Despite falling prices for cooperative units, real estate properties in Manhattan, Brooklyn and Queens have reached record high prices, according to the Real Estate Board of New York’s first quarter 2017 report.
The REBNY Q1 2017 report noted that New York City’s residential market started strong this year with a 15% increase in sales. Condominium sales were a huge factor behind this latest trend, especially those located in neighborhoods that are undergoing new developments, according to Michael Slattery, REBNY’s senior vice president of research. He also mentioned that even locations with little development have been experiencing steady price appreciations.
The report also gave the exact data behind the condominium price increases. In Manhattan, the average sales price bumped up to $3.03 million for the first quarter which is 27% higher than the previous year. In Queens, the average sales price went up by 6% to $602,000. The biggest gain, however, comes from Brooklyn where average sales prices for condominiums shot up to $1.14 million—a whopping 39% in comparison to the first quarter of 2016. Overall, average NYC condominium sales prices rose by 12% to $1.02 million.
This latest development now leads to two implications—the price gap between condominiums and cooperatives and the difficulties of obtaining affordable housing.
Once again, condominiums continue to drive sales while cooperatives lag behind, causing a large price gap between the two. Demand leans towards condominiums, and this motivates sellers to raise their prices. On the other hand, sellers of cooperative units saw this lack of demand as a reason to pull down their prices. Average sales costs for NYC cooperatives have now fallen to $711,000—a slight 2% drop compared to the previous year.
The exponentially increasing prices, especially for NYC condominiums, may also provide difficulties for buyers to find affordable housing. A Street Easy analysis found that New Yorkers would pay an average 65.2% of their income on rent, compared to 59.7% back in 2015. These numbers are expected to further increase this year as prices continue to grow amidst stagnant income levels.