Why Renters May Want To Stay In NYC While Buyers Head To The Suburbs
Renters may be able to snag a deal in 2017 – while buyers will still fare better in the suburbs.
There has to be a tipping point. A point when the cost of living in NYC just isn’t worth it. And when paying a million dollars plus for a one-bedroom in a skyscraper doesn’t sound like such a great deal. Factor in the cost of private schools or under performing public ones, along with parking hassles, and contrast it with a four-bedroom house, backyard, parking and good public schools at half the cost of NYC apartment. That’s when the suburbs start to fight back against the city.
Last year, Brooklyn made news as being the most unaffordable city in America. Now, as spring approaches, many New Yorkers are reassessing the net benefit of living in the city. Such has been the desire for a more affordable housing that a cottage industry of companies, brokers and agents showing frazzled New Yorkers the benefits of living in the tranquil suburbs has flourished. For $35 a person, real estate advisory firm Suburban Jungle sends New Yorkers on their “Suburb Stroller Tours,” introducing them to popular towns in Westchester County, Connecticut, Long Island and New Jersey. There’s also a three-course lunch at a “stroller-friendly” restaurant.
If it all sounds a little contrived and Stepford Wives-ish, it probably is. Clearly, there’s money to be made from uninformed New Yorkers who don’t have the time to do the leg work required to find the right suburb for them. And so these crash courses have bloomed. The New York Times reported that numerous brokers and agents are clocking up sales commissions by working in conjunction with their suburban counterparts.
While buyers get more bang for their buck in the suburbs, renters may want to think twice—at least for the time being—about trading high rents for the trees and fields. NYC developers, it seems, will be paying the price this year of getting high on their own supply of apartment buildings. The recent construction boom, particularly in Brooklyn, Queens, and Manhattan—has created softening in the market as there are now too many available options resulting in stagnating rents rents.
According to Crain’s, National real estate investment trust Avalon Bay expects the suburbs to outperform the the five NYC boroughs in 2017, in terms of rent increases. They should know, they have both assets in the NY suburbs and in the city, where they are currently constructing a 172-unit rental building in Manhattan near Columbus Circle.
“We do expect New York City to be the weakest performing market of our broader New York, New Jersey portfolio in 2017,” Sean Breslin, chief operating officer of the firm.
The firm expects revenue growth in the city to be around one percent this year. In Westchester and on Long Island, that growth is expected to be around 2 percent, while in northern and central New Jersey revenue growth will be closer to 2.5 percent.
According to a December market report from appraisal firm Miller Samuel, rents last month for newly developed buildings in Manhattan fell by nearly 10 percent compared to the year before. In Brooklyn, the drop was slightly less but in northeast Queens rents for new units increased by nearly 13 percent, according to the report.
With new apartments in Long Island City, Queens set to increase dramatically this year along with Brooklyn, there will be roughly double the number of new apartments that came on line in 2016. The advice for those thinking of heading for the suburbs is simple. If you rent, you might be able to snap up a great deal in the city. If you’re thinking of buying and don’t have your heart set on a McMansion, the suburbs may still be the place to be.
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