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New York City can get a bad reputation for being the most expensive city in the country…second behind San Francisco, depending on what you’re talking about! A lot of that has to do with rent prices. Costs add up when you’re experiencing the best attractions the city has to offer, like summer music festivals, funky food finds, delectable coffee shops, or even just ordering in your nightly Seamless. The real kicker, though, is rent. According to Street Easy, the median rent in 2017 for Manhattan was $3150, Brooklyn was $2500, and Queens $2175. Monthly rent costs are much higher than the average US city, especially the up-front payments needed like first month’s rent (or second and third), security deposits, broker fees, and application fees.
Wealth is coming back to most cities so it’s really demand. Besides lots of other cities that were hailed as cheap are seeing quickly rising rents as well!
I see a lot of people commenting here on how it's due to supply and demand, but there is, perhaps, another facet to this problem. NYC, particularly Manhattan, unlike almost any other American city, sees a lot, and I mean LOT of foreigners and wealthy people come here and just buy up apartments with no intention of actually living in them due to the fact that NYC real estate prices are so damn stable and often appreciates in value. In addition, these properties are very tax-friendly. The real estate tax on these units are ridiculously low, and not representative of the actual value of such apartments. As a result, a good portion of land in the desirable parts/neighborhoods have been bought up by developers and been redeveloped into luxury residentials that no one is really ever going to live in (despite what you might see about how many units are purchased). These apartments were also, of course, developed without the intent of a regular NYer ever even living in them, and the sole reason they really include many of the amenities they do is that it looks good to buyers (remember, many of these are investments, not residences). Of course, there is also an aspect of supply and demand that is undeniable, but the investment property problem is also a significant contributor to the issue.
I see a lot of people commenting here on how it's due to supply and demand, but there is, perhaps, another facet to this problem. NYC, particularly Manhattan, unlike almost any other American city, sees a lot, and I mean LOT of foreigners and wealthy people come here and just buy up apartments with no intention of actually living in them due to the fact that NYC real estate prices are so damn stable and often appreciates in value. In addition, these properties are very tax-friendly. The real estate tax on these units are ridiculously low, and not representative of the actual value of such apartments. As a result, a good portion of land in the desirable parts/neighborhoods have been bought up by developers and been redeveloped into luxury residentials that no one is really ever going to live in (despite what you might see about how many units are purchased). These apartments were also, of course, developed without the intent of a regular NYer ever even living in them, and the sole reason they really include many of the amenities they do is that it looks good to buyers (remember, many of these are investments, not residences). Of course, there is also an aspect of supply and demand that is undeniable, but the investment property problem is also a significant contributor to the issue.
If the apartments are unavailable to rent, for whatever reason, this still comes down to supply and demand. A desirable investment area is always the result (or anticipation) of the high demand in the first place.
I see a lot of people commenting here on how it's due to supply and demand, but there is, perhaps, another facet to this problem. NYC, particularly Manhattan, unlike almost any other American city, sees a lot, and I mean LOT of foreigners and wealthy people come here and just buy up apartments with no intention of actually living in them due to the fact that NYC real estate prices are so damn stable and often appreciates in value. In addition, these properties are very tax-friendly. The real estate tax on these units are ridiculously low, and not representative of the actual value of such apartments. As a result, a good portion of land in the desirable parts/neighborhoods have been bought up by developers and been redeveloped into luxury residentials that no one is really ever going to live in (despite what you might see about how many units are purchased). These apartments were also, of course, developed without the intent of a regular NYer ever even living in them, and the sole reason they really include many of the amenities they do is that it looks good to buyers (remember, many of these are investments, not residences). Of course, there is also an aspect of supply and demand that is undeniable, but the investment property problem is also a significant contributor to the issue.
real estate investors keep supply higher then it would be otherwise so it goes both ways . if real estate is not lucrative enough then why deal with tenant crap .
a big part of all rentals in nyc that are in apartment houses are co-ops today owned by investors .
it is no different than the stock market where we have the computerized trading and short selling on down days and huge drops . but we love it when it creates buying panic on up days from short sellers buying and covering their short positions
Last edited by mathjak107; 01-28-2019 at 03:04 AM..
I see a lot of people commenting here on how it's due to supply and demand, but there is, perhaps, another facet to this problem. NYC, particularly Manhattan, unlike almost any other American city, sees a lot, and I mean LOT of foreigners and wealthy people come here and just buy up apartments with no intention of actually living in them due to the fact that NYC real estate prices are so damn stable and often appreciates in value. In addition, these properties are very tax-friendly. The real estate tax on these units are ridiculously low, and not representative of the actual value of such apartments. As a result, a good portion of land in the desirable parts/neighborhoods have been bought up by developers and been redeveloped into luxury residentials that no one is really ever going to live in (despite what you might see about how many units are purchased). These apartments were also, of course, developed without the intent of a regular NYer ever even living in them, and the sole reason they really include many of the amenities they do is that it looks good to buyers (remember, many of these are investments, not residences). Of course, there is also an aspect of supply and demand that is undeniable, but the investment property problem is also a significant contributor to the issue.
the real estate taxes are generally lower in nyc but that is only because we have a nyc income tax . all rental income and gains are subject to nyc income tax . the co-ops we sold in nyc which were rentals , ended up causing all our income to see almost a 30% tax from dollar 1 when you included the federal , state , local and amt tax that it can trigger. even the highest level of the capital gains tax is 24% today and coupled with depreciation recapture and amt tax you are looking at around 30%
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