. Once priced in, these taxes become less onerous.
Mortgage rates: Central banks around the world are near zero percent, so it’s hard to imagine rates rising significantly anytime soon.
Now have at it.
Choosing to rent or buy is deeply personal, and the uncertainty swirling around what will happen to the economy and the New York City real estate market in 2020 is making the choice for would-be buyers that much more difficult. Those that are ready to commit to a home for an extended period of time and have sufficient savings will enjoy the highest number of homes on the market this winter since the financial crisis. With sky-high inventory, buyers right now have a lot of negotiating power and can afford to be picky and patient in their search for the home that’s right for them.
Interview responses have been lightly edited for length and clarity.