Is Right Now a Good Time to Buy an Apartment in NYC? - 2018 Update
2017 has been a record setting year for New York City real estate. With continuing appreciation of the housing market, and some softening in the the very high-end luxury market (i.e. properties $5 million and up), 2018 promises to be an exciting year. With a fast-moving political climate that has many potential implications on would-be buyers, the question you might be asking yourself is: Should I buy an apartment in NYC right now?
Before we dig into the pros and cons of the current state of New York City's booming real estate market, let's quickly review some facts and figures using Q3 - 2017 figures.
Manhattan
Average Sales Price: $2,002,835
Average Price Per Square Foot: $1,678
Median Sales Price: $1,170,000
Brooklyn
Average Sales Price: $981,623
Median Sales Price: $790,000
Average Price Per Square Foot: $1,064
These figures all represent new records, and with the economy showing little signs of slowing down, many buyers might feel like they missed the boat. However, there is never a perfect way of timing everything involved in the apartment purchase process, much of which includes a personal desire to finally purchase a property in the city instead of renting.
** Mid-Year 2018 Update - Buyer's Market Alert **
With the first half of 2018 under wraps, record inventory has flooded the market and absorption rates are down. With more properties on the market, we are now in a buyer's market. This means that would-be buyers have the control and can score amazing deals.
For more about what a buyer's market means for you read: Buyer's Market NYC - 2018 Update
*** 2019 Update Available *** JUST WRITTEN ***
READ: 2019 Update: Is Right Now a Good Time to Buy an Apartment in NYC?
Apartment prices are at all-time highs. Should I wait for the market to correct, cool down or go back down in price?
If you think that you can appropriately time the market, you'll find yourself waiting for a long time, only to take little to no action. One of the biggest mistakes people make is sitting on the sidelines hoping or waiting for the real estate market to slide and prices to come down. This doesn't happen in New York City. Rather, prices don't appreciate as rapidly or perhaps even flatline, but you won't see dramatic reductions. The city's real estate market is propped up by thousands of international buyers. When locals don't buy, international buyers do. Additionally, when people read sensationalized headlines about apartment prices being chopped, the articles often refer to $70 million dollar apartment being chopped to something more "reasonable" like $55 million dollars.
However, you can still score great deals and negotiate your offer. You don't need to wait for a supposed doomsday scenario to get a great deal on a property. You just need to work with brokers (like us) who can help you identify great value and upside opportunity.
It's cheaper to rent than to buy the same type of apartment I'm living in. Why should I buy?
That's a great point! If you're not sold on the idea that you should be buying, then renting is for you. Buying real estate in New York City isn't for everyone. If you need a spreadsheet to help you rationalize why buying is worthwhile, chances are the numbers will never help you justify why you should own. You've already made up your mind. Keep renting.
Isn't Trump's Tax Bill bad for NYC real estate?
For complete coverage of how the new tax bill will potentially impact the New York City real estate market, make sure you read through some of the details.
Some of the potential changes currently in the pipeline are as follows:
$10,000 cap in total local real estate taxes that can be deducted from income tax return
Change in amount of time from 2 years to 5 years that an owner must hold a property as a primary residence in order to avoid capital gains taxes on the first $250,000 as a single filer or $500,000 as a joint filer
So are these changes related to tax deductions terrible for NYC real estate? Absolutely not. While you may be missing out on a few thousand dollars worth of benefit related to your real estate holdings, you will make up the difference in other areas of the tax return.
What benefits are associated with buying real estate in NYC that I would otherwise be missing out on?
If you can afford to purchase an apartment in NYC, there are numerous financial benefits:
Real estate tax deductions
Mortgage tax deductions
Implied savings (a significant component of your mortgage payment will be made up of principal)
Apartment value appreciation
New York City is filled with a vast number of apartment choices.
Whether you're considering a condominium or a co-op, something priced on the low end or a luxury apartment on the high end, or an apartment in Brooklyn or in Manhattan, the choice is yours.
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