NEW YORK CITY–New York City's soaring population reached a record high last year of over 8.6 million and has climbed 5.5% since 2010. An increasing number of New Yorkers searching for a place to live in a tight housing market means higher demand, and with a limited supply should mean increasing prices.
However, a few months ago, the US Census Bureau reported some encouraging signs that things are moving in the right direction with respect to New York's housing market.
The Census survey data revealed a record amount of new housing. There are almost 3.5 million units in the city, now having the third-highest vacancy rate since recording began in 1965. This combination has led to a smaller burden on New York's renters, who now spend less per month on housing on average compared to when the same survey was taken three years ago. Moreover, this is coupled with a robust economy across New York. Incomes rose 11% while rents rose 8.2%.
This week, new data from the Real Estate Board of New York's latest residential sales report tells a similar story. The average sales price for a home (cooperatives, condominiums and one-to-three-family dwellings) in New York City decreased 7% year-over-year to $951,000 in the first quarter of 2018.
The New York City residential sales market recorded a 16% decrease in citywide consideration (monetary value for completed transactions) totaling $10.3 billion in the first quarter of 2018, compared to $12.3 billion in the first quarter of 2017.
This was the third consecutive quarter of year-over-year declines in total residential sales consideration. The New York City residential sales market has not experienced three quarters of consecutive year-over-year decreases since the third quarter of 2009. The $2 billion decrease in total consideration registered in the first quarter of 2018 was the largest year-over-year drop recorded since the third quarter of 2009.
The declines in consideration and transactions are largely attributable to a slowdown in sales activity at the high end of the Manhattan market. Demand has remained strong in other important market segments where average sales prices are significantly lower than Manhattan as demonstrated by several new average sales price records set for cooperative units and one-to-three-family dwellings throughout the boroughs.
Increasing 11% year-over-year, the average sales price of a New York City cooperative unit was $791,000 this quarter. In Manhattan, the average sales price for a coop rose 11% to a new record of $1,308,000, while in Queens, the average sales price for a coop increased 13% to a new record of $310,000 in the first quarter of 2018.
We believe the way out of the housing crisis is to build more affordable and market rate rental housing. Increased development means increased supply. We have seen with the latest census information, this will ease extreme tension on the market for renters of all income levels.
City and state officials deserve credit for staying focused on solutions to address the housing shortage, but more work is left to be done.
More and more people are increasingly drawn to New York City. Even though our population and employment has risen, so has our vacancy rate. The current levels of production that we have seen are enabling the city to absorb this population growth without driving up costs. New York's leaders and community representatives must come together and continue to develop smart, sensible, and more robust plans to build more housing for all New Yorkers.
John H. Banks is the president of the Real Estate Board of New York. The views expressed here are the author's own and not those of ALM's Real Estate Media Group.
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