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I have been reading with interest about the exodus of people from New York City, and the perhaps inevitable increase in house prices in towns up to 100 miles away, including Woodstock and Kingston. Rents have come down in the city as apartments lie empty or are difficult to fill with new tenants.
But what about buying? I want to purchase a place in Manhattan, but I’m unsure whether to wait until next year when prices in New York City could come down further. Is that wishful thinking? Obviously, interest rates are at a record low, so there’s that. What should I do? What would you do?
Manhattan Man, Tired of Renting
Dear Manhattan Man,
I’m sure Jerry Seinfeld would be thrilled to hear you want to stay in the city.
The common wisdom that’s emerged since the coronavirus pandemic swept across the country is that city dwellers — tired of working and teaching their kids from home — are moving to the suburbs in droves in search of wide open spaces.
In reality, across much of the country, that’s not really happening. Recent research from Zillow
shows that for most parts of the U.S., demand for homes in the suburbs has actually kept pace with demand in urban areas.
New York, though, is one of the exceptions — along with San Francisco. You’re correct: Sales activity in the Big Apple’s suburbs are going through the roof. In areas such as Westchester County and the Hamptons, contract signings are occurring at double the pace from a year ago, according to recent data from brokerage Douglas Elliman and consulting firm Miller Samuel.
The problem that many buyers moving to the suburbs have found is that there aren’t enough homes up for sale to meet the demand. As a result, asking prices are rising quickly.
The situation is very different in New York City. But before I address whether I think you should buy right now or wait, I first want to make an appeal to you: Talk to your current landlord.
“There’s a chance you may be able to get a significantly lower rent,” said John Walkup, co-founder and chief operating officer of real-estate technology firm UrbanDigs. “Landlords with renters in hand are looking to keep those renters, whatever it takes.”
Landlords are caught in a bind. Many renters are indeed fleeing for the suburbs — and they’re not being replaced by the typical wave of college students and workers relocating to the city that never sleeps.
“Normally you have a lot of people come into the city during the summer — that was really put on pause,” Walkup said. Many apartments are sitting vacant right now, and your landlord wouldn’t want your unit to be thrown into the mix. I’m not sure when your lease is up, but you should see about cutting a deal with your landlord now while they may be sweating. If your rent goes down, you’ll have more room to save up to buy the apartment of your dreams.
On that note, prices for apartments in New York City have fallen. And they were falling even before the pandemic began, believe it or not. “Prices have been falling now for the third year in a row,” said Nancy Wu, an economist at Zillow subsidiary StreetEasy.
According to Wu, sales are closing at around 10% lower than the asking price in recent months, which she said is a sign that “a lot of off-market negotiations are happening” behind closed doors.
New York City has seen a building boom in recent years, with luxury condominiums springing up in Manhattan’s Hudson Yards, Downtown Brooklyn and Long Island City in Queens. These newer units are pushing prices for older apartments down. It’s even hurt the values of condos in buildings bearing the Trump name.
‘We’re not seeing the panic on the sell side that would force prices lower.’
Some neighborhoods are seeing bigger discounts than others. Apartments located near Midtown and the Financial District in Manhattan are a…