Back HomeThe Luxury Condo and the Increase in Vacancies
The popularity of the luxury condominium has grown increasingly since last year, especially with foreign buyers (who, according to Citi Habitats, make up 40% of the buyers) (2). Most will purchase the condo as an investment, with the sole intention of renting it out to others in Manhattan.
The turnaround time for luxury condos has increased. The overall days on the market for condos has decreased year-to-year to 84 days, from 100 days in 2014; and the number of sales have also increased (4). According to the Corcoran Q4 Market Report, the luxury market sale prices were up 2%, with the majority of sales focused below the 34th street region (4).
Since the supply of luxury condos has increased, there has been decrease in the price of these luxury rentals (1). In order to be more competitive in the market, the owners who rent out these apartments must provide an enticing price. The average decline in rental prices in the past quarter was between 1.3%-3.4% (2). This slight decline is evidence of a competitive market. However, there was an average year-to-year increase of 6.7% for a studio apartment and a 0.4% for a three bedroom (2).
Photo Via Corcoran
New Yorkers are finding it more difficult to afford rent; and have reached their “upper limits of what they’re able to pay after more than four years of almost continuous rent growth” (3). According to Jonathan Miller in an interview with Bloomberg, rent prices are rising in both Manhattan and Brooklyn due to “robust local economy and tight credit conditions on mortgages” (3). There are a low amount of first time buyers and smaller subset of people who are active in the market (3).
Miller predicts that the Federal rate hike will not be a significant impact on the housing market because the majority of the buyers in Manhattan are cash-buyers. On the other hand, there needs to be a change from the current renting conditions. Cities will not be able to flourish properly if there is an increase in jobs but no availability to rent because of the spike in rent prices. 2016 will see that the pace of growth of rent prices is slowing but not stopping.
Written by Kylie Keller
(1) DNAinfo: New York
(2) CitiHabitats
(3) Bloomberg
(4) Corcoran
