Can't Beat the NYC Rental Market? Maybe It's Time to Buy Instead
(Bloomberg) -- New York City renters already pay some of the highest rents in the country, but the widespread use of Airbnb Inc. is pushing even more people out of the city by contributing to soaring rents, New York City’s Comptroller Scott Stringer said, citing a commissioned report by the city. Airbnb counters that rents are now falling in many neighborhoods.
But now, with condo sales in Manhattan and Brooklyn faltering, an affordable place to live may instead just be a down payment away.
New York City home sales have started to take a hit from the new federal tax law changes. Even though the median sales price in Brooklyn rose in the first quarter of 2018 by 3.2 percent to $795,000, the number of sales fell 13.9 percent after ten straight quarters of sales gains, according to realtor Douglas Elliman. The Brooklyn condo market led the declines, with year-over-year median prices falling 7.6 percent and sales down 16.9 percent.
The Manhattan market saw similar declines, with first-quarter median prices falling 2 percent from last year as the number of sales cratered by 24.6 percent. Condos again told the story, with a year-over-year median price decline of 1.3 percent and the number of sales falling by 33 percent.
It’s not just a case of the most-popular boroughs being too crowded that no one wants to live there anymore. Tighter credit and higher mortgage rates, along with the reduced ability to deduct mortgage interest and state and local taxes, means that even the top end of the market is suffering.
Elliman estimates that the sales price in the Manhattan luxury market slid 15.1 percent year-over-year in the first quarter as inventory rose at more than twice the rate of the entire New York City market. The absorption rate, the number of months to sell all inventory at the current rate of sales, rose to 20.4 months from 13.4 the year before, with active inventory in Manhattan rising 15.4 percent to 1,494 units.
Though Airbnb listings peaked in 2015 at more than 43,000 and fell below 40,000 a year later, the city estimates renters paid an additional $616 million in rent in 2016 because of the home-sharing service. In 2010, the service had just 1,000 listings citywide.
Brooklyn was the hardest hit borough, with average monthly rents up 35 percent, or $340 a month, from 2009 to 2016. High-demand Brooklyn neighborhoods Greenpoint and Williamsburg, where average rents surged 62.6 percent or $659 a month, in the same period, play host to 8.3 percent of all Airbnb listings citywide.
Up-and-coming neighborhoods Bed-Stuy and Bushwick have 5.1 percent and 5 percent, respectively, of all city listings. Rents in Bed-Stuy were up 47.2 percent, or $407 a month, while Bushwick saw rents rise 39.5 percent, or $369 month.
Manhattan, which accounted for 52 percent of all New York City Airbnb listings in 2016, was the fourth-hardest hit by rent increases at 19 percent, or $276 a month. Chelsea, Clinton and the Midtown Business District saw rents rise 23.4 percent, or $398 a month, below the hardest-hit neighborhoods of Murray Hill, Gramercy and Stuyvesant Town, which saw rents rise 25.9 percent, or $488 a month.
Staten Island, long the forgotten borough, had the lowest Airbnb-related rent increase, just 14 percent, or $129 a month. Queens, long-hailed as the new Brooklyn, was the second hardest-hit borough with an increase in rent of 22 percent, or $242 a month.
If the city’s right, you may not be able to afford the rent on that one-bedroom condo on the Upper East Side anymore, but you might just be able to buy it now. If you can afford the down payment. And the taxes. And the maintenance. And the insurance.
And then you can list your place on Airbnb -- like the rest of the city.
©2018 Bloomberg L.P.