Rents and house prices in New York fell at the biggest annual rate on record in January, mainly due to overinventories, and it could take years for the city's housing market to return to pre-pandemic levels.
Rents in new York city recorded the biggest year-on-year drop on record in January, with Manhattan falling 15.5 per cent and Brooklyn and Queens down 8.6 per cent, according to StreetEasy, an online real estate platform.
The median asking rent in Manhattan fell to $2750 in January, the lowest level since March 2010, when the city's economy was emerging from the effects of the financial crisis. The median asking rent is $2395 in Brooklyn and $2000 in Queens.
StreetEasy attributes the drop in rents to oversupply because there are twice as many properties available for rent in Manhattan and Brooklyn as they were a year ago, and there are about the same number in Queens.
In terms of home prices, Manhattan and Brooklyn again witnessed record year-on-year declines in January-- 6.2% and 5.4%, respectively.
The median asking price for housing fell to $1.35 million in Manhattan and $925000 in Brooklyn.
Despite the sharp fall in house prices, outstanding sales in Brooklyn and Manhattan (that is, contracted real estate transactions) rose 17.3 per cent and 30.8 per cent respectively from a year earlier, due to a 57 per cent year-on-year increase in luxury property contracts (priced at no less than $3.7 million).
However, the rapid growth in contracts has failed to offset the increase in available inventories, even for luxury properties, which are up 25 per cent from last year. This means that the average price of housing will still fall.
In 2020, the COVID-19 epidemic hit New York's real estate industry hard, with at least 300000 urban residents moving to the suburbs either because of unemployment or in order to have more living space. The city's unemployment rate, which reached 12% in November, fell slightly to 11.4% in December (still almost twice the national average).
Even after mass vaccinations for urban residents, it could take years for New York rents to return to pre-pandemic levels due to permanent job losses and inventory glut.