2018 has been a tumultuous year for New York City real estate.
The year began with a nervous luxury sector and a new Federal tax plan. The shock closure of bombastic brokerage TOWN had tongues wagging all summer, and the big Amazon HQ2 announcement gave the housing market a much-needed jolt this month.
For how residential sales and leasing will shake out in 2019, we turned to the experts for their predictions:
Andrew Barrocas, CEO of residential brokerage MNS, predicts that rental pricing will remain flat through the beginning of the New Year but enjoy a bump post-summer.
“There’s a lot of demand in the marketplace with unemployment at an all time low and more industries like tech moving to New York,” Barrocas said. “So, you have very good things happening on the employment side and then you combine that with fewer new buildings, that equals more demand than supply, which will drive pricing up.”
Barrocas was critical of the rental market’s propensity for generous concession packages. He said concessions are common to draw early interest to a new project, but he believes multiple month concessions are ineffective and expects them to be eliminated altogether in 2019.
Gary Malin, president of Citi Habitats, shared similar thoughts on concessions.
“If you offer too high a concession … clients start to ask themselves, ‘Am I going to be able to stay here?’” Malin said. “The question going into the new year is what adjustment, if any, will property owners be willing to make to bridge the gap of real expectations and their own, to ensure activity?”
Overall, Malin expects the market will largely remain the same with buyers and renters flexible about where they live, depending on the price.
“People are looking for value because not everyone can afford the latest and greatest,” Malin said. “Others may have to explore possibly outside their target zone or type of building.”
With Long Island City, Malin said the area is doing extremely well due to the ongoing new development activity and the close-to-Manhattan location.
However, as the neighborhood becomes even more popular, Malin expects people will look in Queens neighborhoods such as Briarwood for bargains. That Queens neighborhood is seeing more developments and offers a roughly 45-minute F train commute to Long Island City.
Douglas Elliman’s Alexander Boriskin of Douglas Elliman predicts New York home prices could drop as much as 14 percent next year, forcing sellers to re-think their expectations.
“Sellers need to understand that they have to price their properties at where the market is currently. They can’t look at comps from a year or two ago,” said Boriskin.
“A lot of people aren’t going to do this in the beginning of the year, which is going to cause listings to sit around for even more days on the market. The sellers who understand the market are going to price correctly from the start and their transactions are going to be the new comps.”
And Aleksandra Scepanovic, managing director of Ideal Properties Group, agreed that the market will start to favor the buyer, as seller’s prices will continue to adjust.
“2019 is likely to be the year of the reality check,” Scepanovic said. “It’s the year where New York City property buyers are likely to stretch their buying dollar further, while sellers accept that their property is worth just a little less than they originally thought.”
She added that selling homes will still be a profitable venture, but will require more accurate listing price.
And Steven James, president and CEO of Douglas Elliman’s NYC brokerage, shared similar predictions on pricing. He explained that his team is spending a lot of time providing data and recent sales to sellers to get as fair of a listing price as possible.
“The sellers that are realistic, they’ll have a sale and a contract on their property,” James said. “Those who don’t want to get the message, their property will sit and longer and longer.”
Stribling broker Jeffrey Stockwell said buyers will be on the lookout for value as well as stability.
Stockwell, who is handling sales for 350 West 71st Street, said buyers should be looking to more established neighborhoods like the Upper West Side, as opposed to those that are rapidly changing.
“I think we’re coming out of a 20-year period where everyone was looking for up-and-coming neighborhoods,” Stockwell said. “But not all of the five boroughs can become cool and hip, so I think smart buyers are looking for some place that is stable.”
One cool and hip neighborhood that’s been on everyone’s radar for 2019 is Williamsburg, which will face the L train shutdown for 15 months of repair. With its major commuting artery closed from April 2019, many will be left looking for commute alternatives.
Barrocas believes that Williamsburg won’t be as heavily impacted as people expect. He said those who already call the area home will adapt to the shutdown by taking the NYC Ferry Service or other modes of transport.
“There’s nothing anyone needs to go to Manhattan for now, whereas that wasn’t the case with Williamsburg five or 10 years ago,” Barrocas said. “Now, it’s really its own standalone city and is very desirable regardless.”
Barrocas said the initial uncertainty of Williamsburg’s future was due to the MTA debating whether they should shut the train line down completely for 15 months or do repair work intermittently, which would take far longer. Now that the MTA has committed to the 15-month shutdown, Barrocas said people can plan around and commit to moving into the neighborhood. As a silver lining, he added that there would be fewer tourists due to the shutdown.
“That uncertainty was awful, that’s a killer from a rental standpoint,” Barrocas said. “Now that’s all figured out, we’ve seen much better results on retention and absorption.”
Tali Berzak of Compass Real Estate said many Williamsburg renters are hunkering down and renewing leases at deeply discounted rates — but sees some clouds on the horizon.
“These residents most likely believe that they will be able to power through the shutdown. Unfortunately, I predict that this shutdown will be more disruptive than anticipated and these same renters will find themselves breaking leases to move south toward BedStuy and Crown Heights where they will have access to the A/C, J, G, 2/3, or 4/5 trains,” Berzak said.
“These neighborhoods are already experiencing the migration, but I think we will see a greater influx of renters from Williamsburg in the summer of 2019, a few months after the shutdown begins.”
2018 also saw New York agents begin to adapt to co-living. With even the city now looking to develop co-living properties, the trend is particularly appealing to “millennials seeking flexible, cost-effective living with a sense of community,” according to a CBRE report. “We see the rise of co-living across the country as a positive sign for the multifamily market overall,” said Jeanette Rice, head of multifamily research at CBRE.
Stribling’s Stockwell predicts 2019 will be a year of caution among buyers. “People want to make a safe, smart purchase and now that they are cautious, they don’t want to take risks,” Stockwell said. “They want something secure and something they can enjoy now, and not in five years.”
Technology is the big thing the market agrees on and 2019 will herald a new era of new tech, they expect.
Blockchain burst onto the market this year with companies such as Imbrex cutting out middlemen and allowing users to directly list their properties on the platform.
Molly Townsend, director of sales for the luxury residential condo Quay Tower, said smart home tech such as voice-activated home assistants will become soon become standard.
“Peoples’ smart home needs will become greater and greater and they will expect that lifestyle where they need everything to be integrated,” Townsend said. “With the pressure and fast pace of living in New York City, once that technology catches on, it’ll just be an expectation.”
Quay Tower at 50 Bridge Park Drive partnered up with Amazon to install Amazon Echo and Echo Dot technology is all 126 units so residents can switch on lights, adjust the temperature and use appliances remotely.
With Amazon headed to Long Island City, Townsend expects a more tech-savvy crowd moving into the area and its nearby neighborhoods in Queens and Northern Brooklyn.