William Huston, AIF®, AIFA®

New York Real Estate Market: A Window of Opportunity Opens for Smaller Investors

William Huston, AIF®, AIFA®

William Huston, AIF®, AIFA®

New York Real Estate Market: A Window of Opportunity Opens for Smaller Investors

real estate agent

Are you a smaller investor dreaming of making your mark in the bustling world of real estate? Well, get ready to seize an incredible opportunity in the New York market!

With a fluctuating median sale price, and a temporarily declining rental market lowering acquiring prices, the Big Apple is beckoning many buyers like never before.

Whether you're an experienced investor or just dipping your toes into the real estate pool, this is your chance to dive into a window of opportunity and make your mark in the concrete jungle. Explore the exciting opportunity of the New York real estate market currently opening up!

You can also work with experts in the NYC real estate market.

Key Takeaways
  • Diversify your investment portfolio by exploring the New York real estate market, which can provide stability and potential long-term growth.
  • Conduct thorough due diligence, seek professional guidance, and monitor market trends to make informed investment decisions and mitigate risks.
  • Manage risks effectively by considering maintenance costs, vacancy rates, financing risks, and regulatory changes.
  • Continuously educate yourself to stay informed about industry trends and best practices; real estate investing is a long-term endeavor that requires sticking to your investment strategy and weathering market fluctuations.

The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on financial planning and financial management here. More on disclaimers here.

New York Housing Market

residential real estate

The delicate balance between housing supply and demand in New York City plays a pivotal role in shaping the city's real estate landscape. As the vibrant metropolis continues to attract residents and businesses, the interplay between available housing units and the growing demand for shelter creates a dynamic and ever-evolving market.

NYC housing supply and demand

For a long time, the New York City real estate market grappled with a persistent challenge – a limited supply struggling to keep pace with the ever-increasing demand for housing and office spaces. This dynamic duo worked hand in hand, driving prices to soaring heights and creating a fiercely competitive environment. However, the consequences of this ongoing struggle have given rise to a new set of circumstances. Rather than solely grappling with skyrocketing prices, the market now faces a different problem altogether.

What Changed in 2022

massive real estate property

The most recent housing report from the New York State Association of REALTORS® reveals a disheartening trend, as closed sales have plummeted to their lowest level in almost a decade.

Residential properties sold

This scarcity of homes for sale has created a fiercely competitive landscape, leaving buyers contending with intense rivalry, while sellers find themselves grappling to attract interested buyers. The market's ongoing struggle with limited inventory and increasing interest rates has cast a shadow over the housing industry in New York State.

New York Median Home Prices

In June of 2022, the median sale prices soared to an impressive figure of over $962,000, exemplifying the exceptionally high prices observed across the entire region, with Manhattan standing out prominently among the five boroughs.

As for the average home value in New York, it currently stands at $648,402, marking a notable increase of 2.7% over the past year. On average, homes go under contract within approximately 77 days, reflecting the relatively swift pace of pending sales in the market.

These statistics paint a vivid picture of the robust and competitive real estate landscape in New York, where prices remain elevated, making it an intriguing market for both buyers and sellers alike.

Manhattan median price

The commercial real estate market in Manhattan is experiencing significant challenges, with office spaces remaining partially vacant and the looming threat of widespread defaults due to rising interest rates.

NYC Housing Market in 2023

real estate fund

A quick overview reveals interesting trends:

Drop in foreclosures

The real estate market witnessed a significant downturn in February 2023, with closed sales experiencing a staggering 34.3 percent decline compared to the same month in the previous year.

This sharp drop marked the lowest number of closed sales since February 2014, painting a gloomy picture for the industry. In line with this trend, new listings also suffered, decreasing by 15.8 percent year-over-year, while pending sales saw an 8.1 percent decrease.

Drop in Inventory

Adding to the market woes, the inventory of available homes for sale dwindled by 8.2 percent in comparison to February 2022, continuing a downward trend that has persisted for 40 consecutive months.

Causes for falling sales

real estate investing fund

The root causes behind this decline in sales can be attributed to two key factors: a shortage of available inventory and the rise in interest rates. According to Freddie Mac, interest rates steadily increased throughout February, with the monthly rate for a 30-year fixed-rate mortgage starting at 6.09 percent and climbing to 6.50 percent.

Low Inventory Impact Sales

Low housing inventory has exerted a significant impact on sales in the real estate market. With limited available properties and increasing borrowing costs, buyers face heightened competition and reduced purchasing power, leading to a noticeable impact on overall sales volumes.

Mortgage Interest Rates

Mortgage interest rates have a significant impact on sales in the real estate market. With rising mortgage rates, it becomes more expensive for New York homebuyers to finance their home purchases, reducing their purchasing power and potentially dampening demand.

Conversely, when interest rates are low, it can stimulate buyer activity and increase affordability, leading to higher sales volumes.

A window of opportunity for smaller investors

real estate property

However, amidst these struggles, a subset of affluent investors is irresistibly drawn to the prospect of owning property in the heart of New York City. As institutional buyers step back from deals, high-net-worth families and lesser-known developers are seizing the opportunity to hunt for bargains in Manhattan's office buildings.

These investors are increasingly dominating the market, eager to secure a piece of what was once among the world's most coveted commercial property markets. Anticipating further transactions, current building owners, burdened by financial constraints and mounting borrowing costs, are looking to offload their properties at discounted prices.

Family offices, which are responsible for managing finances for the ultra-rich, are among those keenly interested in capitalizing on this chance to acquire valuable properties.

The shifting dynamics in Manhattan's commercial real estate sector suggest a new wave of activity as both buyers and sellers navigate the evolving landscape.

What causes housing prices to fall?

Besides the watershed moment that the stiff competition among buyers climaxed in, overvalued housing prices and unemployment have been identified as other possible culprits for falling prices.

Overvalued housing markets in NYC

While California and Seattle, Washington, are often associated with some of the most overpriced markets for purchasing a home, and California and Florida dominate the list for renting, New York City has its own share of historically overpriced markets.

Neighborhoods like Tribeca, Greenwich Village, and SoHo in Manhattan have garnered a reputation for housing high-end luxury properties that contribute to their status as overpriced markets within the city.

This had its own contribution to the current real estate trend in these markets.

Sharply rising rates of unemployment beginning during the pandemic might also have added to the problem. And though the employment rate returned to a reasonable level in 2022, it is already beginning to pick up again, although for obviously different reasons.

Will real estate market value continue to fall?

real estate funds

As the cost of obtaining a mortgage becomes more expensive, it naturally dampens the demand for real estate, subsequently exerting downward pressure on house prices. This challenging combination of limited inventory and rising interest rates has undoubtedly impacted the market dynamics, warranting careful consideration for both buyers and sellers in the real estate landscape.

Is NYC real estate a buyer's market or a seller's market?


As of March 2023, the real estate market in New York City favors buyers, as indicated by the data. The median listing home price has experienced a notable year-over-year decrease of 16.6%, signaling a decline in home prices overall.

Furthermore, the sale-to-list price ratio is relatively low, with homes selling on average 3.32% below the asking price. Ideally, buyers prefer a sale-to-list price ratio closer to 90%, whereas sellers typically aim for a ratio of 100% or higher.

In terms of inventory, there are currently 25,863 homes available for sale in New York City, indicating a surplus of supply compared to demand. The average time a home spends on the market before being sold stands at 151 days, slightly longer than the previous month but slightly shorter than the previous year.

However, it's important to note that certain neighborhoods, like Tribeca, still boast high median listing home prices, with properties averaging around $4.3 million, making it the most expensive neighborhood. This suggests that while the overall market may favor buyers, there are specific areas where it may still lean towards sellers due to the higher prices.

Overall, the current market conditions in New York City present opportunities for buyers, yet the presence of high-priced neighborhoods indicates that a seller's market persists in certain areas.

What should you do as a non-institutional investor?

non-institutional real estate investors

As a non-institutional investor seeking to seize this opportunity, there are practical steps to follow as you enter the market:

Search out the best deals

As a non-institutional investor, it's essential to negotiate and secure the best deal possible. Conduct thorough market research, analyze comparable sales, and consider enlisting the help of a real estate professional to guide you through the buying process.

Leverage your knowledge and resources to negotiate favorable terms, such as purchase price, financing options, or contingencies, to get the most advantageous deal.

Don't buy at the lowest price

While getting a good deal is important, solely focusing on the lowest price can lead to overlooking other crucial factors. Consider the property's condition, location, potential for growth, and comparable sales in the area to assess its true value.

Consider the value of the property

Look beyond the price tag and assess the overall value of the property. Evaluate its potential for rental income, future appreciation, and any unique features or amenities that may make it desirable in the market.

Do not invest in the properties for the short run

Real estate investments generally yield better returns over the long term. Avoid the temptation of short-term gains and focus on properties that have the potential to appreciate in value over time, allowing you to build equity and generate consistent income.

Figure out how to sell for top dollar

When investing in real estate, consider your exit strategy. Plan ways to maximize the selling price, such as improving the property's condition, staging it effectively, or timing the sale during a favorable market period.

Properly preparing and marketing the property can help you achieve the highest possible sale price. Our real estate expert can ease this process for you.

Bay Street Capital Holdings

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Bay Street Capital Holdings is a Palo Alto-based financial planning, wealth management, and investment advisory firm that prioritizes managing total risk and volatility over maximizing returns.

Its founder, William Huston, is among Investopedia's Top 100 Financial Advisors for 2021 and only two of nineteen California firms recognized as Black-owned.

Bay Street supports diverse and emerging fund managers and entrepreneurs and was a finalist in the Asset Manager for Corporate Social Responsibility (CSR) category out of over 900 firms across the US in 2021.








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