Two bedroom units are definitely the “sweet spot” in New York City’s lagging housing market.
Representing 31.5% of Manhattan’s current for-sale category, two-bedroom units have long been the bread and butter for developers when, in the 1990’s, two-bedroom units accounted for nearly 50% of all sales. Since then, the shift to ultra lux condos, larger and more lavish apartments targeted to investors drowned out more “normal” sized two-bedroom units.
Moving up from one-bedroom to two-bedroom units has a median cost of $685,000, too expensive for some move-up buyers and too small for some lux buyers, thus squeezing two-bedroom units into “difficult positions for sellers” with an oversupply of some 2,500 units, according to Jonathan Miller, president of Miller Samuels Appraisers and Consultants.
Take a look at how unit costs have fluctuated from Q3 2018 to Q3 2019 for people choosing to live and work in NYC:
Unit Size Q3 2018 Q32019 Change
Studio $495,000 $483,750 -2.3%
One Bedroom $815,000 $830,000 +1.8%
Two Bedroom $1,65,000 $1,515,000 -8.2%
Three Bedroom $2,861,250 $2,720,000 -4.9%
Four+ Bedroom $6.2M $5,146,579 -17%
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Looking at units in specific markets, check out where, if anywhere, there are bargains to be had in NYC housing:
According to Frederick Warburg Peters, CEO of Warburg Realty, “Sooner or later, what was happening in the luxury market was likely to catch up with the two-bedroom market. (That market) sunk into the doldrums four months ago.” List prices have dropped -20% from previous prices to $599,000 and $750,000 from $995,000. Additionally, the median price of co-ops fell for the first time in 13 years, according to a report by Elliman Real Estate.
The biggest discounts are available downtown south of 14th Street where median sales prices dropped -15% to $1,568,750 compared to Q3 2018. Midtown units experienced the deepest discounts for resale units, dropping -10% to $1,217,500.
Income Restricted Buildings
These units are reserved for mid-income buyers in the Housing Development Fund Corporation co-ops. There are not many of these units available so scrounging around looking for one takes time and effort. One two-bedroom was recently listed for $325,000, -24% less than Q3 2018’s asking price of $430,000.
Among such income restricted units, Upper Manhattan had the fewest Q3 sales of co-=ops and condos in a decade, according to StreetEasy.
IN Queens, sales were down -7% from one year ago at this point in time but median home prices rose to $600,000.
Brooklyn is seeing rising inventory, falling prices in its luxury segment and co-ops hit a new price high in Q3 2019 at $485,000.
The Bronx offered no sales numbers or prices but this is the most affordable borough in NYC. The problem in this borough, however, is that major development is booming here.
Because of the glut of empty luxury condos (25% remain unsold, according to StreetEasy), this might be a good place to consider looking. No front-end discounts are happening in terms of price BUT back-end discounts are. Prices are falling just below $1M in order to not pull the trigger on mansion taxes and developers/sellers are offering to pick up transfer taxes, closing costs, rent-to-buy deals and much more.
Frederick Warburg Peters of Warburg Realty said, “There’s practically nowhere where you can’t negotiate (everything)…where you draw the line in the sand is another thing.”
Thanks to the New York Times for source data.